USA Compression Partners, LP 10-K

ITEM 9A. Controls and Procedures Disclosure Controls and Procedures As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2023, at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for us. Our internal control system was designed to provide reasonable assurance regarding the preparation and fair presentation of our published financial statements. There are inherent limitations to the effectiveness of any control system, however well designed, including the possibility of human error and the possible circumvention or overriding of controls. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Management must make judgments with respect to the relative cost and expected benefits of any specific control measure. The design of a control system also is based in part on assumptions and judgments made by management about the likelihood of future events, and there can be no assurance that a control will be effective under all potential future conditions. As a result, even an effective system of internal control over financial reporting can provide no more than reasonable assurance with respect to the fair presentation of financial statements and the processes under which they were prepared. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the 2013 Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework. Based on this assessment, our management believes that, as of December 31, 2023, our internal control over financial reporting was effective. Grant Thornton LLP, an independent registered public accounting firm that audited our consolidated financial statements included herein, also has audited the effectiveness of our internal control over financial reporting as of December 31, 2023, as stated in their report, which is included herein. 52 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors of USA Compression GP, LLC and Unitholders of USA Compression Partners, LP Opinion on internal control over financial reporting We have audited the internal control over financial reporting of USA Compression Partners, LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2023, and our report dated February 13, 2024 expressed an unqualified opinion on those financial statements. Basis for opinion The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Houston, Texas February 13, 2024 53 Table of Contents Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. Other Information During the three months ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed the Company of the adoption , modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K, except as follows: • On November 13, 2023 , Eric D. Long , our President and Chief Executive Officer and Director , adopted an equity trading plan in accordance with Rule 10b5-1(c)(1) under the Exchange Act. The plan provides for the sale of up to a maximum of 196,859 of our common units. The first trade under the plan will not occur until February 16, 2024 at the earliest, and the plan will terminate on or before November 8, 2024. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 54 Table of Contents PART III ITEM 10. Directors, Executive Officers, and Corporate Governance Board of Directors Our general partner, USA Compression GP, LLC (the “General Partner”), manages our operations and activities. The General Partner is wholly owned by Energy Transfer LP (“Energy Transfer”). The General Partner has a board of directors (the “Board”) that manages our business, and the Board has appointed executive officers of the General Partner. References to “our officers” and “our directors” in this section refers to the officers and directors of the General Partner. The Board is not elected by our unitholders and is not subject to re-election on a regular basis in the future. As the sole member of the General Partner, Energy Transfer is entitled under the limited liability company agreement of the General Partner (the “GP LLC Agreement”) to appoint all directors of the General Partner, subject to rights and restrictions contained in other agreements. The GP LLC Agreement provides that the Board shall consist of between two and eleven persons. The Board is comprised of eight members, all of whom were designated by Energy Transfer. Pursuant to a Board Representation Agreement (the “Board Representation Agreement”) among us, the General Partner, Energy Transfer, EIG Veteran Equity Aggregator, L.P. (along with its affiliated funds, “EIG”), and EIG Management Company, LLC (“EIG Management”), entered into on April 2, 2018 (the “Transactions Date”) in connection with our private placement to EIG and FS Specialty Lending Fund (formerly known as FS Energy and Power Fund) (“FSSL”) of Preferred Units and warrants to purchase common units of the Partnership (the “Warrants”), EIG Management has the right to designate one member of the Board for so long as EIG and FSSL own, in the aggregate, more than 5% of the Partnership’s outstanding common units (taking into account the common units issuable upon conversion of the Preferred Units and exercise of the Warrants). EIG Management has not designated a board member following the resignation of its previous designee, Matthew S. Hartman, on November 20, 2023. Three members of the Board are independent as defined under the independence standards established by the NYSE and the SEC. Although the NYSE does not require a publicly traded limited partnership like us to have a majority of independent directors on the Board or to establish a compensation committee or a nominating committee, the Board has elected to have a standing compensation committee (the “Compensation Committee”). We do not have a nominating committee in light of the fact that Energy Transfer and EIG currently collectively have the right to appoint all of the members of the Board. Eric D. Long, our President and Chief Executive Officer (“CEO”), is currently the only management member of the Board. The non-management members of the Board meet in executive session without any members of management present at least twice a year. Mr. William S. Waldheim presides at such meetings. Interested parties can communicate directly with non-management members of the Board by mail in care of the General Counsel and Secretary at USA Compression Partners, LP, 111 Congress Avenue, Suite 2400, Austin, Texas 78701. Such communications should specify the intended recipient or recipients. Commercial solicitations or similar communications will not be forwarded to the Board. As a limited partnership, NYSE rules do not require us to seek unitholder approval for the election of any of our directors. We do not have a formal process for identifying director nominees, nor do we have a formal policy regarding consideration of diversity in identifying director nominees. We believe, however, that the individuals appointed as directors have experience, skills, and qualifications relevant to our business and have a history of service in senior leadership positions with the qualities and attributes required to provide effective oversight of the Partnership. Independent Directors . The Board has determined that each of Glenn E. Joyce, W. Brett Smith, William S. Waldheim are, and prior to his departure Matthew S. Hartman was, an independent director under the standards established by the NYSE and the Exchange Act. The Board considered all relevant facts and circumstances and applied the independence guidelines of the NYSE and the Exchange Act in determining that none of these directors has any material relationship with us, our management, the General Partner or its affiliates, or our subsidiaries. Mr. Smith is President of, and owns limited partnership interests in, Promontory Exploration, LP, Rubicon Oil & Gas II LP, and Quientesa Royalty LP, which entities own non-operating working or royalty interests in wells and receive proceeds from liquids production purchased by a subsidiary of Energy Transfer under agreements with well operators. The Board determined that Mr. Smith’s association with these entities did not preclude the independence of Mr. Smith. Mr. Hartman is a Managing Director at EIG, and, since the Transactions Date, EIG has owned over 80% of the Preferred Units and outstanding warrants in the Partnership. Additionally, during 2023 prior to Mr. Hartman’s departure, EIG owned common units in us as a result of the exercise of the warrants. The Board determined that EIG’s ownership interest in the Partnership did not preclude the independence of Mr. Hartman because (i) EIG’s ownership interest in the Partnership did not confer voting rights sufficient to participate in the control of the Partnership or influence its management, (ii) the Board Representation Agreement does not grant EIG a sufficient number of seats on the Board to significantly influence or control its 55 Table of Contents decision making or materially influence the management or operation of the Partnership, and (iii) the Board has determined that ownership of even a significant amount of the Partnership’s securities does not, by itself, preclude a finding of independence. The Board’s Role in Risk Oversight The Board administers its risk oversight function as a whole and through its committees. It does so in part through discussion and review of our business, financial reporting, and corporate governance policies, procedures, and practices, with opportunity to make specific inquiries of management. In addition, at each regular meeting of the Board, management provides a report of the Partnership’s operational and financial performance, which often prompts questions and feedback from the Board. The audit committee of the Board (the “Audit Committee”) provides additional risk oversight through its quarterly meetings, where it discusses policies with respect to risk assessment and risk management, reviews contingent liabilities and risks that may be material to the Partnership, and assesses major legislative and regulatory developments that could materially impact the Partnership’s contingent liabilities and risks. The Audit Committee also is required to discuss any material violations of our policies brought to its attention on an ad-hoc basis. Additionally, the Compensation Committee reviews our overall compensation program and its effectiveness at both linking executive pay to performance and aligning the interests of our executives and our unitholders. Committees of the Board of Directors Audit Committee. The Board appoints the Audit Committee, which is comprised solely of directors who meet the independence and experience standards established by the NYSE and the Exchange Act. The Audit Committee consists of Messrs. Joyce, Smith, and Waldheim, and prior to his departure, Mr. Hartman. Mr. Waldheim serves as chairman of the Audit Committee. The Board determined that Mr. Waldheim is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of SEC Regulation S-K, and that each of Messrs. Joyce, Smith, Waldheim is, and prior to his departure Mr. Hartman was, “independent” within the meaning of the applicable NYSE and Exchange Act rules governing audit committee independence. The Audit Committee assists the Board in its oversight of the integrity of our financial statements and our compliance with legal and regulatory requirements as well as the effectiveness of our corporate policies and internal controls. The Audit Committee has the sole authority to retain and terminate our independent registered public accounting firm, approve all auditing services and related fees and the terms thereof, and pre-approve any non-audit services to be rendered by our independent registered public accounting firm. The Audit Committee also is responsible for confirming the independence and objectivity of our independent registered public accounting firm. Our independent registered public accounting firm is given unrestricted access to the Audit Committee. The charter of the Audit Committee (the “Audit Committee Charter”) is available under the Investor Relations tab on our website at usacompression.com. We will provide a copy of the Audit Committee Charter to any of our unitholders without charge upon written request to Investor Relations, 111 Congress Avenue, Suite 2400, Austin, TX 78701. Compensation Committee. The NYSE does not require a listed limited partnership like us to have a compensation committee. However, the Board established the Compensation Committee to, among other things, oversee our compensation program described below in Part III, Item 11 “Executive Compensation.” The Compensation Committee consists of Messrs. Joyce, Smith, and Waldheim and is chaired by Mr. Joyce. The Compensation Committee establishes and reviews general policies related to our compensation and benefits, and is responsible for making recommendations to the Board with respect to the compensation and benefits of the Board. In addition, the Compensation Committee administers the USA Compression Partners, LP 2013 Long-Term Incentive Plan, as amended and as may be further amended or replaced from time to time (the “LTIP”). Under the charter of the Compensation Committee (the “Compensation Committee Charter”), a director serving as a member of the Compensation Committee may not be an officer of, or employed by, the General Partner, us, or our subsidiaries. During 2021, none of Mr. Joyce, Mr. Smith, or Mr. Waldheim was an officer or employee of Energy Transfer or any of its affiliates, or served as an officer of any company with respect to which any of our executive officers served on such company’s board of directors. In addition, none of Mr. Joyce, Mr. Smith, or Mr. Waldheim is a former employee of Energy Transfer or any of its affiliates. The Compensation Committee Charter is available under the Investor Relations tab on our website at usacompression.com. We will provide a copy of the Compensation Committee Charter to any of our unitholders without charge upon written request to Investor Relations, 111 Congress Avenue, Suite 2400, Austin, TX 78701. Conflicts Committee. As set forth in the GP LLC Agreement, the General Partner may, from time to time, establish a conflicts committee to which the Board will appoint independent directors and which may be asked to review specific matters that the Board believes may involve conflicts of interest between us, our limited partners, and Energy Transfer. Such conflicts committee will determine the resolution of the conflict of interest in any matter referred to it in good faith. The members of the 56 Table of Contents conflicts committee may not be officers or employees of the General Partner or directors, officers, or employees of its affiliates, including Energy Transfer, and must meet the independence and experience standards established by the NYSE and the Exchange Act to serve on the Audit Committee, and certain other requirements. Any matters approved by the conflicts committee in good faith will be conclusively deemed to be fair and reasonable to us, approved by all of our partners, and not a breach by the General Partner of any duties it may owe us or our unitholders. Corporate Governance Guidelines and Code of Ethics The Board has adopted Corporate Governance Guidelines (the “Guidelines”) that outline important policies and practices regarding our governance and provide a framework for the function of the Board and its committees. The Board also has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to the General Partner and its subsidiaries and affiliates, including us, and to all of its and their directors, employees, and officers, including its principal executive officer, principal financial officer, and principal accounting officer. We intend to post any amendments to the Code, or waivers of its provisions applicable to our directors or executive officers, including our principal executive officer and principal financial officer, on our website. The Guidelines and the Code are available under the Investor Relations tab on our website at usacompression.com. We will provide copies of the Guidelines and the Code to any of our unitholders without charge upon written request to Investor Relations, 111 Congress Avenue, Suite 2400, Austin, TX 78701. Note that the preceding internet addresses are for informational purposes only and are not intended to be hyperlinked. Accordingly, no information found on or provided at those internet addresses or on our website in general is intended or deemed to be incorporated by reference herein. Directors and Executive Officers The following table shows information as of February 8, 2024 regarding the current directors and executive officers of USA Compression GP, LLC. Name Age Position with USA Compression GP, LLC Eric D. Long 65 President and Chief Executive Officer and Director G. Tracy Owens 61 Vice President of Finance and Chief Accounting Officer Eric A. Scheller 60 Vice President and Chief Operating Officer Christopher W. Porter 40 Vice President, General Counsel and Secretary Sean T. Kimble 59 Vice President, Human Resources Christopher R. Curia 68 Director Glenn E. Joyce 66 Director Thomas E. Long 67 Director Thomas P. Mason 67 Director W. Brett Smith 64 Director William S. Waldheim 67 Director Bradford D. Whitehurst 49 Director The directors of the General Partner hold office until the earlier of their death, resignation, removal, or disqualification or until their successors have been elected and qualified. Officers serve at the discretion of the Board. There are no family relationships among any of the directors or executive officers of the General Partner. Eric D. Long has served as our President and CEO since September 2002 and has served as a director of the General Partner since June 2011. Mr. Long co-founded USA Compression in 1998 and has over 40 years of experience in the oil and gas industry. From 1980 to 1987, Mr. Long served in a variety of technical and managerial roles for several major pipeline and oil and natural gas producing companies, including Bass Enterprises Production Co. and Texas Oil & Gas. Mr. Long then served in a variety of senior officer level operating positions with affiliates of Hanover Energy, Inc., a company primarily engaged in the business of gathering, compressing, and transporting natural gas. In 1993, Mr. Long co-founded Global Compression Services, Inc., a compression services company. Mr. Long was formerly on the board of directors of the Wiser Oil Company, a NYSE listed company from May 2001 until it was sold to Forest Oil Corporation in May 2004. Mr. Long received his bachelor’s degree, with honors, in Petroleum Engineering from Texas A&M University. He is a registered Professional Engineer in the state of Texas. 57 Table of Contents As a result of his professional background, Mr. Long brings to us executive level strategic, operational, and financial skills. These skills, combined with his over 40 years of experience in the oil and natural gas industry, including in particular his experience in the compression services sector, make Mr. Long a valuable member of the Board. G. Tracy Owens has served as Vice President of Finance and Chief Accounting Officer of the Company since April 2017, and was designated as our principal financial officer in October 2023. Prior to joining us in 2017, Mr. Owens served as Vice President and Chief Accounting Officer of Southcross Energy Partners GP, LLC, the general partner of Southcross Energy Partners, L.P. (“Southcross”) from August 2015 until December 2016. Before joining Southcross, Mr. Owens served as Controller for Alon USA Energy, Inc. (“Alon”) since 2006. Prior to joining Alon, Mr. Owens served as Controller for Hunt Refining Company from 1996 until 2006 and as Senior Manager at KPMG LLP from 1986 until 1996. Mr. Owens received a BBA in Accounting from Baylor University in 1986. He is a member of the American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants. Eric A. Scheller has served as our Vice President, Chief Operating Officer since June 2020. Prior to that, Mr. Scheller served as our Vice President – Fleet Operations since April 2018, and prior to that was our Vice President, Operations & Performance Management beginning in August 2015. Prior to joining us, Mr. Scheller was a Director at Sapient Global Markets since August 2013. Before Sapient, Mr. Scheller was a consultant in private practice advising midstream and chemicals firms from January 2012 to July 2013. Prior to that, he held several positions with Enterprise Products Partners LP from November 2004 to December 2011, most recently as Regional Director, Pipeline & Storage Services. Mr. Scheller holds a B.S. in Chemical Engineering (Math minor), a Masters of Chemical Engineering, and an M.B.A., all from the University of Houston. Mr. Scheller also is a CFA ® charterholder. Christopher W. Porter has served as our Vice President, General Counsel and Secretary since January 2017, and, prior to that, had served as our Associate General Counsel and Assistant Secretary since October 2015. From January 2010 through October 2015, Mr. Porter practiced corporate and securities law at Hunton Andrews Kurth LLP, representing public and private companies, including master limited partnerships, in capital markets offerings, mergers and acquisitions, and corporate governance. Mr. Porter holds a B.B.A. degree in accounting from Texas A&M University, a M.S. degree in finance from Texas A&M University, and a J.D. degree from The George Washington University. Sean T. Kimble has served as our Vice President, Human Resources since June 2014. Mr. Kimble brings to us over twenty-five years of human resources leadership experience. Prior to joining us, he was most recently the Senior Vice President of Human Resources at Millard Refrigerated Services from January 2011 to May 2014 where he led all aspects of human resources. Before joining Millard, he was the Chief Administrative Officer and Executive Vice President of Human Resources at MV Transportation from March 2005 to February 2009 where he led human resources, safety, labor relations, and various other operating support functions. Mr. Kimble holds a B.S. in marketing from Sacramento State University and an M.B.A. from Saint Mary’s College of California. Mr. Kimble also completed the University of Michigan’s Strategic HR and Strategic Collective Bargaining Programs. Christopher R. Curia has served on the Board since April 2018. Mr. Curia also has served as a director on the board of directors of the general partner of Sunoco LP, a subsidiary of Energy Transfer LP, since August 2014 and as its Executive Vice President-Human Resources since April 2015. Mr. Curia was appointed the Executive Vice President and Chief Human Resources Officer of the general partner of Energy Transfer LP in April 2015. Mr. Curia joined Energy Transfer Operating, L.P. (“ETO”), a subsidiary of Energy Transfer LP which has since merged with Energy Transfer LP, in July 2008. Prior to joining ETO, Mr. Curia held HR leadership positions at both Valero Energy Corporation and Pennzoil, and has more than three decades of Human Resources experience in the oil and gas field. Mr. Curia holds a master’s degree in Industrial Relations from the University of West Virginia. Mr. Curia was selected to serve on the Board due to the valuable perspective he brings from his extensive experience working as a human resources professional in the energy industry, and the insights he brings to the Board on matters such as succession planning, compensation, employee management, and acquisition evaluation and integration. Glenn E. Joyce has served on the Board since April 2018. Mr. Joyce was with Apex International Energy (“Apex”) for over six years, most recently as their Chief Administrative Officer from January 2017 through April 2022. Prior to joining Apex, he spent over 17 years with Apache Corporation where his last position was Director of Global Human Resources in which he managed the HR functions of the international regions of Apache (Australia, Argentina, UK, Egypt). Previously, he worked for Amoco and was involved in international operations in many different countries. Mr. Joyce received his bachelor’s degree in accounting from Texas A&M University. Mr. Joyce was selected to serve on the Board due to his extensive experience in senior human resources leadership positions in the energy industry. 58 Table of Contents Thomas E. Long has served on the Board since April 2018. Mr. Long was appointed as Co-Chief Executive Officer of the general partner of Energy Transfer LP effective January 2021. Since May 2022, Mr. Long also has served as a director of Texas Capital Bancshares, Inc. Mr. Long previously served as the Chief Financial Officer of the general partner of Energy Transfer LP from February 2016 until January 2021. Mr. Long also has served as a director of the general partner of Energy Transfer LP since April 2019. Mr. Long served as Co-Chief Executive Officer of ETO’s general partner from January 2021 until its merger into Energy Transfer LP in April 2021 and was previously its Chief Financial Officer. He also served on the board of directors of the general partner of Sunoco LP from May 2016 until May 2021. Mr. Long also served as the Chief Financial Officer and as a director of PennTex Midstream Partners, LP’s general partner from November 2016 to July 2017. Mr. Long also served as Executive Vice President and Chief Financial Officer of Regency GP LLC from November 2010 to April 2015. Mr. Long was selected to serve on the Board because of his understanding of energy-related corporate finance gained through his extensive experience in the energy industry. Thomas P. Mason has served on the Board since April 2018. Since December 2022, Mr. Mason has served as the Executive Vice President and President – LNG of the general partner of Energy Transfer LP. Mr. Mason became the Executive Vice President and General Counsel of the general partner of Energy Transfer LP in December 2015, and served as the Executive Vice President, General Counsel and President – LNG from October 2018 following the merger of Energy Transfer Equity, L.P. and Energy Transfer Partners, L.P. until December 2022 when he resigned from his role as General Counsel. In February 2021, Mr. Mason assumed leadership responsibility over Energy Transfer LP’s newly created Alternative Energy Group, which focuses on the development of alternative energy projects aimed at continuing to reduce Energy Transfer LP’s environmental footprint throughout its operations. Mr. Mason previously served as Senior Vice President, General Counsel and Secretary of ETO’s general partner from April 2012 to December 2015, as Vice President, General Counsel and Secretary from June 2008 and as General Counsel and Secretary from February 2007. Prior to joining ETO, he was a partner in the Houston office of Vinson & Elkins L.L.P. Mr. Mason also previously served on the Board of Directors of the general partner of Sunoco Logistics Partners L.P. from October 2012 to April 2017 and also served on the Board of Directors of the general partner of PennTex Midstream Partners, LP from November 2016 to July 2017. Mr. Mason was selected to serve on the Board because of his decades of legal experience in securities, mergers and acquisitions, and corporate governance in the energy sector. W. Brett Smith has served on the Board since April 2021. Mr. Smith also has served as President and Managing Partner of Rubicon Oil & Gas, LLC since October 2000, President of Rubicon Oil & Gas II, LP since May 2005, President of Quientesa Royalty LP since February 2005, President of Acton Energy LP since October 2008 and President of Promontory Exploration, LP since 2017. Mr. Smith was President of Rubicon Oil & Gas, LP from October 2000 to May 2005. For more than 30 years Mr. Smith has been active in assembling exploration prospects in the Permian Basin, Oklahoma, New Mexico, and the Rocky Mountain areas. Mr. Smith served on the board of directors of the general partner of ETO and on its audit committee from February 2018 through April 2021. Mr. Smith also previously served on the board of directors of Sunoco LP and was a member of its audit and compensation committees. Mr. Smith was selected to serve on the Board based on his experience as an executive in the oil and gas industry, as well as his recent experience on the board of another publicly traded limited partnership. William S. Waldheim has served on the Board since April 2018. Mr. Waldheim also served on the board of directors of Southcross Energy Partners GP, LLC from February 2020 through April 2022. Mr. Waldheim served as a director and a member of the Audit, Finance & Risk Committee of Enbridge Energy Company, Inc. and Enbridge Energy Management, L.L.C. from February 2016 through December 2018. He previously served as President of DCP Midstream LP where he had overall responsibility for DCP Midstream’s affairs including commercial, trading, and business development until his retirement in 2015. Prior to this, Mr. Waldheim was President of Midstream Marketing and Logistics for DCP Midstream and managed natural gas, crude oil, and natural gas liquids marketing and logistics. From 2005 to 2008, he was Group Vice President of Commercial for DCP Midstream, managing its upstream and downstream commercial business. Mr. Waldheim started his professional career in 1978 with Champlin Petroleum as an auditor and financial analyst and served in roles involving NGL and crude oil distribution and marketing. He served as Vice President of NGL and Crude Oil Marketing for Union Pacific Fuels from 1987 until 1998 at which time it was acquired by DCP Midstream. Mr. Waldheim was selected to serve on the Board because of his broad and extensive experience in senior leadership roles in the energy industry and his financial and accounting expertise. Bradford D. Whitehurst has served on the Board since April 2019. Since November 2022, Mr. Whitehurst has served as the Executive Vice President of Tax and Corporate Initiatives of the general partner of Energy Transfer LP. From January 2021 through November 2022, Mr. Whitehurst was the Chief Financial Officer of the general partner of Energy Transfer LP. Prior to that, Mr. Whitehurst served as their Executive Vice President – Head of Tax since August 2014. Mr. Whitehurst also served as 59 Table of Contents the Chief Financial Officer of the general partner of ETO from January 2021 until its merger into Energy Transfer LP in April 2021, and prior to that was their Executive Vice President – Head of Tax since August 2014. Prior to joining Energy Transfer LP, Mr. Whitehurst was a partner in the Washington, DC office of Bingham McCutchen LLP and an attorney in the Washington, DC offices of both McKee Nelson LLP and Hogan & Hartson. Mr. Whitehurst has specialized in partnership taxation and has advised Energy Transfer LP in his role as outside counsel since 2006. Mr. Whitehurst was selected to serve on the Board because of his strong background in the energy sector and specialized knowledge of the taxation structure and issues unique to partnerships. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires that the members of the Board, our executive officers, and persons who own more than 10 percent of a registered class of our equity securities file initial reports of ownership and reports of changes in ownership of our common units and other equity securities with the SEC and any exchange or other system on which such securities are traded or quoted. To our knowledge and based solely on a review of Section 16(a) forms filed electronically with the SEC, we believe that all reporting obligations of the members of the Board, our executive officers and greater than 10 percent unitholders under Section 16(a) were satisfied during the year ended December 31, 2023. Common Unit Ownership by Directors and Executive Officers We encourage our directors and executive officers to invest in and retain ownership of our common units, but we do not require such individuals to establish and maintain a particular level of ownership. Reimbursement of Expenses of the General Partner The General Partner does not receive any management fee or other compensation for its management of us, but we reimburse the General Partner and its affiliates for all expenses incurred on our behalf, including the compensation of employees of the General Partner or its affiliates that perform services on our behalf. These expenses include all expenditures necessary or appropriate to the conduct of our business and that are allocable to us. The Partnership Agreement provides that the General Partner will determine in good faith the expenses that are allocable to us. There is no cap on the amount that may be paid or reimbursed to the General Partner or its affiliates for compensation or expenses incurred on our behalf. ITEM 11. Executive Compensation As is commonly the case with publicly traded limited partnerships, we have no officers, directors, or employees. Under the terms of the Partnership Agreement, we are ultimately managed by the General Partner, which is controlled by Energy Transfer. All of our employees, including our executive officers, are employees of USA Compression Management Services, LLC (“USAC Management”), a wholly owned subsidiary of the General Partner. References to “our officers” and “our directors” refer to the officers and directors of the General Partner. Compensation Discussion & Analysis Named Executive Officers The following disclosure describes the executive compensation program for the named executive officers identified below (the “NEOs”). For the year ended December 31, 2023, the NEOs were: • Eric D. Long, President and CEO; • G. Tracy Owens, Vice President of Finance and Chief Accounting Officer;* • Michael C. Pearl, Former Vice President, Chief Financial Officer and Treasurer;* • Eric A. Scheller, Vice President and Chief Operating Officer; • Christopher W. Porter, Vice President, General Counsel and Secretary; and • Sean T. Kimble, Vice President, Human Resources. *Mr. Pearl left the Partnership effective October 5, 2023. Effective October 6, 2023, Mr. Owens was designated by the Board as the principal financial officer of the Company. 60 Table of Contents Compensation Philosophy and Objectives Since our initial public offering in 2013, we have consistently based our compensation philosophy and objectives on the premise that a significant portion of each NEO’s total compensation should be incentive-based or “at-risk” compensation. We share Energy Transfer’s philosophy that the NEOs’ total compensation levels should be competitive in the marketplace for executive talent and abilities. The Compensation Committee generally targets a competitive range at or near the 50 th percentile of the market for aggregate compensation consisting of the three main components of our compensation program: base salary, annual discretionary cash bonus, and long-term equity incentive awards. The Compensation Committee believes that a desirable balance of incentive-based compensation is achieved by: (i) the payment of annual discretionary cash bonuses that consider (a) the achievement of the financial and operational performance objectives for a fiscal year set at the beginning of such fiscal year and (b) the individual contributions of each NEO to our level of success in achieving the annual financial and operational performance objectives, and (ii) the annual grant of time-based restricted phantom unit awards under the LTIP, which awards are intended to incentivize and retain our key employees for the long-term and motivate them to focus their efforts on increasing the market price of our common units and the level of cash distributions we pay to our common unitholders. The following charts illustrate the level of at-risk incentive compensation we awarded in 2023 to our CEO and, on an averaged basis, the other NEOs. Compensation has been annualized for NEOs that served for only a portion of 2023. “Variable/at-risk” compensation is comprised of long-term equity incentive awards and annual discretionary cash bonuses, and “fixed” compensation is comprised of base salary. Our compensation program is structured to achieve the following: • compensate executive officers with an industry-competitive total compensation package of competitive base salaries and significant incentive opportunities yielding a total compensation package in a competitive range at or near the 50 th percentile of the market; • attract, retain, and reward talented executive officers and key members of management by providing a total compensation package competitive with those of their counterparts at similarly situated companies; • motivate executive officers and key employees to achieve strong financial and operational performance; • ensure that a significant portion of each executive officer’s compensation is performance-based or “at risk” compensation; and • reward individual performance. Methodology to Setting Compensation Packages Our executive compensation program is administered by the Compensation Committee. The Compensation Committee considers market trends in compensation, including the practices of identified competitors, and the alignment of the compensation program with the Partnership’s compensation philosophy described above. Specifically, for the NEOs, the Compensation Committee: • establishes and approves target compensation levels for each NEO; • approves Partnership performance measures and goals; 61 Table of Contents • determines the mix between cash and equity compensation, short-term, and long-term incentives and benefits; • verifies the achievement of previously established performance goals; and • approves the resulting cash or equity awards to the NEOs. The Compensation Committee also considers other factors such as the role, contribution, skills, experience, and performance of an individual relative to his or her peers at the Partnership, and internal compensation levels within Energy Transfer and its subsidiaries (the “Energy Transfer Group”). The Compensation Committee does not assign a specific weight to these factors, but rather makes a subjective judgment taking all of these factors into account. The Compensation Committee reviews and approves all compensation for the NEOs. In determining the compensation for the NEOs, the Compensation Committee takes into account input and recommendations from the CEO with respect to the compensation of the other NEOs. In this context, the CEO considers comparative compensation data and evaluates the individual performance of each of the other NEOs and their respective contributions to the Partnership. The recommendations from the CEO are then reviewed by the Compensation Committee, which may accept the recommendations or make adjustments to the recommended compensation based on the Compensation Committee’s assessment of the individual’s performance, contributions to the Partnership, and internal compensation levels within the Energy Transfer Group. The CEO’s compensation is reviewed and approved by the Compensation Committee based on comparative compensation data, including within the Energy Transfer Group, and the Compensation Committee’s independent evaluation of the CEO’s contributions to the Partnership’s performance. The Compensation Committee periodically compares results for the annual base salary, annual cash bonus, and long-term equity incentive awards of the NEOs against data for compensation levels for specific executive positions reported in published executive compensation surveys within each of the (i) energy industry and (ii) overall market. The Compensation Committee also reviews publicly filed peer group executive compensation disclosures pertaining to certain executive roles, utilizing this data as an important reference point. Periodically, we engage a third-party consultant to provide the Compensation Committee with market information regarding compensation levels at peer companies to assist in evaluating compensation levels for our executives, including the NEOs. In 2023, we engaged Meridian Compensation Partners, LLC (“Meridian”), the independent compensation advisor to Energy Transfer, to conduct a report on market information and compensation levels of our peer companies (the “2023 Meridian Report”). The Compensation Committee utilized the 2023 Meridian Report when setting NEO compensation for the 2024 year and when determining the number of equity awards that should be granted to our NEOs in December 2023, which were based on the 2024 base salaries of the NEOs. In connection with the engagement of Meridian for the 2023 Meridian Report, based on the information presented to it, the Compensation Committee assessed the independence of Meridian under applicable SEC and NYSE rules and concluded that Meridian’s work for the Compensation Committee did not raise any conflicts of interest. 62 Table of Contents For purposes of the 2023 Meridian Report, our peer group included the following companies: Company Ticker 1. Antero Midstream Corporation AM 2. Archrock, Inc. AROC 3. Cactus, Inc. WHD 4. Enerflex Ltd. EFX.TO 5. EnLink Midstream, LLC ENLC 6. Expro Group Holdings N.V. XPRO 7. Genesis Energy, L.P. GEL 8. Helmerich & Payne, Inc. HP 9. Kodiak Gas Services, Inc. KGS 10. NuStar Energy L.P. NS 11. Oil States International, Inc. OIS 12. Pro Petro Holding Corp. PUMP 13. RPC, Inc. RES 14. Select Water Solutions, Inc. WTTR 15. Summit Midstream Partners, LP SMLP 16. Sunoco LP SUN 17. TETRA Technologies, Inc. TTI Prior to this, in 2021, we had also engaged Meridian Compensation Partners, LLC to prepare a similar report. In 2022, the Compensation Committee determined that this report was completed recently enough to be utilized as a data source in reviewing and setting 2023 NEO compensation levels, but did have Meridian update the report to account for the impact of inflation. As a result, the Compensation Committee relied on the results of the report completed in 2021 (as updated in 2022, the “2021 Meridian Report”), for information on base salary, bonus, and general compensation items for 2023 for the NEOs. As discussed above, the Compensation Committee utilized the 2023 Meridian Report when determining the value of equity awards that should be granted to our NEOs in December 2023. In connection with the engagement of Meridian in 2021, based on the information presented to it, the Compensation Committee assessed the independence of Meridian under applicable SEC and NYSE rules and concluded that Meridian’s work for the Compensation Committee did not raise any conflicts of interest. 63 Table of Contents For purposes of the 2021 Meridian Report, our peer group included the following companies: Company Ticker 1. Antero Midstream Corporation AM 2. Archrock, Inc. AROC 3. Crestwood Equity Partners LP CEQP 4. DCP Midstream, LP DCP 5. Enerflex Ltd. EFX.TO 6. EnLink Midstream, LLC ENLC 7. Equitrans Midstream Corporation ETRN 8. Exterran Corporation EXTN 9. Genesis Energy, L.P. GEL 10. Holly Energy Partners, L.P. HEP 11. Martin Midstream Partners L.P. MMLP 12. NuStar Energy L.P. NS 13. Summit Midstream Partners, LP SMLP 14. TETRA Technologies, Inc. TTI 15. Western Midstream Partners, LP WES Elements of the Compensation Program Compensation for the NEOs primarily consists of the following elements and corresponding objectives: Compensation Element Primary Objective Base salary To recognize performance of job responsibilities and to attract and retain individuals with superior talent. Annual incentive compensation To promote near-term performance objectives and reward individual contributions to the achievement of those objectives. Long-term equity incentive awards To emphasize long-term performance objectives, encourage the maximization of unitholder value, and retain key executives by providing an opportunity to participate in the ownership of the Partnership. Retirement savings (401(k)) plan To provide an opportunity for tax-efficient savings. Other elements of compensation and perquisites To attract and retain talented executives in a cost-efficient manner by providing benefits comparable to those offered by similarly situated companies. Base Salary for 2023 Base salaries for the NEOs generally have been set at a level deemed appropriate by the Compensation Committee to attract and retain individuals with superior talent. Base salary increases are determined based on the job responsibilities, demonstrated proficiency and performance of the NEO, and market conditions. In connection with determining base salaries for each of the NEOs for 2023, the Compensation Committee and CEO considered cost of living increases, internal compensation levels within the Energy Transfer Group, and comparable salaries for certain executive roles within our peer group contained in the 2021 Meridian Report. The Compensation Committee provided each NEO with an increase to his base salary for the 2023 year. 64 Table of Contents The 2023 base salaries and 2022 base salaries for the NEOs, including our CEO, are set forth in the following table: Name and Principal Position 2023 Base Salary ($) 2022 Base Salary ($) Eric D. Long, President and Chief Executive Officer 711,330 683,972 G. Tracy Owens, Vice President of Finance and Chief Accounting Officer 325,000 (1) (2) Michael C. Pearl, Former Vice President, Chief Financial Officer and Treasurer 416,000 (3) 400,000 (4) Eric A. Scheller, Vice President and Chief Operating Officer 385,000 360,500 Christopher W. Porter, Vice President, General Counsel and Secretary 374,400 360,000 Sean T. Kimble, Vice President, Human Resources 338,000 325,000 ________________________ (1) Mr. Owens’s base salary was increased to $325,000 effective October 9, 2023 in connection with his designation as principal financial officer of the Company. The amount above reflects his annualized base salary for 2023 after this increase. See “– Summary Compensation Table” below for the salary received by Mr. Owens in 2023. (2) Mr. Owens was not an NEO in 2022; therefore, only his 2023 base salary is reported. (3) Mr. Pearl left the Partnership effective October 5, 2023. The amount above reflects his annualized base salary for 2023. See “– Summary Compensation Table” below for the salary received by Mr. Pearl in 2023. (4) Mr. Pearl joined the Partnership effective August 9, 2022. The amount above reflects his annualized base salary for 2022. Mr. Pearl received $160,000 in base salary in 2022. Annual Cash Incentive Compensation for 2023 Each of the NEOs is entitled to participate in the USA Compression Partners, LP Amended and Restated Annual Cash Incentive Plan (the “Bonus Plan”) and their potential bonus is governed by the Bonus Plan and, for Messrs. Porter and Kimble, also governed by their respective employment agreements. The Compensation Committee acts as the administrator of the Bonus Plan under the supervision of the full Board, and has the discretion to amend, modify, or terminate the Bonus Plan at any time. In February 2024, the Compensation Committee made the determination to pay annual cash bonus awards to executives, including the NEOs, under the Bonus Plan attributable to the year ended December 31, 2023. Although the Bonus Plan generally is based on our satisfaction of certain performance measures that were previously established for the 2023 year, the Compensation Committee retains the authority to use its business judgement to make decisions or adjustments to the Bonus Plan’s funding pool or the individual bonus awards resulting from the guidelines set forth below. The Bonus Plan contains four payout factors and corresponding percentages that comprise the total annual target bonus for all eligible employees, including the NEOs (the “Annual Target Bonus Pool”), as shown in the following chart. Bonus Plan Payout Factors Payout Factor % of Total Annual Target Bonus Adjusted EBITDA Budget Target Payout Factor 30% Distributable Cash Flow Budget Target Payout Factor 30% Leverage Ratio Budget Target Payout Factor 30% Safety Budget Target Payout Factor 10% Each of the Adjusted EBITDA Budget Target Payout Factor (the “Adjusted EBITDA Factor”) and the Distributable Cash Flow, or DCF, Budget Target Payout Factor (the “DCF Factor”) assign payout factors from 0% to 120% based on the percentage of the Partnership’s budgeted Adjusted EBITDA and DCF, respectively, achieved for the year, as shown in the following chart. Adjusted EBITDA and DCF Factors % of Budget Target Bonus Pool Payout Factor Greater than or equal to 110% 1.20x 109.9% – 105.0% 1.10x 104.9% – 95.0% 1.00x 94.9% – 90.0% 0.90x 89.9% – 80.0% 0.75x Less than 80.0% 0.00x 65 Table of Contents For the 2023 year, the Compensation Committee set the Adjusted EBITDA Budget Target at $501.7 million and the DCF Budget Target at $269.9 million. The Leverage Ratio Budget Target Payout Factor (the “Leverage Ratio Factor”) assigns payout factors based on the Partnership’s achievement of its budgeted Leverage Ratio (as defined in the Partnership’s Credit Agreement, provided that, for purposes of calculating the Leverage Ratio for the Bonus Plan, EBITDA attributable to the full plan year is used in lieu of any other time period) for the year, as shown in the following chart. Leverage Ratio Factor Range within Budget Target Bonus Pool Payout Factor More than 0.250 below budget target 1.20x 0.250 – 0.125 below 1.10x 0.124 below – 0.125 above 1.00x 0.126 – 0.375 above 0.70x 0.376 – 0.500 above 0.50x Greater than 0.500 above 0.00x For the 2023 year, the Compensation Committee set the Leverage Ratio Budget Target at 4.55x. The Safety Budget Target Payout Factor (the “Safety Factor”) assigns payout factors based on the Partnership’s Total Recordable Incident Rate, or TRIR (as calculated by the U.S. Occupational Safety and Health Administration), against the Partnership’s TRIR target, as shown in the following chart. Safety Factor % of Target Bonus Pool Payout Factor Less than 100% 1.00x 100% – 105% 0.90x 105.1% – 110% 0.80x 110.1% – 115% 0.70x 115.1% – 125% 0.60x Greater than 125% 0.00x For the 2023 year, the Compensation Committee set the Safety Target (as defined in the Bonus Plan) at 0.90. The establishment and amount of the bonus pool is 100% discretionary and subject to approval and/or adjustment by the Compensation Committee. In determining bonuses for the NEOs, the Compensation Committee takes into account whether the Partnership achieved or exceeded its targeted performance objectives. In the case of the NEOs, their bonus pool targets for the 2023 year range from 50% to 130% of their respective annual base salary. For the 2023 year, the Compensation Committee set a target bonus amount (the “Target Bonus”) for each NEO, other than Mr. Owens, prior to the first quarter of the 2023 year, which was set as a percentage of the NEO’s base salary. Mr. Owens’s Target Bonus was set by the Compensation Committee in October 2023. For the bonus applicable to the 2023 year, the Target Bonus, as a percentage of base salary and as a dollar amount, is reflected in the table below. Name Percentage of Base Salary Target Amount ($) Eric D. Long, President and Chief Executive Officer 130 % 924,729 G. Tracy Owens, Vice President of Finance and Chief Accounting Officer 50 % 150,362 (1) Michael C. Pearl, Former Vice President, Chief Financial Officer and Treasurer 100 % 416,000 Eric A. Scheller, Vice President and Chief Operating Officer 100 % 385,000 Christopher W. Porter, Vice President, General Counsel and Secretary 90 % 336,960 Sean T. Kimble, Vice President, Human Resources 90 % 304,200 ________________________ (1) Mr. Owens’s Target Bonus was based three-quarters on his base salary of $292,632 and one-quarter on his increased base salary of $325,000. 66 Table of Contents The annual cash bonus pool targets for 2023 were based on the determination of the Compensation Committee in consultation with Meridian (other than for Mr. Owens), and in consideration of the available compensation data and the role, contribution, skills, experience, and performance of an individual relative to his or her peers at the Partnership. Target Bonuses, if any, are paid within one week following delivery by our independent auditor of the audit of our financial statements for the year to which the Target Bonus relates, but in any case, no later than March 15 of the year following the year to which the Target Bonus relates. For the year ended December 31, 2023, we achieved (i) Adjusted EBITDA of $511,938,973, resulting in an Adjusted EBITDA Bonus Pool Payout Factor of 1.00; (ii) DCF of $281,112,503, resulting in a DCF Bonus Pool Payout Factor of 1.00; (iii) Leverage Ratio, as calculated for the purposes of the Bonus Plan, of 4.43x, resulting in a Leverage Ratio Bonus Pool Payout Factor of 1.00; and (iv) a TRIR of 0.65 resulting in a Safety Bonus Pool Payout Factor of 1.00. Based on these payout factors, the awards made pursuant to the Bonus Plan with respect to the year ended December 31, 2023 equal 100% of each NEOs Target Bonus and were as follows: Name (1) Bonus ($) Eric D. Long, President and Chief Executive Officer 924,729 G. Tracy Owens, Vice President of Finance and Chief Accounting Officer 150,362 (2) Eric A. Scheller, Vice President and Chief Operating Officer 385,000 Christopher W. Porter, Vice President, General Counsel and Secretary 336,960 Sean T. Kimble, Vice President, Human Resources 304,200 ________________________ (1) Mr. Pearl left the Partnership prior to the payout of the Target Bonuses for the year ended December 31, 2023. Accordingly, no bonus payment was made to Mr. Pearl for 2023. (2) Mr. Owens’s Target Bonus was based three-quarters on his base salary of $292,632 and one-quarter on his base salary of $325,000. Amounts received after October 2023 by the NEOs pursuant to the Bonus Plan are subject to certain clawback policies, and may be subject to repayment in part or in full if the Company is required to prepare an accounting restatement. Long-Term Equity Incentive Awards The LTIP, which has been in effect since 2013, is designed to promote our interests, as well as the interests of our unitholders, by rewarding our officers, directors, and certain of our employees for delivering desired performance results, as well as by strengthening our ability to attract, retain, and motivate qualified individuals to serve as officers, directors, and employees. The LTIP provides for the grant, from time to time at the discretion of the Compensation Committee, of unit awards, restricted units, phantom units, unit options, unit appreciation rights, DERs, and other common unit-based awards, although since our initial public offering in 2013, the Compensation Committee has only granted awards of phantom units with DERs under the LTIP. The Compensation Committee acts as the administrator of the LTIP. Each phantom unit (“Phantom Unit”) represents the right to receive (as applicable) a common unit or an amount of cash equal to the fair market value of a common unit (or a combination thereof) upon the vesting of such Phantom Unit pursuant to the LTIP, the applicable award agreement thereunder (“Phantom Unit Agreement”), and as determined by the Compensation Committee in its discretion. The outstanding, unvested Phantom Units granted under the LTIP and held by the NEOs are reflected below in “– Outstanding Equity Awards as of December 31, 2023.” Our current Phantom Unit Agreement provides for (i) incremental vesting over five years in two tranches ((a) 60% on the third December 5 following the grant and (b) 40% on the fifth December 5 following the grant), (ii) vesting of 100% of the outstanding, unvested Phantom Units in the event of (a) a Change in Control (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”) or (b) the NEO’s death or Disability (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”), (iii) vesting of 40% of the outstanding, unvested Phantom Units if the NEO voluntarily retires between the ages of 65–68 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years (with the remaining 60% being forfeited), and (iv) vesting of 50% of the outstanding, unvested Phantom Units if the NEO voluntarily retires at or over the age 68 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years (with the remaining 50% being forfeited). The vesting of the Phantom Units are subject, in each case, to the NEO’s continued employment with us until the relevant vesting date. The target level of annual long-term incentive awards granted in December 2023 for each of the NEOs is expressed below as a percentage of the NEO’s base salary. In determining the level of the December 2023 grants of Phantom Units to the NEOs, the Compensation Committee, taking into account the role, contribution, skills, experience, and performance of an NEO relative to his or her peers at the Partnership, award levels within the Energy Transfer Group, and market and other data contained in the 2023 Meridian Report, determined each of the NEOs’ long-term incentive targets. Due to the fact that determinations were made in late 2023, the base salaries used for these calculations with respect to Messrs. Long, Scheller, Porter and Kimble were 67 Table of Contents the then-determined base salaries set for the 2024 calendar year. The Compensation Committee granted Mr. Owens a set amount of long-term incentive awards, based on the factors described above. Each NEO’s December 2023 grant value is shown in the following table: Long-Term Incentive Target Amounts Awarded December 5, 2023 Name (1) Percentage of Base Salary Grant Date Amount ($) Eric D. Long, President and Chief Executive Officer 500 % 3,698,915 G. Tracy Owens, Vice President of Finance and Chief Accounting Officer 62 % 200,000 Eric A. Scheller, Vice President and Chief Operating Officer 200 % (2) 840,000 Christopher W. Porter, Vice President, General Counsel and Secretary 200 % 820,000 Sean T. Kimble, Vice President, Human Resources 175 % 615,160 ________________________ (1) Mr. Pearl left the Partnership prior to the grant of the long-term incentive awards for 2023. Accordingly, no long-term incentive award was granted to Mr. Pearl for 2023. (2) In addition to the grant awarded to Mr. Scheller in December 2023, the Compensation Committee awarded Mr. Scheller an LTIP award on February 17, 2023 for 18,753 Phantom Units, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027. Under the LTIP, the Compensation Committee has the discretion to determine whether any portion of Phantom Units should be settled in cash upon vesting. On October 27, 2023, the Compensation Committee approved the current default settlement method for Phantom Units of 50% in cash (valued based on the closing price on the NYSE of the Partnership’s common units on the date of vesting) and 50% in common units for all vesting of Phantom Units occurring during 2024. However, the Compensation Committee has also specified that employees may elect to decrease the percentage of this cash settlement. If an employee affirmatively requests in writing that the percentage of cash settlement be set at a specific amount that is less than 50% (and such employee agrees to pay out of his or her own funds the amount of any required federal withholding to the extent that the cash portion is insufficient for the Partnership to withhold and pay such amounts on the employee’s behalf), the Compensation Committee approves in advance such lesser cash settlement percentage. Each award of Phantom Unit granted to an employee, including the NEOs, is granted in tandem with a corresponding award of DERs, which entitles the recipient to receive an amount in cash on a quarterly basis equal to the product of (a) the number of Phantom Units granted under such award to the grantee that remain outstanding and unvested as of the record date for the distribution on the Partnership’s common units for such quarter and (b) the quarterly distribution with respect to the Partnership’s common units. Awards granted pursuant to the LTIP are subject to certain clawback features, and the award may not vest or settle if we determine that the recipient committed certain acts of misconduct, as more particularly described in the LTIP. Retention Phantom Unit Awards In each of 2018 and 2019, the Compensation Committee approved an additional grant of Phantom Units to Mr. Long in recognition of the importance of Mr. Long to the Partnership’s long-term success and to encourage his retention by providing additional time-based compensation. These Phantom Units are referred to as “Retention Units” and were issued pursuant to Retention Phantom Unit Agreements entered into between our General Partner and Mr. Long on the grant date of the award (the “Retention Agreements”). The Compensation Committee has not awarded any Retention Units to our NEOs subsequent to 2019. The Retention Units vest incrementally, with 60% of the Retention Units vesting on the third December 5 following the grant and 40% on the fifth December 5 following the grant. The Retention Agreements also provide for the vesting of 100% of the then-unvested Retention Units upon (i) Mr. Long’s termination of employment without Cause or for Good Reason (each as defined in the Retention Agreement and set forth below under “Potential Payments upon Termination or Change in Control”), (ii) a Change in Control (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”), or (iii) Mr. Long’s death or Disability (as defined under the LTIP and set forth below under “Potential Payments upon Termination or Change in Control”). In addition, Mr. Long’s Retention Agreements provide for vesting of 40% of the outstanding, unvested Phantom Units if Mr. Long voluntarily retires at age 65 or older and has been employed by us, our General Partner, or our or its affiliates for at least 10 years (with the remaining 60% being forfeited). The vesting of the Retention Units are subject, in each case, to Mr. Long’s continued employment with us until the relevant vesting date. In accordance with the foregoing vesting schedule, as of December 31, 2023, the Retention Units granted to Mr. Long in 2018 were fully vested. 68 Table of Contents For additional information regarding the remaining Retention Agreement, please see “– Potential Payments upon Termination or Change in Control-Retention Phantom Unit Agreement” below. Benefit Plans and Perquisites We provide the NEOs with certain other benefits and perquisites, which we do not consider to be a significant component of our overall executive compensation program, but which we recognize as an important factor in attracting and retaining talented executives. The NEOs are eligible under the same plans as all other employees with respect to our (i) medical, dental, vision, disability, and life insurance benefits and (ii) a defined contribution plan that is tax-qualified under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). In addition, we currently provide one or more NEOs with an annual automobile allowance and club memberships. The Compensation Committee has determined it is appropriate to offer these perquisites in order to provide compensation opportunities competitive with those offered by similarly situated public companies. In determining the compensation payable to the NEOs, the Compensation Committee considers perquisites in the context of the total compensation the NEOs are eligible to receive. However, given the fact that perquisites represent a relatively small portion of the NEOs’ total compensation, the availability of these perquisites does not materially influence the Compensation Committee’s decision making with respect to other elements of the NEOs’ total compensation. The value of personal benefits and perquisites we provided to each of the NEOs in 2023 is set forth below in “– Summary Compensation Table.” Employment Agreements Each of Messrs. Porter and Kimble is party to an employment agreement with us (together, the “Employment Agreements”), each of which has been extended on a year-to-year basis and will be automatically extended for successive twelve-month periods unless either party delivers written notice to the other at least 90 days prior to the end of the current employment term. Please see the description of the Employment Agreements under “Potential Payments upon Termination or Change in Control” for further details on the terms of the Employment Agreements. Separation Agreement Mr. Pearl resigned from his positions on October 5, 2023. In recognition of his service and contributions to the Partnership, the Compensation Committee approved a separation payment of $500,000 (the “Separation Payment”) to Mr. Pearl. The Separation Payment was paid in a lump sum and was contingent upon Mr. Pearl’s execution of a Separation and Restrictive Covenant Agreement and Full Release and Waiver of Claims pursuant to which he released all claims against us, and which provides for certain non-disparagement and confidentiality obligations. Risk Assessment Related to Our Compensation Structure We believe our compensation program for all of our employees, including the NEOs, is appropriately structured and not reasonably likely to result in material risk to us because it is structured in a manner that does not promote excessive risk-taking that could damage our reputation, negatively impact our financial results, or reward poor judgment. We also have allocated our compensation among base salary and short- and long-term compensation in such a way as to not encourage excessive risk-taking. Furthermore, all business groups and employees receive similar compensation components of base pay and short-term incentives. We typically offer long-term equity incentives to employees at the director level or above, and we use Phantom Units rather than unit options for these equity awards because Phantom Units retain value even in a depressed market, so employees are less likely to take unreasonable risks to get or keep options “in-the-money.” Finally, the time-based vesting pursuant to our Phantom Unit agreement over three to five years for our currently outstanding long-term incentive awards ensures that our employees’ interests align with those of our unitholders with respect to our long-term performance. Accounting and Tax Considerations We account for the equity compensation expense for equity awards granted under our LTIP in accordance with GAAP, which requires us to estimate and record an expense for each equity award over the vesting period of the award. For employees, Phantom Units are accounted for as a liability and are re-measured at fair value at the end of each reporting period using the market price of the Partnership’s common units. Phantom Units granted to independent directors do not have a cash settlement option; therefore, we account for these awards as equity. During the requisite service period, compensation cost is recognized using the proportionate amount of the award’s fair value that has been earned through service to date. Because we are a master limited partnership and the General Partner is a limited liability company, section 162(m) of the Internal Revenue Code (the “Code”), which generally precludes public corporations (as defined pursuant to regulations issued under section 162(m)) from taking a tax deduction for individual compensation to certain of its executive officers in excess of $1 million, does not apply to the compensation paid to the NEOs and, accordingly, the Compensation Committee did not consider its impact in making the compensation recommendations discussed above. 69 Table of Contents Compensation Committee Interlocks and Insider Participation We do not have any Compensation Committee interlocks. Messrs. Joyce, Smith, and Waldheim are the only members of the Compensation Committee, and during 2023 neither Mr. Joyce nor Mr. Smith nor Mr. Waldheim was an officer or employee of Energy Transfer or any of its affiliates, or served as an officer of any company with respect to which any of our executive officers served on such company’s board of directors. In addition, neither Mr. Joyce nor Mr. Smith nor Mr. Waldheim is a former employee of Energy Transfer or any of its affiliates. Compensation Committee Report The Compensation Committee has reviewed and discussed the section of this report entitled “Compensation Discussion and Analysis” with management of the Partnership and approved its inclusion in this Annual Report on Form 10-K. Compensation Committee Glenn E. Joyce (Chairman) William S. Waldheim W. Brett Smith The foregoing report shall not be deemed to be incorporated by reference by any general statement or reference to this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate this information by reference, and otherwise shall not be deemed filed under those Acts. Summary Compensation Table The following table provides information concerning compensation of our NEOs for the fiscal years presented below, as applicable. Name and Principal Position Year Salary ($) Bonus ($) (1) Unit Awards ($) (2) Non-Equity Incentive Plan Compensation ($) (3) All Other Compensation ($) (4)(5) Total ($) Eric D. Long 2023 711,330 — 3,698,902 924,729 1,699,814 7,034,775 President and Chief Executive Officer 2022 683,972 — 3,556,634 854,965 1,556,768 6,652,339 2021 664,050 — 2,735,885 854,965 1,504,151 5,759,051 G. Tracy Owens 2023 300,102 — 199,990 150,362 95,091 745,545 Vice President of Finance and Chief Accounting Officer Michael C. Pearl 2023 320,000 — — — 634,437 954,437 Former Vice President, Chief Financial Officer and Treasurer 2022 160,000 — 1,335,984 158,904 14,991 1,669,879 Eric A. Scheller 2023 385,000 — 1,224,995 385,000 377,573 2,372,568 Vice President and Chief Operating Officer 2022 360,500 — 769,997 324,450 298,387 1,753,334 2021 350,000 — 720,997 324,450 214,883 1,610,330 Christopher W. Porter 2023 374,400 — 819,978 336,960 354,327 1,885,665 Vice President, General Counsel and Secretary 2022 360,000 — 748,798 324,000 307,310 1,740,108 2021 330,000 — 719,995 305,910 241,983 1,597,888 Sean T. Kimble 2023 338,000 — 615,159 304,200 324,521 1,581,880 Vice President, Human Resources 2022 325,000 9,750 591,496 292,500 298,908 1,517,654 2021 325,000 — 568,749 301,275 268,950 1,463,974 ________________________ (1) In 2022, Mr. Kimble was granted a one-time lump sum payment of $9,750 by the Compensation Committee. (2) The Phantom Unit values reflect the aggregate grant date fair value of the awards calculated in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standard Codification (“ASC”) Topic 718, disregarding the estimated likelihood of forfeitures. For a discussion of the assumptions utilized in determining the fair value of these awards, please see Note 15 in Part II, Item 8 “Financial Statements and Supplementary Data”. 70 Table of Contents (3) Represents the awards earned under the Bonus Plan for each of the NEOs. Amounts earned for the 2023 year will be paid after the Partnership’s audited financials are finalized. (4) See the chart below for a detailed breakdown of amounts reported in this column for 2023: Name DERs Automobile Allowance Employer 401(k) Contributions Club Membership Dues Parking Mr. Long $ 1,638,603 $ 18,000 $ 16,500 $ 17,792 $ 8,919 Mr. Owens $ 80,086 — $ 15,005 — $ — Mr. Pearl $ 115,249 — $ 16,000 — $ 3,188 Mr. Scheller $ 360,099 — $ 16,500 — $ 974 Mr. Porter $ 334,171 — $ 16,500 — $ 3,656 Mr. Kimble $ 303,780 — $ 16,500 — $ 4,241 (5) Mr. Pearl left the Partnership effective October 5, 2023. In connection with his departure, he received a separation payment of $500,000. Grants of Plan-Based Awards during the Year Ended December 31, 2023 The below reflects awards granted to our NEOs under the LTIP and our Bonus Plan during 2023. Name Grant Date Approval Date of Equity-Based Awards Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) All Other Unit Awards: Number of Units (#) (2) (3) Grant Date Fair Value of Unit Awards ($) (4) Target ($) Maximum ($) Eric D. Long 2/10/2023 924,729 1,091,180 President and Chief Executive Officer 12/5/2023 10/27/2023 157,803 3,698,902 G. Tracy Owens 10/5/2023 150,362 177,427 Vice President of Finance and Chief Accounting Officer 12/5/2023 10/27/2023 8,532 199,990 Michael C. Pearl 2/10/2023 416,000 490,880 Former Vice President, Chief Financial Officer and Treasurer Eric A. Scheller 2/10/2023 385,000 454,300 Vice President and Chief Operating Officer 2/17/2023 2/17/2023 18,753 384,999 12/5/2023 10/27/2023 35,836 839,996 Christopher W. Porter 2/10/2023 336,960 397,613 Vice President, General Counsel and Secretary 12/5/2023 10/27/2023 34,982 819,978 Sean T. Kimble 2/10/2023 304,200 358,956 Vice President, Human Resources 12/5/2023 10/27/2023 26,244 615,159 ________________________ (1) These awards were granted in 2023 pursuant to our Bonus Plan. The potential payout pursuant to these awards could be zero, thus we have not reflected a threshold amount in the table above. Actual amounts earned for 2023 have been reflected within the Summary Compensation Table above. (2) The Phantom Units granted to our NEOs on December 5, 2023 were granted pursuant to our LTIP and will vest incrementally, with 60% of the Phantom Units vesting on December 5, 2026, and the remaining 40% of the Phantom Units vesting on December 5, 2028. The Phantom Units granted to Mr. Scheller on February 17, 2023 were granted pursuant to our LTIP and will vest incrementally, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027. All these Phantom Units will also vest in full upon a Change in Control (as defined in the LTIP) or the death or Disability (as defined in the LTIP) of the NEO. If the NEO retires after attaining the age of 65 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years, 60% of his then-unvested Phantom Units granted in 2023, will be forfeited, and the remainder will vest, at the time of retirement. If the NEO is at or over age 68 at the time of retirement and has been employed by us, our General Partner, or our or its 71 Table of Contents affiliates for at least 10 years, 50% of his then-unvested Phantom Units granted in 2023 will be forfeited, and the remainder will vest, at the time of retirement. (3) The Phantom Units granted to our NEOs on December 5, 2023, and to Mr. Scheller on February 17, 2023, were granted in tandem with a corresponding DER. (4) The reported grant date fair value of unit awards was calculated by multiplying the closing price of the Partnership’s common units on the grant date by the number of units granted, as required by FASB ASC Topic 718. The closing price of the Partnership’s common units was $20.53 on February 17, 2023, and $23.44 on December 5, 2023. Outstanding Equity Awards as of December 31, 2023 The following table provides information regarding Phantom Units granted to the NEOs pursuant to the LTIP in each of the years ended December 31, 2019, 2020, 2021, 2022 and 2023 that were outstanding as of December 31, 2023, as well as the scheduled vesting schedule for each outstanding award. Potential acceleration events or change in control treatment for the Phantom Units are described below in the section titled “Potential Payments upon Termination or Change in Control.” None of the NEOs held any outstanding option awards as of December 31, 2023. Name (8) Number of Outstanding Phantom Units (#) Market Value of Outstanding Phantom Units ($) (9) Eric D. Long, President and Chief Executive Officer 2019 Grants 83,527 (1)(2) 1,906,921 2020 Grant 85,408 (3) 1,949,865 2021 Grant 182,880 (4) 4,175,150 2022 Grant 193,611 (5) 4,420,139 2023 Grant 157,803 (6) 3,602,642 G. Tracy Owens, Vice President of Finance and Chief Accounting Officer 2019 Grant 3,773 (2) 86,138 2020 Grant 4,822 (3) 110,086 2021 Grant 10,026 (4) 228,894 2022 Grant 8,165 (5) 186,407 2023 Grant 8,532 (6) 194,786 Eric A. Scheller, Vice President and Chief Operating Officer 2019 Grant 12,578 (2) 287,156 2020 Grant 19,694 (3) 449,614 2021 Grant 48,195 (4) 1,100,292 2022 Grant 41,916 (5) 956,942 2023 February Grant 18,753 (7) 428,131 2023 Grant 35,836 (6) 818,136 Christopher W. Porter, Vice President, General Counsel and Secretary 2019 Grant 12,679 (2) 289,462 2020 Grant 18,568 (3) 423,907 2021 Grant 48,128 (4) 1,098,762 2022 Grant 40,762 (5) 930,596 2023 Grant 34,982 (6) 798,639 Sean T. Kimble, Vice President, Human Resources 2019 Grant 13,951 (2) 318,501 2020 Grant 18,287 (3) 417,492 2021 Grant 38,018 (4) 867,951 2022 Grant 32,199 (5) 735,103 2023 Grant 26,244 (6) 599,151 ________________________ 72 Table of Contents (1) On December 5, 2019, Mr. Long received a grant of 41,764 Retention Units pursuant to the LTIP and a Retention Agreement, of which 16,705 remain unvested as of December 31, 2023. These remaining unvested Retention Units will vest on December 5, 2024. (2) Includes Phantom Units granted pursuant to the LTIP on December 5, 2019, to the following NEOs, of which the following remain unvested as of December 31, 2023: Mr. Long – 66,822; Mr. Owens – 3,773; Mr. Scheller – 12,578; Mr. Porter – 12,679; and Mr. Kimble – 13,951. These remaining unvested Phantom Units will vest on December 5, 2024. (3) Includes Phantom Units granted pursuant to the LTIP on December 5, 2020, to the following NEOs, of which the following remain unvested as of December 31, 2023: Mr. Long – 85,408; Mr. Owens – 4,822; Mr. Scheller – 19,694; Mr. Porter – 18,568; and Mr. Kimble – 18,287. These remaining unvested Phantom Units will vest on December 5, 2025. (4) Includes Phantom Units granted pursuant to the LTIP on December 5, 2021, to the NEOs as follows: Mr. Long – 182,880; Mr. Owens – 10,026; Mr. Scheller – 48,195; Mr. Porter – 48,128; and Mr. Kimble – 38,018. The Phantom Units granted on December 5, 2021, vest incrementally, with 60% of the Phantom Units vesting on December 5, 2024, and the remaining 40% of the Phantom Units vesting on December 5, 2026. (5) Includes Phantom Units granted pursuant to the LTIP on December 5, 2022, to the NEOs as follows: Mr. Long – 193,611; Mr. Owens – 8,165; Mr. Scheller – 41,916; Mr. Porter – 40,762; and Mr. Kimble – 32,199. The Phantom Units granted on December 5, 2022, vest incrementally, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027. (6) Includes Phantom Units granted pursuant to the LTIP on December 5, 2023, to the NEOs as follows: Mr. Long – 157,803; Mr. Owens – 8,532; Mr. Scheller – 35,836; Mr. Porter – 34,982; and Mr. Kimble – 26,244. The Phantom Units granted on December 5, 2023, vest incrementally, with 60% of the Phantom Units vesting on December 5, 2026, and the remaining 40% of the Phantom Units vesting on December 5, 2028. (7) Mr. Scheller was awarded an LTIP award on February 17, 2023 for 18,753 Phantom Units, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027. (8) Mr. Pearl left the Partnership effective October 5, 2023, at which time Mr. Pearl’s unvested equity awards were forfeited. (9) The market value of Phantom Units is calculated by multiplying $22.83, the closing price of the Partnership’s common units on December 29, 2023, the last trading day of 2023, by the number of Phantom Units outstanding. Units Vested During the Year Ended December 31, 2023 The following table provides information regarding the vesting of Phantom Units held by the NEOs during 2023. There are no options outstanding on the Partnership’s common units. Name Number of Phantom Units Vested (#) Value Realized on Vesting ($) (6) Eric D. Long, President and Chief Executive Officer 234,861 (1) 5,505,142 G. Tracy Owens, Vice President of Finance and Chief Accounting Officer 11,350 (2) 266,044 Michael C. Pearl, Former Vice President, Chief Financial Officer and Treasurer — — Eric A. Scheller, Vice President and Chief Operating Officer 35,028 (3) 821,056 Christopher W. Porter, Vice President, General Counsel and Secretary 38,992 (4) 913,972 Sean T. Kimble, Vice President, Human Resources 42,202 (5) 989,215 ________________________ (1) Mr. Long settled approximately 50% of his newly vested Phantom Units in cash in the amount of $2,752,583 (before taxes), which cash settlement was reported as a disposition of those Phantom Units. The remaining 117,430 vested Phantom Units were settled in our common units following such cash settlement. (2) Mr. Owens settled approximately 50% of his newly vested Phantom Units in cash in the amount of $133,045 (before taxes), which cash settlement was reported as a disposition of those Phantom Units. The remaining 5,674 vested Phantom Units were settled in our common units following such cash settlement. (3) Mr. Scheller settled approximately 50% of his newly vested Phantom Units in cash in the amount of $410,528 (before taxes), which cash settlement was reported as a disposition of those Phantom Units. The remaining 17,514 vested Phantom Units were settled in our common units following such cash settlement. (4) Mr. Porter settled approximately 50% of his newly vested Phantom Units in cash in the amount of $456,986 (before taxes), which cash settlement was reported as a disposition of those Phantom Units. The remaining 19,496 vested Phantom Units were settled in our common units following such cash settlement. 73 Table of Contents (5) Mr. Kimble settled approximately 50% of his newly vested Phantom Units in cash in the amount of $494,607 (before taxes), which cash settlement was reported as a disposition of those Phantom Units. The remaining 21,101 vested Phantom Units were settled in our common units following such cash settlement. (6) The value realized on the vesting of Phantom Units was calculated by multiplying $23.44, the closing price of the Partnership’s common units on the date of vesting (December 5, 2023) by the number of Phantom Units vesting on such date. Potential Payments upon Termination or Change in Control The NEOs are entitled to severance payments and/or other benefits upon certain terminations of employment and, in certain cases, in connection with a Change in Control (as defined in the LTIP and as described below) of the General Partner. All capitalized terms used in the following description but not defined therein will have the definitions set forth in the referenced document. Retention Phantom Unit Agreement On December 5, 2019, Mr. Long entered into a Retention Agreement providing for a grant of Retention Units that vest incrementally, with 60% of the Retention Units vesting on December 5, 2022, and 40% of the Retention Units vesting on December 5, 2024. For the purposes of the following description, the “Company” means USA Compression GP, LLC. The Retention Agreement provides for the vesting of 100% of the then-unvested Retention Units upon (i) Mr. Long’s termination of employment by the Company without Cause or for separation by Mr. Long for Good Reason (each as defined in the Retention Agreement and described below), (ii) a Change in Control (as defined under the LTIP and as described below), or (iii) Mr. Long’s death or Disability (as defined under the LTIP and as described below). In the event of Mr. Long’s termination of employment by the Company without Cause or separation by Mr. Long for Good Reason, provided that Mr. Long executes and does not revoke a general release and waiver of claims, Mr. Long will also be entitled to a severance payment intended to capture the value of future distributions associated with Retention Units forfeited for tax withholding purposes upon vesting (the “Release Payment”). Pursuant to the terms of Mr. Long’s Retention Agreement, upon Mr. Long’s termination of employment due to voluntary retirement, provided that Mr. Long is at least 65 years of age at the time of such retirement and has been employed by the Company, the Partnership or their Affiliates for at least 10 years, 40% of his then-outstanding, unvested Retention Units will receive accelerated vesting and the remaining 60% will automatically be forfeited at the time of his retirement. As used in the Retention Agreement, “Cause” means (1) the commission by Mr. Long of a criminal or other act that involves dishonesty, misrepresentation or moral turpitude; (2) engagement by Mr. Long in any willful or deliberate misconduct which causes or is reasonably likely to cause economic damage to the Company, the Partnership or any of its and their subsidiaries or injury to the business reputation of the Company, the Partnership or its or their subsidiaries; (3) engagement in any dishonest or fraudulent conduct by Mr. Long in the performance of Mr. Long’s duties on behalf of the Company, the Partnership or its or their subsidiaries, including, without limitation, the theft or misappropriation of funds or the disclosure of confidential or proprietary information; (4) a knowing breach by Mr. Long of any fiduciary duty applicable to Mr. Long in performance of Mr. Long’s duties as contained in the organizational documents of the Company, the Partnership or any of its or their subsidiaries; (5) the continuing failure or refusal of Mr. Long to satisfactorily perform the essential duties of Mr. Long for the Company; (6) improper conduct materially prejudicial to the business of the Company, the Partnership or any of its or their subsidiaries; (7) the material disregard or violation by Mr. Long of any policy or procedure of the Company; or (8) any other conduct materially detrimental (as determined in the sole reasonable judgment of the Company) to the Company’s, the Partnership’s or its or their subsidiaries’ business. With respect to a termination for Cause pursuant to clauses (5), (6), (7), and (8) above, such termination will not be considered for Cause unless Mr. Long has been given written notice specifying in detail the conduct that allegedly constitutes grounds to terminate for Cause and an opportunity for 30 days after receipt of such notice to cure such grounds, if curable. Termination for Cause under clauses (1), (2), (3), or (4) above cannot be cured by the individual and no such notice to cure will be delivered. “Good Reason” is defined under the Retention Agreement as the occurrence, during the Restricted Period (as defined in the Retention Agreement) and without Mr. Long’s prior written consent, of any one or more of the following: (1) a material reduction in Mr. Long’s current title; (2) a more than 10% reduction by the Company in Mr. Long’s rate of annual base salary, annual bonus target or annual long-term incentive target, each determined as of the grant date; (3) a material diminution in Mr. Long’s authority, duties, reporting relationship or responsibilities that is inconsistent in a material and adverse respect with Mr. Long’s authority, duties, reporting relationship or responsibilities with the Partnership on the grant date, provided that such material diminution is also accompanied with any associated reduction in Mr. Long’s annual base salary, annual bonus target or annual long-term incentive target, determined based on Mr. Long’s highest annual base salary, annual bonus target or annual long-term incentive target during the most recent 365-day period prior to the date the change described in this clause (3) occurs; or (4) a change of 50 miles or more in the geographic location of Mr. Long’s principal place of employment as of the grant date. For any resignation to be treated as based on “Good Reason” under the Retention Agreement, the following must occur: (x) Mr. 74 Table of Contents Long must provide written notice to the Company of the existence of the Good Reason condition within a period not to exceed 30 days of the initial existence of the condition; (y) the Company shall have not less than 30 days following its receipt of such during which it may remedy the condition; and (z) Mr. Long’s termination of employment must occur within the 90 day period after the initial existence of the condition specified in such notice. Further, no act or omission shall be “Good Reason” if Mr. Long has consented in writing to such act or omission. Employment Agreements As previously noted, each of Messrs. Porter and Kimble is party to an Employment Agreement providing for certain payments and benefits upon certain terminations of employment. For the purposes of the following description, the “Company” means USAC Management with respect to Messrs. Porter and Kimble. All capitalized terms used in the following description but not defined therein will have the definitions set forth in the referenced document. The Employment Agreements provide for the following in the event of a termination of the NEO without Cause or by the NEO with Good Reason (each as defined in the Employment Agreements and set forth below): (i) semi-monthly severance payments for the one-year period following the NEO’s Separation from Service (the “Severance Period”) in an amount totaling the higher of the NEO’s Base Salary for (a) the current year and (b) any previous year during the term of the Employment Agreement (the “Severance Payment”); (ii) the entire amount of any earned Annual Bonus for the year preceding the year in which the NEO is terminated by the Company for “convenience” (as defined in the Employment Agreements and set forth below) or resigns for Good Reason; (iii) a pro rata portion (based on the number of days the NEO was employed during the year) of any earned Annual Bonus for the year in which the NEO is terminated without Cause or resigns for Good Reason; (iv) continued health insurance benefits for the NEO and his eligible dependents for a period of 24 months following his Separation from Service (the “Coverage Period”), as follows: (a) for the first 12 months of the Coverage Period, the Company will provide such health insurance coverage at its own expense (other than the NEO’s monthly cost-sharing contribution under the Company’s group health plan, as in effect at the time of the NEO’s Separation from Service); (b) for the following six months of the Coverage Period, such health insurance coverage will be at the NEO’s sole expense; and (c) for the final six months of the Coverage Period, the Company will be responsible for the proportion of the cost of such health insurance coverage that the NEO covered in the first 12 months of the Coverage Period; and the NEO will be responsible for the proportion that the Company covered during the first 12 months of the Coverage Period; and (v) within 30 days of the NEO’s Separation from Service, all earned but unpaid base salary and paid time off. The NEO’s right to the Severance Payment and continued health insurance benefits described in (i) and (iv) of the preceding sentence are subject to (1) the NEO’s execution of a release of claims against the Company within 45 days of such NEO’s Separation from Service and (2) the NEO’s compliance with the continuing obligations under his Employment Agreement, including confidentiality, non-compete and non-solicit obligations. In the event of the termination of Mr. Porter’s or Mr. Kimble’s employment by the Company without Cause or by the NEO with Good Reason within two years of a “change in control event” within the meaning of Treasury Regulation 1.409A-3(i)(5), the Severance Payment will be paid in a lump sum on the Company’s first regular payroll date that occurs on or after 30 days after the date of the NEO’s Separation from Service. In the event of a termination of Mr. Porter’s or Mr. Kimble’s employment due to death or Disability (as defined in the Employment Agreements), the Company shall pay the following to the NEO or the NEO’s estate: (i) the entire amount of any earned Annual Bonus for the year preceding the year in which the NEO dies or becomes Disabled; (ii) a pro rata portion (based on the number of days employed during the year) of any earned Annual Bonus for the year in which the NEO dies or becomes Disabled; and (iii) all earned but unpaid base salary and paid time off. In the event of the NEO’s death during the Severance Period, the Severance Payment will be paid in a lump sum within 30 days of his death. As used in the Employment Agreements, a termination for “convenience” generally means an involuntary termination for any reason, including, under certain circumstances, a failure to renew the employment agreement at the end of an initial term or any renewal term, other than a termination for “Cause.” “Cause” is defined in the Employment Agreements to mean (i) any material breach of the Employment Agreement, including the material breach of any representation, warranty or covenant made under the Employment Agreement by the NEO, (ii) the NEO’s breach of any applicable duties of loyalty to the Company or any of its affiliates, gross negligence or material misconduct, or a significant act or acts of personal dishonesty or deceit, taken by the NEO, in the performance of the duties and services required of the NEO that is demonstrably and significantly injurious to the Company or any of its affiliates, (iii) conviction of a felony or crime involving moral turpitude, (iv) the NEO’s willful and continued failure or refusal to perform substantially the NEO’s material obligations pursuant to the Employment Agreement or follow any lawful and reasonable directive from the CEO or the Board, as applicable, other than as a result of the NEO’s incapacity, or (v) a violation of federal, state or local law or regulation applicable to the business of the Company that is demonstrably and significantly injurious to the Company. 75 Table of Contents “Good Reason” is defined in the Employment Agreements to mean (i) a material breach by the Company of the Employment Agreement or any other material agreement with the NEO, (ii) a material reduction in the NEO’s base salary, other than a reduction that is generally applicable to all similarly situated employees of the Company, (iii) a material reduction in the NEO’s duties, authority, responsibilities, job title or reporting relationships, (iv) a material reduction by the Company in the facilities or perquisites available to the NEO, other than a reduction that is generally applicable to all similarly situated employees, or (v) the relocation of the geographic location of the NEO’s current principal place of employment by more than 50 miles from the location of the NEO’s principal place of employment as of the effective date of the Employment Agreement. “Disability” is defined in the Employment Agreements as the NEO being unable to perform essential functions of his position, with reasonable accommodation, due to an illness or physical or mental impairment or other incapacity which continues for a period in excess of 20 consecutive weeks. The determination of Disability will be made by a physician selected by the NEO and acceptable to the Company or its insurers. Change in Control Benefits – LTIP On November 1, 2018, the Compensation Committee adopted the Phantom Unit Agreement, which (i) provides for incremental vesting of Phantom Units over five years (60% on the third December 5 following the grant and 40% on the fifth December 5 following the grant) and (ii) provides for vesting of 100% of the outstanding, unvested Phantom Units in the event of (a) a Change in Control (as defined under the LTIP and set forth below) or (b) the death or Disability of the NEO. Also, under the Phantom Unit Agreement, if the NEO has been employed by the Company, the Partnership, or their Affiliates for at least 10 years and is at least 65 at the time of his voluntary retirement, 60% of his then-unvested Phantom Units will be forfeited, and the remainder will vest, at the time of retirement. If the NEO has been employed by the Company, the Partnership or their Affiliates for at least 10 years and is at or over age 68 at the time of his voluntary retirement, 50% of his then-unvested Phantom Units will be forfeited, and the remainder will vest, at the time of retirement. For purposes of this description, the “Company” means USA Compression GP, LLC. A “Change in Control” as defined under the LTIP means the occurrence of any of the following events: (i) any “person” or “group” within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act, other than the Company, Energy Transfer, an Affiliate of the Company (as determined immediately prior to such event), or an Affiliate of, or successor to, Energy Transfer, shall become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in the Company or the Partnership; (ii) the limited partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the Partnership; (iii) the sale or other disposition by either the Company or the Partnership of all or substantially all of its assets in one or more transactions to any Person other than the Company, the Partnership, Energy Transfer, an Affiliate of the Company (as determined immediately prior to such event), the Partnership, or an Affiliate of, or successor to, Energy Transfer; or (iv) a transaction resulting in a Person other than the Company, Energy Transfer, an Affiliate of the Company (as determined immediately prior to such event), or an Affiliate of, or successor to, Energy Transfer being the sole general partner of the Partnership. However, if an LTIP award is subject to section 409A of the Code, a “Change in Control” will be defined in accordance with section 409A of the Code and the regulations promulgated thereunder. “Disability” as defined under the LTIP means, as determined by the Compensation Committee in its discretion exercised in good faith, a physical or mental condition of the NEO that would entitle him or her to payment of disability income payments under the Company’s or the Partnership’s or one of its subsidiaries’ long-term disability insurance policy or plan for employees as then in effect; or in the event that an NEO is not covered, for whatever reason, under the Company’s or the Partnership’s or one of its subsidiaries’ long-term disability insurance policy or plan for employees or the Company or the Partnership or one of its subsidiaries does not maintain such a long-term disability insurance policy, “Disability” means a total and permanent disability within the meaning of Section 22(e)(3) of the Code; provided, however, that if a Disability constitutes a payment event with respect to any award which provides for the deferral of compensation and is subject to section 409A of the Code, then, to the extent required to comply with section 409A of the Code, the NEO must also be considered “disabled” within the meaning of section 409A(a)(2)(C) of the Code. A determination of Disability may be made by a physician selected or approved by the Compensation Committee and, in this respect, NEOs shall submit to an examination by such physician upon request by the Compensation Committee. Potential Payments upon Termination or Change in Control Except as otherwise noted, the values in the table below assume that a Change in Control occurred on December 31, 2023, and/or that the NEO’s employment terminated on that date, as applicable. The amounts actually payable to any NEO can only be calculated with certainty upon actual termination or a Change in Control. Except as otherwise noted, the value of the acceleration of the LTIP awards was calculated using the value of $22.83, which was the closing price of the Partnership’s common units on December 29, 2023, the last trading day of 2023. 76 Table of Contents Executive Benefits and Payments Change in Control followed by termination without “Cause” or for “Good Reason” ($) (10) Termination of Employment without “Cause” or for “Good Reason” ($) (10) Termination of Employment because of Death or Disability ($) (11) Termination by the Executive Other Than for “Good Reason” ($) (12) Continued Employment Following Change of Control ($) (13) Eric D. Long President and Chief Executive Officer Salary — — — — — Bonus — — — — — Accelerated Vesting of Phantom Units (1) 15,673,343 — (3) 15,673,343 — (3) 15,673,343 Accelerated Vesting of Retention Units (2) 381,375 381,375 381,375 — (4) 381,375 Release Payment under Retention Agreements (5) 60,827 60,827 — — — Totals 16,115,545 442,202 16,054,718 — 16,054,718 G. Tracy Owens Vice President of Finance and Chief Accounting Officer Salary — — — — — Bonus — — — — — Accelerated Vesting of Phantom Units (1) 806,310 — 806,310 — 806,310 Totals 806,310 — 806,310 — 806,310 Michael C. Pearl (6) Former Vice President, Chief Financial Officer and Treasurer Salary — — — — — Bonus — — — — — Accelerated Vesting of Phantom Units — — — — — Totals — — — — — Eric A. Scheller Vice President and Chief Operating Officer Salary — — — — — Bonus — — — — — Accelerated Vesting of Phantom Units (1) 4,040,271 — 4,040,271 — 4,040,271 Totals 4,040,271 — 4,040,271 — 4,040,271 Christopher W. Porter Vice President, General Counsel and Secretary Salary (7) 401,458 401,458 27,058 27,058 — Bonus (8) 660,960 660,960 660,960 — — Accelerated Vesting of Phantom Units (1) 3,541,367 — 3,541,367 — 3,541,367 Health and Welfare Plan Benefits (9) 28,072 28,072 — — — Totals 4,631,857 1,090,490 4,229,385 27,058 3,541,367 Sean T. Kimble Vice President, Human Resources Salary (7) 364,000 364,000 26,000 26,000 — Bonus (8) 596,700 596,700 596,700 — — Accelerated Vesting of Phantom Units (1) 2,938,198 — 2,938,198 — 2,938,198 Health and Welfare Plan Benefits (9) 28,072 28,072 — — — Totals 3,926,970 988,772 3,560,898 26,000 2,938,198 ________________________ 77 Table of Contents (1) In the event of the NEO’s cessation of service for any reason, other than as set forth below, 100% of the NEO’s Phantom Units that have not vested prior to or in connection with such cessation of service shall be automatically forfeited. If the NEO retires after attaining the age of 65 and has been employed by us, our General Partner, or our or its affiliates for at least 10 years, 60% of his then-unvested Phantom Units will be forfeited, and the remainder will vest, at the time of retirement and, if the NEO is at or over age 68 at the time of retirement and has been employed by us, our General Partner, or our or its affiliates for at least 10 years, 50% of his then-unvested Phantom Units will be forfeited, and the remainder will vest, at the time of retirement. In the event of the death or Disability (as defined under the LTIP) of the NEO, 100% of the then-unvested Phantom Units shall vest in full immediately prior to such NEO’s cessation of service due to death or Disability. In the event of a Change in Control (as defined under the LTIP), 100% of the NEO’s outstanding, unvested Phantom Units would vest. (2) The remaining Retention Agreement for Mr. Long provides that 100% of the outstanding, unvested Retention Units held by Mr. Long will vest immediately prior to Mr. Long’s Separation from Service for the following reasons: (i) termination of Mr. Long by the Company without Cause or by Mr. Long with Good Reason, and (ii) upon the death or Disability of Mr. Long. In the event of a Change in Control (as defined under the LTIP), 100% of Mr. Long’s outstanding, unvested Retention Units would vest. Also, if Mr. Long terminates his employment due to retirement and he is at the time of retirement 65 years of age or older, 40% of his then-unvested Retention Units will vest and the remaining 60% of his then-unvested Retention Units will be forfeited. (3) If Mr. Long's separation was also due to voluntary retirement, 40% of his Phantom Units would vest, valued at $6,269,337. (4) If Mr. Long's separation was also due to voluntary retirement, 40% of his Retention Units would vest, valued at $152,550. (5) Provided that Mr. Long executes and does not revoke a general release and waiver of claims, Mr. Long will be entitled to the Release Payment, which is intended to capture the value of future distributions associated with Retention Units forfeited for tax withholding purposes, which payment would be paid within 60 days of Mr. Long’s date of separation. The tax withholding rate as of December 31, 2023, for Mr. Long applicable to the vesting of the Retention Units would have been 39.35%. (6) Mr. Pearl left the Partnership effective October 5, 2023. In recognition of his service and contributions to us and as approved by our Compensation Committee, we paid Mr. Pearl a separation payment of $500,000 (the “Separation Payment”). The Separation Payment was paid in a lump sum and was contingent upon Mr. Pearl’s execution of a Separation and Restrictive Covenant Agreement and Full Release and Waiver of Claims pursuant to which he released all claims against us, and which provides for certain non-disparagement and confidentiality obligations. Mr. Pearl also received $16,000 of earned but unpaid base salary as of October 5, 2023, the date of his departure, bringing the total amount received by Mr. Pearl pursuant to his departure to $516,000. (7) The listed salary for each of Messrs. Porter and Kimble represents his accrued but unused paid time off as of December 31, 2023 plus, with respect to the first two columns, his base salary as of December 31, 2023. Any accrued but unused paid time off owed to Mr. Porter or Mr. Kimble would be paid within 30 days of the date of his termination of employment, and the base salary would be paid out as set forth in footnote (10). (8) The listed bonus amount for each of Messrs. Porter and Kimble is his pro rata bonus awarded with respect to the year ended December 31, 2023, and his bonus awarded with respect to the year ended December 31, 2022. (9) In the event of Mr. Porter’s or Mr. Kimble’s termination by the Company without Cause or by the NEO with Good Reason, he and his eligible dependents will be entitled to continued health insurance benefits for the Coverage Period, as follows: (a) for the first 12 months of the Coverage Period, the Company will provide such health insurance coverage at its own expense (other than the NEO’s monthly cost-sharing contribution under the Company’s group health plan, as in effect at the time of the NEO’s Separation from Service); (b) for the following six months of the Coverage Period, such health insurance coverage will be at the NEO’s sole expense; and (c) for the final six months of the Coverage Period, the Company will be responsible for the proportion of the cost of such health insurance coverage that the NEO covered in the first 12 months of the Coverage Period; and the NEO will be responsible for the proportion that the Company covered during the first 12 months of the Coverage Period. Messrs. Long, Owens, and Scheller are not currently party to any contractual arrangements providing for continued health insurance coverage by the Company following a termination of employment. (10) The Employment Agreements for each of Messrs. Porter and Kimble provide that upon termination by the Company without Cause or by the NEO for Good Reason, the NEO is entitled to receive one times his base salary, payable in equal semi-monthly installments over the course of one year provided, that any such installment payments that would otherwise be paid prior to the Company’s first regular payroll date that occurs on or after the 60th day following the date of Employee’s Separation from Service (the “First Pay Date”) shall be paid on the First Pay Date. Upon the death of Mr. Porter or Mr. Kimble during this one-year period, his salary payment will be accelerated and all remaining Severance Payments (as defined in the Employment Agreements) would be paid in a lump sum within 30 days of his death. If such termination occurs within two years after a “change in control event” within the meaning of Treasury Regulation 1.409A-3(i)(5), the Severance Payment will be made in a lump sum on the first regular payroll date that occurs on or after 30 days of the NEO’s termination date. (11) Upon the death or Disability (as defined in the Employment Agreements) of Mr. Porter or Mr. Kimble, he (or his estate) will be entitled to his pro rata bonus awarded with respect to the year ended December 31, 2023, and his bonus awarded with respect to the year ended December 31, 2022. (12) In the event of the termination of employment by any of the NEOs without Good Reason, the NEO will be entitled to all earned but unpaid annual base salary. None of the NEOs had earned but unpaid annual base salary as of December 31, 2023. (13) The NEOs are not entitled to a certain level of compensation in the event of continued employment following a Change in Control, but for purposes of this table it is assumed that the NEO would continue to receive a level of base salary, bonus, benefits, and other 78 Table of Contents compensation in the event of continued employment following a Change in Control that is the same as, or similar to, the amounts shown in the Summary Compensation Table. Accordingly, no additional amounts are shown for salary, bonus, or health and welfare plan benefits because those amounts would remain as in effect at the time of the Change in Control, and only the acceleration values of outstanding equity at the time of a Change of Control have been reflected. CEO Pay Ratio Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, require us to provide certain information about the relationship of the annual total compensation of our employees and the annual total compensation of our Chief Executive Officer, Eric Long (our “CEO”). The employees providing services to us are directly employed by USAC Management, therefore we do not have employees for purposes of the pay ratio rules. Rather than providing a pay ratio disclosure that contemplates no employees, we have determined that the disclosure that would be most aligned with the spirit of the pay ratio rules and that would provide our unitholders with more meaningful information would be to provide a ratio using the median employee from the USAC Management employee population. All references to “our” employees within this section shall refer to the applicable USAC Management employees. For 2023, our last completed fiscal year: • The median of the annual total compensation of all employees (other than the CEO) was $113,178. • The annual total compensation of our CEO, as reported in the Summary Compensation Table included elsewhere within this Form 10-K, was $7,034,775. • Based on this information, for 2023 the ratio of the annual total compensation of Mr. Long to the median of the annual total compensation of all employees was reasonably estimated to be 62.2 to 1. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: • We determined that, as of December 31, 2023, our employee population consisted of approximately 822 individuals with all of these individuals located in the U.S. This population consisted of our full-time employees, as we did not have any part-time employees, temporary employees or seasonal workers as of December 31, 2023. • We selected December 31, 2023, as our identification date for determining our median employee because it enabled us to make such identification in a reasonably efficient and economic manner. • We used a consistently applied compensation measure to identify our median employee of comparing the amount of salary or wages, bonuses, compensation received from equity award vesting, and any other compensation items reported to the Internal Revenue Service on Form W-2 for 2023. • We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the U.S., we did not make any cost-of-living adjustments in identifying the median employee. • After we identified our median employee, we combined all of the elements of such employee’s compensation for the 2023 year in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $113,178. • With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2023 Summary Compensation Table included in this Form 10-K. Director Compensation For the year ended December 31, 2023, our CEO was the only NEO who also served as a director, and he did not receive additional compensation for his service on the Board. Mr. Long’s compensation as an NEO is reflected in the Summary Compensation Table above. Officers, employees, paid consultants, or advisors of us or the General Partner or its affiliates who also serve as directors do not receive additional compensation for their service as directors. Other than Mr. Hartman, our directors who are not officers, employees, paid consultants, or advisors of us or the General Partner or its affiliates receive cash and equity-based compensation for their services as directors. Our director compensation program is subject to revision by the Board from time to time. The following table shows the total fees earned and other compensation paid in cash to each independent director during 2023. 79 Table of Contents Name Fees Paid in Cash ($) Unit Awards ($) (1) All Other Compensation ($) (2) Total ($) Matthew S. Hartman (3) — — — — Glenn E. Joyce 130,000 99,993 50,219 280,212 William S. Waldheim 132,500 99,993 50,219 282,712 W. Brett Smith 122,500 99,993 28,585 251,078 ________________________ (1) Represents the grant date fair value of our Phantom Units, calculated in accordance with ASC Topic 718. For a detailed discussion of the assumptions utilized in coming to these values, please see Note 15 in Part II, Item 8 “Financial Statements and Supplementary Data”. As of December 31, 2023, the independent members of the Board who receive equity awards held the following number of outstanding equity awards under the LTIP: Mr. Joyce: 16,355 Phantom Units; Mr. Smith: 12,112 Phantom Units and Mr. Waldheim: 16,355 Phantom Units. The Phantom Units granted in 2023 to Messrs. Joyce, Smith, and Waldheim vest incrementally, with 60% of the Phantom Units vesting on December 5, 2025, and the remaining 40% of the Phantom Units vesting on December 5, 2027. In the event of the director’s cessation of service due to death, Disability, or a Change in Control, 100% of his outstanding, unvested Phantom Units will vest immediately prior to such event. (2) Amounts in this column reflect the value of DERs received by the directors with respect to their outstanding Phantom Unit awards. For Messrs. Joyce, Waldheim, and Smith, the amount shown includes DERs paid with respect to the Partnership’s quarterly distribution on its common units with respect to each quarter in the 2023 year. (3) Mr. Hartman was appointed to the Board pursuant to the Board Representation Agreement, and did not receive compensation for his service on the Board. Mr. Hartman resigned from our Board on November 20, 2023. On July 30, 2018, the Board adopted the Amended and Restated Outside Director Compensation Policy (the “Director Compensation Policy”), which provides for: (i) an annual cash retainer of $100,000; (ii) an annual cash retainer for acting as the Chairman of the Audit Committee and for acting as Chairman of the Compensation Committee; (iii) an annual cash retainer for membership on the Audit Committee and for membership on the Compensation Committee; (iv) an undetermined fixed sum for membership on a special or conflicts committee; (v) an annual equity grant with a value of $100,000; and (vi) a one-time director onboarding equity award of 2,500 Phantom Units. The Phantom Units granted pursuant to the Director Compensation Policy vest incrementally over five years and all outstanding, unvested Phantom Units vest in full in the event of the director’s death, Disability, or upon a Change in Control (each as defined in the LTIP). The Director Compensation Policy does not provide for per meeting attendance fees. The following chart summarizes the Director Compensation Policy. Compensation Element Director Compensation Detail Annual Cash Retainer $100,000 Committee Chair Cash Retainer Audit Committee: $25,000 Compensation Committee: $15,000 Committee Membership Retainer (if not Committee Chair) Audit Committee: $15,000 Compensation Committee: $7,500 Initial Phantom Unit Award 2,500 Phantom Units Annual Phantom Unit Award $100,000 value DERs on Unvested Phantom Units Yes (paid on a current basis) Phantom Unit Vesting Schedule 60% vest on third December 5 following grant 40% vest on fifth December 5 following grant Change-in-Control Unvested Phantom Units vest in full Cessation of Service due to Death or Disability Unvested Phantom Units vest in full Attendance Fee Per Meeting None Reimbursement of Out-of-Pocket Expenses Yes Indemnification Yes, to fullest extent permitted under Delaware law ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters Pursuant to the terms of an Equity Restructuring Agreement the Partnership entered into on January 15, 2018, with the General Partner and Energy Transfer Equity, L.P. (the “Equity Restructuring Agreement”), at any time after the first 80 Table of Contents anniversary of the Transactions Date, Energy Transfer has the right to contribute (or cause any of its subsidiaries to contribute) to the Partnership all of the outstanding equity interests in any of its subsidiaries that owns the General Partner Interest (as defined in the Equity Restructuring Agreement) in exchange for $10,000,000 (the “GP Contribution”); provided that the GP Contribution will occur automatically if at any time following the Transactions Date (i) Energy Transfer or one of its affiliates owns, directly or indirectly, the General Partner Interest and (ii) Energy Transfer and its affiliates collectively own less than 12,500,000 of the Partnership’s common units. Security Ownership of Certain Beneficial Owners and Management The following table sets forth the beneficial ownership of the Partnership’s common units and Preferred Units as of February 8, 2024, held by: • each person who beneficially owns 5% or more of the Partnership’s outstanding common units; • all of the directors of the General Partner; • each NEO of the General Partner; and • all directors and current executive officers of the General Partner as a group. As of February 8, 2024, there were 103,001,911 common units outstanding. Except as indicated by footnote, the persons named in the table below have sole voting and investment power with respect to all common units shown as beneficially owned by them and their address is 111 Congress Avenue, Suite 2400, Austin, Texas 78701. Any fractional common units are rounded down to the nearest whole number. The table also presents information with respect to Energy Transfer’s common units beneficially owned as of February 8, 2024, by each current director and named executive officer of the General Partner and by all directors and executive officers of the General Partner as a group. As of February 8, 2024, Energy Transfer had 3,367,757,556 common units outstanding. Any fractional common units are rounded down to the nearest whole number. USA Compression Partners, LP Energy Transfer LP Name of Beneficial Owner Common Units Beneficially Owned Percentage of Common Units Common Units Beneficially Owned Percentage of Common Units Energy Transfer LP (1) (2) 46,056,228 44.71 % N/A N/A EIG Veteran Equity Aggregator, L.P. (3) 19,339,427 15.81 % N/A N/A Invesco Ltd. (4) 12,526,020 12.16 % N/A N/A ALPS Advisors, Inc. (5) 8,772,895 8.52 % N/A N/A Eric D. Long (6) 577,841 * 10,144 * G. Tracy Owens 24,909 * — * Michael C. Pearl (7) — * — * Eric A. Scheller 83,782 * — * Christopher W. Porter 38,515 * 3,400 * Sean T. Kimble 72,918 * 500 * Christopher R. Curia — * 512,131 * Glenn E. Joyce 24,138 * — * Thomas E. Long — * 1,075,649 * Thomas P. Mason — * 891,285 * W. Brett Smith 1,500 * 38,339 * William S. Waldheim 24,138 * — * Bradford D. Whitehurst (8) 3,616 * 663,131 * All directors and officers as a group (12 persons) (9) 851,357 * 3,194,579 * ________________________ * Less than 1%. (1) Energy Transfer LP has shared voting and dispositive power over 46,056,228 common units based on a Schedule 13D/A filed on August 5, 2019 with the SEC. The Schedule 13D/A was filed jointly by Energy Transfer LP, LE GP, LLC, Kelcy L. Warren, USA Compression GP, LLC, Energy Transfer Partners, L.L.C., Energy Transfer Partners GP, L.P., and Energy Transfer Operating, L.P. (collectively, the 81 Table of Contents “Energy Transfer Reporting Companies”). The principal business address of each of the Energy Transfer Reporting Companies, other than USA Compression GP, LLC, is 8111 Westchester Drive, Suite 600, Dallas, Texas 75225. The principal business address of USA Compression GP, LLC is 111 Congress Avenue, Suite 2400, Austin, Texas 78701. (2) Includes 8,000,000 common units held by USA Compression GP, LLC. (3) EIG owns approximately 387,011 Preferred Units, which are convertible into 19,339,427 common units at the election of the holder. Upon conversion of all 387,011 Preferred Units, EIG would have sole voting and dispositive power over 19,339,427 common units of the Partnership based on the Schedule 13D/A filed on January 26, 2024, with the SEC and our records. The principal business address of EIG Veteran Equity Aggregator, L.P. is 600 New Hampshire Ave NW, STE. 1200, Washington, DC 20037. (4) Invesco Ltd. has the sole power to dispose or to direct the disposition of and sole power to vote or to direct the vote of 12,526,020 common units based on a Schedule 13G/A filed on February 12, 2024, with the SEC. Invesco Ltd., in its capacity as a parent holding company to its investment advisers, may be deemed to beneficially own these 12,526,020 common units which are held of record by clients of Invesco Ltd. The principal business address of Invesco Ltd. is 1331 Spring Street NW, Suite 2500, Atlanta GA 30309. (5) The Schedule 13G was filed jointly by ALPS Advisors, Inc., an investment adviser registered under Section 203 of the Investment Advisors Act of 1940 (“AAI”) and Alerian MLP ETF, an investment company registered under the Investment Company Act of 1940 (“Alerian”). AAI and Alerian have the shared power to dispose or to direct the disposition of and shared power to vote or to direct the vote of 8,772,895 common units based on a Schedule 13G filed on February 5, 2024, with the SEC. AAI furnishes investment advice to certain investment companies (collectively, the “Funds”). In its role as an investment advisor, AAI has voting and/or investment power over the common units owned by the Funds, and may be deemed to be the beneficial ownership of the common units held by the Funds. All 8,772,895 common units are owned by the Funds and AAI disclaims beneficial ownership. Alerian MLP ETF, one of the Funds to which AAI provides investment advice, has an interest of 8,772,895 common units, or 8.52% in us. The principal business address of AAI and Alerian is 1290 Broadway, Suite 1000, Denver, CO 80203. (6) Includes 503,885 of our common units held directly by Mr. Long, 17,592 of our common units held by Aladdin Partners, L.P., a limited partnership affiliated with Mr. Long, and 56,364 of our common units held by certain trusts of which Mr. Long is the trustee. The Energy Transfer LP common units reported as owned by Mr. Long include 4,000 common units held by Aladdin Partners, L.P., and 6,144 common units held by certain trusts of which Mr. Long is the trustee. (7) Based on information contained in our records as of October 5, 2023. (8) Mr. Whitehurst holds 328,617 of Energy Transfer LP’s common units in a margin account. (9) Includes our directors and current executive officers. Securities Authorized for Issuance Under Equity Compensation Plans The Board adopted the LTIP in January 2013. On November 1, 2018, the Board approved and adopted the First Amendment to the LTIP (the “First Amendment”) with immediate effectiveness. The First Amendment (i) increased the number of common units available to be awarded under the LTIP by 8,590,000 common units (which brought the total number of common units available to be awarded under the LTIP to 10,000,000 common units); (ii) provided that common units withheld to satisfy the exercise price or tax withholding obligations with respect to an award will not be considered to be common units that have been delivered under the LTIP; (iii) for awards granted on or after April 3, 2018, modifies the definition of “Change in Control” under the LTIP to refer to Energy Transfer and its Affiliates (as defined under the LTIP) and successors; (iv) updated the tax withholding provision of the LTIP; and (v) extended the term of the LTIP until November 1, 2028. The following table provides certain information with respect to the LTIP as of December 31, 2023: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in the first column) Equity compensation plans approved by security holders — N/A — Equity compensation plans not approved by security holders 1,923,032 N/A 5,743,870 (1) ________________________ (1) As of December 31, 2023, we had 7,666,902 common units available under the LTIP before giving effect to the outstanding awards of 1,923,032 Phantom Units. Pursuant to the terms of the LTIP, other than director Phantom Unit awards, awards of Phantom Units may be settled in cash or common units at the discretion of the Board or a committee thereof. Any Phantom Unit settled in cash will not result in the actual delivery of a common unit. Additionally, Phantom Units withheld to satisfy the exercise price or tax withholdings of an award 82 Table of Contents and Phantom Units that are forfeited, cancelled, or otherwise terminate or expire without the actual delivery of common units will be available for delivery pursuant to other awards. For more information about the LTIP, please see Note 15 in Part II, Item 8 “Financial Statements and Supplementary Data”. ITEM 13. Certain Relationships and Related Party Transactions, and Director Independence Certain Relationships and Related Party Transactions Services Agreement We entered into that certain Services Agreement with USAC Management, a wholly owned subsidiary of the General Partner, effective on January 1, 2013 (the “Services Agreement”), pursuant to which USAC Management provides to us and the General Partner management, administrative and operating services, and personnel to manage and operate our business. We or one of our subsidiaries pays USAC Management for the allocable expenses it incurs in its performance under the Services Agreement. These expenses include, among other things, salary, bonus, cash incentive compensation, and other amounts paid to persons who perform services for us or on our behalf and other expenses allocated by USAC Management to us. USAC Management has substantial discretion to determine in good faith which expenses to incur on our behalf and what portion to allocate to us. On October 28, 2022, the Services Agreement was amended to extend its term to December 31, 2027. The Services Agreement may be terminated at any time by (i) the Board upon 120 days’ written notice for any reason in its sole discretion or (ii) USAC Management upon 120 days’ written notice if: (a) we or the General Partner experience a Change of Control (as defined in the Services Agreement); (b) we or the General Partner breach the terms of the Services Agreement in any material respect following 30 days’ written notice detailing the breach (which breach remains uncured after such period); (c) a receiver is appointed for all or substantially all of our or the General Partner’s property or an order is made to wind up our or the General Partner’s business; (d) a final judgment, order or decree that materially and adversely affects the ability of us or the General Partner to perform under the Services Agreement is obtained or entered against us or the General Partner, and such judgment, order or decree is not vacated, discharged or stayed; or (e) certain events of bankruptcy, insolvency or reorganization of us or the General Partner occur. USAC Management will not be liable to us for their performance of, or failure to perform, services under the Services Agreement unless its acts or omissions constitute gross negligence or willful misconduct. Transactions with Energy Transfer We provide compression and related services to entities affiliated with Energy Transfer, which became a related party of ours on April 2, 2018. As of December 31, 2023, Energy Transfer has ownership and control of the General Partner and ownership of approximately 46% of our limited partner interests (including the 8,000,000 common units owned by the General Partner). We recognized $21.7 million in revenue from compression and related services from entities affiliated with Energy Transfer for the year ended December 31, 2023. We may provide compression and related services to entities affiliated with Energy Transfer in the future, and any significant transactions will be disclosed. The following table summarizes payments and revenues between us and Energy Transfer during 2023. Transaction Explanation Amount/Value 2023 quarterly distributions on limited partner interests Represents the aggregate amount of distributions made to Energy Transfer in respect of the Partnership’s common units during 2023. $ 96.7 million Revenue for compression and related services Represents the aggregate amount of revenue recognized for providing compression services to entities affiliated with Energy Transfer for the full year 2023. $ 21.7 million Conflicts of Interest Conflicts of interest exist, and may arise in the future, as a result of the relationships between the General Partner and its affiliates, including Energy Transfer, on the one hand, and the Partnership and its limited partners, on the other hand. The directors and officers of the General Partner have fiduciary duties to manage the General Partner in a manner beneficial to its 83 Table of Contents owners. At the same time, the General Partner has a fiduciary duty to manage the Partnership in a manner beneficial to us and our unitholders. Whenever a conflict arises between the General Partner or its affiliates, on the one hand, and the Partnership and its limited partners, on the other hand, the General Partner will resolve that conflict. The Partnership Agreement contains provisions that modify and limit the General Partner’s fiduciary duties to the Partnership’s unitholders. The Partnership Agreement also restricts the remedies available to the Partnership’s unitholders for actions taken by the General Partner that, without those limitations, might constitute breaches of its fiduciary duty. The Partnership Agreement provides that the General Partner will not be in breach of its obligations under the Partnership Agreement or its fiduciary duties to us or our unitholders if a transaction with an affiliate or the resolution of a conflict of interest is (a) approved by the conflicts committee of the Board, although the General Partner is not obligated to seek such approval; (b) approved by the vote of a majority of our outstanding common units, excluding any common units owned by the General Partner and its affiliates; (c) on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or (d) fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us. The General Partner may, but is not required to, seek the approval of such resolution from the conflicts committee of the Board. In connection with a situation involving a conflict of interest, any determination by the General Partner must be made in good faith, provided that, if the General Partner does not seek approval from the conflicts committee and the Board determines that the resolution or course of action taken with respect to the conflict of interest satisfies either of the standards set forth in subclauses (c) or (d) above, then it will conclusively be deemed that, in making its decision, the Board acted in good faith. Unless the resolution of a conflict is specifically provided for in the Partnership Agreement, the General Partner or the conflicts committee may consider any factors that it determines in good faith to be appropriate when resolving a conflict. When the Partnership Agreement provides that someone act in good faith, it requires that person to reasonably believe he is acting in the best interests of the Partnership. Please read Part I, Item 1A “Risk Factors – Risks Inherent in an Investment in Us”. Procedures for Review, Approval, and Ratification of Related Person Transactions The Audit Committee reviews and considers related party transactions with affiliates of Energy Transfer for compression and related services. The Audit Committee has authorized the General Partner’s management to enter into transactions for compression and related services with entities affiliated with Energy Transfer on arms-length terms taking into account then-current market conditions applicable to the services to be provided, and any such transaction shall be deemed approved by the Audit Committee. If other conflicts or potential conflicts of interest arises between the General Partner and its affiliates, including Energy Transfer, on the one hand and the Partnership and its limited partners, on the other hand, the resolution of any such conflict or potential conflict is addressed as described under “Conflicts of Interest.” Pursuant to the Partnership’s Code of Business Conduct and Ethics and Corporate Governance Guidelines, directors, officers, and employees are required to disclose any situations that reasonably would be expected to give rise to a conflict of interest and report it to their supervisor, the Partnership’s general counsel, or the Board, as appropriate. Director Independence Please see Part III, Item 10 “Directors, Executive Officers and Corporate Governance – Board of Directors” for a discussion of director independence matters. 84 Table of Contents ITEM 14. Principal Accountant Fees and Services The following table sets forth fees paid for professional services rendered by Grant Thornton LLP (“Grant Thornton”) during the years ended December 31, 2023 and 2022 (in millions): Year Ended December 31, 2023 2022 Audit fees (1) $ 1.0 $ 1.0 Audit-related fees — — Tax fees — — All other fees — — Total $ 1.0 $ 1.0 ________________________ (1) Expenditures classified as “Audit fees” above were billed to the Partnership and include the audits of our annual financial statements and internal control over financial reporting, reviews of our quarterly financial statements, and fees associated with comfort letters and consents related to securities offerings and registration statements. The Audit Committee has adopted the Audit Committee Charter, which is available on our website and which requires the Audit Committee to pre-approve all audit and non-audit services to be provided by our independent registered public accounting firm. The Audit Committee does not delegate its pre-approval responsibilities to management or to an individual member of the Audit Committee. The Audit Committee approved 100% of the services described above. 85 Table of Contents PART IV ITEM 15. Exhibits and Financial Statement Schedules (a) Documents filed as a part of this report. 1. Financial Statements . See “Index to Consolidated Financial Statements” set forth on Page F-1 . 2. Financial Statement Schedule All other schedules have been omitted because they are not required under the relevant instructions. 3. Exhibits The following documents are filed as exhibits to this report: Exhibit Number Description 2.1 Contribution Agreement dated as of January 15, 2018, by and among USA Compression Partners, LP, Energy Transfer Partners, L.P., Energy Transfer Partners GP, L.P., ETC Compression, LLC and, solely for certain purposes therein, Energy Transfer Equity, L.P. (incorporated by reference to Exhibit 2.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on January 16, 2018) 2.2 Equity Restructuring Agreement, dated as of January 15, 2018, by and among Energy Transfer Equity, L.P., USA Compression Partners, LP and USA Compression GP, LLC (incorporated by reference to Exhibit 2.2 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on January 16, 2018) 3.1 Certificate of Limited Partnership of USA Compression Partners, LP (incorporated by reference to Exhibit 3.1 to Amendment No. 3 of the Partnership’s registration statement on Form S-1 (Registration No. 333-174803) filed on December 21, 2011) 3.2 Second Amended and Restated Agreement of Limited Partnership of USA Compression Partners, LP (incorporated by reference to Exhibit 3.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on April 6, 2018) 4.1 Indenture, dated as of March 23, 2018 by and among USA Compression Partners, LP, USA Compression Finance Corp., the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on March 26, 2018) 4.2 First Supplemental Indenture, dated as of April 2, 2018, among USA Compression Partners, LP, USA Compression Finance Corp., the guarantors named on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on April 6, 2018) 4.3 Form of 6.875% Senior Note due 2026 (incorporated by reference to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on March 26, 2018) 4.4 Indenture, dated as of March 7, 2019 by and among USA Compression Partners, LP, USA Compression Finance Corp., the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on March 7, 2019) 4.5 Form of 6.875% Senior Note due 2027 (incorporated by reference to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on March 7, 2019) 4.6 Registration Rights Agreement, dated as of April 2, 2018, by and among USA Compression Partners, LP, Energy Transfer Equity, L.P., Energy Transfer Partners, L.P. and USA Compression Holdings, LLC (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on April 6, 2018) 4.7 Registration Rights Agreement, dated as of April 2, 2018, by and between USA Compression Partners, LP and the Purchasers party thereto (incorporated by reference to Exhibit 4.2 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on April 6, 2018) 86 Table of Contents 4.8 Board Representation Agreement, dated as of April 2, 2018, by and among USA Compression Partners, LP, USA Compression GP, LLC, Energy Transfer Equity, L.P. and the Purchasers party thereto (incorporated by reference to Exhibit 4.3 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on April 6, 2018) 4.9* Description of the USA Compression Partners, LP Common Units 10.1 Seventh Amended and Restated Credit Agreement, dated as of December 8, 2021, among USA Compression Partners, LP, as borrower, the guarantors party thereto from time to time, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent and issuing bank (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on December 8, 2021) 10.2† Long-Term Incentive Plan of USA Compression Partners, LP (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on January 18, 2013) 10.3† First Amendment to the USA Compression Partners, LP 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on November 6, 2018) 10.4† Employment Agreement, dated July 1, 2016, between USA Compression Management Services, LLC and Sean T. Kimble (incorporated by reference to Exhibit 10.13 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-35779) filed on February 19, 2019) 10.5† Employment Agreement, dated December 14, 2016, between USA Compression Management Services, LLC and Christopher W. Porter (incorporated by reference to Exhibit 10.6 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-35779) filed on February 16, 2021) 10.6†* Separation and Restrictive Covenant Agreement and Full Release and Waiver of Claims dated October 5, 2023, with Michael C. Pearl 10.7 Services Agreement, dated effective January 1, 2013, by and among USA Compression Partners, LP, USA Compression GP, LLC and USA Compression Management Services, LLC (incorporated by reference to Exhibit 10.11 to Amendment No. 10 of the Partnership’s registration statement on Form S-1 (Registration No. 333-174803) filed on January 7, 2013) 10.8 Amendment No. 1 to Services Agreement, dated effective November 3, 2017, by and among USA Compression Partners, LP, USA Compression GP, LLC and USA Compression Management Services, LLC (incorporated by reference to Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on November 7, 2017) 10.9 Amendment No. 2 to Services Agreement, dated effective as of October 31, 2022, by and among USA Compression Partners, LP, USA Compression GP, LLC and USA Compression Management Services, LLC (incorporated by reference to Exhibit 10.1 to the Partnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on November 1, 2022) 10.10† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Director Phantom Unit Agreement (incorporated by reference to Exhibit 10.8 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35779) filed on March 28, 2013) 10.11† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Employee Phantom Unit Agreement (incorporated by reference to Exhibit 10.10 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-35779) filed on February 20, 2014) 10.12† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Director Phantom Unit Agreement (in lieu of Annual Cash Retainer) (incorporated by reference to Exhibit 10.10 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35779) filed on March 28, 2013) 10.13† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Director Phantom Unit Agreement (incorporated by reference to Exhibit 10.5 to the Partnership’s Quarterly Report on form 10-Q (File No. 001-35779) filed on November 6, 2018) 10.14† USA Compression Partners, LP Amended and Restated Annual Cash Incentive Plan (incorporated by reference to Exhibit 10.21 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 001-35779) filed on February 19, 2019) 87 Table of Contents 10.15† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Employee Phantom Unit Agreement (with updated performance metrics) (incorporated by reference to Exhibit 10.13 to the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-35779) filed on February 11, 2016) 10.16† USA Compression Partners, LP 2013 Long-Term Incentive Plan – Form of Employee Phantom Unit Agreement (incorporated by reference to Exhibit 10.6 to the Partnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on November 6, 2018) 10.17† USA Compression Partners, LP 2013 Long-Term Incentive Plan – Form of Retention Phantom Unit Agreement (incorporated by reference to Exhibit 10.2 to the Partnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on November 6, 2018) 10.18† Form of Termination Agreement and Mutual Release (incorporated by reference to Exhibit 10.3 to the Partnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on November 6, 2018) 10.19† USA Compression GP, LLC Amended and Restated Outside Director Compensation Policy (incorporated by reference to Exhibit 10.4 to the Partnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on November 6, 2018) 10.20 Series A Preferred Unit and Warrant Purchase Agreement, dated January 15, 2018, among USA Compression Partners, LP and the purchasers party thereto (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on January 16, 2018) 21.1* List of subsidiaries of USA Compression Partners, LP 22.1* List of Subsidiary Guarantors and Co-Issuer 23.1* Consent of Grant Thornton LLP 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1# Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2# Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1* USA Compression Partners, LP Executive Officer Incentive Compensation Clawback Policy 101* Interactive data files pursuant to Rule 405 of Regulation S-T: (i) our Consolidated Balance Sheets as of December 31, 2023 and 2022; (ii) our Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021; (iii) our Consolidated Statements of Changes in Partners’ Capital (Deficit) for the years ended December 31, 2023, 2022, and 2021; (iv) our Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021; and (v) the notes to our Consolidated Financial Statements 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed Herewith. # Furnished herewith; not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. † Management contract or compensatory plan or arrangement. 88 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. USA COMPRESSION PARTNERS, LP By: USA Compression GP, LLC, its General Partner Date: February 13, 2024 By: /s/ Eric D. Long Eric D. Long President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 13, 2024. Name Title /s/ Eric D. Long President and Chief Executive Officer and Director Eric D. Long (Principal Executive Officer) /s/ G. Tracy Owens Vice President of Finance and Chief Accounting Officer G. Tracy Owens (Principal Financial and Accounting Officer) /s/ Christopher R. Curia Director Christopher R. Curia /s/ Glenn E. Joyce Director Glenn E. Joyce /s/ Thomas E. Long Director Thomas E. Long /s/ Thomas P. Mason Director Thomas P. Mason /s/ W. Brett Smith Director W. Brett Smith /s/ William S. Waldheim Director William S. Waldheim /s/ Bradford D. Whitehurst Director Bradford D. Whitehurst 89 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) F- 2 Consolidated Balance Sheets as of December 31, 2023 and 2022 F- 3 Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 F- 4 Consolidated Statements of Changes in Partners’ Capital (Deficit) for the years ended December 31, 2023, 2022, and 2021 F- 5 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021 F- 6 Notes to Consolidated Financial Statements F- 7 Note 1 – Organization and Description of Business F- 7 Note 2 – Basis of Presentation and Accounting Policies F- 7 Note 3 – Trade Accounts Receivable F- 10 Note 4 – Inventories F- 10 Note 5 – Property and Equipment and Identifiable Intangible Assets F- 11 Note 6 – Other Current Liabilities F- 12 Note 7 – Lease Accounting F- 12 Note 8 – Derivative Instrument F- 15 Note 9 – Income Tax Expense (Benefit) F- 15 Note 10 – Debt Obligations F- 16 Note 11 – Preferred Units F- 20 Note 12 – Partners’ Deficit F- 22 Note 13 – Revenue Recognition F- 24 Note 14 – Transactions with Related Parties F- 26 Note 15 – Unit-Based Compensation F- 26 Note 16 – Employee Benefit Plans F- 27 Note 17 – Commitments and Contingencies F- 27 Note 18 – Recent Accounting Pronouncements F- 28 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors of USA Compression GP, LLC and Unitholders of USA Compression Partners, LP Opinion on the financial statements We have audited the accompanying consolidated balance sheets of USA Compression Partners, LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in partners’ capital (deficit), and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 13, 2024 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ GRANT THORNTON LLP We have served as the Partnership’s auditor since 2017. Houston, Texas February 13, 2024 F-2 Table of Contents USA COMPRESSION PARTNERS, LP Consolidated Balance Sheets (in thousands, except unit amounts) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 11 $ 35 Accounts receivable, net of allowances for credit losses of $ 2,260 and $ 1,164 , respectively 95,421 83,822 Related-party receivables — 52 Inventories 114,728 93,754 Derivative instrument 5,670 — Prepaid expenses and other assets 10,617 8,784 Total current assets 226,447 186,447 Property and equipment, net 2,237,625 2,172,924 Lease right-of-use assets 17,290 18,195 Identifiable intangible assets, net 245,652 275,032 Other assets 9,746 13,126 Total assets $ 2,736,760 $ 2,665,724 Liabilities, Preferred Units, and Partners’ Deficit Current liabilities: Accounts payable $ 39,781 $ 35,303 Accrued liabilities 85,132 76,016 Deferred revenue 62,589 62,345 Total current liabilities 187,502 173,664 Long-term debt, net 2,336,088 2,106,649 Operating lease liabilities 14,731 16,146 Derivative instrument, long term 4,466 — Other liabilities 10,924 8,255 Total liabilities 2,553,711 2,304,714 Commitments and contingencies Preferred Units 476,334 477,309 Partners’ deficit: Common units, 100,986,011 and 98,227,656 units issued and outstanding, respectively ( 293,285 ) ( 125,111 ) Warrants — 8,812 Total partners’ deficit ( 293,285 ) ( 116,299 ) Total liabilities, Preferred Units, and partners’ deficit $ 2,736,760 $ 2,665,724 See accompanying notes to consolidated financial statements. F-3 Table of Contents USA COMPRESSION PARTNERS, LP Consolidated Statements of Operations (in thousands, except per unit amounts) Year Ended December 31, 2023 2022 2021 Revenues: Contract operations $ 802,562 $ 673,214 $ 609,450 Parts and service 21,890 15,729 11,228 Related party 21,726 15,655 11,967 Total revenues 846,178 704,598 632,645 Costs and expenses: Cost of operations, exclusive of depreciation and amortization 284,708 234,336 194,389 Depreciation and amortization 246,096 236,677 238,769 Selling, general, and administrative 72,714 61,278 56,082 Loss (gain) on disposition of assets ( 1,667 ) 1,527 ( 2,588 ) Impairment of compression equipment 12,346 1,487 5,121 Total costs and expenses 614,197 535,305 491,773 Operating income 231,981 169,293 140,872 Other income (expense): Interest expense, net ( 169,924 ) ( 138,050 ) ( 129,826 ) Gain on derivative instrument 7,449 — — Other 127 91 107 Total other expense ( 162,348 ) ( 137,959 ) ( 129,719 ) Net income before income tax expense 69,633 31,334 11,153 Income tax expense 1,365 1,016 874 Net income 68,268 30,318 10,279 Less: distributions on Preferred Units ( 47,775 ) ( 48,750 ) ( 48,750 ) Net income (loss) attributable to common unitholders’ interests $ 20,493 $ ( 18,432 ) $ ( 38,471 ) Weighted average common units outstanding – basic 98,634 97,780 97,068 Weighted average common units outstanding – diluted 100,675 97,780 97,068 Basic net income (loss) per common unit $ 0.21 $ ( 0.19 ) $ ( 0.40 ) Diluted net income (loss) per common unit $ 0.20 $ ( 0.19 ) $ ( 0.40 ) Distributions declared per common unit for respective periods $ 2.10 $ 2.10 $ 2.10 See accompanying notes to consolidated financial statements. F-4 Table of Contents USA COMPRESSION PARTNERS, LP Consolidated Statements of Changes in Partners’ Capital (Deficit) (in thousands) Common Units Warrants Total Partners’ capital ending balance, December 31, 2020 $ 323,676 $ 13,979 $ 337,655 Vesting of phantom units 3,821 — 3,821 Distributions and DERs, $ 2.10 per unit ( 203,883 ) — ( 203,883 ) Issuance of common units under the DRIP 1,775 — 1,775 Unit-based compensation for equity-classified awards 211 — 211 Net loss attributable to common unitholders’ interests ( 38,471 ) — ( 38,471 ) Partners’ capital ending balance, December 31, 2021 87,129 13,979 101,108 Vesting of phantom units 3,860 — 3,860 Distributions and DERs, $ 2.10 per unit ( 205,219 ) — ( 205,219 ) Issuance of common units under the DRIP 2,132 — 2,132 Unit-based compensation for equity-classified awards 252 — 252 Exercise and conversion of warrants into common units 5,167 ( 5,167 ) — Net loss attributable to common unitholders’ interests ( 18,432 ) — ( 18,432 ) Partners’ capital (deficit) ending balance, December 31, 2022 ( 125,111 ) 8,812 ( 116,299 ) Vesting of phantom units 6,878 — 6,878 Distributions and DERs, $ 2.10 per unit ( 206,488 ) — ( 206,488 ) Issuance of common units under the DRIP 1,860 — 1,860 Unit-based compensation for equity-classified awards 271 — 271 Exercise and conversion of warrants into common units 8,812 ( 8,812 ) — Net income attributable to common unitholders’ interests 20,493 — 20,493 Partners’ deficit ending balance, December 31, 2023 $ ( 293,285 ) $ — $ ( 293,285 ) See accompanying notes to consolidated financial statements. F-5 Table of Contents USA COMPRESSION PARTNERS, LP Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income $ 68,268 $ 30,318 $ 10,279 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 246,096 236,677 238,769 Provision for expected credit losses 1,500 ( 700 ) ( 2,700 ) Amortization of debt issuance costs 7,279 7,265 9,765 Unit-based compensation expense 22,169 15,894 15,523 Deferred income tax benefit ( 52 ) ( 151 ) ( 42 ) Loss (gain) on disposition of assets ( 1,667 ) 1,527 ( 2,588 ) Change in fair value of derivative instrument ( 1,204 ) — — Impairment of compression equipment 12,346 1,487 5,121 Changes in assets and liabilities: Accounts receivable and related-party receivables, net ( 13,047 ) 29,980 145 Inventories ( 76,796 ) ( 31,594 ) ( 12,592 ) Prepaid expenses and other current assets ( 1,833 ) ( 2,767 ) ( 3,572 ) Other assets 4,197 3,465 3,489 Accounts payable 523 7,547 9,023 Accrued liabilities and deferred revenue 4,106 ( 38,358 ) ( 5,195 ) Net cash provided by operating activities 271,885 260,590 265,425 Cash flows from investing activities: Capital expenditures, net ( 238,522 ) ( 134,224 ) ( 45,213 ) Proceeds from disposition of property and equipment 5,334 3,682 4,466 Proceeds from insurance recovery 535 597 1,559 Net cash used in investing activities ( 232,653 ) ( 129,945 ) ( 39,188 ) Cash flows from financing activities: Proceeds from revolving credit facility 1,089,191 844,549 697,679 Payments on revolving credit facility ( 863,334 ) ( 714,935 ) ( 655,147 ) Cash paid related to net settlement of unit-based awards ( 6,446 ) ( 2,961 ) ( 3,174 ) Cash distributions on common units ( 209,049 ) ( 207,446 ) ( 206,329 ) Cash distributions on Preferred Units ( 48,750 ) ( 48,750 ) ( 48,750 ) Deferred financing costs ( 379 ) ( 549 ) ( 9,960 ) Other ( 489 ) ( 518 ) ( 558 ) Net cash used in financing activities ( 39,256 ) ( 130,610 ) ( 226,239 ) Increase (decrease) in cash and cash equivalents ( 24 ) 35 ( 2 ) Cash and cash equivalents, beginning of year 35 — 2 Cash and cash equivalents, end of year $ 11 $ 35 $ — Supplemental cash flow information: Cash paid for interest, net of capitalized amounts $ 163,589 $ 128,961 $ 120,564 Cash paid for income taxes $ 1,146 $ 887 $ 819 Supplemental non-cash transactions: Non-cash distributions to certain common unitholders (DRIP) $ 1,860 $ 2,132 $ 1,775 Transfers from inventories to property and equipment, net $ 54,570 $ 22,329 $ 10,793 Changes in capital expenditures included in accounts payable and accrued liabilities $ 3,644 $ 6,507 $ 720 Changes in financing costs included in accounts payable and accrued liabilities $ 125 $ ( 265 ) $ 391 Exercise and conversion of warrants into common units $ 8,812 $ 5,167 $ — See accompanying notes to consolidated financial statements. F-6 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements (1) Organization and Description of Business Unless otherwise indicated, the terms “our,” “we,” “us,” “the Partnership,” and similar language refer to USA Compression Partners, LP, collectively with its consolidated subsidiaries. We are a Delaware limited partnership. Through our operating subsidiaries, we provide natural gas compression services to customers under fixed-term contracts in the natural gas and crude oil industries, using compression packages that we design, engineer, own, operate, and maintain. We also own and operate a fleet of equipment used to provide natural gas treating services, such as carbon dioxide and hydrogen sulfide removal, cooling, and dehydration. We provide compression services in shale plays throughout the U.S., including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. USA Compression GP, LLC, a Delaware limited liability company, serves as our general partner and is referred to herein as the “General Partner.” The General Partner is wholly owned by Energy Transfer. The Partnership is a borrower under a revolving credit facility and its subsidiaries are guarantors of that revolving credit facility (see Note 10). The accompanying consolidated financial statements include the accounts of the Partnership and its subsidiaries, all of which are wholly owned by us. Net income (loss) attributable to partners is allocated to our common units and participating securities using the two-class income allocation method. All intercompany balances and transactions have been eliminated in consolidation. Our common units trade on the NYSE under the ticker symbol “USAC”. USA Compression Management Services, LLC (“USAC Management”), a wholly owned subsidiary of the General Partner, performs management, administrative and operating services for us, and provides us with personnel to manage and operate our business. All of our employees, including our executive officers, are employees of USAC Management. As of December 31, 2023, USAC Management had 822 full-time employees. None of our employees are subject to collective bargaining agreements. (2) Basis of Presentation and Significant Accounting Policies Basis of Presentation Our accompanying consolidated financial statements have been prepared in accordance with GAAP and pursuant to SEC rules and regulations. Use of Estimates Our consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions by management that affect the reported amounts in these consolidated financial statements and the accompanying results. Although these estimates were based on management’s available knowledge of current and expected future events, actual results could differ from these estimates. Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents consist of all cash balances. We consider investments in highly liquid financial instruments purchased with an original maturity of 90 days or less to be cash equivalents. Trade Accounts Receivable Trade accounts receivable are recorded at their invoiced amounts. Allowance for Credit Losses We evaluate allowance for credit losses with reference to our trade accounts receivable balances, which are measured at amortized cost. Due to the short-term nature of our trade accounts receivable, we consider the amortized cost of trade accounts receivable to equal the receivable’s carrying amounts, excluding the allowance for credit losses. F-7 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements Our determination of the allowance for credit losses requires us to make estimates and judgments regarding our customers’ ability to pay amounts due. We continuously evaluate the financial strength of our customers and the overall business climate in which our customers operate, and make adjustments to the allowance for credit losses as necessary. We evaluate the financial strength of our customers by reviewing the aging of their receivables owed to us, our collection experiences with the customer, correspondence, financial information, and third-party credit ratings. We evaluate the business climate in which our customers operate by reviewing various publicly available materials regarding our customers’ industry, including the solvency of various companies in the industry. Inventories Inventories consist of serialized and non-serialized parts primarily used on compression units. All inventories are stated at the lower of cost or net realizable value. Serialized parts inventories are determined using the specific-identification cost method, while non-serialized parts inventories are determined using the weighted-average cost method. Purchases of inventories are considered operating activities within the Consolidated Statements of Cash Flows. Property and Equipment Property and equipment are carried at cost except for (i) certain acquired assets which are recorded at fair value on their respective acquisition dates and (ii) impaired assets which are recorded at fair value as of the last impairment evaluation date for which an adjustment was required. Overhauls and major improvements that increase the value or extend the life of compression equipment are capitalized and depreciated over three to five years . Ordinary maintenance and repairs are charged to cost of operations, exclusive of depreciation and amortization. When property and equipment is retired or sold, the associated carrying value and the related accumulated depreciation are removed from our accounts and any related gains or losses are recorded within our Consolidated Statements of Operations within the period of sale or disposition. Capitalized interest is calculated by multiplying our monthly effective interest rate on outstanding variable-rate indebtedness by the amount of qualifying costs, which include upfront payments to acquire certain compression units. Capitalized interest was $ 0.9 million, $ 0.9 million, and $ 0.2 million for the years ended December 31, 2023, 2022, and 2021, respectively. Impairment of Long-Lived Assets The carrying value of long-lived assets that are not expected to be recovered from future cash flows are written-down to estimated fair value. We test long-lived assets for impairment when events or circumstances indicate that a long-lived asset’s carrying value may not be recoverable or will no longer be utilized within the operating fleet. The most common circumstance requiring compression units to be evaluated for impairment involves idle units that do not meet the desired performance characteristics of our revenue-generating horsepower. The carrying value of a long-lived asset is not recoverable if the asset’s carrying value exceeds the sum of the undiscounted cash flows expected to be generated from the use and eventual disposition of the asset. If the carrying value of the long-lived asset exceeds the sum of the undiscounted cash flows associated with the asset, an impairment loss equal to the amount of the carrying value exceeding the fair value of the asset is recognized. The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, based on an estimate of discounted cash flows, the expected net sale proceeds compared to the other similarly configured fleet units that we recently sold, or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to continue using. Refer to Note 5 for more detailed information about impairment charges during the years ended December 31, 2023, 2022, and 2021. Identifiable Intangible Assets Identifiable intangible assets are recorded at cost and amortized using the straight-line method over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to our future cash flows. The estimated useful lives of our intangible assets range from 15 to 25 years. We assess identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We did no t record any impairment of identifiable intangible assets for the years ended December 31, 2023, 2022, or 2021. F-8 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements Revenue Recognition Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs with the provision of services or the transfer of goods. Revenue is measured at the amount of consideration we expect to receive in exchange for providing services or transferring goods. Incidental items, if any, that are immaterial in the context of the contract are recognized as expenses. Refer to Note 13 for more detailed information about revenue recognition for the years ended December 31, 2023, 2022, and 2021. Income Taxes USA Compression Partners, LP is organized as a partnership for U.S. federal and state income tax purposes. As a result, our partners are responsible for U.S. federal and state income taxes on their distributive share of our items of income, gain, loss, or deduction. Net earnings for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities. Texas also imposes an entity-level income tax on partnerships that is based on Texas sourced taxable margin (the “Texas Margin Tax”). Texas Margin Tax impacts are included within our consolidated financial statements. Our wholly owned finance subsidiary, USA Compression Finance Corp. (“Finance Corp”), is a corporation for U.S. federal and state income tax purposes and any resulting tax impacts attributable to Finance Corp are included within our consolidated financial statements. Refer to Note 9 for more detailed information about the Texas Margin Tax for the years ended December 31, 2023, 2022, and 2021. Pass-Through Taxes Sales taxes incurred on behalf of, and passed through to, customers are accounted for on a net basis. Fair-Value Measurements Accounting standards applicable to fair-value measurements establish a framework for measuring fair value and stipulate disclosures about fair-value measurements. The standards apply to recurring and non-recurring financial and non-financial assets and liabilities that require or permit fair-value measurements. Among the required disclosures is the fair-value hierarchy of inputs we use to value an asset or a liability. The three levels of the fair-value hierarchy are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. As of December 31, 2023, and 2022, our financial instruments primarily consisted of cash and cash equivalents, trade accounts receivable, trade accounts payable, and long-term debt, and as of December 31, 2023, a derivative instrument. The book values of cash and cash equivalents, trade accounts receivable, and trade accounts payable are representative of fair value due to their short-term maturities. Our revolving credit facility applies floating interest rates to amounts drawn under the facility; therefore, the carrying amount of our revolving credit facility approximates its fair value. The fair value of our Senior Notes 2026 and Senior Notes 2027 were estimated using quoted prices in inactive markets and are considered Level 2 measurements. The following table summarizes the aggregate principal amount and fair value of our Senior Notes 2026 and Senior Notes 2027 (in thousands): December 31, 2023 2022 Senior Notes 2026, aggregate principal $ 725,000 $ 725,000 Fair value of Senior Notes 2026 720,621 706,875 Senior Notes 2027, aggregate principal 750,000 750,000 Fair value of Senior Notes 2027 737,963 725,625 F-9 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements The fair value of our derivative instrument, which is an interest-rate swap, was estimated based on inputs from actively quoted public markets, including interest-rate forward curves, and is considered a Level 2 measurement. We consider counterparty credit risk and our own credit risk in the determination of the estimated fair value. The following table summarizes the gross fair value of our interest-rate swap (in thousands): December 31, 2023 2022 Interest-rate swap $ 1,204 $ — Refer to Note 8 for additional information on the interest-rate swap. Operating Segment We operate in a single business segment, the compression services business. (3) Trade Accounts Receivable The allowance for credit losses, which was $ 2.3 million and $ 1.2 million at December 31, 2023 and 2022, respectively, represents our best estimate of the amount of probable credit losses included within our existing accounts receivable balance. The following summarizes activity within our trade accounts receivable allowance for credit losses balance (in thousands): Allowance for Credit Losses Balance as of December 31, 2021 $ 2,057 Current-period provision for expected credit losses ( 700 ) Write-offs charged against the allowance ( 203 ) Recoveries collected 10 Balance as of December 31, 2022 1,164 Current-period provision for expected credit losses 1,500 Write-offs charged against the allowance ( 487 ) Recoveries collected 83 Balance as of December 31, 2023 $ 2,260 Unfavorable developments related to customers in bankruptcy was the primary factor supporting the recognized increase to the allowance for credit losses for the year ended December 31, 2023. Favorable market conditions for customers, attributable to sustained increases in commodity prices, was the primary factor supporting the recognized decrease to the allowance for credit losses for the year ended December 31, 2022. During the year ended December 31, 2021, we recognized a reversal of $ 2.7 million to the current-period provision for expected credit losses. Improved market conditions for customers resulting from improved commodity prices was the primary factor supporting the recorded decrease to the allowance for credit losses for the year ended December 31, 2021. (4) Inventories Components of inventories are as follows (in thousands): December 31, 2023 2022 Serialized parts $ 59,901 $ 46,923 Non-serialized parts 54,827 46,831 Total inventories $ 114,728 $ 93,754 F-10 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements (5) Property and Equipment and Identifiable Intangible Assets Property and Equipment Property and equipment consisted of the following (in thousands): December 31, 2023 2022 Compression and treating equipment $ 3,902,115 $ 3,658,000 Computer equipment 33,456 34,941 Automobiles and vehicles 46,395 34,947 Leasehold improvements 9,414 8,997 Buildings 3,464 3,464 Furniture and fixtures 868 795 Land 77 77 Total property and equipment, gross 3,995,789 3,741,221 Less: accumulated depreciation and amortization ( 1,758,164 ) ( 1,568,297 ) Total property and equipment, net $ 2,237,625 $ 2,172,924 Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows: Compression and treating equipment, acquired new 25 years Compression and treating equipment, acquired used 5 - 25 years Furniture and fixtures 3 - 10 years Vehicles and computer equipment 1 - 10 years Buildings 5 years Leasehold improvements 5 years Depreciation expense on property and equipment was $ 216.7 million, $ 207.3 million, and $ 209.4 million for the years ended December 31, 2023, 2022, and 2021, respectively. During the years ended December 31, 2023 and 2021, there were gains on disposition of assets of $ 1.7 million and $ 2.6 million, respectively. During the year ended December 31, 2022, there was a loss on disposition of assets of $ 1.5 million. For the years ended December 31, 2023, 2022, and 2021, we evaluated the future deployment of our idle fleet assets under then-current market conditions and retired 42 , 15 , and 26 compression units, respectively, representing approximately 37,700 , 3,200 , and 11,000 of aggregate horsepower, respectively, that previously were used to provide compression services in our business. As a result, we recorded impairments of compression equipment of $ 12.3 million, $ 1.5 million, and $ 5.1 million for the years ended December 31, 2023, 2022, and 2021, respectively. The primary circumstances supporting these impairments were: (i) unmarketability of certain compression units into the foreseeable future, (ii) excessive maintenance costs associated with certain fleet assets, and (iii) prohibitive retrofitting costs that likely would prevent certain compression units from securing customer acceptance. These compression units were written down to their estimated salvage values, if any. F-11 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements Identifiable Intangible Assets Identifiable intangible assets, net consisted of the following (in thousands): Customer Relationships Trade Names Total Gross balance as of December 31, 2022 $ 485,162 $ 65,500 $ 550,662 Accumulated amortization ( 234,418 ) ( 41,212 ) ( 275,630 ) Net balance as of December 31, 2022 $ 250,744 $ 24,288 $ 275,032 Gross balance as of December 31, 2022 $ 485,162 $ 65,500 $ 550,662 Accumulated amortization ( 260,523 ) ( 44,487 ) ( 305,010 ) Net balance as of December 31, 2023 $ 224,639 $ 21,013 $ 245,652 Amortization expense for the years ended December 31, 2023, 2022, and 2021, was $ 29.4 million, $ 29.4 million, and $ 29.4 million, respectively. The expected amortization of the intangible assets for each of the five succeeding years is as follows: Year Ending December 31, 2024 $ 29,380 2025 29,380 2026 29,380 2027 14,486 2028 12,135 (6) Other Current Liabilities Components of other current liabilities included the following (in thousands): December 31, 2023 2022 Accrued interest expense 31,960 32,763 Accrued unit-based compensation liability 21,896 17,743 Accrued capital expenditures 13,672 10,028 (7) Lease Accounting Lessee Accounting We maintain both finance leases and operating leases, primarily related to office space, warehouse facilities, and certain corporate equipment. Our leases have remaining lease terms of up to six years , some of which include options that permit renewals for additional periods. We determine if an arrangement is a lease at inception. Operating leases are included in lease right-of-use (“ROU”) assets, accrued liabilities, and operating lease liabilities within our Consolidated Balance Sheets. Finance leases are included in property and equipment, accrued liabilities, and other liabilities within our Consolidated Balance Sheets. ROU lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. ROU lease assets also include any lease payments made and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable costs such as our proportionate share of actual costs for utilities, common area maintenance, property taxes, and insurance are not included in the lease liability and are recognized in the period in which they are incurred. F-12 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements For short-term leases (leases that have terms of twelve months or less upon commencement), lease payments are recognized on a straight-line basis and no ROU assets are recorded. For certain equipment leases, such as office equipment, we account for the lease and non-lease components as a single-lease component. Supplemental balance sheet information related to leases consisted of the following (in thousands): December 31, 2023 2022 Operating leases: Lease right-of-use assets $ 17,290 $ 18,195 Accrued liabilities ( 4,066 ) ( 3,631 ) Operating lease liabilities ( 14,731 ) ( 16,146 ) Finance leases: Property and equipment, gross $ 3,661 $ 3,685 Accumulated depreciation ( 2,628 ) ( 2,278 ) Property and equipment, net 1,033 1,407 Accrued liabilities ( 459 ) ( 484 ) Other liabilities ( 722 ) ( 1,211 ) Components of lease expense consisted of the following (in thousands): Year Ended December 31, Income Statement Line Item 2023 2022 2021 Operating lease costs: Operating lease cost Cost of operations, exclusive of depreciation and amortization $ 3,586 $ 3,349 $ 3,074 Operating lease cost Selling, general, and administrative 1,490 1,490 1,524 Total operating lease costs 5,076 4,839 4,598 Finance lease costs: Amortization of lease assets Depreciation and amortization 351 376 443 Short-term lease costs: Short-term lease cost Cost of operations, exclusive of depreciation and amortization 135 165 374 Short-term lease cost Selling, general, and administrative 39 10 30 Total short-term lease costs 174 175 404 Variable lease costs: Variable lease cost Cost of operations, exclusive of depreciation and amortization 10 129 141 Variable lease cost Selling, general, and administrative 803 649 597 Total variable lease costs 813 778 738 Total lease costs $ 6,414 $ 6,168 $ 6,183 F-13 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements The weighted-average remaining lease terms and weighted-average discount rates were as follows: Year Ended December 31, 2023 2022 2021 Weighted-average remaining lease term: Operating leases 5 years 6 years 7 years Finance leases 4 years 4 years 3 years Weighted-average discount rate: Operating leases 5.1 % 4.9 % 5.0 % Finance leases 6.3 % 5.2 % 3.9 % Supplemental cash flow information related to leases consisted of the following (in thousands): Year Ended December 31, 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ ( 5,034 ) $ ( 4,743 ) $ ( 4,463 ) Operating cash flows from finance leases ( 174 ) ( 124 ) ( 129 ) Financing cash flows from finance leases ( 489 ) ( 518 ) ( 558 ) ROU assets obtained in exchange for lease obligations: Operating leases $ 3,105 $ 1,720 $ 730 Finance leases — 790 430 Maturities of lease liabilities as of December 31, 2023, consisted of the following (in thousands): Operating Leases Finance Leases Total 2024 $ 4,913 $ 524 $ 5,437 2025 4,214 240 4,454 2026 3,558 240 3,798 2027 2,940 240 3,180 2028 2,952 100 3,052 Thereafter 2,804 — 2,804 Total lease payments 21,381 1,344 22,725 Less: present-value discount ( 2,584 ) ( 163 ) ( 2,747 ) Present value of lease liabilities $ 18,797 $ 1,181 $ 19,978 As of December 31, 2023, we have no t entered into any additional leases that have not yet commenced that create significant rights and obligations. Lessor Accounting In 2014, we granted a bargain purchase option to a customer with respect to certain compressor packages leased to the customer. The bargain purchase option provided the customer with an option to acquire the equipment at a value significantly less than the fair market value at the end of the lease term. During 2021, the customer exercised its bargain purchase option resulting in a gain of $ 1.1 million recognized within loss (gain) on disposition of assets for the year ended December 31, 2021. Prior to the customer exercising its bargain purchase option, revenue and interest income related to the lease was recognized over the lease term. We recognized maintenance revenue within contract operations revenue and interest income within interest expense, net. Maintenance revenue and interest income recognized for the year ended December 31, 2021 was $ 0.3 million and $ 0.1 million, respectively. F-14 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements Accounting Standards Codification (“ASC”) Topic 842 Leases provides lessors with a practical expedient to not separate non-lease components from the associated lease components and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under ASC Topic 606 Revenue from Contracts with Customers (“ASC Topic 606”) and certain conditions are met. Our contract operations services agreements meet these conditions, and we consider the predominant component to be the non-lease components, resulting in the ongoing recognition of revenue following ASC Topic 606 guidance. (8) Derivative Instrument In April 2023, we entered into an interest-rate swap to manage interest-rate risk associated with the floating-rate Credit Agreement. The interest-rate swap’s notional principal amount was $ 700 million and had a termination date of April 1, 2025. Under the interest-rate swap, we paid a fixed interest rate of 3.785 % and received floating interest-rate payments that were indexed to the one-month SOFR. In October 2023, we modified our existing interest-rate swap to continue to manage interest-rate risk associated with the floating-rate Credit Agreement. The notional principal amount under the modified interest-rate swap remains $ 700 million and the termination date was extended from April 1, 2025 to December 31, 2025. Under the modified interest-rate swap, we pay a fixed interest rate of 3.9725 % and continue to receive floating interest rate payments that are indexed to the one-month SOFR. We do not apply hedge accounting to our currently outstanding derivative. Our derivative is carried on the Consolidated Balance Sheets at fair value and is classified as current or long-term depending on the expected timing of settlement, and gains and losses associated with the derivative instrument are recognized currently in gain on derivative instrument within the Consolidated Statements of Operations. Cash flows related to cash settlements for the periods presented are classified as operating activities within the Consolidated Statements of Cash Flows. The following table summarizes the location and fair value of our derivative instrument on our Consolidated Balance Sheets (in thousands): Assets Liabilities December 31, December 31, Balance Sheet Classification 2023 2022 2023 2022 Derivative instrument $ 5,670 $ — $ — $ — Derivative instrument, long term — — 4,466 — The following table summarizes the location and amounts recognized related to our derivative instrument within our Consolidated Statements of Operations (in thousands): Year Ended December 31, 2023 2022 2021 Gain on derivative instrument $ 7,449 $ — $ — (9) Income Tax Expense We are subject to the Texas Margin Tax, which applies a tax to our gross margin. We do not conduct business in any other state where a similar tax is applied. The Texas Margin Tax requires certain forms of legal entities, including limited partnerships, to pay a tax of 0.75 % on its “margin,” as defined in the law, based on annual results. The tax base to which the tax is applied is the least of (i) 70 % of total revenues for federal income tax purposes, (ii) total revenue less cost of goods sold, or (iii) total revenue less compensation for federal income tax purposes. Components of our income tax expense are as follows (in thousands): Year Ended December 31, 2023 2022 2021 Current tax expense $ 1,417 $ 1,167 $ 916 Deferred tax benefit ( 52 ) ( 151 ) ( 42 ) Total income tax expense $ 1,365 $ 1,016 $ 874 F-15 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements Deferred income tax balances are the direct effect of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the taxes are actually paid or recovered. The tax effects of temporary differences related to property and equipment, identifiable intangible assets, and goodwill that gives rise to deferred tax assets (liabilities), included net within other liabilities, are as follows (in thousands): December 31, 2023 2022 Deferred tax assets: Goodwill $ 12 $ 13 Deferred tax liabilities: Property and equipment ( 4,189 ) ( 4,240 ) Identifiable intangible assets ( 24 ) ( 26 ) Total deferred tax liabilities ( 4,213 ) ( 4,266 ) Deferred tax liabilities, net $ ( 4,201 ) $ ( 4,253 ) ASC Topic 740 Income Taxes (“ASC Topic 740”) provides guidance on measurement and recognition in accounting for income tax uncertainties and provides related guidance on derecognition, classification, disclosure, interest, and penalties. As of December 31, 2023, we had no material unrecognized tax benefits (as defined in ASC Topic 740). We do not expect to incur interest charges or penalties related to our tax positions, but if such charges or penalties are incurred, our policy is to account for interest charges and penalties as income tax expense within the Consolidated Statements of Operations. Our U.S. Federal income tax returns for years 2019 and 2020 currently are under examination by the Internal Revenue Service (“IRS”). Refer to Note 17 for more detailed information about our IRS examinations. Examinations of our Texas Margin Tax returns for report years 2018 through 2021 were completed in 2023 by the Texas Comptroller of Public Accounts with no material adjustments. In general, USA Compression and its subsidiaries are no longer subject to examination by the IRS, and most state jurisdictions, for the 2018 and prior years. The Bipartisan Budget Act of 2015 provides that any tax adjustments (including any applicable penalties and interest) resulting from partnership audits generally will be determined at the partnership level for tax years beginning after December 31, 2017. To the extent possible under these rules, our General Partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if eligible, issue a revised information statement to each unitholder, and former unitholder, with respect to an audited and adjusted return. The Bipartisan Budget Act of 2015 allows a partnership to elect to apply these provisions to any return of the partnership filed for partnership taxable years beginning after the date of the enactment, November 2, 2015. We do not intend to elect to apply these provisions for any tax return filed for partnership taxable years beginning before January 1, 2018. (10) Debt Obligations Our debt obligations, of which there is no current portion, consisted of the following (in thousands): December 31, 2023 2022 Senior Notes 2026, aggregate principal $ 725,000 $ 725,000 Senior Notes 2027, aggregate principal 750,000 750,000 Less: deferred financing costs, net of amortization ( 10,725 ) ( 14,307 ) Total senior notes, net 1,464,275 1,460,693 Revolving credit facility 871,813 645,956 Total long-term debt, net $ 2,336,088 $ 2,106,649 Revolving Credit Facility The Credit Agreement matures on December 8, 2026, except that if any portion of the Senior Notes 2026 are outstanding on December 31, 2025, the Credit Agreement will mature on December 31, 2025. F-16 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements The Credit Agreement has an aggregate commitment of $ 1.6 billion (subject to availability under our borrowing base). The Partnership’s obligations under the Credit Agreement are guaranteed by the guarantors party to the Credit Agreement, which currently consists of all of the Partnership’s subsidiaries. In addition, under the Credit Agreement the Partnership’s Secured Obligations (as defined therein) are secured by: (i) substantially all of the Partnership’s assets and substantially all of the assets of the guarantors party to the Credit Agreement, excluding real property and other customary exclusions; and (ii) all of the equity interests of the Partnership’s U.S. restricted subsidiaries (subject to customary exceptions). Borrowings under the Credit Agreement bear interest at a per-annum interest rate equal to, at the Partnership’s option, either the Alternate Base Rate or SOFR plus the applicable margin. “Alternate Base Rate” means the greatest of (i) the prime rate, (ii) the applicable federal funds effective rate plus 0.50 %, and (iii) one-month SOFR rate plus 1.00 %. The applicable margin for borrowings varies (a) in the case of SOFR loans, from 2.00 % to 2.75 % per annum, and (b) in the case of Alternate Base Rate loans, from 1.00 % to 1.75 % per annum, and are determined based on a total-leverage-ratio pricing grid. In addition, the Borrower is required to pay commitment fees based on the daily unused amount of the Credit Agreement in an amount equal to 0.375 % per annum. Amounts borrowed and repaid under the Credit Agreement may be re-borrowed, subject to borrowing base availability. The Credit Agreement permits us to make distributions of available cash to unitholders so long as (i) no default under the facility has occurred, is continuing, or would result from the distribution; (ii) immediately prior to and after giving effect to such distribution, we are in compliance with the facility’s financial covenants; and (iii) immediately prior to and after giving effect to such distribution, we have availability under the Credit Agreement of at least $ 100 million. In addition, the Credit Agreement contains various covenants that may limit, among other things, our ability to (subject to exceptions): • grant liens; • make certain loans or investments; • incur additional indebtedness or guarantee other indebtedness; • enter into transactions with affiliates; • merge or consolidate; • sell our assets; and • make certain acquisitions. The Credit Agreement also contains various financial covenants, including covenants requiring us to maintain: • a minimum EBITDA to interest coverage ratio of 2.50 to 1.00, determined as of the last day of each fiscal quarter, with EBITDA and interest expense annualized for the most-recent fiscal quarter; • a ratio of total secured indebtedness to EBITDA not greater than 3.00 to 1.00 or less than 0.00 to 1.00, determined as of the last day of each fiscal quarter, with EBITDA annualized for the most-recent fiscal quarter; and • a maximum funded debt-to-EBITDA ratio, defined in the Credit Agreement as the Total Leverage Ratio, determined as of the last day of each fiscal quarter with EBITDA annualized for the most-recent fiscal quarter, of 5.25 to 1.00. In addition, the Partnership may increase the applicable ratio by 0.25 for any fiscal quarter during which a Specified Acquisition (as defined in the Credit Agreement) occurs and for the following two fiscal quarters, but in no event shall the maximum ratio exceed 5.50 to 1.00 for any fiscal quarter as a result of such increase. For purposes of the above covenants, EBITDA is calculated as set forth in the Credit Agreement. If a default exists under the Credit Agreement, the lenders will be able to accelerate the maturity on the amount then outstanding and exercise other rights and remedies. In connection with entering into the Credit Agreement, we paid certain upfront fees and arrangement fees to the arrangers, syndication agents and senior managing agents of the Credit Agreement in the amount of $ 10.0 million during the year ended December 31, 2021. These fees were capitalized to loan costs and are amortized over the remaining term of the Credit Agreement. As of December 31, 2023, we were in compliance with all of our covenants under the Credit Agreement. As of December 31, 2023, we had outstanding borrowings under the Credit Agreement of $ 871.8 million and $ 728.2 million of remaining unused availability of which, due to restrictions related to compliance with the applicable financial covenants, $ 529.1 million was available to be drawn. The borrowing base consists of eligible accounts receivable, inventory, F-17 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements and compression units. The largest component, representing 93 % of the borrowing base as of December 31, 2023, was eligible compression units. Eligible compression units consist of compressor packages that are under service contracts, leased or rented, and carried in the financial statements as fixed assets. Our weighted-average interest rate in effect for all borrowings under the Credit Agreement for the year ended December 31, 2023, was 7.68 %, and our weighted-average interest rate under the Credit Agreement as of December 31, 2023, was 7.98 %. There were no letters of credit issued under the Credit Agreement as of December 31, 2023. The Credit Agreement is a “revolving credit facility” that includes a lockbox arrangement, whereby remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility. Senior Notes 2027 On March 7, 2019, the Partnership and Finance Corp co-issued the Senior Notes 2027. The Senior Notes 2027 mature on September 1, 2027, and accrue interest at the rate of 6.875 % per year. Interest on the Senior Notes 2027 is payable semi-annually in arrears on each of March 1 and September 1. We may redeem all or a part of the Senior Notes 2027 at redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on September 1 of the years indicated below: Year Percentages 2023 103.438 % 2024 101.719 % 2025 and thereafter 100.000 % If we experience a change of control followed by a ratings decline, unless we have previously exercised, or concurrently exercise, our right to redeem the Senior Notes 2027 (as described above), we may be required to offer to repurchase the Senior Notes 2027 at a purchase price equal to 101 % of the principal amount repurchased, plus accrued and unpaid interest, if any, to the repurchase date. The indenture governing the Senior Notes 2027 (the “2027 Indenture”) contains certain financial covenants that we must comply with in order to make certain restricted payments as described in the 2027 Indenture. As of December 31, 2023, we were in compliance with such financial covenants under the 2027 Indenture. The Senior Notes 2027 are fully and unconditionally guaranteed (the “2027 Guarantees”), jointly and severally, on a senior unsecured basis by all of our existing subsidiaries (other than Finance Corp), and will be fully and unconditionally guaranteed, jointly and severally, by each of our future restricted subsidiaries that either borrows under, or guarantees, the Credit Agreement or guarantees certain of our other indebtedness (collectively, the “Guarantors”). The Senior Notes 2027 and the 2027 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any. The Senior Notes 2027 and the 2027 Guarantees effectively are subordinated in right of payment to all of the Guarantors’, Finance Corp’s, and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinate to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2027. Senior Notes 2026 On March 23, 2018, the Partnership and Finance Corp co-issued the Senior Notes 2026. The Senior Notes 2026 mature on April 1, 2026, and accrue interest at the rate of 6.875 % per year. Interest on the Senior Notes 2026 is payable semi-annually in arrears on each of April 1 and October 1. F-18 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements We may redeem all or a part of the Senior Notes 2026 at redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on April 1 of the years indicated below: Year Percentages 2023 101.719 % 2024 and thereafter 100.000 % If we experience a change of control followed by a ratings decline, unless we have previously exercised, or concurrently exercise, our right to redeem the Senior Notes 2026 (as described above), we may be required to offer to repurchase the Senior Notes 2026 at a purchase price equal to 101 % of the principal amount repurchased, plus accrued and unpaid interest, if any, to the repurchase date. The indenture governing the Senior Notes 2026 (the “2026 Indenture”) contains certain financial covenants that we must comply with in order to make certain restricted payments as described in the 2026 Indenture. As of December 31, 2023, we were in compliance with such financial covenants under the 2026 Indenture. The Senior Notes 2026 are fully and unconditionally guaranteed (the “2026 Guarantees”), jointly and severally, on a senior unsecured basis by the Guarantors. The Senior Notes 2026 and the 2026 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any. The Senior Notes 2026 and the 2026 Guarantees effectively are subordinated in right of payment to all of the Guarantors’, Finance Corp’s, and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinate to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026. We have no assets or operations independent of our subsidiaries, and there are no significant restrictions on our ability to obtain funds from our subsidiaries by dividend or loan. Each of the Guarantors is 100 % owned by us. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X under the Securities Act of 1933, as amended. Subsidiary Guarantors The Partnership may from time to time file a Registration Statement on Form S-3 with the SEC to register the issuance and sale of, among other securities, debt securities, which may be co-issued by Finance Corp (together with the Partnership, the “Issuers”) and fully and unconditionally guaranteed on a joint and several basis by the Partnership’s operating subsidiaries for the benefit of each holder and the trustee. Such guarantees are expected to be subject to release, subject to certain limitations, as follows (i) upon the sale, exchange or transfer, by way of a merger or otherwise, to any person that is not our affiliate, of all of our direct or indirect limited partnership or other equity interest in such subsidiary guarantor; or (ii) upon delivery by an Issuer of a written notice to the trustee of the release or discharge of all guarantees by such subsidiary guarantor of any debt of the Issuers other than obligations arising under the indenture governing such debt and any debt securities issued under such indenture, except a discharge or release by or as a result of payment under such guarantees. Maturities of long-term debt for each of the five succeeding years are as follows (in thousands): Year Ending December 31, 2024 $ — 2025 — 2026 (1) 1,596,813 2027 750,000 2028 — ________________________ (1) The Credit Agreement matures on December 8, 2026, except that if any portion of the 6.875 % Senior Notes 2026 are outstanding on December 31, 2025, the Credit Agreement will mature on December 31, 2025. F-19 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements (11) Preferred Units Preferred Unit and Warrant Private Placement On April 2, 2018, we completed a private placement of $ 500 million in the aggregate of (i) newly authorized and established Preferred Units and (ii) two tranches of warrants to purchase common units with certain investment funds managed, or advised, by EIG Global Energy Partners. We issued the holders of the Preferred Units an aggregate of 500,000 Preferred Units with a face value of $ 1,000 per Preferred Unit, a tranche of warrants with the right to purchase 10,000,000 common units with a strike price of $ 19.59 per common unit, and a tranche of warrants with the right to purchase 5,000,000 common units with a strike price of $ 17.03 per common unit. Refer to Note 12 for further information on these warrants. On November 13, 2018, the Partnership filed a Registration Statement on Form S-3 to register 41,202,553 common units that are potentially issuable upon conversion of the Preferred Units and exercise of the warrants described above. The Preferred Units rank senior to our common units with respect to distributions and liquidation rights. The holders of the Preferred Units are entitled to receive cumulative quarterly cash distributions equal to $ 24.375 per Preferred Unit. As of December 31, 2023 and 2022, 500,000 Preferred Units were issued and outstanding. We have declared and paid per-unit quarterly cash distributions to the holders of the Preferred Units of record as follows: Payment date Distribution per Preferred Unit February 5, 2021 $ 24.375 May 7, 2021 24.375 August 6, 2021 24.375 November 5, 2021 24.375 Total 2021 distributions $ 97.50 February 4, 2022 $ 24.375 May 6, 2022 24.375 August 5, 2022 24.375 November 4, 2022 24.375 Total 2022 distributions $ 97.50 February 3, 2023 $ 24.375 May 5, 2023 24.375 August 4, 2023 24.375 November 3, 2023 24.375 Total 2023 distributions $ 97.50 Announced Quarterly Distribution On January 11, 2024, we declared a cash distribution of $ 24.375 per unit on our Preferred Units. The distribution was paid on February 2, 2024, to the holders of the Preferred Units of record as of the close of business on January 22, 2024. Redemption and Conversion Features As of April 2, 2023, 100 % of the Preferred Units are convertible, at the option of the holder, into common units in accordance with the terms of our Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”). The conversion rate for the Preferred Units is the quotient of (i) the sum of (a) $ 1,000 , plus (b) any unpaid cash distributions on the applicable Preferred Unit, divided by (ii) $ 20.0115 for each Preferred Unit. As of December 31, 2023, the Preferred Units are convertible into a maximum number of 24,985,633 common units, assuming there are no unpaid cash distributions on the Preferred Units. F-20 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements The holders of the Preferred Units are entitled to vote on an as-converted basis with the common unitholders and (as proportionately adjusted for unit splits, unit distributions, and similar transactions) will have certain other class voting rights with respect to any amendment to the Partnership Agreement that would adversely affect any rights, preferences, or privileges of the Preferred Units. In addition, upon certain events involving a change of control, the holders of the Preferred Units may elect, among other potential elections, to convert their Preferred Units to common units at the then change of control conversion rate. As of April 2, 2023, we have the option to redeem all or any portion of the Preferred Units then outstanding, subject to certain minimum redemption threshold amounts, for a redemption price set forth in the Partnership Agreement. On or after April 2, 2028, each holder of the Preferred Units will have the right to require us to redeem all or a portion of their Preferred Units, subject to certain minimum redemption threshold amounts, for a redemption price set forth in the Partnership Agreement, which we may elect to pay up to 50 % in common units, subject to certain additional limits. The Preferred Units are presented as temporary equity within the mezzanine section of the Consolidated Balance Sheets because the redemption provisions on or after April 2, 2028 are outside the Partnership’s control. The Preferred Units were recorded at their issuance date fair value, net of issuance cost. Net income allocations increase the carrying value and declared distributions decrease the carrying value of the Preferred Units. As the Preferred Units are not currently redeemable, and it is not probable that they will become redeemable, adjustment to the initial carrying value is not necessary and would only be required if it becomes probable that the Preferred Units would become redeemable. January 2024 Conversion On January 12, 2024, the holders of the Preferred Units elected to convert 40,000 Preferred Units into 1,998,850 common units. These Preferred Units were converted into common units and, for our fourth-quarter 2023 distribution, the holders received the common unit distribution of $ 0.525 on the 1,998,850 common units in lieu of the Preferred Unit distribution of $ 24.375 on the converted 40,000 Preferred Units. Changes in the Preferred Units’ balance are as follows (in thousands): Preferred Units Balance as of December 31, 2020 $ 477,309 Net income allocated to Preferred Units 48,750 Cash distributions on Preferred Units ( 48,750 ) Balance as of December 31, 2021 477,309 Net income allocated to Preferred Units 48,750 Cash distributions on Preferred Units ( 48,750 ) Balance as of December 31, 2022 477,309 Net income allocated to Preferred Units 47,775 Cash distributions on Preferred Units ( 48,750 ) Balance as of December 31, 2023 $ 476,334 Refer to Note 14 for information about the rights EIG Veteran Equity Aggregator, L.P. (along with its affiliated funds, “EIG”) has to designate one of the members of the board of directors of the General Partner (the “Board”). F-21 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements (12) Partners’ Deficit Common Units The change in common units outstanding were as follows: Common Units Outstanding Number of common units outstanding, December 31, 2020 96,962,323 Vesting of phantom units 263,985 Issuance of common units under the DRIP 118,399 Number of common units outstanding, December 31, 2021 97,344,707 Vesting of phantom units 224,386 Issuance of common units under the DRIP 124,255 Exercise and conversion of warrants into common units 534,308 Number of common units outstanding, December 31, 2022 98,227,656 Vesting of phantom units 310,059 Issuance of common units under the DRIP 87,808 Exercise and conversion of warrants into common units 2,360,488 Number of common units outstanding, December 31, 2023 100,986,011 As of December 31, 2023, Energy Transfer held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by Energy Transfer. The limited partners holding our common units have the following rights, among others: • right to receive distributions of our available cash within 45 days after the end of each quarter, so long as we have paid the required distributions on the Preferred Units for such quarter; • right to transfer limited partner unit ownership to substitute limited partners; • right to approve certain amendments of the Partnership Agreement; • right to electronic access of an annual report, containing audited financial statements and a report on those financial statements by our independent public accountants, within 90 days after the close of the fiscal year end; and • right to receive information reasonably required for tax reporting purposes within 90 days after the close of the calendar year. F-22 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements Cash Distributions We have declared and paid per-unit quarterly distributions to our limited partner unitholders of record, including holders of our common and phantom units, as follows (dollars in millions, except distribution per unit): Payment Date Distribution per Limited Partner Unit Amount Paid to Common Unitholders Amount Paid to Phantom Unitholders Total Distribution February 5, 2021 $ 0.525 $ 50.9 $ 1.1 $ 52.0 May 7, 2021 0.525 50.9 1.1 52.0 August 6, 2021 0.525 51.0 1.1 52.1 November 5, 2021 0.525 51.0 1.0 52.0 Total 2021 distributions $ 2.10 $ 203.8 $ 4.3 $ 208.1 February 4, 2022 $ 0.525 $ 51.1 $ 1.2 $ 52.3 May 6, 2022 0.525 51.1 1.2 52.3 August 5, 2022 0.525 51.4 1.1 52.5 November 4, 2022 0.525 51.5 1.0 52.5 Total 2022 distributions $ 2.10 $ 205.1 $ 4.5 $ 209.6 February 3, 2023 $ 0.525 $ 51.6 $ 1.1 $ 52.7 May 5, 2023 0.525 51.6 1.1 52.7 August 4, 2023 0.525 51.6 1.2 52.8 November 3, 2023 0.525 51.6 1.1 52.7 Total 2023 distributions $ 2.10 $ 206.4 $ 4.5 $ 210.9 Announced Quarterly Distribution On January 11, 2024, we announced a cash distribution of $ 0.525 per unit on our common units. The distribution was paid on February 2, 2024, to common unitholders of record as of the close of business on January 22, 2024. DRIP During the years ended December 31, 2023, 2022, and 2021, distributions of $ 1.9 million, $ 2.1 million, and $ 1.8 million, respectively, were reinvested under the DRIP resulting in the issuance of 87,808 , 124,255 , and 118,399 common units, respectively. On August 5, 2020, we filed a registration statement on Form S-3 for the issuance of up to 5,000,000 units under the DRIP. Warrants On April 27, 2022, the tranche of warrants with the right to purchase 5,000,000 common units with a strike price of $ 17.03 per common unit was exercised in full by the holders. The exercise of these warrants was net settled by the Partnership for 534,308 common units. On October 27, 2023, the tranche of warrants with the right to purchase 10,000,000 common units with a strike price of $ 19.59 per common unit was exercised in full by the holders. The exercise of the warrants was net settled by the Partnership for 2,360,488 common units. As of December 31, 2023, no warrants remained outstanding. The warrants outstanding as of December 31, 2022 were presented within the equity section of the Consolidated Balance Sheets in accordance with GAAP as they were indexed to the Partnership’s common units, and required physical settlement or net settlement in the Partnership’s common units. The warrants were valued at issuance using the Black-Scholes-Merton model. F-23 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements Income (Loss) Per Unit The computation of income (loss) per unit is based on the weighted average number of participating securities, which includes our common units and certain equity-based awards outstanding during the applicable period. Basic income (loss) per unit is determined by dividing net income (loss) allocated to participating securities after deducting the amount distributed on Preferred Units, by the weighted-average number of participating securities outstanding during the period. Income (loss) attributable to unitholders is allocated to participating securities based on their respective shares of the distributed and undistributed earnings for the period. To the extent cash distributions exceed net income (loss) attributable to unitholders for the period, the excess distributions are allocated to all participating securities outstanding based on their respective ownership percentages. Diluted income (loss) per unit is computed using the treasury stock method, which considers the potential issuance of limited partner units associated with our long-term incentive plan and warrants. Unvested phantom units and unexercised warrants are not included in basic income (loss) per unit, as they are not considered to be participating securities, but are included in the calculation of diluted income (loss) per unit to the extent they are dilutive, and in the case of warrants to the extent they are considered “in the money.” For the year ended December 31, 2023, approximately 1,167,000 and 873,000 incremental unvested phantom units and “in the money” outstanding warrants, respectively, represent the difference between our basic and diluted weighted-average common units outstanding. For the years ended December 31, 2022 and 2021, approximately 980,000 and 829,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive. For the year ended December 31, 2022, approximately 42,000 incremental “in the money” then-outstanding warrants were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive. For the year ended December 31, 2021, our outstanding warrants were not included in the computation as they were not considered “in the money” for the period. (13) Revenue Recognition Disaggregation of Revenue The following table disaggregates our revenue by type of service (in thousands): Year Ended December 31, 2023 2022 2021 Contract operations revenue $ 823,661 $ 688,857 $ 621,449 Retail parts and services revenue 22,517 15,741 11,196 Total revenues $ 846,178 $ 704,598 $ 632,645 The following table disaggregates our revenue by timing of provision of services or transfer of goods (in thousands): Year Ended December 31, 2023 2022 2021 Services provided over time: Primary term $ 643,284 $ 489,091 $ 419,307 Month-to-month 180,377 199,766 202,142 Total services provided over time 823,661 688,857 621,449 Services provided or goods transferred at a point in time 22,517 15,741 11,196 Total revenues $ 846,178 $ 704,598 $ 632,645 Contract operations revenue Revenue from contracted compression, natural gas treating, and maintenance services is recognized ratably as services are provided to our customers under our fixed-fee contracts over the term of the contract. Initial contract terms typically range from six months to five years . However, we usually continue to provide compression services at a specific location beyond the initial contract term, either through contract renewal or on a month-to-month or longer basis. We primarily enter into fixed-fee contracts whereby our customers are required to pay our monthly fee even during periods of limited or disrupted throughput. Services generally are billed monthly, one month in advance of the commencement of the service month, except for certain F-24 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements customers who are billed at the beginning of the service month, and payment generally is due 30 days after receipt of our invoice. Amounts invoiced in advance are recorded as deferred revenue until earned, at which time they are recognized as revenue. The amount of consideration we receive and revenue we recognize is based on the fixed-fee rate stated in each service contract. Variable consideration exists in select contracts when billing rates vary based on actual equipment availability or volume of total installed horsepower. Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenues to each performance obligation based on its relative standalone service fee. We generally determine standalone service fees based on the service fees charged to customers or use expected cost plus margin. The majority of our service performance obligations are satisfied over time as services are rendered at selected customer locations on a monthly basis and based on specific performance criteria identified in the applicable contract. The monthly service for each location is substantially the same service month-to-month and is promised consecutively over the service contract term. We measure progress and performance of the service consistently using a straight-line, time-based method as each month passes, because our performance obligations are satisfied evenly over the contract term as the customer simultaneously receives and consumes the benefits provided by our service. If variable consideration exists, it is allocated to the distinct monthly service within the series to which such variable consideration relates. We have elected to apply the invoicing practical expedient to recognize revenue for such variable consideration, as the invoice corresponds directly to the value transferred to the customer based on our performance completed to date. There are typically no material obligations for returns or refunds. Our standard contracts do not usually include material non-cash consideration. Retail parts and services revenue Retail parts and services revenue primarily is earned on directly reimbursable freight and crane charges that are the financial responsibility of the customers and maintenance work on units at customer locations that are outside the scope of core maintenance activities. Revenue from retail parts and services is recognized at the point-in-time the part is transferred or service is provided and control is transferred to the customer. At such time, the customer has the ability to direct the use of the benefits of such part or service after we have performed our services. We bill upon completion of the service or transfer of the parts, and payment generally is due 30 days after receipt of our invoice. The amount of consideration we receive and revenue we recognize is based on the invoice amount. There are typically no material obligations for returns, refunds, or warranties. Our standard contracts do not usually include material variable or non-cash consideration. Deferred Revenue We record deferred revenue when cash payments are received or due in advance of our performance. Components of deferred revenue were as follows (in thousands): December 31, Balance sheet location 2023 2022 Current (1) Deferred revenue $ 62,589 $ 62,345 Noncurrent Other liabilities 6,000 2,789 Total $ 68,589 $ 65,134 ________________________ (1) We recognized $ 61.4 million of revenue during the year ended December 31, 2023, related to our deferred revenue balance as of December 31, 2022. Performance Obligations As of December 31, 2023, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue was $ 1.0 billion. We expect to recognize these remaining performance obligations as follows (in thousands): 2024 2025 2026 2027 Thereafter Total Remaining performance obligations $ 552,753 $ 248,288 $ 128,972 $ 71,823 $ 24,757 $ 1,026,593 F-25 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements (14) Transactions with Related Parties We provide natural gas compression and treating services to entities affiliated with Energy Transfer, which as of December 31, 2023, owned approximately 46 % of our limited partner interests and 100 % of the General Partner. Revenue recognized from those entities affiliated with Energy Transfer on our Consolidated Statement of Operations were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Related-party revenues $ 21,726 $ 15,655 $ 11,967 We had approximately $ 0 and $ 52,000 within related-party receivables on our Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively, from those entities affiliated with Energy Transfer. Pursuant to the Board Representation Agreement entered into by us, the General Partner, Energy Transfer, and EIG, in connection with our private placement of Preferred Units and warrants to EIG, EIG Management Company, LLC has the right to designate one of the members of the Board for so long as the holders of the Preferred Units hold more than 5 % of the Partnership’s outstanding common units in the aggregate (taking into account the common units issuable upon conversion of the Preferred Units and exercise of the warrants). (15) Unit-Based Compensation Long-Term Incentive Plan In January 2013, the Board adopted the USA Compression Partners, LP 2013 Long-Term Incentive Plan (as amended, the “LTIP”), which is available for certain employees, consultants, and directors of the General Partner and any of its affiliates who perform services for us. The LTIP provides for awards of unit options, unit appreciation rights, restricted units, phantom units, DERs, unit awards, profits interest units, and other unit-based awards. Under the LTIP, the maximum number of common units available for issuance is 10,000,000 and the term of the LTIP is until November 1, 2028. Awards that are forfeited, canceled, paid, or otherwise terminate or expire without the actual delivery of common units will be available for delivery pursuant to other awards. The LTIP is administered by the Board or a committee thereof. The General Partner’s executive officers, certain of its employees, and certain of its independent directors were granted these awards to incentivize them to help drive our future success and to share in the economic benefits of that success. All employees with phantom units have the option to have a portion of their award settled in cash and a portion settled in common units upon vesting, unless otherwise approved by the Board or a committee thereof. The amount that can be settled in cash is in excess of the employee’s minimum statutory tax-withholding rate. ASC Topic 718 Compensation – Stock Compensation requires the entire amount of an award with such features to be accounted for as a liability. Under the liability method of accounting for unit-based compensation, we re-measure the fair value of the award at each financial statement date until the award vests or is forfeited. The fair value is measured using the market price of the Partnership’s common units. During the requisite service period (the vesting period of the awards), compensation cost is recognized using the proportionate amount of the award’s fair value that has been earned through service to date. Phantom units granted to independent directors do not have a cash settlement option and as such, we account for these awards as equity. Each phantom unit is granted in tandem with a corresponding DER, which entitles the recipient to receive an amount in cash on a quarterly basis equal to the product of (i) the number of the recipient’s outstanding, unvested phantom units on the record date for such quarter and (ii) the quarterly distribution declared by the Board for such quarter with respect to the Partnership’s common units. During the years ended December 31, 2023, 2022, and 2021, an aggregate of 476,959 , 603,365 , and 638,903 , respectively, phantom units (including the corresponding DERs) were granted under the LTIP to the General Partner’s executive officers, certain of its employees, and independent directors. The phantom units (including the corresponding DERs) awarded are subject to restrictions on transferability, customary forfeiture provisions, and time vesting provisions. These phantom unit awards vest incrementally, with 60 % of the phantom units vesting on December 5 of the third year following the grant and the remaining 40 % vesting on December 5 of the fifth year following the grant. Phantom units vest in full upon a change in control. Award recipients do not have all the rights of a unitholder in the Partnership with respect to the phantom units until the units have vested. As of December 31, 2023, and 2022, our total unit-based compensation liability was $ 21.9 million and $ 17.7 million, respectively. During the years ended December 31, 2023, 2022, and 2021, we recognized $ 22.2 million, $ 15.9 million, and F-26 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements $ 15.5 million of compensation expense associated with these awards, respectively, recorded in selling, general, and administrative expense. During the years ended December 31, 2023, 2022, and 2021, amounts paid related to the cash settlement of vested awards under the LTIP were $ 6.4 million, $ 3.0 million, and $ 3.2 million, respectively. The total fair value and intrinsic value of the phantom units vested under the LTIP was $ 7.3 million, $ 4.1 million, and $ 4.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. The following table summarizes information regarding phantom unit awards for the periods presented: Number of Units Weighted-Average Grant Date Fair Value per Unit Phantom units outstanding at December 31, 2020 2,137,957 $ 14.88 Granted 638,903 14.92 Vested ( 475,831 ) 15.13 Forfeited ( 71,261 ) 14.50 Phantom units outstanding at December 31, 2021 2,229,768 $ 13.57 Granted 603,365 18.31 Vested ( 386,916 ) 15.89 Forfeited ( 292,202 ) 14.10 Phantom units outstanding at December 31, 2022 2,154,015 $ 14.21 Granted 476,959 23.13 Vested ( 585,055 ) 13.29 Forfeited ( 122,887 ) 17.50 Phantom units outstanding at December 31, 2023 1,923,032 $ 17.08 The unrecognized compensation cost associated with phantom unit awards was an aggregate $ 21.6 million as of December 31, 2023. We expect to recognize the unrecognized compensation cost for these awards on a weighted-average basis over a period of approximately 2.7 years. (16) Employee Benefit Plans A 401(k) plan is available to all of our employees. The plan permits employees to contribute up to 20 % of their salary, up to the statutory limits, which was $ 22,500 for 2023. The plan provides for discretionary matching contributions by us on an annual basis. Aggregate matching contributions made to employees’ 401(k) plans were $ 3.8 million, $ 3.2 million, and $ 3.5 million for the years ended December 31, 2023, 2022, and 2021, respectively. (17) Commitments and Contingencies (a) Major Customers and Concentration of Credit Risk One customer accounted for approximately 11 % of total revenue for the year ended December 31, 2023. No customer accounted for 10% or more of total revenues for the years ended December 31, 2022 or 2021. As of December 31, 2023, one customer accounted for 17 % of our trade accounts receivable, net balance. As of December 31, 2022, one customer accounted for 13 % of our trade accounts receivable, net balance. Financial instruments that potentially subject us to concentrations of credit risk consist of cash and cash equivalents and trade accounts receivable. Our cash and cash equivalents have a zero-loss expectation because we maintain minimal balances in our cash and cash equivalents’ accounts and have no history of loss. Trade accounts receivable are due from companies of varying size engaged principally in oil and natural gas activities throughout the U.S.; therefore, our customers may be similarly affected by changes in economic and other conditions within the industry. We perform periodic evaluations of our customers’ financial condition, including monitoring our customers’ payment history and current credit worthiness to manage this risk. We generally do not obtain collateral for trade receivables, but we may require payment in advance. Payment terms are on a short-term basis and in accordance with industry practice. We consider this credit risk to be limited due to these companies’ financial resources, the nature of the products and services we provide, and the terms of our customer agreements. F-27 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements (b) Litigation From time to time, we and our subsidiaries may be involved in various claims and litigation arising in the ordinary course of business. In management’s opinion, the resolution of such matters is not expected to have a material adverse effect on our consolidated financial position, results of operations, or cash flows. (c) Tax Contingencies Our compliance with state and local sales tax regulations is subject to audit by various taxing authorities. Certain taxing authorities have either claimed or issued an assessment that specific operational processes, which we and others in our industry regularly conduct, result in transactions that are subject to state sales taxes. We and others in our industry have disputed these claims and assessments based on either existing tax statutes or published guidance by the taxing authorities. We currently are protesting certain assessments made by the Oklahoma Tax Commission (“OTC”). We believe it is reasonably possible that we could incur losses related to this assessment depending on whether the administrative law judge assigned by the OTC accepts our position that the transactions are not taxable and we ultimately lose any and all subsequent legal challenges to such determination. We estimate that the range of losses we could incur is from $ 0 to approximately $ 25.8 million, including penalties and interest. Our U.S. federal income tax returns for years 2019 and 2020 currently are under examination by the IRS. The IRS has issued preliminary partnership examination changes, along with imputed underpayment computations, for the 2019 and 2020 tax years. Under the Bipartisan Budget Act of 2015, there are several procedural steps, including an appeals process, to complete before a final imputed underpayment, if any, is determined. Based on discussions with the IRS, we estimate a potential range of loss from a final imputed underpayment of $ 0 to approximately $ 26.4 million, including interest, for potential adjustments resulting from the IRS examinations. Once a final partnership imputed underpayment, if any, is determined, our General Partner may elect to either pay the imputed underpayment (including any applicable penalties and interest) directly to the IRS or, if eligible, issue a revised information statement to each unitholder, and former unitholder, with respect to an audited and adjusted return. (d) Equipment Purchase Commitments Our future capital commitments are comprised of binding commitments under purchase orders for new compression units ordered but not received. The commitments as of December 31, 2023, were $ 53.4 million, all of which is expected to be settled within the next twelve months. (e) Environmental The Partnership’s operations are subject to federal, state, and local laws, rules, and regulations regarding water quality, hazardous and solid waste management, air quality control, and other environmental matters. These laws, rules, and regulations require the Partnership to conduct its operations in a specified manner and to obtain and comply with a wide variety of environmental registrations, licenses, permits, inspections, and other approvals. Failure to comply with applicable environmental laws, rules, and regulations may expose the Partnership to significant fines, penalties, and/or interruptions in operations. The Partnership’s environmental policies and procedures are designed to achieve compliance with such applicable laws, rules, and regulations. These evolving laws, rules, and regulations, and claims for damages to property, employees, other persons, and the environment resulting from current or past operations may result in significant expenditures and liabilities in the future. (18) Recent Accounting Pronouncements In December 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 improves and enhances income tax disclosure requirements, including new disclosures related to tax rate reconciliation and income taxes paid. The amendments in this update are effective for annual periods beginning after December 15, 2024, and interim periods within annual periods beginning after December 15, 2025, with early adoption permitted. ASU 2023-09 is to be applied on a prospective basis, with retrospective application permitted. We are currently evaluating the impact, if any, of the amendments to ASU 2023-09 on our consolidated financial statements. In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 improves and enhances reportable segment disclosure requirements, including new disclosures related to significant segment expenses. The amendments in this update are effective for annual periods beginning after F-28 Table of Contents USA COMPRESSION PARTNERS, LP Notes to Consolidated Financial Statements December 15, 2023, and interim periods within annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 is to be applied on a retrospective basis. We are currently evaluating the impact, if any, of the amendments to ASU 2023-07 on our consolidated financial statements. F-29