What changed in this filing

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Item 1A. Risk Factors

2025-02-11 compared with 2024-02-13 · 70 added, 70 removed, 611 unchanged (19% of the section changed)

10 unchanged sentences

• We face significant competition that may cause us to lose market share and reduce our cash available for distribution.

• Implementing the shared services model with Energy Transfer will be a complex and time-consuming process.

Disruptions to our systems or operations caused by the implementation may have a material adverse impact on us.

• Our customers may choose to vertically integrate their operations by purchasing and operating their own compression fleet, increasing the number of compression units they currently own, or using alternative technologies for enhancing crude oil production, which could result in a decrease in our revenues and cash available for distribution to unitholders.

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The IRS may challenge this treatment, which could adversely affect the value of our common units.

• We generally prorate our items of income, gain, loss, and deduction for federal income tax purposes between transferors and transferees of our units each month based on the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred.

instead of on the basis of the date a particular unit is transferred.

The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss, and deduction among our unitholders.

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In particular, lower natural gas or crude oil prices over the long term could result in a decline in the production of natural gas or crude oil, respectively, resulting in reduced demand for our compression services.

For example, in 2020, following disputes between the members of OPEC+ about production levels and the price of crude oil, and amid the outbreak of COVID-19, the price of crude oil declined rapidly beginning in March of that year.

For example, in 2020, the price of crude oil declined rapidly beginning in March of that year.

During 2020, the North American rig count reached a low of 247 rigs in August of 2020, down from 790 rigs at the end of January of that year, the price of WTI crude oil briefly went negative in April 2020, down from $51.58 per barrel at the end of January of that year, and Henry Hub natural gas spot reached a low of $1.33 per MMBtu in September 2020, down from $1.91 per MMBtu at the end of January of that year.

The decline in commodity prices and the demand for and production of crude oil and natural gas resulted in a decline in the demand for our compression services, which caused a reduction of our revenues and our cash available for distribution in 2020 and 2021.

In addition, a small portion of our fleet is used in gas lift applications in connection with crude oil production using horizontal drilling techniques.

During periods of low crude oil prices, we typically experience pressure on service rates and utilization from our customers in gas lift applications, and we experienced such effects in 2020, as an example.

In addition, a portion of our fleet is used in gas lift applications in connection with crude oil production using horizontal drilling techniques.

During periods of low crude oil prices, we typically experience pressure on service rates and utilization from our customers in gas lift applications, and we have experienced such effects in the past.

Any future decreases in the rate at which crude oil and natural gas reserves are developed, whether due to increased governmental regulation, low commodity pricing environment, limitations on exploration and production activity, or other factors, could have a material adverse effect on our business.

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The natural gas compression business is highly competitive.

Some of our competitors have a broader geographic scope and greater financial and other resources than we do.

Some of our competitors have greater financial and other resources than we do.

Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current revenue and cash flows could be adversely affected by the activities of our competitors and our customers.

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All of these competitive pressures could have a material adverse effect on our business, results of operations, financial condition, and cash available for distribution.

Implementing the shared services model with Energy Transfer will be a complex and time-consuming process.

Disruptions to our systems or operations caused by the implementation may have a material adverse impact on us.

We are currently implementing a shared services model with Energy Transfer whereby we intend to share personnel and resources with Energy Transfer in certain departments, including information technology, accounting, and human resources.

Integrating these functions with Energy Transfer will require substantial time, resources, and coordination.

This could result in significant disruptions or require a disproportionate amount of our management’s attention, and may result in unforeseen

operational or administrative difficulties or costs.

We may encounter significant delays to this integration, which would further exacerbate these effects.

We may also encounter difficulties in integrating our personnel with Energy Transfer’s teams, and may lose key employees.

Additionally, as part of the shared services integration, many of our information systems will migrate to Energy Transfer’s enterprise resource planning (“ERP”) systems.

This migration may result in significant disruptions to our accounting or other internal systems, including our ability maintain effective systems of internal control over financial reporting and disclosure controls.

If any of these risks or any other unanticipated complications were to materialize, we may not realize the desired benefits from the shared services integration, such as operational and administrative synergies and cost reductions, which could result in a negative impact on our cash flows.

Additionally, disruptions to our internal systems, including our internal control over financial reporting, could negatively impact our business, results of operations and financial condition.

Our customers may choose to vertically integrate their operations by purchasing and operating their own compression fleet, increasing the number of compression units they currently own, or using alternative technologies for enhancing crude oil production, which could result in a decrease in our revenues and cash available for distribution to unitholders.

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The Credit Agreement has an aggregate commitment of $1.6 billion (subject to availability under our borrowing base).

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.

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.

As of December 31, 2023, we had $725.0 million and $750.0 million aggregate principal amount outstanding on our Senior Notes 2026 and Senior Notes 2027, respectively.

The Senior Notes 2026 and Senior Notes 2027 accrue interest at the rate of 6.875% per year.

The Credit Agreement matures on December 8, 2026.

As of December 31, 2024, we had outstanding borrowings under the Credit Agreement of $772.1 million and, after accounting for outstanding letters of credit in the amount of $0.8 million, $827.1 million of remaining unused availability of which, due to restrictions related to compliance with the applicable financial covenants, $782.5 million was available to be drawn.

As of December 31, 2024, we had $750.0 million and $1.0 billion aggregate principal amount outstanding on our Senior Notes 2027 and Senior Notes 2029, respectively.

The Senior Notes 2027 and Senior Notes 2029 accrue interest at the rate of 6.875% and 7.125% per year, respectively.

Our ability to incur additional debt also is subject to limitations in the Credit Agreement, including certain financial covenants.

As of December 31, 2024, our leverage ratio under the Credit Agreement was 4.02x.

Financial covenants in the Credit Agreement permit a maximum leverage ratio of 5.25 to 1.00 (except that we may increase the applicable Total Leverage Ratio by 0.25 for any fiscal quarter during which a Specified Acquisition (as defined in the Credit Agreement) occurs and the following two fiscal quarters, but in no event shall the maximum Total Leverage Ratio exceed 5.50 to 1.00 for any fiscal quarter as a result of such increase);

Financial covenants in the

Credit Agreement permit a maximum leverage ratio of 5.25 to 1.00 (except that we may increase the applicable Total Leverage Ratio by 0.25 for any fiscal quarter during which a Specified Acquisition (as defined in the Credit Agreement) occurs and the following two fiscal quarters, but in no event shall the maximum Total Leverage Ratio exceed 5.50 to 1.00 for any fiscal quarter as a result of such increase);

an Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 2.50 to 1.00;

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In addition, our ability to service our debt under the Credit Agreement could be impacted by market interest rates, as all of our outstanding borrowings under the Credit Agreement are subject to variable interest rates that fluctuate with changes in market interest rates.

A substantial increase in the interest rates applicable to our variable-rate indebtedness outstanding could have a material negative impact on our cash available for distribution.

While the U.S.

Federal Reserve has begun lowering interest rates, macroeconomic circumstances may change, resulting in delays or reversal of such actions, which may result in a prolonged high-interest rate environment.

Any substantial increase in the interest rates applicable to our variable-rate indebtedness outstanding could have a material negative impact on our cash available for distribution.

Based on our December 31, 2024, variable-rate indebtedness outstanding, a one percent increase in the effective interest rate would result in an annual increase in our interest expense of approximately $7.7 million.

delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital.

If our operating results are not sufficient to service our current or future indebtedness, we could be forced to take actions such as reducing the level of distributions on our common units, curtailing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital.

We may be unable to affect any of these actions on terms satisfactory to us or at all.

We depend on a limited number of suppliers and are vulnerable to product shortages and price increases, which could have a negative impact on our results of operations.

The substantial majority of the components for our natural gas compression equipment are supplied by Caterpillar Inc., Cummins Inc., and Arrow Engine Company for engines;

Air-X-Changers and Alfa Laval (US) for coolers;

The substantial majority of the components for our natural gas compression equipment are supplied by Caterpillar Inc., Cummins Inc., INNIO Waukesha, and TECO-Westinghouse for engines;

Air-X-Changers, Alfa Laval (US), AXH air-coolers, EADS Cooling Solutions, LLC, and R&R Engineering Co.

and Ariel Corporation, Cooper Machinery Services Gemini products, and Arrow Engine Company for compressor frames and cylinders.

Our reliance on these suppliers involves several risks, including price increases and a potential inability to obtain an adequate supply of required components in a timely manner.

In addition, supply chain disruptions (including those caused by COVID-19 lockdowns or geopolitical events, such as the ongoing military conflict involving Russia and Ukraine) may harm our suppliers and further complicate existing supply chain constraints.

We also rely primarily on four vendors, A G Equipment Company, Alegacy Equipment, LLC., Standard Equipment Company, and Genis Holdings LLC, to package and assemble our compression units.

In addition, supply chain disruptions (including those caused by geopolitical events) may harm our suppliers and further complicate existing supply chain constraints.

We also rely primarily on three vendors, A G Equipment Company, Alegacy Equipment, LLC., and Standard Equipment Company, to package and assemble our compression units.

We do not have long-term contracts with these suppliers or packagers, and a partial or complete loss of any of these sources could have a negative impact on our results of operations and could damage our customer relationships.

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If we do not achieve our expected growth, we may not be able to maintain or increase the level of distributions on our common units, likely causing the market price of our common units to decline.

Pandemics and other public health crises may have an adverse effect on our business and results of operations.

Pandemics and other public health crises could significantly reduce the demand for, price of, and level of production of natural gas and crude oil, which could have an adverse impact on our business and results of operations.

For example, the COVID-19 pandemic that began in early 2020 caused volatility in the capital markets and negatively impacted the worldwide economy, including the oil and gas industry.

Demand for crude oil and natural gas declined in 2020 due in part to the COVID-19 pandemic and associated government-imposed restrictions and decreased consumer demand.

This reduced demand also contributed to a decline in commodity prices and production.

These declines had a negative impact on many of our customers involved in the domestic exploration and production of crude oil and natural gas, which in turn had an adverse effect on our business and results of operations.

A resurgence of COVD-19, or the emergence of a different pandemic, could once again reduce the demand for, price of, and level of production of natural gas and crude oil in the regions where we provide compression services, which potentially could cause:

• a negative impact on our results of operations and financial condition;

• the deterioration of the financial condition of our customers, suppliers, and vendors;

• a hindrance on our ability to pay distributions, service our debt and other liabilities, and comply with certain restrictive financial covenants in the Credit Agreement and the Indentures;

• renegotiations of our service contracts at lower rates;

• additional costs to us, which could be significant, in connection with litigation and bankruptcies resulting from customer financial deterioration.

Furthermore, market volatility could increase our cost of capital and block our access to the equity and debt capital markets, which could eventually impede our ability to grow, make distributions to our unitholders at current levels, and comply with the terms of our debt agreements.

Additionally, if any pandemic were to significantly spread into our workforce, this could hinder our ability to provide services and otherwise perform our contractual obligations to our customers.

The duration of any pandemic and the magnitude of its repercussions cannot be reasonably estimated, and depending on the duration and severity of the pandemic, it could materially adversely affect our financial condition and results of operations.

Our ability to fund purchases of additional compression units and expansion capital expenditures in the future is dependent on our ability to access external capital, and if we are unable to access this external capital, we may be limited in our ability to grow our operations or maintain or increase our distributions.

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The deterioration of the financial condition of our customers could adversely affect our business.

During times when the natural gas or crude oil markets weaken, such as during the COVID-19 pandemic, our customers are more likely to experience financial difficulties, including being unable to access debt or equity financing, which could result in a reduction in our customers’ spending for our services.

During times when the natural gas or crude oil markets weaken our customers are more likely to experience financial difficulties, including being unable to access debt or equity financing, which could result in a reduction in our customers’ spending for our services.

For example, our customers could seek to preserve capital or reduce expenses by using lower-cost providers of compression services, not renewing month-to-month contracts, determining not to enter into any new compression service contracts, or seeking lower contract prices for our services.

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Nonpayment and nonperformance by our customers, suppliers, or vendors could reduce our revenues, increase our expenses, and otherwise have a negative impact on our ability to conduct our business, operating results, cash flows, and ability to make distributions to our unitholders.

Weak economic conditions and widespread financial distress, such as what resulted from the COVID-19 pandemic, did and could again reduce the liquidity of our customers, suppliers, or vendors, making it more difficult for them to meet their obligations to us.

Weak economic conditions and widespread financial distress, have in the past and could again reduce the liquidity of our customers, suppliers, or vendors, making it more difficult for them to meet their obligations to us.

We therefore are subject to heightened risks of loss resulting from nonpayment or nonperformance by our customers, suppliers, and vendors.

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In the event that any of our customers was to enter into bankruptcy, we could lose all or a portion of the amounts owed to us by such customer, and we may be forced to cancel all or a portion of our service contracts with such customer at significant expense to us.

For example, as of December 31, 2023, one customer accounted for 17% of our trade accounts receivable, net balance.

If this customer was to enter bankruptcy or failed to pay us, it could adversely affect our business, results of operations, financial condition, and cash flows.

For example, as of December 31, 2024, two customers accounted for 12% and 11% of our trade accounts receivable, net balance, respectively.

If these customers were to enter bankruptcy or failed to pay us, it could adversely affect our business, results of operations, financial condition, and cash flows.

In addition, nonperformance by suppliers or vendors who have committed to provide us with critical products or services could raise our costs or interfere with our ability to successfully conduct our business.

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Additionally, because distributions on the Preferred Units are cumulative, we will have to pay all unpaid accumulated distributions on the Preferred Units before we can pay any distributions on our common units.

Also, because distributions on our common units are not cumulative, if we do not pay distributions on our common units with respect to any quarter, our common unitholders will not be entitled to receive distributions covering any prior periods if we later recommence paying distributions on our common units.

Also, because distributions on our common units are not cumulative, if we do not pay distributions on our common units with respect to any quarter, our

common unitholders will not be entitled to receive distributions covering any prior periods if we later recommence paying distributions on our common units.

The Preferred Units are convertible into common units in accordance with the terms of the Partnership Agreement by the holders of the Preferred Units or by us in certain circumstances.

In 2024, holders of our Preferred Units converted an aggregate of 320,000 Preferred Units.

Our obligation to pay distributions on the Preferred Units, or on the common units issued following the conversion of the Preferred Units, could impact our liquidity and reduce the amount of cash flow available for working capital, capital expenditures, growth opportunities, acquisitions, and other general Partnership purposes.

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These events could cause us to record impairments of identifiable intangible assets.

For example, for the year ended December 31, 2020, we recognized a $619.4 million impairment of goodwill as a result of the economic downturn caused by the response to COVID-19.

For example, for the year ended December 31, 2020, we recognized a $619.4 million impairment of goodwill as a result of an economic downturn that occurred that year.

If we determine that any of our identifiable intangible assets are impaired, we will be required to take an immediate charge to earnings with a corresponding reduction of partners’ capital resulting in an increase in balance sheet leverage as measured by debt to total capitalization.

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Events and conditions that could result in impairment in the value of our long-lived assets include changes in the industry in which we operate, competition, advances in technology, adverse changes in the regulatory environment, or other factors leading to a reduction in our expected long-term profitability.

For example, 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.

For example, for the years ended December 31, 2024, 2023, and 2022, we evaluated the future deployment of our idle fleet assets under current market conditions and retired 2, 42, and 15 compression units, respectively, representing approximately 1,260, 37,700, and 3,200 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 $0.3 million, $12.3 million, and $1.5 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Additionally, for the year ended December 31, 2024, we recognized a $0.6 million impairment of assets related to capitalized software costs that are no longer expected to provide benefit.

Our ability to manage and grow our business effectively may be adversely affected if we lose key management or operational personnel.

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We may be unable to grow successfully through acquisitions, which may negatively impact our operations and limit our ability to maintain or increase the level of distributions on our common units.

From time to time, we may choose to make business acquisitions, such as the CDM Acquisition, to pursue market opportunities, increase our existing capabilities, and expand into new geographic areas of operations.

From time to time, we may choose to make business acquisitions to pursue market opportunities, increase our existing capabilities, and expand into new geographic areas of operations.

While we have reviewed acquisition opportunities in the past and will continue to do so in the future, we may not be able to identify attractive acquisition opportunities or successfully acquire identified targets.

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Inspections may not be performed on every asset, and environmental problems, such as groundwater contamination, may not be observable even when an inspection is undertaken.

Integration of assets acquired in past acquisitions or future acquisitions with our existing business can be complex, time-consuming, and costly, particularly in the case of material acquisitions such as the CDM Acquisition, which significantly increased our size and expanded the geographic areas in which we operate.

Integration of assets acquired in future acquisitions with our existing business can be complex, time-consuming, and costly, particularly in the case of material acquisitions such as the CDM Acquisition, which significantly increased our size and expanded the geographic areas in which we operate.

A failure to successfully integrate acquired assets with our existing business in a timely manner may have a material adverse effect on our business, financial condition, results of operations, or cash available for distribution to our unitholders.

The difficulties of integrating past and future acquisitions with our business include, among other things:

The difficulties of integrating future acquisitions with our business include, among other things:

• operating a larger combined organization in new geographic areas and new lines of business;

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emissions thresholds.

In January 2024, the EPA issued a proposed rule to impose and collect the methane emissions charge authorized under the IRA 2022.

In November 2024, the EPA issued a final rule to impose and collect the methane emissions charge authorized under the IRA 2022.

In addition, federal or state governmental agencies could seek to pursue legislative, regulatory, or executive initiatives that restrict GHG emissions.

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Although it is not currently possible to predict with specificity how the IRA 2022 or any proposed or future GHG legislation, regulation, agreements, or initiatives will impact our business, any legislation or regulation of GHG emissions that may be imposed in areas in which we conduct business or on the assets we operate, including a carbon tax or cap-and-trade program, could result in increased compliance or operating costs, additional operating restrictions, or reduced demand for our services, and could have a material adverse effect on our business, financial condition, and results of operations.

In March 2022, the SEC announced its intention to promulgate rules requiring climate disclosures.

Although the form and substance of these requirements is not yet known, this may result in additional costs to comply with any such disclosure requirements.

In January 2024, the Biden administration announced a moratorium on approvals of applications for LNG export authorizations by the United States Department of Energy (“DOE”) while the DOE conducts studies related to the cumulative impact of LNG exports on domestic natural gas prices, climate change, and other matters.

The moratorium on these approvals is expected to continue for several months and it is uncertain as to timing or conclusions of these studies and the resulting effect on the DOE approval process related to applications for LNG export authorizations.

As a result, it is difficult to predict whether changes to the DOE’s approval process will have a negative effect on the prospects for future LNG export projects and on demand for domestic natural gas production that would be supported by these new LNG projects.

Climate change may increase the frequency and severity of weather events that could result in severe personal injury, property damage, and environmental damage, which could curtail our or our customers’ operations and otherwise materially adversely affect our cash flows.

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Supply and demand for crude oil and natural gas is dependent on a variety of factors, many of which are beyond our control.

These factors include, among others, the potential adoption of new government regulations, including those related to fuel conservation measures and climate change regulations, technological advances in fuel economy, and energy generation

For example, legislative, regulatory, or executive actions intended to reduce emissions of GHGs, such as the IRA 2022, could increase the cost of consuming crude oil and natural gas, or provide incentives to encourage alternative forms of energy, thereby potentially causing a reduction in the demand for crude oil and natural gas.

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Unlike the holders of common stock in a corporation, our common unitholders only have limited voting rights on matters affecting our business and, therefore, limited ability to influence management’s decisions regarding our business.

Common unitholders have no right to elect the General Partner or the board of directors of the General Partner (the “Board”).

unitholders have no right to elect the General Partner or the board of directors of the General Partner (the “Board”).

Energy Transfer is the sole member of the General Partner and has the right to appoint the majority of the members of the Board, including all but one of its independent directors.

Also, pursuant to that certain Board Representation Agreement entered into by us, the General Partner, Energy Transfer, and EIG Veteran Equity Aggregator, L.P.

(along with its affiliated funds, “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 that would be issuable upon conversion of the Preferred Units and exercise of the warrants).

If our common unitholders are dissatisfied with the General Partner’s performance, they have little ability to remove the General Partner.

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The market price of master limited partnership units, like other yield-oriented securities, may be affected by, among other factors, implied distribution yield.

The distribution yield is often used by investors to compare and rank yield-oriented securities

for investment decision-making purposes.

The distribution yield is often used by investors to compare and rank yield-oriented securities for investment decision-making purposes.

Therefore, increases or decreases in interest rates may affect whether or not certain investors decide to invest in master limited partnership units, including ours, and a rising interest rate environment could have an adverse impact on our common unit price and impair our ability to issue additional equity or incur debt to fund growth or for other purposes, including distributions.

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• our amount of cash available for distribution to common unitholders may decrease;

• our ratio of taxable income to distributions may increase;

• the relative voting strength of each previously outstanding common unit may be diminished;

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As of February 6, 2025, the holders of our Preferred Units (the “Preferred Unitholders”) have converted a portion of their Preferred Units into 15,990,804 common units, in accordance with the formula set forth in our Partnership Agreement.

Additionally, the warrants held by the Preferred Unitholders have been exercised and net settled in full for 2,894,796 common units, all of which have been sold by the Preferred Unitholders.

Additionally, the warrants held by the Preferred Unitholders have been exercised and net settled in full for 2,894,796 common units.

We have granted certain registration rights to Energy Transfer and its affiliates with respect to any common units they own, and have filed a registration statement with the SEC for the benefit of the Preferred Unitholders with respect to any common units they may receive upon conversion of the Preferred Units or exercise of the warrants.

Energy Transfer may, and the Preferred Unitholders may continue to, sell such common units.

Energy Transfer may, and the Preferred Unitholders have and may continue to, sell our common units.

Any sales of these common units in the public or private markets could have an adverse impact on the price of our common units.

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Under Delaware law, unitholders could be held liable for our obligations to the same extent as a general partner if a court determined that the right of limited partners to remove our General Partner or to take other action under the Partnership Agreement constituted participation in the “control” of our business.

Additionally, under Delaware law, the General Partner has

unlimited liability for the obligations of the Partnership, such as our debts and environmental liabilities, except for those contractual obligations of the Partnership that are expressly made without recourse to the General Partner.

Additionally, under Delaware law, the General Partner has unlimited liability for the obligations of the Partnership, such as our debts and environmental liabilities, except for those contractual obligations of the Partnership that are expressly made without recourse to the General Partner.

The limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some of the states in which we do business.

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Distributions generally would be taxed again as corporate dividends (to the extent of our current and accumulated earnings and profits), and no income, gains, losses, deductions, or credits would flow through to you.

Because taxes would be levied on us as a corporation, our cash available for distribution also would be substantially reduced.

Because taxes would be levied on us as a corporation, our cash

available for distribution also would be substantially reduced.

Therefore, if we were treated as a corporation for federal income tax purposes, there would be a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common units.

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For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures, you may be allocated taxable income and gain resulting from the sale.

The ultimate effect of any such allocations will depend on the

unitholder’s individual tax position with respect to its units.

The ultimate effect of any such allocations will depend on the unitholder’s individual tax position with respect to its units.

Unitholders are encouraged to consult their tax advisors with respect to the consequences of transactions that may result in income and gain to unitholders.

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In addition, our costs of any contest with the IRS will be borne indirectly by our unitholders because the costs will reduce our cash available for distribution.

If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.

adjustments directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.

For tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us.

Federal income tax returns for years 2019 and 2020 are currently under examination by the IRS.

To the extent possible under applicable rules, the General Partner may pay such taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, elect to issue a revised Schedule K-1 to each unitholder and former unitholder with respect to an audited and adjusted return.

To the extent possible under applicable rules, the General Partner may pay such taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, elect to issue Form 8986, effectively taking the place of a revised Schedule K-1, to each unitholder and former unitholder with respect to an audited and adjusted return.

No assurances can be made that such election will be practical, permissible, or effective in all circumstances.

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Our ability to deduct interest paid or accrued on indebtedness properly allocable to a trade or business (“business interest”) may be limited in certain circumstances.

Generally, our deduction for business interest is limited to the sum of our business interest income and 30% of our “adjusted taxable income.” For the purposes of this limitation, our adjusted taxable income is computed without regard to any business interest expense or business interest income, and for taxable years beginning on or after January 1, 2022, shall be reduced by depreciation and amortization to the extent such depreciation or amortization is not capitalized into cost of goods sold with respect to inventory.

As a result of this limitation, the amount of taxable income allocated to our unitholders in the taxable year in which the limitation is in effect will increase, which was $95.1 million for tax year 2022, and any future limitations on our ability to deduct business interest may similarly increase taxable income allocated

to our unitholders.

Our “business interest” has been subject to limitation under these rules by $105.5 million and $95.1 million for tax years 2023 and 2022, respectively.

As a result, our unitholders may be subject to limitation on their ability to deduct interest expense incurred by us and allocated to them.

In certain circumstances, a unitholder may be able to utilize a portion of a business interest deduction subject to this limitation in future taxable years.

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A unitholder’s share of our income, gain, loss, and deduction, and any gain from the sale of our units generally will be considered effectively connected income.

As a result, distributions to a non-U.S.

distributions to a non-U.S.

unitholder will be subject to withholding at the highest applicable effective tax rate and a non-U.S.

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In determining the items of income, gain, loss, and deduction allocable to our unitholders, we must routinely determine the fair market value of our assets.

Although we may from time to time consult with professional appraisers regarding valuation matters, we make many fair market value estimates using a methodology based on the market value of our common units as a means to measure the fair market value of our assets.

Although we may from time to time consult with professional appraisers regarding valuation

matters, we make many fair market value estimates using a methodology based on the market value of our common units as a means to measure the fair market value of our assets.

The IRS may challenge these valuation methods and the resulting allocations of income, gain, loss, and deduction.

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We rely on our information technology infrastructure to process, transmit, and store electronic information critical to our business activities.

In recent years, there has been a rise in the number of cyberattacks on other companies’ network and information systems by state-sponsored and other criminal organizations, as well as data security incidents caused by human error, vulnerabilities in software and other technologies, or vendor and supply chain incidents.

In recent years, there has been a rise in the number of cyberattacks on other companies’ network and

information systems by state-sponsored and other criminal organizations, as well as data security incidents caused by human error, vulnerabilities in software and other technologies, or vendor and supply chain incidents.

As a result, the risks associated with such an event continue to increase and we frequently detect, respond to and mitigate security incidents.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors