USA Compression Partners
Annual Report 2014

Plain-text annual report

Table of ContentsX` UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K (Mark One) ☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2014 or ☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-35779 USA Compression Partners, LP(Exact Name of Registrant as Specified in its Charter) Delaware 75-2771546(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 100 Congress Avenue, Suite 450Austin, TX 78701(Address of Principal Executive Offices) (Zip Code) (512) 473-2662(Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Units Representing Limited Partner Interests New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best ofthe registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☐(Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of common units held by non-affiliates of the registrant (treating directors and executive officers of the registrant’s general partnerand holders of 5% or more of the common units outstanding, for this purpose, as if they were affiliates of the registrant) as of June 30, 2014, the last business day of theregistrant’s most recently completed second fiscal quarter was $425,597,152. This calculation does not reflect a determination that such persons are affiliates for anyother purpose. As of February 17, 2015, there were 32,036,276 common units and 14,048,588 subordinated units outstanding. DOCUMENTS INCORPORATED BY REFERENCE: NONE Table of ContentsTable of Contents PART I 1 Item 1.Business2 Item 1A.Risk Factors13 Item 1B.Unresolved Staff Comments32 Item 2.Properties32 Item 3.Legal Proceedings32 Item 4.Mine Safety Disclosures32 PART II 32 Item 5.Market For Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities32 Item 6.Selected Financial Data34 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations41 Item 7A.Quantitative and Qualitative Disclosures About Market Risk55 Item 8.Financial Statements and Supplementary Data55 Item 9.Changes in and Disagreements With Accountants on Accounting and FinancialDisclosure55 Item 9A.Controls and Procedures55 Item 9B.Other Information56 PART III 57 Item 10.Directors, Executive Officers and Corporate Governance57 Item 11.Executive Compensation62 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters70 Item 13.Certain Relationships and Related Transactions, and Director Independence72 Item 14.Principal Accountant Fees and Services74 PART IV 75 Item 15.Exhibits and Financial Statement Schedules75 i Table of ContentsPART I DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This report contains “forward-looking statements.” All statements other than statements of historical fact contained in thisreport are forward-looking statements, including, without limitation, statements regarding our plans, strategies, prospects andexpectations concerning our business, results of operations and financial condition. You can identify many of thesestatements by looking for words such as “believe,” “expect,” “intend,” “project,” “anticipate,” “estimate,” “continue” orsimilar words or the negative thereof. Known material factors that could cause our actual results to differ from those in these forward-looking statements aredescribed below, in Part I, Item 1A (“Risk Factors”) and Part II, Item 7 (“Management’s Discussion and Analysis of FinancialCondition and Results of Operations”). Important factors that could cause our actual results to differ materially from theexpectations reflected in these forward-looking statements include, among other things: ·changes in general economic conditions and changes in economic conditions of the crude oil and natural gasindustry specifically; ·competitive conditions in our industry; ·changes in the long-term supply of and demand for crude oil and natural gas; ·our ability to realize the anticipated benefits of acquisitions and to integrate the acquired assets with our existingfleet; ·actions taken by our customers, competitors and third-party operators; ·changes in the availability and cost of capital; ·operating hazards, natural disasters, weather related delays, casualty losses and other matters beyond our control; ·the effects of existing and future laws and governmental regulations; and ·the effects of future litigation. All forward-looking statements included in this report are based on information available to us on the date of this report.Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statement, whether asa result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributableto us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.1 Table of Contents ITEM 1.Business References in this report to “USA Compression,” “we,” “our,” “us,” “the Partnership” or like terms refer to USACompression Partners, LP and its wholly owned subsidiaries, including USA Compression Partners, LLC (“USACOperating”) and USAC OpCo 2, LLC (“OpCo 2” and together with USAC Operating, the “Operating Subsidiaries”).References to our “general partner” refer to USA Compression GP, LLC. References to “USA Compression Holdings” refer toUSA Compression Holdings, LLC, the owner of our general partner. References to “USAC Management” refer to USACompression Management Services, LLC, a wholly owned subsidiary of our general partner. References to “Riverstone”refer to Riverstone/Carlyle Global Energy and Power Fund IV, L.P., and affiliated entities, including Riverstone Holdings,LLC. Overview We are a growth oriented Delaware limited partnership and we believe that we are one of the largest independentproviders of compression services in the U.S. in terms of total compression fleet horsepower. We have been providingcompression services since 1998 and completed our initial public offering in January 2013. As of December 31, 2014, we had1,549,020 horsepower in our fleet and approximately 230,000 horsepower on order for expected delivery primarily in the firstthree quarters of 2015. We provide compression services to our customers primarily in connection with infrastructureapplications, including both allowing for the processing and transportation of natural gas through the domestic pipelinesystem and enhancing crude oil production through artificial lift processes. As such, our compression services play a criticalrole in the production, processing and transportation of both natural gas and crude oil. We provide compression services in a number of shale plays throughout the U.S., including the Utica, Marcellus, PermianBasin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville and Fayetteville shales. The demand forour services is driven by the domestic production of natural gas and crude oil; as such, we have focused our activities in areasof attractive production growth, which are generally found in these shale and unconventional resource plays. According torecent studies promulgated by the Energy Information Agency (“EIA”), the production and transportation volumes in theseplays are expected to increase over time due to the comparatively attractive economic returns versus returns achieved in manyconventional basins. Furthermore, the changes in production volumes and pressures of shale plays over time require a widerrange of compression services than in conventional basins. We believe the flexibility of our compression units positions uswell to meet these changing operating conditions. Our business focuses largely on compression services at infrastructureinstallations, including centralized natural gas gathering systems and processing facilities, utilizing large horsepowercompression units, typically in shale plays; however, we also provide compression services in more mature conventionalbasins, including crude oil wells targeted by horizontal drilling techniques. The recent advent of horizontal drilling hasallowed producers to produce incremental volumes of crude oil on economic terms that tend to remain attractive even inperiods of low commodity prices. We operate a modern fleet of compression units, with an average age of approximately four years. We acquire ourcompression units from third-party fabricators who build the units to our specifications, utilizing specific original equipmentmanufacturers and assembling the units in a manner that provides us the ability to meet certain operating conditionthresholds. Our standard new-build compression units are generally configured for multiple compression stages allowing us tooperate our units across a broad range of operating conditions. The design flexibility of our units, particularly in midstreamapplications, allows us to enter into longer-term contracts and reduces the redeployment risk of our horsepower in the field.Our modern and standardized fleet, decentralized field level operating structure and technical proficiency in predictive andpreventive maintenance and overhaul operations have enabled us to achieve average service run times consistently above thelevels required by our customers. As part of our services, we engineer, design, operate, service and repair our compression units and maintain relatedsupport inventory and equipment. The compression units in our modern fleet are designed to be easily adaptable to fit ourcustomers’ changing compression requirements. By focusing on the needs of our customers and by providing them withreliable and flexible compression services in geographic areas of attractive growth, we are able to generate stable cash flowsfor our unitholders. 2 Table of ContentsWe provide compression services to our customers under fixed-fee contracts with initial contract terms between sixmonths and five years, depending on the application and location of the compression unit. We typically continue to providecompression 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 take-or-pay contracts whereby our customers are required to pay our monthlyfee even during periods of limited or disrupted throughput, which enhances the stability and predictability of our cash flows.We are not directly exposed to commodity price risk because we do not take title to the natural gas we compress and becausethe natural gas used as fuel by our compression units is supplied by our customers without cost to us. Our assets and operations are organized into a single reportable segment and are all located and conducted in the UnitedStates. See our consolidated financial statements, and the notes thereto, included elsewhere in this report for financialinformation on our operations and assets; such information is incorporated herein by reference. Business Strategies Our principal business objective is to increase the quarterly cash distributions that we pay to our unitholders over timewhile ensuring the ongoing stability and growth of our business. We expect to achieve this objective by executing on thefollowing strategies: ·Capitalize on the increased need for natural gas compression in conventional and unconventional plays. We expectadditional demand for compression services to result from the continuing shift of natural gas production to domesticshale plays as well as the declining production pressures of aging conventional basins. In addition, we expecthorizontal drilling in crude oil production in targeted areas of comparatively better economic returns to continue andas a result, the use of, and thus demand for, artificial lift techniques required in such production represents anadditional growth area. Our fleet of modern, flexible compression units is capable of being rapidly deployed andredeployed and designed to operate in multiple compression stages, which will enable us to capitalize on theseopportunities both in emerging shale plays and conventional fields. ·Continue to execute on attractive organic growth opportunities. Between 2004 and 2014, we grew the horsepowerin our fleet of compression units and our compression revenues at a compound annual growth rate of 25%, primarilythrough organic growth. We believe organic growth opportunities will continue to be our most attractive source ofnear-term growth. We seek to achieve continued organic growth by (i) increasing our business with existingcustomers, (ii) obtaining new customers in our existing areas of operations and (iii) expanding our operations intonew geographic areas, each of which contributed to our fleet growth in 2014. ·Partner with customers who have significant compression needs. We actively seek to identify customers withmeaningful acreage positions or significant infrastructure development in active and growing areas. We work withthese customers to jointly develop long-term and adaptable solutions designed to optimize their lifecyclecompression costs. We believe this is important in determining the overall economics of producing, gathering andtransporting natural gas and crude oil. Our proactive and collaborative approach positions us to serve as ourcustomers’ compression service provider of choice. ·Pursue accretive acquisition opportunities. While our principal growth strategy is to continue to grow organically,we may pursue accretive acquisition opportunities, including the acquisition of complementary businesses,participation in joint ventures or the purchase of compression units from existing or new customers in conjunctionwith providing compression services to them. We consider opportunities that (i) are in our existing geographic areasof operations or new, high-growth regions, (ii) meet internally established economic thresholds and (iii) may befinanced on reasonable terms. ·Maintain financial flexibility. We intend to maintain financial flexibility to be able to take advantage of growthopportunities. Historically, we have utilized our cash flow from operations, borrowings under our revolving creditfacility and operating leases to fund capital expenditures to expand our compression services business. Thisapproach has allowed us to significantly grow our fleet and the amount of cash we generate, while maintaining ourdebt at levels we believe are manageable for our business. We believe the appropriate3 Table of Contentsmanagement of our financial position and the resulting access to capital positions us to take advantage of futuregrowth opportunities as they arise. Our Operations Compression Services We provide compression services for a monthly service fee. As part of our services, we engineer, design, operate, serviceand repair our fleet of compression units and maintain related support inventory and equipment. We have consistentlyprovided average service run times above the levels required by our customers. In general, our team of field servicetechnicians service only our compression fleet. In limited circumstances for established customers, we will agree to servicethird-party owned equipment. We seek to enter into service contracts with each of our customers. On August 30, 2013, wecompleted the acquisition of assets and certain liabilities related to S&R Compression, LLC’s (“S&R”) business of providinggas lift compression services to third parties engaged in the exploration, production, gathering, processing, transportation ordistribution of oil and gas in exchange for 7,425,261 common units, which were valued at $181.9 million at the time ofissuance (the “S&R Acquisition”). In connection with the S&R Acquisition, we acquired contracts styled as rentals related tothe active compressors in the acquired fleet. We have converted all but a small minority of these agreements into servicecontracts. We do not own any compression fabrication facilities. Our Compression Fleet The fleet of compression units that we own and use to provide compression services consists of specially engineeredcompression units that utilize standardized components, principally engines manufactured by Caterpillar, Inc. and compressorframes and cylinders manufactured by Ariel Corporation. Our units can be rapidly and cost effectively modified for specificcustomer applications. Approximately 97% of our fleet horsepower as of December 31, 2014 was purchased new and theaverage age of our compression units was approximately four years. Our modern, standardized compressor fleet primarilyconsists of the Caterpillar 3400, 3500 and 3600 engine classes, which range from 401 to 4,735 horsepower per unit. Theselarger horsepower units, defined as 400 horsepower per unit or greater, represented 78.3% of our total fleet horsepower(including compression units on order) as of December 31, 2014. In addition, a portion of our fleet consists of smallerhorsepower units ranging from 30 horsepower to 390 horsepower that are primarily used in gas lift applications. We believethe young age and overall composition of our compressor fleet results in fewer mechanical failures, lower fuel usage (a directcost savings for our customers), and reduced environmental emissions. The following table provides a summary of our compression units by horsepower as of December 31, 2014 (includingadditional new compression unit horsepower on order for delivery primarily in the first three quarters of 2015): Unit Horsepower FleetHorsepowerNumberofUnits Horsepoweron Order (1)Number ofUnitson Order TotalHorsepowerNumberofUnits Percentage ofTotalHorsepower Percentage ofTotalUnits Small horsepower <400 363,5922,192 23,984128 387,5762,320 21.7 %68.5 %Large horsepower >400 <1,000 146,704228 - - 146,704228 8.2 %6.7 %>1,000 1,038,724714 214,460123 1,253,184837 70.1 %24.7 %Total 1,549,0203,134 238,444251 1,787,4643,385 100.0 %100.0 % (1)As of December 31, 2014, we had on order 238,444 horsepower, of which 189,684 horsepower is expected to be deliveredbetween January 2015 and June 2015, and 48,760 horsepower is expected to be delivered between July 2015 andSeptember 2015. 4 Table of ContentsThe following table sets forth certain information regarding our compression fleet as of the dates and for the periodsindicated: Year EndedPercent December 31,ChangeOperating Data (unaudited): 2014 2013 2012 2014 2013 Fleet horsepower(1) 1,549,020 1,202,374 919,121 28.8 % 30.8 % Total available horsepower(2) 1,623,400 1,278,829 935,681 26.9 % 36.7 % Revenue generating horsepower(3) 1,351,052 1,070,457 794,324 26.2 % 34.8 % Average revenue generating horsepower(4) 1,200,851 902,168 749,821 33.1 % 20.3 % Revenue generating compression units 2,651 2,137 978 24.1 % 118.5 % Average horsepower per revenue generating compressionunit(5) 505 720 791 (29.9)%(9.0)% Horsepower utilization(6): At period end 93.6 % 94.1 % 92.8 % (0.5)% 1.4 % Average for the period(7) 94.0 % 93.8 % 94.5 % 0.2 % (0.7)% (1)Fleet horsepower is horsepower for compression units that have been delivered to us (and excludes units on order). As ofDecember 31, 2014, we had approximately 230,000 horsepower on order with expected delivery primarily in the firstthree quarters of 2015. (2)Total available horsepower is revenue generating horsepower under contract for which we are billing a customer,horsepower in our fleet that is under contract but is not yet generating revenue, horsepower not yet in our fleet that isunder contract but not yet generating revenue and that is subject to a purchase order and idle horsepower. Total availablehorsepower excludes new horsepower on order for which we do not have a compression services contract. (3)Revenue generating horsepower is horsepower under contract for which we are billing a customer. (4)Calculated as the average of the month-end revenue generating horsepower for each of the months in the period. (5)Calculated as the average of the month-end horsepower per revenue generating compression unit for each of the monthsin the period. (6)Horsepower utilization is calculated as (i)(a) revenue generating horsepower plus (b) horsepower in our fleet that is undercontract, but is not yet generating revenue plus (c) horsepower not yet in our fleet that is under contract not yetgenerating revenue and that is subject to a purchase order, divided by (ii) total available horsepower less idle horsepowerthat is under repair. Horsepower utilization based on revenue generating horsepower and fleet horsepower at eachapplicable period end was 87.2%, 89.0%, and 86.4% for the years ended December 31, 2014, 2013 and 2012,respectively. (7)Calculated as the average utilization for the months in the period based on utilization at the end of each month in theperiod. Average horsepower utilization based on revenue generating horsepower was 87.3%, 87.3% and 88.9% for eachyear ended December 31, 2014, 2013, and 2012, respectively. A growing number of our compression units contained electronic control systems that enable us to monitor the unitsremotely by satellite or other means to supplement our technicians’ on-site monitoring visits. We intend to continue toselectively add remote monitoring systems to our fleet during 2015. All of our compression units are designed toautomatically shut down if operating conditions deviate from a pre-determined range. While we retain the care, custody,ongoing maintenance and control of our compression units, we allow our customers, subject to a defined protocol, to start,stop, accelerate and slow down compression units in response to field conditions. We adhere to routine, preventive and scheduled maintenance cycles. Each of our compression units is subjected torigorous sizing and diagnostic analyses, including lubricating oil analysis and engine exhaust emission analysis. We have5 Table of Contentsproprietary field service automation capabilities that allow our service technicians to electronically record and trackoperating, technical, environmental and commercial information at the discrete unit level. These capabilities allow our fieldtechnicians to identify potential problems and act on them before such problems result in down-time. Generally, we expect each of our compression units to undergo a major overhaul between service deployment cycles. Thetiming of these major overhauls depends on multiple factors, including run time and operating conditions. A major overhaulinvolves the periodic rebuilding of the unit to materially extend its economic useful life or to enhance the unit’s ability tofulfill broader or more diversified compression applications. Because our compression fleet is comprised of units of varyinghorsepower that have been placed into service with staggered initial on-line dates, we are able to schedule overhauls in a wayto avoid excessive annual maintenance capital expenditures and minimize the revenue impact of down-time. We believe that our customers, by outsourcing their compression requirements, can achieve higher compression runtimes,which translates into increased volumes of either natural gas or crude oil production and therefore increased revenues. Utilizing our compression services also allows our customers to reduce their operating, maintenance and equipment costs byallowing us to efficiently manage their changing compression needs. In many of our service contracts, we guarantee ourcustomers availability (as described below) ranging from 95% to 98%, depending on field level requirements. General Compression Service Contract Terms The following discussion describes the material terms generally common to our compression service contracts. Wegenerally have separate contracts for each distinct location for which we will provide compression services. Term and termination. Our contracts typically have an initial term between six months and five years, depending on theapplication and location of the compression unit. After the expiration of the applicable term, the contract continues on amonth-to-month or longer basis until terminated by us or our customers upon notice as provided for in the applicable contract. Availability. Our contracts often provide a guarantee of specified availability. We define availability as the percentage oftime in a given period that our compression services are being provided or are capable of being provided. Availability isreduced by instances of “down-time” that are attributable to anything other than events of force majeure or acts or failures toact by the customer. Down-time under our contracts usually begins when our services stop being provided or when we receivenotice from the customer of the problem. Down-time due to scheduled maintenance is also excluded from our availabilitycommitment. Our failure to meet a stated availability guarantee may result in a service fee credit to the customer. As aconsequence of our availability guarantee, we are incentivized to perform predictive and preventive maintenance on our fleetas well as promptly respond to a problem to meet our contractual commitments and ensure our customers the compressionavailability on which their business and our service relationship are based. For service contracts that do not have a statedavailability guarantee, we work with those customers to ensure that our compression services meet their operational needs. Fees and expenses. Our customers pay a fixed monthly fee for our services. Compression services generally are billedmonthly in advance of the service period, except for certain customers, which are billed at the beginning of the service month,and they are generally due 30 days from the date of the invoice. We are not responsible for acts of force majeure, and ourcustomers generally are required to pay our monthly fee even during periods of limited or disrupted throughput. We aregenerally responsible for the costs and expenses associated with operation and maintenance of our compression equipment,such as providing necessary lubricants, although certain fees and expenses are the responsibility of our customers under theterms of their contracts. For example, all fuel gas is provided by our customers without cost to us, and in many cases customersare required to provide all water and electricity. At the customer’s option, we can provide fluids necessary to run the unit tothe customer for an additional fee. We provide such fluids for a substantial majority of the compression units deployed in gaslift applications. We are also reimbursed by our customers for certain ancillary expenses such as trucking and crane operation,depending on the terms agreed to in the applicable contract, resulting in no gross operating margin. 6 Table of ContentsService standards and specifications. We commit to provide compression services under service contracts that typicallyprovide that we will supply all compression equipment, tools, parts, field service support and engineering. Our contracts donot specify the specific compression equipment we will use; instead, in consultation with the customer, we determine whatequipment is necessary to perform our contractual commitments. Title; Risk of loss. We own all of the compression equipment in our fleet that we use to provide compression services, andwe normally bear the risk of loss or damage to our equipment and tools and injury or death to our personnel. Insurance. Our contracts typically provide that both we and our customers are required to carry general liability, workers’compensation, employers’ liability, automobile and excess liability insurance. Marketing and Sales Our marketing and client service functions are performed on a coordinated basis by our sales and field technicians.Salespeople and field technicians qualify, analyze and scope new compression applications as well as regularly visit ourcustomers to ensure customer satisfaction, to determine a customer’s needs related to existing services being provided and todetermine the customer’s future compression service requirements. This ongoing communication allows us to quickly identifyand respond to our customers’ compression requirements. We currently focus on geographic areas where we can achieveeconomies of scale through high density operations. Customers Our customers consist of more than 250 companies in the energy industry, including major integrated oil companies,public and private independent exploration and production companies and midstream companies. Our largest customer for theyears ended December 31, 2014 and 2013 was Southwestern Energy Corporation and its subsidiaries (“SouthwesternEnergy”). Southwestern Energy accounted for 11.6% of our revenue for the year ended December 31, 2014 and 14.3% of ourrevenue for the year ended December 31, 2013. Our ten largest customers, including Southwestern Energy, accounted for 46%and 49% of our revenue for the years ended December 31, 2014 and 2013, respectively. Suppliers and Service Providers The principal manufacturers of components for our natural gas compression equipment include Caterpillar, Inc., CumminsInc., and Arrow Engine Company for engines, Air-X-Changers and Air Cooled Exchangers for coolers, and Ariel Corporation,GE Oil & Gas Gemini products and Arrow Engine Company for compressor frames and cylinders. We also rely primarily onfour vendors, A G Equipment Company, Alegacy Equipment, LLC, Standard Equipment Corp. and S&R, to package andassemble our compression units. Although we rely primarily on these suppliers, we believe alternative sources for natural gascompression equipment are generally available if needed. However, relying on alternative sources may increase our costs andchange the standardized nature of our fleet. We have not experienced any material supply problems to date, although lead-times for new Caterpillar engines and new Ariel compressor frames have in the past been in excess of one year due to increaseddemand and supply allocations imposed on equipment packagers and end-users. Please read Part I, Item 1A (“Risk Factors —Risks Related to Our Business — We depend on a limited number of suppliers and are vulnerable to product shortages andprice increases, which could have a negative impact on our results of operations”). Competition The compression services business is highly competitive. Some of our competitors have a broader geographic scope, aswell as greater financial and other resources than we do. On a regional basis, we experience competition from numeroussmaller companies that may be able to more quickly adapt to changes within our industry and changes in economicconditions as a whole, more readily take advantage of available opportunities and adopt more aggressive pricing policies.Additionally, the historical availability of attractive financing terms from financial institutions and equipment manufacturershas made the purchase of individual compression units increasingly affordable to our7 Table of Contentscustomers. We believe that we compete effectively on the basis of price, equipment availability, customer service, flexibilityin meeting customer needs, quality and reliability of our compressors and related services. Please read Part I, Item 1A (“RiskFactors — Risks Related to Our Business — We face significant competition that may cause us to lose market share andreduce our cash available for distribution”). Seasonality Our results of operations have not historically reflected any material seasonality, and we do not currently have reason tobelieve seasonal fluctuations will have a material impact in the foreseeable future. Insurance We believe that our insurance coverage is customary for the industry and adequate for our business. As is customary in theenergy services industry, we review our safety equipment and procedures and carry insurance against most, but not all, risks ofour business. Losses and liabilities not covered by insurance would increase our costs. The compression business can behazardous, involving unforeseen circumstances such as uncontrollable flows of gas or well fluids, fires and explosions orenvironmental damage. To address the hazards inherent in our business, we maintain insurance coverage that, subject tosignificant deductibles, includes physical damage coverage, third party general liability insurance, employer’s liability,environmental and pollution and other coverage, although coverage for environmental and pollution related losses is subjectto significant limitations. Under the terms of our standard compression services contract, we are responsible for themaintenance of insurance coverage on our compression equipment. Please read Part I, Item 1A (“Risk Factors — Risks Relatedto Our Business — We do not insure against all potential losses and could be seriously harmed by unexpected liabilities”). Environmental and Safety Regulations We are subject to stringent and complex federal, state and local laws and regulations governing the discharge of materialsinto the environment or otherwise relating to protection of human health, safety and the environment. These regulationsinclude compliance obligations for air emissions, water quality, wastewater discharges and solid and hazardous wastedisposal, as well as regulations designed for the protection of human health and safety and threatened or endangered species.Compliance with these environmental laws and regulations may expose us to significant costs and liabilities and cause us toincur significant capital expenditures in our operations. We are often obligated to assist customers in obtaining permits orapprovals in our operations from various federal, state and local authorities. Permits and approvals can be denied or delayed,which may cause us to lose potential and current customers, interrupt our operations and limit our growth and revenue.Moreover, failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminalpenalties, imposition of remedial obligations and the issuance of injunctions delaying or prohibiting operations. Privateparties may also have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliancewith environmental laws and regulations or for personal injury or property damage. While we believe that our operations arein substantial compliance with applicable environmental laws and regulations and that continued compliance with currentrequirements would not have a material adverse effect on us, there is no assurance that this trend of compliance will continuein the future. In addition, the clear trend in environmental regulation is to place more restrictions on activities that mayadversely affect the environment. Thus, any changes in, or more stringent enforcement of, these laws and regulations thatresult in more stringent and costly pollution control equipment, waste handling, storage, transport, disposal or remediationrequirements could have a material adverse effect on our operations and financial position. We do not believe that compliance with federal, state or local environmental laws and regulations will have a materialadverse effect on our business, financial position or results of operations or cash flows. We cannot assure you, however, thatfuture events such as changes in existing laws or enforcement policies, the promulgation of new laws or regulations, or thedevelopment or discovery of new facts or conditions or unforeseen incidents will not cause us to incur significant costs. Thefollowing is a discussion of material environmental and safety laws that relate to our operations. We believe that we are insubstantial compliance with all of these environmental laws and regulations. Please read Part I, Item 1A (“Risk Factors —Risks Related to Our Business — We are subject to substantial environmental regulation, and changes in these regulationscould increase our costs or liabilities”).8 Table of Contents Air emissions. The Clean Air Act (“CAA”) and comparable state laws regulate emissions of air pollutants from variousindustrial sources, including natural gas compressors, and impose certain monitoring and reporting requirements. Suchemissions are regulated by air emissions permits, which are applied for and obtained through the various state or federalregulatory agencies. Our standard natural gas compression contract provides that the customer is responsible for obtaining airemissions permits and assuming the environmental risks related to site operations. Increased obligations of operators to reduceair emissions of nitrogen oxides and other pollutants from internal combustion engines in transmission service have beenenacted by governmental authorities. For example, in 2010, the U.S. Environmental Protection Agency (“EPA”) publishednew regulations under the CAA to control emissions of hazardous air pollutants from existing stationary reciprocal internalcombustion engines, also known as Quad Z regulations. In 2012, the EPA proposed amendments to the final rule in responseto several petitions for reconsideration, which were finalized and became effective in 2013. The rule requires us to undertakecertain expenditures and activities, including purchasing and installing emissions control equipment on certain compressorengines and generators. In 2012, the EPA proposed minor amendments to the CAA regulations applicable to the manufacturers, owners andoperators of new, modified and reconstructed stationary reciprocating internal combustion engines, also known as Quad Jregulations, in order to conform the final rule to the amendments to the Quad Z regulations discussed above. Theseamendments were finalized and became effective in 2013. These modifications do not impose material unbudgeted costs onoperations. On November 25, 2014, the EPA issued a proposed rule to strengthen the National Ambient Air Quality Standard(“NAAQs”) for ground level ozone. The proposed rule updates both the primary ozone standard and the secondary standard.Both proposed standards are 8-hour standards set within a range of 65 to 70 parts per billion (ppb). The EPA is also seekingcomments on levels for the health standard as low as 60 ppb. The EPA will take comments on this proposed regulation for 90days after its publication in the federal register and has stated it will issue a final decision by October 1, 2015. In addition, in2013, the EPA promulgated a final rule revising the annual standard for fine particulate matter, or PM 2.5, by lowering thelevel from 15 to 12 micrograms per cubic meter. On December 18, 2014, the EPA issued final area designations for the 2012NAAQs for PM 2.5. Designation of new non-attainment areas for the revised ozone or PM 2.5 NAAQS may result in additionalfederal and state regulatory actions that may impact our customers’ operations and increase the cost of additions to property,plant and equipment. In 2012, the EPA finalized rules that establish new air emission controls for oil and natural gas production and natural gasprocessing operations. Specifically, the EPA’s rule package included New Source Performance Standards to address emissionsof sulfur dioxide and volatile organic compounds (“VOCs”) and a separate set of emission standards to address hazardous airpollutants frequently associated with oil and natural gas production and processing activities. The rules establish specific newrequirements regarding emissions from compressors and controllers at natural gas processing plants, dehydrators, storage tanksand other production equipment as well as the first federal air standards for natural gas wells that are hydraulically fractured. Inaddition, the rules establish leak detection requirements for natural gas processing plants at 500 ppm. In 2013, the EPA issueda final update to the VOC performance standards for storage tanks used in crude oil and natural gas production andtransmission. On December 19, 2014, the EPA published final amendments to the July 2014 proposal. These rules may requirea number of modifications to our operations, including the installation of new equipment to control emissions from ourcompressors at initial startup. Compliance with such rules may result in significant costs, including increased capitalexpenditures and operating costs, and could adversely impact our business. In addition, the Texas Commission on Environmental Quality (“TCEQ”) has finalized revisions to certain air permitprograms that significantly increase the air permitting requirements for new and certain existing oil and gas production andgathering sites for 15 counties in the Barnett Shale production area. The final rule establishes new emissions standards forengines, which could impact the operation of specific categories of engines by requiring the use of alternative engines,compressor packages or the installation of aftermarket emissions control equipment. The rule became effective for the BarnettShale production area in April 2011, with the lower emissions standards becoming applicable between 2015 and 2030depending on the type of engine and the permitting requirements. The cost to comply with the revised air permit programs isnot expected to be material at this time. However, the TCEQ has stated it will9 Table of Contentsconsider expanding application of the new air permit program statewide. At this point, we cannot predict the cost to complywith such requirements if the geographic scope is expanded. There can be no assurance that future requirements compelling the installation of more sophisticated emission controlequipment would not have a material adverse impact on our business, financial condition, results of operations and cashavailable for distribution. Climate change. Methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of naturalgas, are examples of greenhouse gases. In recent years, the U.S. Congress has considered legislation to reduce emissions ofgreenhouse gases. It presently appears unlikely that comprehensive climate legislation will be passed by either house ofCongress in the near future, although energy legislation and other initiatives are expected to be proposed that may be relevantto greenhouse gas emissions issues. However, almost half of the states have begun to address greenhouse gas emissions,primarily through the planned development of emission inventories or regional greenhouse gas cap and trade programs.Depending on the particular program, we could be required to control greenhouse gas emissions or to purchase and surrenderallowances for greenhouse gas emissions resulting from our operations. Independent of Congress, the EPA is beginning to adopt regulations controlling greenhouse gas emissions under itsexisting CAA authority. For example, on December 15, 2009, the EPA officially published its findings that emissions ofcarbon dioxide, methane and other greenhouse gases endanger human health and the environment because emissions of suchgases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes. These findingsby the EPA allowed the agency to proceed with the adoption and implementation of regulations that restrict emissions ofgreenhouse gases under existing provisions of the CAA. In 2009, the EPA adopted rules regarding regulation of greenhouseemissions from motor vehicles. In addition, on September 22, 2009, the EPA issued a final rule requiring the reporting ofgreenhouse gas emissions in the United States beginning in 2011 for emissions occurring in 2010 from specified largegreenhouse gas emission sources. On November 30, 2010, the EPA published a final rule expanding its existing greenhousegas emissions reporting rule for petroleum and natural gas facilities, including natural gas transmission compression facilitiesthat emit 25,000 metric tons or more of carbon dioxide equivalent per year. The rule, which went into effect on December 30,2010, requires reporting of greenhouse gas emissions by such regulated facilities to the EPA by September 2012 for emissionsduring 2011 and annually thereafter. In 2010, the EPA also issued a final rule, known as the “Tailoring Rule,” that madecertain large stationary sources and modification projects subject to permitting requirements for greenhouse gas emissionsunder the CAA. Both the Tailoring Rule and the EPA’s endangerment finding were challenged in federal court and were upheld by theD.C. Court of Appeals. In July 2014, the United States Supreme Court invalidated the Tailoring Rule but it refused toconsider other issues such as whether greenhouse gases endanger public health. As a result, under federal law, a source is nolonger required to meet the PSD and Title V permitting requirements based solely on its greenhouse gas emissions. Finally, on January 8, 2014, the EPA published standards of performance for greenhouse gas emissions from new powerplants. The proposal sets forth a performance standard for integrated gasification combined cycled units and utility boilersbased on the use of partial carbon capture and sequestration technology. The proposal also sets limits for stationary naturalgas combustion turbines based on the use of natural gas combined cycle technology. Comments on this proposed rule weredue March 10, 2014. In addition, on June 2, 2014, the EPA proposed the Clean Power Plan rule, which is intended to reducecarbon emissions from existing power plants. The rule was published in the Federal Register on June 18, 2014. Comments onthe plan were due on December 1, 2014 and the EPA is expected to issue a final rule regarding carbon emissions from newpower plants sometime in mid-summer 2015. In June 2014, an Ohio-based coal company filed a petition for an extraordinarywrit in the United States Court of Appeals in Washington, D.C. challenging the EPA’s authority to regulate carbon dioxideemissions from existing coal-fired power plants under Section 111(d) of the Clean Air Act. Briefing in this case is currentlyongoing. Although it is not currently possible to predict with specificity how any proposed or future greenhouse gas legislation orregulation will impact our business, any legislation or regulation of greenhouse gas emissions that may be imposed in areas inwhich we conduct business could result in increased compliance costs or additional operating10 Table of Contentsrestrictions or reduced demand for our services, and could have a material adverse effect on our business, financial conditionand results of operations. Water discharge. The Clean Water Act (“CWA”) and analogous state laws impose restrictions and strict controls withrespect to the discharge of pollutants, including spills and leaks of oil and other substances, into waters of the United States.The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by theEPA or an analogous state agency. The CWA and regulations implemented thereunder also prohibit the discharge of dredgeand fill material into regulated waters, including jurisdictional wetlands, unless authorized by an appropriately issued permit.The CWA also requires the development and implementation of spill prevention, control and countermeasures, including theconstruction and maintenance of containment berms and similar structures, if required, to help prevent the contamination ofnavigable waters in the event of a petroleum hydrocarbon tank spill, rupture or leak at such facilities. In addition, the CWAand analogous state laws require individual permits or coverage under general permits for discharges of storm water runofffrom certain types of facilities. Federal and state regulatory agencies can impose administrative, civil and criminal penalties aswell as other enforcement mechanisms for non-compliance with discharge permits or other requirements of the CWA andanalogous state laws and regulations. Our compression operations do not generate process wastewaters that are discharged towaters of the U.S. In any event, our customers assume responsibility under the majority of our standard natural gascompression contracts for obtaining any discharge permits that may be required under the CWA. Safe Drinking Water Act. A significant portion of our customers’ natural gas production is developed fromunconventional sources that require hydraulic fracturing as part of the completion process. Hydraulic fracturing involves theinjection of water, sand and chemicals under pressure into the formation to stimulate gas production. Legislation to amend theSafe Drinking Water Act (“SDWA”) to repeal the exemption for hydraulic fracturing from the definition of “undergroundinjection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals torequire disclosure of the chemical constituents of the fluids used in the fracturing process, have been proposed and the U.S.Congress continues to consider legislation to amend the Safe Drinking Water Act. Scrutiny of hydraulic fracturing activitiescontinues in other ways, with the EPA having commenced a multi-year study of the potential environmental impacts ofhydraulic fracturing, the results of which were originally anticipated to be available in 2014, but are now expected in March2015. The EPA also has announced that it believes hydraulic fracturing using fluids containing diesel fuel can be regulatedunder the SDWA notwithstanding the SDWA’s general exemption for hydraulic fracturing. Several states have also proposedor adopted legislative or regulatory restrictions on hydraulic fracturing, including prohibitions on the practice. We cannotpredict the future of such legislation and what additional, if any, provisions would be included. If additional levels ofregulation, restrictions and permits were required through the adoption of new laws and regulations at the federal or statelevel, that could lead to delays, increased operating costs and process prohibitions that could reduce demand for ourcompression services, which would materially adversely affect our revenue and results of operations. Solid waste. The Resource Conservation and Recovery Act (“RCRA”) and comparable state laws control the managementand disposal of hazardous and non-hazardous waste. These laws and regulations govern the generation, storage, treatment,transfer and disposal of wastes that we generate including, but not limited to, used oil, antifreeze, filters, sludges, paint,solvents and sandblast materials. The EPA and various state agencies have limited the approved methods of disposal for thesetypes of wastes. Site remediation. The Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) andcomparable state laws impose strict, joint and several liability without regard to fault or the legality of the original conduct oncertain classes of persons that contributed to the release of a hazardous substance into the environment. These persons includethe owner and operator of a disposal site where a hazardous substance release occurred and any company that transported,disposed of or arranged for the transport or disposal of hazardous substances released at the site. Under CERCLA, such personsmay be liable for the costs of remediating the hazardous substances that have been released into the environment, for damagesto natural resources, and for the costs of certain health studies. In addition, where contamination may be present, it is notuncommon for the neighboring landowners and other third parties to file claims for personal injury, property damage andrecovery of response costs. While we generate materials in the course of our operations that may be regulated as hazardoussubstances, we have not received notification that we may be potentially responsible for cleanup costs under CERCLA at anysite.11 Table of Contents While we do not currently own or lease any material facilities or properties for storage or maintenance of our inactivecompression units, we may use third party properties for such storage and possible maintenance and repair activities. Inaddition, our active compression units typically are installed on properties owned or leased by third party customers andoperated by us pursuant to terms set forth in the natural gas compression services contracts executed by those customers.Under most of our natural gas compression services contracts, our customers must contractually indemnify us for certaindamages we may suffer as a result of the release into the environment of hazardous and toxic substances. We are not currentlyresponsible for any remedial activities at any properties used by us; however, there is always the possibility that our future useof those properties may result in spills or releases of petroleum hydrocarbons, wastes or other regulated substances into theenvironment that may cause us to become subject to remediation costs and liabilities under CERCLA, RCRA or otherenvironmental laws. We cannot provide any assurance that the costs and liabilities associated with the future imposition ofsuch remedial obligations upon us would not have a material adverse effect on our operations or financial position. Safety and health. The Occupational Safety and Health Act (“OSHA”) and comparable state laws strictly govern theprotection of the health and safety of employees. The OSHA hazard communication standard, the EPA community right-to-know regulations under the Title III of CERCLA and similar state statutes require that we organize and, as necessary, discloseinformation about hazardous materials used or produced in our operations to various federal, state and local agencies, as wellas employees. Employees USAC Management, a wholly owned subsidiary of our general partner, performs certain management and otheradministrative services for us, such as accounting, corporate development, finance and legal. All of our employees, includingour executive officers, are employees of USAC Management. As of December 31, 2014, USAC Management had 457 full timeemployees. None of our employees are subject to collective bargaining agreements. We consider our employee relations to begood. Available Information Our internet website address is www.usacpartners.com. We make available, free of charge at the “Investor Relations”portion of our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K andall amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,as amended (the “Exchange Act”), as soon as reasonably practicable after such reports are electronically filed with, orfurnished to, the SEC. The information contained on our website does not constitute part of this report. The SEC maintains an internet website that contains these reports at www.sec.gov. Any materials we file with the SECalso may be read or copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Informationconcerning the operation of the Public Reference Room may be obtained by calling the SEC at (800) 732-0330.12 Table of Contents ITEM 1A.Risk Factors As described in Part I (“Disclosure Regarding Forward-Looking Statements”), this report contains forward-lookingstatements regarding us, our business and our industry. The risk factors described below, among others, could cause ouractual results to differ materially from the expectations reflected in the forward-looking statements. If any of the followingrisks were to occur, our business, financial condition or results of operations could be materially and adversely affected. Inthat case, we might not be able to pay our minimum quarterly distribution on our common units or grow such distributionsand the trading price of our common units could decline. Risks Related to Our Business We may not have sufficient cash from operations following the establishment of cash reserves and payment of fees andexpenses, including cost reimbursements to our general partner, to enable us make cash distributions at our currentdistribution rate to holders of our common units and subordinated units. In order to make cash distributions at our current distribution rate of $0.51 per unit per quarter, or $2.04 per unit per year,we will require available cash of $23.5 million per quarter, or $94.1 million per year, based on the number of common units,subordinated units and the 1.7% general partner interest outstanding as of February 17, 2015. Under our cash distributionpolicy, the amount of cash we can distribute to our unitholders principally depends upon the amount of cash we generate fromour operations, which will fluctuate from quarter to quarter based on, among other things: ·the level of production of, demand for, and price of natural gas and crude oil, particularly the level of production inthe locations where we provide compression services; ·the fees we charge, and the margins we realize, from our compression services; ·the cost of achieving organic growth in current and new markets; ·the level of competition from other companies; and ·prevailing global and regional economic and regulatory conditions, and their impact on us and our customers. In addition, the actual amount of cash we will have available for distribution will depend on other factors, including: ·the levels of our maintenance capital expenditures and expansion capital expenditures; ·the level of our operating costs and expenses; ·our debt service requirements and other liabilities; ·fluctuations in our working capital needs; ·restrictions contained in our revolving credit facility; ·the cost of acquisitions; ·fluctuations in interest rates; ·our ability to borrow funds and access the capital markets; and ·the amount of cash reserves established by our general partner. 13 Table of ContentsA long-term reduction in the demand for, or production of, natural gas or crude oil in the locations where we operate couldadversely affect the demand for our services or the prices we charge for our services, which could result in a decrease in ourrevenues and cash available for distribution. The demand for our compression services depends upon the continued demand for, and production of, natural gas andcrude oil. Demand may be affected by, among other factors, natural gas prices, crude oil prices, weather, availability ofalternative energy sources, governmental regulation and general demand for energy. Any prolonged, substantial reduction inthe demand for natural gas or crude oil would likely depress the level of production activity and result in a decline in thedemand for our compression services, which could result in a reduction in our revenues and our cash available for distribution.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. Additionally, an increasing percentage of natural gasand crude oil production comes from unconventional sources, such as shales, tight sands and coalbeds. Such sources can beless economically feasible to produce in low commodity price environments, in part due to costs related to compressionrequirements, and a reduction in demand for natural gas or gas lift for crude oil may cause such sources of natural gas or crudeoil to be uneconomic to drill and produce, which could in turn negatively impact the demand for our services. In addition,governmental regulation and tax policy may impact the demand for natural gas or crude oil or impact the economic feasibilityof development of new fields or production of existing fields, which are important components of our ability to expand. We have several key customers. The loss of any of these customers would result in a decrease in our revenues and cashavailable for distribution. We provide compression services under contracts with several key customers. The loss of one of these key customers mayhave a greater effect on our financial results than for a company with a more diverse customer base. Our largest customer forthe years ended December 31, 2014 and 2013 was Southwestern Energy. Southwestern Energy accounted for 11.6% and14.3% of our revenue for the years ended December 31, 2014 and 2013, respectively. Our ten largest customers, includingSouthwestern Energy, accounted for 46% and 49% of our revenue for the years ended December 31, 2014 and 2013,respectively. The loss of all or even a portion of the compression services we provide to our key customers, as a result ofcompetition or otherwise, could have a material adverse effect on our business, results of operations, financial condition andcash available for distribution. The erosion of the financial condition of our customers could adversely affect our business. During times when the natural gas or oil markets weaken, our customers are more likely to experience financialdifficulties, 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 by using lower cost providers, notrenewing month-to-month contracts or determining not to enter into any new compression service contracts. The recentvolatility in commodity prices has caused many of our customers to reconsider near-term capital budgets, which may impactlarge-scale natural gas infrastructure and crude oil production activities. We expect the drop in commodity prices will cause a delay or cancellation of some customers’ projects. Reduced demand for our services could adversely affect our business,results of operations, financial condition and cash flows. In addition, in the event of the financial failure of a customer, wecould experience a loss of all or a portion of our outstanding accounts receivable associated with that customer. We face significant competition that may cause us to lose market share and reduce our cash available for distribution. The compression business is highly competitive. Some of our competitors have a broader geographic scope, as well asgreater financial and other resources than we do. Our ability to renew or replace existing contracts with our customers at ratessufficient to maintain current revenue and cash flows could be adversely affected by the activities of our competitors and ourcustomers. If our competitors substantially increase the resources they devote to the development and marketing ofcompetitive services or substantially decrease the prices at which they offer their services, we may be unable to competeeffectively. Some of these competitors may expand or construct newer, more powerful or more flexible compression fleets thatwould create additional competition for us. All of these competitive pressures could have14 Table of Contentsa material adverse effect on our business, results of operations, financial condition and reduce our cash available fordistribution. Our customers may choose to vertically integrate their operations by purchasing and operating their own compression fleet,expanding the amount of compression units they currently own or using alternative technologies for enhancing crude oilproduction. Our customers that are significant producers, processors, gatherers and transporters of natural gas and crude oil maychoose to vertically integrate their operations by purchasing and operating their own compression fleets in lieu of using ourcompression services. The historical availability of attractive financing terms from financial institutions and equipmentmanufacturers facilitates this possibility by making the purchase of individual compression units increasingly affordable toour customers. In addition, there are many technologies available for the artificial enhancement of crude oil production, andour customers may elect to use these alternative technologies instead of the gas lift compression services we provide. Suchvertical integration, increases in vertical integration or use of alternative technologies could result in decreased demand forour compression services, which may have a material adverse effect on our business, results of operations, financial conditionand reduce our cash available for distribution. A significant portion of our services are provided to customers on a month-to-month basis, and we cannot be sure that suchcustomers will continue to utilize our services. Our contracts typically have an initial term between six months and five years, depending on the application and locationof the compression unit. After the expiration of the applicable term, the contract continues on a month-to-month or longerbasis until terminated by us or our customers upon notice as provided for in the applicable contract. As of December 31, 2014,approximately 36% of our compression services on a horsepower basis (and 40% on a revenue basis for the year endedDecember 31, 2014) were provided on a month-to-month basis to customers who continue to utilize our services followingexpiration of the primary term of their contracts with us. These customers can generally terminate their month-to-monthcompression services contracts on 30-days’ written notice. If a significant number of these customers were to terminate theirmonth-to-month services, or attempt to renegotiate their month-to-month contracts at substantially lower rates, it could have amaterial adverse effect on our business, results of operations, financial condition and cash available for distribution. We may be unable to grow our cash flows if we are unable to expand our business, which could limit our ability to maintainor increase distributions to our unitholders. A principal focus of our strategy is to continue to grow the per unit distribution on our common units by expanding ourbusiness. Our future growth will depend upon a number of factors, some of which we cannot control. These factors include ourability to: ·develop new business and enter into service contracts with new customers; ·retain our existing customers and maintain or expand the services we provide them; ·recruit and train qualified personnel and retain valued employees; ·expand our geographic presence; ·effectively manage our costs and expenses, including costs and expenses related to growth; ·consummate accretive acquisitions; ·obtain required debt or equity financing for our existing and new operations; and ·meet customer specific contract requirements or pre-qualifications. 15 Table of ContentsIf we do not achieve our expected growth, we may not be able to maintain or increase distributions to our unitholders, inwhich event the market price of our common units will likely decline materially. We may be unable to grow successfully through acquisitions, and we may not be able to integrate effectively the businesseswe may acquire, which may impact our operations and limit our ability to increase distributions to our unitholders. From time to time, we may choose to make business acquisitions to pursue market opportunities, increase our existingcapabilities and expand into new areas of operations. On August 30, 2013, we completed the acquisition of all of thecompression and related assets of S&R. We will continue to review acquisition opportunities in the future, but we may not beable to identify attractive acquisition opportunities or successfully acquire identified targets. In addition, we may not besuccessful in integrating any future acquisitions into our existing operations, which may result in unforeseen operationaldifficulties or diminished financial performance or require a disproportionate amount of our management’s attention. Even ifwe are successful in integrating future acquisitions into our existing operations, we may not derive the benefits, such asoperational or administrative synergies, that we expected from such acquisitions, which may result in the commitment of ourcapital resources without the expected returns on such capital. Furthermore, competition for acquisition opportunities mayescalate, increasing our cost of making acquisitions or causing us to refrain from making acquisitions. Our inability to makeacquisitions, or to integrate acquisitions successfully into our existing operations, may adversely impact our operations andlimit our ability to increase distributions to our unitholders. Our ability to grow in the future is dependent on our ability to access external expansion capital. Our partnership agreement requires us to distribute to our unitholders all of our available cash, which excludes expensesand prudent operating reserves. We expect that we will rely primarily upon external financing sources, including borrowingsunder our revolving credit facility and the issuance of debt and equity securities, to fund expansion capital expenditures.However, we may not be able to obtain equity or debt financing on terms favorable to us, or at all. To the extent we are unableto efficiently finance growth externally, our ability to increase distributions to our uniholders could be significantly impaired.In addition, because we distribute all of our available cash, we may not grow as quickly as businesses that reinvest theiravailable cash to expand ongoing operations. To the extent we issue additional units in connection with other expansioncapital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable tomaintain or increase our per unit distribution level. There are no limitations in our partnership agreement on our ability toissue additional units, including units ranking senior to the common units. The incurrence of borrowings or other debt by usto finance our growth strategy would result in interest expense, which in turn would affect our cash available for distribution. Our debt levels may limit our flexibility in obtaining additional financing, pursuing other business opportunities and payingdistributions. We have a $1.1 billion revolving credit facility that matures on January 6, 2020. In addition, we have the option toincrease the amount of total commitments under the revolving credit facility by $200 million, subject to receipt of lendercommitments and satisfaction of other conditions. As of December 31, 2014, we had outstanding borrowings of $594.9million, borrowing availability (based on our borrowing base) of $255.1 million and, subject to compliance with theapplicable financial covenants, borrowing availability under the revolving credit facility of $133.3 million. Financialcovenants permitted a maximum leverage ratio of 5.50 to 1.0 as of December 31, 2014 and will permit a maximum leverageratio of 5.95 to 1.0 as of March 31, 2015. As of February 17, 2015, we had outstanding borrowings of $657.4 million. Our ability to incur additional debt is subject to limitations in our revolving credit facility, including certain financialcovenants. Our level of debt could have important consequences to us, including the following: ·our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions orother purposes may not be available or such financing may not be available on favorable terms;·we will need a portion of our cash flow to make payments on our indebtedness, reducing the funds that wouldotherwise be available for operating activities, future business opportunities and distributions; and16 Table of Contents·our debt level will make us more vulnerable, than our competitors with less debt, to competitive pressures or adownturn in our business or the economy generally. Our ability to service our debt will depend upon, among other things, our future financial and operating performance,which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of whichare beyond our control. In addition, our ability to service our debt under the revolving credit facility could be impacted bymarket interest rates, as all of our outstanding borrowings are subject to interest rates that fluctuate with movements in interestrate markets. A substantial increase in the interest rates applicable to our outstanding borrowings could have a material impacton our cash available for distribution. If our operating results are not sufficient to service our current or future indebtedness,we could be forced to take actions such as reducing distributions, reducing 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 effect any of these actions on terms satisfactory to us, or at all. Restrictions in our revolving credit facility may limit our ability to make distributions to our unitholders and may limit ourability to capitalize on acquisition and other business opportunities. The operating and financial restrictions and covenants in our revolving credit facility and any future financingagreements could restrict our ability to finance future operations or capital needs or to expand or pursue our businessactivities. Our revolving credit facility restricts or limits our ability (subject to exceptions) to: ·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; or ·make certain acquisitions. Furthermore, our revolving credit facility contains certain operating and financial covenants. Our ability to comply withthese covenants and restrictions may be affected by events beyond our control, including prevailing economic, financial andindustry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may beimpaired. If we violate any of the restrictions, covenants, ratios or other tests in our revolving credit facility, a significantportion of our indebtedness may become immediately due and payable, our lenders’ commitment to make further loans to usmay terminate, and we may be prohibited from making distributions to our unitholders. We might not have, or be able toobtain, sufficient funds to make these accelerated payments. We may not be able to replace such revolving credit facility, or ifwe are, any subsequent replacement of our revolving credit facility or any new indebtedness could have similar or greaterrestrictions. Please read Part II, Item 7 (“Management’s Discussion and Analysis of Financial Condition and Results ofOperations—Liquidity and Capital Resources—Description of Revolving Credit Facility”). An impairment of goodwill or other intangible assets could reduce our earnings. We have recorded $208.1 million of goodwill and $82.4 million of other intangible assets as of December 31, 2014.Goodwill is recorded when the purchase price of a business exceeds the fair market value of the tangible and separatelymeasurable intangible net assets. Generally accepted accounting principles of the United States (“GAAP”) requires us to testgoodwill for impairment on an annual basis or when events or circumstances occur indicating that goodwill might beimpaired. Any event that causes a reduction in demand for our services could result in a reduction of our estimates of17 Table of Contentsfuture cash flows and growth rates in our business. These events could cause us to record impairments of goodwill or otherintangible assets. If we determine that any of our goodwill or other intangible assets are impaired, we will be required to takean immediate charge to earnings with a corresponding reduction of partners’ capital resulting in an increase in balance sheetleverage as measured by debt to total capitalization. There was no impairment recorded for goodwill or other intangible assetsfor the years ended December 31, 2014 and 2013. Our ability to manage and grow our business effectively may be adversely affected if we lose management or operationalpersonnel. We depend on the continuing efforts of our executive officers. The departure of any of our executive officers could have asignificant negative effect on our business, operating results, financial condition and on our ability to compete effectively inthe marketplace. Additionally, our ability to hire, train and retain qualified personnel will continue to be important and could becomemore challenging as we grow and to the extent energy industry market conditions are competitive. When general industryconditions are good, as was the case for the years ended December 31, 2014 and 2013, the competition for experiencedoperational and field technicians increases as other energy and manufacturing companies’ needs for the same personnelincreases. Our ability to grow or even to continue our current level of service to our current customers could be adverselyimpacted if we are unable to successfully hire, train and retain these important personnel. We depend on a limited number of suppliers and are vulnerable to product shortages and price increases, which could havea 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 Air Cooled Exchangers for coolers, and ArielCorporation, GE Oil & Gas Gemini products and Arrow Engine Company for compressor frames and cylinders. Our relianceon these suppliers involves several risks, including price increases and a potential inability to obtain an adequate supply ofrequired components in a timely manner. We also rely primarily on four vendors, A G Equipment Company, AlegacyEquipment, LLC, Standard Equipment Corp. and S&R, 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 negativeimpact on our results of operations and could damage our customer relationships. Some of these suppliers manufacture thecomponents we purchase in a single facility and any damage to that facility could lead to significant delays in delivery ofcompleted units. We are subject to substantial environmental regulation, and changes in these regulations could increase our costs orliabilities. We are subject to stringent and complex federal, state and local laws and regulations, including laws and regulationsregarding the discharge of materials into the environment, emission controls and other environmental protection andoccupational health and safety concerns. Environmental laws and regulations may, in certain circumstances, impose strictliability for environmental contamination, which may render us liable for remediation costs, natural resource damages andother damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by,prior owners or operators or other third parties. In addition, where contamination may be present, it is not uncommon forneighboring land owners and other third parties to file claims for personal injury, property damage and recovery of responsecosts. Remediation costs and other damages arising as a result of environmental laws and regulations, and costs associatedwith new information, changes in existing environmental laws and regulations or the adoption of new environmental laws andregulations could be substantial and could negatively impact our financial condition or results of operations. Moreover,failure to comply with these environmental laws and regulations may result in the imposition of administrative, civil andcriminal penalties and the issuance of injunctions delaying or prohibiting operations. We conduct operations in a wide variety of locations across the continental U.S. These operations require U.S. federal,state or local environmental permits or other authorizations. Our operations may require new or amended facility permits orlicenses from time to time with respect to storm water discharges, waste handling or air emissions relating to18 Table of Contentsequipment operations, which subject us to new or revised permitting conditions that may be onerous or costly to comply with.Additionally, the operation of compression units may require individual air permits or general authorizations to operate undervarious air regulatory programs established by rule or regulation. These permits and authorizations frequently containnumerous compliance requirements, including monitoring and reporting obligations and operational restrictions, such asemission limits. Given the wide variety of locations in which we operate, and the numerous environmental permits and otherauthorizations that are applicable to our operations, we may occasionally identify or be notified of technical violations ofcertain requirements existing in various permits or other authorizations. We could be subject to penalties for anynoncompliance in the future. In our business, we routinely deal with natural gas, oil and other petroleum products at our worksites. Hydrocarbons orother hazardous substances or wastes may have been disposed or released on, under or from properties used by us to providecompression services or inactive compression unit storage or on or under other locations where such substances or wastes havebeen taken for disposal. These properties may be subject to investigatory, remediation and monitoring requirements underfederal, state and local environmental laws and regulations. The modification or interpretation of existing environmental laws or regulations, the more vigorous enforcement ofexisting environmental laws or regulations, or the adoption of new environmental laws or regulations may also negativelyimpact oil and natural gas exploration and production, gathering and pipeline companies, including our customers, which inturn could have a negative impact on us. New regulations, proposed regulations and proposed modifications to existing regulations under the Clean Air Act, ifimplemented, could result in increased compliance costs. In August 2010, the EPA published new regulations under the CAA to control emissions of hazardous air pollutants fromexisting stationary reciprocating internal combustion engines. In June, 2012, the EPA proposed amendments to the finalrule in response to several petitions for reconsideration, and EPA finalized the proposed amendments in January 2013. Thefinal rule was effective in 2013. The rule requires us to undertake certain expenditures and activities, including purchasingand installing emissions control equipment on a portion of our engines located at major sources of hazardous air pollutants,following prescribed maintenance practices for engines (which are consistent with our existing practices), and implementingadditional emissions testing and monitoring. If we were unable to maintain compliance with the final rule, our business,financial condition, results of operations or cash available for distribution could be impacted. On November 25, 2014, the EPA issued a proposed rule to strengthen the NAAQs for ground level ozone. The proposedrule updates both the primary ozone standard and the secondary standard. Both proposed standards are 8-hour standards setwithin a range of 65 to 70 parts per billion (ppb). The EPA is also seeking comments on levels for the health standard as low as60 ppb. The EPA will take comments on this proposed regulation for 90 days after its publication in the federal register andhas stated it will issue a final decision by October 1, 2015. In addition, in 2013, the EPA promulgated a final rule revising theannual standard for fine particulate matter, or PM 2.5, by lowering the level from 15 to 12 micrograms per cubic meter. OnDecember 18, 2014, the EPA issued final area designations for the 2012 NAAQs for PM 2.5. Designation of new non-attainment areas for the revised ozone or PM 2.5 NAAQS may result in additional federal and state regulatory actions that mayimpact our customers’ operations and increase the cost of additions to property, plant and equipment. In 2012, the EPA finalized rules that establish new air emission controls for oil and natural gas production and natural gasprocessing operations. Specifically, the EPA’s rule package included New Source Performance Standards to address emissionsof sulfur dioxide and VOCs and a separate set of emission standards to address hazardous air pollutants frequently associatedwith oil and natural gas production and processing activities. The rules establish specific new requirements regardingemissions from compressors and controllers at natural gas processing plants, dehydrators, storage tanks and other productionequipment as well as the first federal air standards for natural gas wells that are hydraulically fractured. In addition, therules establish leak detection requirements for natural gas processing plants at 500 ppm. In 2013, the EPA issued a finalupdate to the VOC performance standards for storage tanks used in crude oil and natural gas production and transmission. OnDecember 19, 2014, the EPA published final amendments to the July 2014 proposal. These rules may require a number ofmodifications to our operations, including the installation of new19 Table of Contentsequipment to control emissions from our compressors at initial startup. Compliance with such rules could result in significantcosts, including increased capital expenditures and operating costs, and could adversely impact our business. In addition, the TCEQ has finalized revisions to certain air permit programs that significantly increase the air permittingrequirements for new and certain existing oil and gas production and gathering sites for 15 counties in the Barnett Shaleproduction area. The final rule establishes new emissions standards for engines, which could impact the operation of specificcategories of engines by requiring the use of alternative engines, compression packages or the installation of aftermarketemissions control equipment. The rule became effective for the Barnett Shale production area in April 2011, with the loweremissions standards becoming applicable between 2015 and 2030 depending on the type of engine and the permittingrequirements. The cost to comply with the revised air permit programs is not expected to be material at this time. However, theTCEQ has stated it will consider expanding application of the new air permit program statewide. At this point, we cannotpredict the cost to comply with such requirements if the geographic scope is expanded. These new regulations and proposals, when finalized, and any other new regulations requiring the installation of moresophisticated pollution control equipment could have a material adverse impact on our business, results of operations,financial condition and cash available for distribution. Climate change legislation and regulatory initiatives could result in increased compliance costs. Methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of natural gas, areexamples of greenhouse gases. In recent years, the U.S. Congress has considered legislation to reduce emissions of greenhousegases. It presently appears unlikely that comprehensive climate legislation will be passed by either house of Congress in thenear future, although energy legislation and other initiatives are expected to be proposed that may be relevant to greenhousegas emissions issues. However, almost half of the states have begun to address greenhouse gas emissions, primarily throughthe planned development of emission inventories or regional greenhouse gas cap and trade programs. Depending on theparticular program, we could be required to control greenhouse gas emissions or to purchase and surrender allowances forgreenhouse gas emissions resulting from our operations. Independent of Congress, the EPA is beginning to adopt regulations controlling greenhouse gas emissions under itsexisting CAA authority. For example, in December 2009, the EPA officially published its findings that emissions of carbondioxide, methane, and other greenhouse gases endanger human health and the environment because emissions of such gasesare, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes. These findings bythe EPA allowed the agency to proceed with the adoption and implementation of regulations that restrict emissions ofgreenhouse gases under existing provisions of the CAA. In 2009, the EPA adopted rules regarding regulation of greenhouseemissions from motor vehicles. In addition, on September 2009, the EPA issued a final rule requiring the reporting ofgreenhouse gas emissions in the United States beginning in 2011 for emissions occurring in 2010 from specified largegreenhouse gas emission sources. In November 2010, the EPA published a final rule expanding its existing greenhouse gasemissions reporting rule for petroleum and natural gas facilities, including natural gas transmission compression facilities thatemit 25,000 metric tons or more of carbon dioxide equivalent per year. The rule, which went into effect in December 2010,requires reporting of greenhouse gas emissions by such regulated facilities to the EPA by September 2012 for emissionsduring 2011 and annually thereafter. In 2010, the EPA also issued a final rule, known as the “Tailoring Rule,” that makescertain large stationary sources and modification projects subject to permitting requirements for greenhouse gas emissionsunder the CAA. Both the Tailoring Rule and the EPA’s endangerment finding were challenged in federal court and were upheld by theD.C. Court of Appeals. In July 2014, the United States Supreme Court invalidated the Tailoring Rule but it refused toconsider other issues such as whether greenhouse gases endanger public health. As a result, under federal law, a source is nolonger required to meet the PSD and Title V permitting requirements based solely on its greenhouse gas emissions. Finally, on January 8, 2014, the EPA published standards of performance for greenhouse gas emissions from new powerplants. The proposal sets forth a performance standard for integrated gasification combined cycled units and utility boilersbased on the use of partial carbon capture and sequestration technology. The proposal also sets limits for20 Table of Contentsstationary natural gas combustion turbines based on the use of natural gas combined cycle technology. In addition, on June 2,2014, EPA proposed the Clean Power Plan rule, which was intended to reduce carbon emissions from existing power plants.Comments on the plan were due on December 1, 2014 and the EPA is expected to issue a final rule regarding carbon emissionsfrom new power plants in January 2015. On June 18, 2014, an Ohio-based coal company filed a petition for an extraordinarywrit in the United States Court of Appeals in Washington, D.C. challenging the EPA’s authority to regulate carbon dioxideemissions from existing coal-fired power plants under Section 111(d) of the Clean Air Act. Briefing in this case is currentlyongoing. Although it is not currently possible to predict with specificity how any proposed or future greenhouse gas legislation orregulation will impact our business, any legislation or regulation of greenhouse gas emissions that may be imposed in areas inwhich we conduct business could result in increased compliance costs or additional operating restrictions or reduced demandfor our services, and could have a material adverse effect on our business, financial condition and results of operations. Increased regulation of hydraulic fracturing could result in reductions or delays in natural gas production by ourcustomers, which could adversely impact our revenue. A significant portion of our customers’ natural gas production is from unconventional sources that require hydraulicfracturing as part of the completion process. Hydraulic fracturing involves the injection of water, sand and chemicals underpressure into the formation to stimulate gas production. Legislation to amend the SDWA to repeal the exemption for hydraulicfracturing from the definition of “underground injection” and require federal permitting and regulatory control of hydraulicfracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturingprocess, were proposed in past sessions of Congress. The U.S. Congress continues to consider legislation to amend the SDWA.Scrutiny of hydraulic fracturing activities continues in other ways, with the EPA having commenced a multi-year study of thepotential environmental impacts of hydraulic fracturing, the results of which were originally anticipated to be available in2014, but are now expected in March 2015. The EPA also has announced that it believes hydraulic fracturing using fluidscontaining diesel fuel can be regulated under the SDWA notwithstanding the SDWA’s general exemption for hydraulicfracturing. Several states have also proposed or adopted legislative or regulatory restrictions on hydraulic fracturing,including prohibitions on the practice. We cannot predict if additional legislation will be enacted and if so, what itsprovisions would be. If additional levels of regulation, restriction and permits are required through the adoption of new lawsand regulations at the federal or state level, that could lead to delays, increased operating costs and process prohibitions forour customers that could reduce demand for our compression services, which could have a material adverse effect on ourbusiness, financial condition, results of operations and cash available for distribution. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities. Our operations are subject to inherent risks such as equipment defects, malfunction and failures, and natural disasters thatcan result in uncontrollable flows of gas or well fluids, fires and explosions. These risks could expose us to substantialliability for personal injury, death, property damage, pollution and other environmental damages. Our insurance may beinadequate to cover our liabilities. Further, insurance covering the risks we face or in the amounts we desire may not beavailable in the future or, if available, the premiums may not be commercially justifiable. If we were to incur substantialliability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur liability at atime when we are not able to obtain liability insurance, our business, results of operations and financial condition could beadversely affected. 21 Table of ContentsTerrorist attacks, the threat of terrorist attacks, hostilities in the Middle East, or other sustained military campaigns mayadversely impact our results of operations. The long-term impact of terrorist attacks, such as the attacks that occurred on September 11, 2001, and the magnitude ofthe threat of future terrorist attacks on the energy industry in general and on us in particular are not known at this time.Uncertainty surrounding hostilities in the Middle East or other sustained military campaigns may affect our operations inunpredictable ways, including disruptions of crude oil and natural gas supplies and markets for crude oil, natural gas andnatural gas liquids and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act ofterror. Changes in the insurance markets attributable to terrorist attacks may make certain types of insurance more difficult forus to obtain. Moreover, the insurance that may be available to us may be significantly more expensive than our existinginsurance coverage. Instability in the financial markets as a result of terrorism or war could also affect our ability to raisecapital. If we fail to develop or maintain an effective system of internal controls, we may not be able to report our financial resultsaccurately or prevent fraud, which would likely have a negative impact on the market price of our common units. In connection with the closing of our initial public offering, we became subject to the public reporting requirements ofthe Exchange Act. Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and tooperate successfully as a publicly traded partnership. We continue to evaluate the effectiveness of and improve upon ourinternal controls. Our efforts to develop and maintain our internal controls may not be successful, and we may be unable tomaintain effective controls over our financial processes and reporting in the future or to comply with our obligations underSection 404 of the Sarbanes Oxley Act of 2002 (“Section 404”). For example, Section 404(a) requires us, among other things,to review and report annually on the effectiveness of our internal control over financial reporting. We were required to complywith Section 404(a) beginning with our fiscal year ended December 31, 2013. In addition, our independent registered publicaccountants will be required to assess the effectiveness of internal control over financial reporting at the end of the fiscal yearafter we are no longer an “emerging growth company” under the Jumpstart Our Business Startups Act, which may be for up tofive fiscal years after the date we completed our initial public offering, which was in January 2013. Any failure to develop,implement or maintain effective internal controls or to improve our internal controls could harm our operating results or causeus to fail to meet our reporting obligations. Given the difficulties inherent in the design and operation of internal controls overfinancial reporting, we can provide no assurance as to our independent registered public accounting firm’s conclusions aboutthe effectiveness of our internal controls, and we may incur significant costs in our efforts to comply with Section 404.Ineffective internal controls will subject us to regulatory scrutiny and a loss of confidence in our reported financialinformation, which could have an adverse effect on our business and would likely have a negative effect on the trading priceof our common units. Risks Inherent in an Investment in Us Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors. Unlike the holders of common stock in a corporation, our unitholders have only limited voting rights on matters affectingour business and, therefore, limited ability to influence management’s decisions regarding our business. Unitholders have noright to elect our general partner or its board of directors. USA Compression Holdings is the sole member of our general partnerand has the right to appoint our general partner’s entire board of directors, including its independent directors. If theunitholders are dissatisfied with the performance of our general partner, they have little ability to remove our general partner.As a result of these limitations, the price of our common units may be diminished because of the absence or reduction of atakeover premium in the trading price. Furthermore, our partnership agreement also contains provisions limiting the ability ofunitholders to call meetings or to acquire information about our operations, as well as other provisions limiting theunitholders’ ability to influence the manner or direction of management. 22 Table of ContentsUSA Compression Holdings owns and controls our general partner, which has sole responsibility for conducting ourbusiness and managing our operations. Our general partner and its affiliates, including USA Compression Holdings, haveconflicts of interest with us and limited fiduciary duties and they may favor their own interests to the detriment of us and ourcommon unitholders. USA Compression Holdings, which is principally owned and controlled by Riverstone, owns and controls our generalpartner and appointed all of the officers and directors of our general partner, some of whom are also officers and directors ofUSA Compression Holdings. Although our general partner has a fiduciary duty to manage us in a manner that is beneficial tous and our unitholders, the directors and officers of our general partner have a fiduciary duty to manage our general partner ina manner that is beneficial to its owners. Conflicts of interest will arise between USA Compression Holdings, Riverstone andour general partner, on the one hand, and us and our unitholders, on the other hand. In resolving these conflicts of interest, ourgeneral partner may favor its own interests and the interests of USA Compression Holdings and the other owners of USACompression Holdings over our interests and the interests of our common unitholders. These conflicts include the followingsituations, among others: ·neither our partnership agreement nor any other agreement requires USA Compression Holdings to pursue a businessstrategy that favors us; ·our general partner is allowed to take into account the interests of parties other than us, such as USA CompressionHoldings, in resolving conflicts of interest; ·our partnership agreement limits the liability of and reduces the fiduciary duties owed by our general partner, andalso restricts the remedies available to our unitholders for actions that, without such limitations, might constitutebreaches of fiduciary duty; ·except in limited circumstances, our general partner has the power and authority to conduct our business withoutunitholder approval; ·our general partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additionalpartnership interests and the creation, reduction or increase of reserves, each of which can affect the amount of cashthat is distributed to our unitholders; ·our general partner determines the amount and timing of any capital expenditures and whether a capital expenditureis classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capitalexpenditure, which does not reduce operating surplus. This determination can affect the amount of cash that isdistributed to our unitholders and to our general partner and the ability of the subordinated units to convert tocommon units; ·our general partner determines which costs incurred by it are reimbursable by us; ·our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if thepurpose or effect of the borrowing is to make a distribution on the subordinated units, to make incentive distributionsor to accelerate the expiration of the subordination period; ·our partnership agreement permits us to classify up to $36.6 million as operating surplus, even if it is generated fromasset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. Thiscash may be used to fund distributions on our subordinated units or to our general partner in respect of the generalpartner interest or the incentive distribution rights (or “IDRs”); ·our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for anyservices rendered to us or entering into additional contractual arrangements with any of these entities on our behalf; ·our general partner intends to limit its liability regarding our contractual and other obligations;23 Table of Contents ·our general partner may exercise its right to call and purchase all of the common units not owned by it and itsaffiliates if they own more than 80% of the common units; ·our general partner controls the enforcement of the obligations that it and its affiliates owe to us; ·our general partner decides whether to retain separate counsel, accountants or others to perform services for us; and ·our general partner may elect to cause us to issue common units to it in connection with a resetting of the targetdistribution levels related to our general partner’s IDRs without the approval of the conflicts committee of the boardof directors of our general partner or our unitholders. This election may result in lower distributions to our commonunitholders in certain situations. Our general partner’s liability regarding our obligations is limited. Our general partner has included, and will continue to include, provisions in its and our contractual arrangements thatlimit its liability under such contractual arrangements so that the counterparties to such arrangements have recourse onlyagainst our assets, and not against our general partner or its assets. Our general partner may therefore cause us to incurindebtedness or other obligations that are nonrecourse to our general partner. Our partnership agreement provides that anyaction taken by our general partner to limit its liability is not a breach of our general partner’s fiduciary duties, even if wecould have obtained more favorable terms without the limitation on liability. In addition, we are obligated to reimburse orindemnify our general partner to the extent that it incurs obligations on our behalf. Any such reimbursement orindemnification payments would reduce the amount of cash otherwise available for distribution. Our partnership agreement limits our general partner’s fiduciary duties to holders of our common and subordinated units. Our partnership agreement contains provisions that modify and reduce the fiduciary standards to which our generalpartner would otherwise be held by state fiduciary duty law. For example, our partnership agreement permits our generalpartner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner, orotherwise free of fiduciary duties to us and our unitholders. This entitles our general partner to consider only the interests andfactors that it desires and relieves it of any duty or obligation to give any consideration to any interest of, or factors affecting,us, our affiliates or our limited partners. Examples of decisions that our general partner may make in its individual capacityinclude: ·how to allocate business opportunities among us and its affiliates; ·whether to exercise its limited call right; ·how to exercise its voting rights with respect to the units it owns; ·whether to elect to reset target distribution levels; and ·whether or not to consent to any merger or consolidation of the Partnership or amendment to the partnershipagreement. By purchasing a common unit, a common unitholder agrees to become bound by the provisions in the partnershipagreement, including the provisions discussed above. 24 Table of ContentsEven if holders of our common units are dissatisfied, they currently cannot remove our general partner without USACompression Holdings’ consent. The unitholders are currently unable to remove our general partner because our general partner and its affiliates ownsufficient units to be able to prevent its removal. The vote of the holders of at least 662/3% of all outstanding common andsubordinated units voting together as a single class is required to remove our general partner. USA Compression Holdingsowns an aggregate of 42.0% of our outstanding common and subordinated units. Also, if our general partner is removedwithout cause during the subordination period and no units held by the holders of the subordinated units or their affiliates(including our general partner and its affiliates) are voted in favor of that removal, all subordinated units will automatically beconverted into common units. A removal of our general partner under these circumstances would adversely affect our commonunits by prematurely eliminating their distribution and liquidation preference over our subordinated units, which wouldotherwise have continued until we had met certain distribution and performance tests. Cause is narrowly defined in ourpartnership agreement to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding ourgeneral partner liable for actual fraud or willful misconduct in its capacity as our general partner. Generally, poor managementof our business by our general partner does not constitute “cause”. Our partnership agreement restricts the remedies available to holders of our common units for actions taken by our generalpartner that might otherwise constitute breaches of fiduciary duty. Our partnership agreement contains provisions that restrict the remedies available to unitholders for actions taken by ourgeneral partner that might otherwise constitute breaches of fiduciary duty under state fiduciary duty law. For example, ourpartnership agreement: ·provides that whenever our general partner makes a determination or takes, or declines to take, any other action in itscapacity as our general partner, our general partner is required to make such determination, or take or decline to takesuch other action, in good faith, and will not be subject to any other or different standard imposed by our partnershipagreement, Delaware law, or any other law, rule or regulation, or at equity; ·provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacityas a general partner so long as such decisions are made in good faith, meaning that it believed that the decisions werein the best interest of our partnership; ·provides that our general partner and its officers and directors will not be liable for monetary damages to us, ourlimited partners or their assignees resulting from any act or omission unless there has been a final and non-appealablejudgment entered by a court of competent jurisdiction determining that our general partner or its officers anddirectors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminalmatter, acted with knowledge that the conduct was criminal; and ·provides that our general partner will not be in breach of its obligations under the partnership agreement or itsfiduciary 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 of directors of our general partner, although our generalpartner is not obligated to seek such approval; (b)approved by the vote of a majority of the outstanding common units, excluding any common units ownedby our general partner and its affiliates; (c)on terms no less favorable to us than those generally being provided to or available from unrelated thirdparties; 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. 25 Table of ContentsIn connection with a situation involving a transaction with an affiliate or a conflict of interest, any determination by ourgeneral partner must be made in good faith. If an affiliate transaction or the resolution of a conflict of interest is not approvedby our common unitholders or the conflicts committee and the board of directors of our general partner determines that theresolution or course of action taken with respect to the affiliate transaction or conflict of interest satisfies either of thestandards set forth in subclauses (c) and (d) above, then it will conclusively be deemed that, in making its decision, the boardof directors of our general partner acted in good faith. Our general partner may elect to cause us to issue common units to it in connection with a resetting of the target distributionlevels related to its IDRs, without the approval of the conflicts committee of its board of directors of our general partner orthe holders of our common units. This could result in lower distributions to holders of our common units. Our general partner has the right, at any time when there are no subordinated units outstanding and it has receivedincentive distributions at the highest level to which it is entitled (48.0%) for each of the prior four consecutive fiscal quarters,to reset the initial target distribution levels at higher levels based on our distributions at the time of the exercise of the resetelection. Following a reset election by our general partner, the minimum quarterly distribution will be adjusted to equal thereset minimum quarterly distribution, and the target distribution levels will be reset to correspondingly higher levels based onpercentage increases above the reset minimum quarterly distribution. If our general partner elects to reset the target distribution levels, it will be entitled to receive a number of common unitsand to maintain its general partner interest. The number of common units to be issued to our general partner will equal thenumber of common units which would have entitled the holder to an average aggregate quarterly cash distribution in the priortwo quarters equal to the average of the distributions to our general partner on the IDRs in the prior two quarters. Our generalpartner’s general partner interest in us (currently 1.7%) will be maintained at the percentage that existed immediately prior tothe reset election. Our general partner could exercise this reset election at a time when it is experiencing, or expects toexperience, declines in the cash distributions it receives related to its IDRs and may, therefore, desire to be issued commonunits rather than retain the right to receive incentive distributions based on the initial target distribution levels. As a result, areset election may cause our common unitholders to experience a reduction in the amount of cash distributions that ourcommon unitholders would have otherwise received had we not issued new common units to our general partner inconnection with resetting the target distribution levels. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units. Unitholders’ voting rights are further restricted by a provision of our partnership agreement providing that any units heldby a person or group that owns 20% or more of any class of units then outstanding, other than our general partner, its affiliates,their direct transferees and their indirect transferees approved by our general partner (which approval may be granted in itssole discretion) and persons who acquired such units with the prior approval of our general partner, cannot vote on any matter. Our general partner interest or the control of our general partner may be transferred to a third party without unitholderconsent. Our general partner may transfer its general partner interest to a third party in a merger or in a sale of all or substantially allof its assets without the consent of the unitholders. Furthermore, our partnership agreement does not restrict the ability of USACompression Holdings to transfer all or a portion of its ownership interest in our general partner to a third party. The newowner of our general partner would then be in a position to replace the board of directors and officers of our general partnerwith its own designees and thereby exert significant control over the decisions made by the board of directors and officers ofour general partner. An increase in interest rates may cause the market price of our common units to decline. Like all equity investments, an investment in our common units is subject to certain risks. In exchange for accepting theserisks, investors may expect to receive a higher rate of return than would otherwise be obtainable from lower-risk investments.Accordingly, as interest rates rise, the ability of investors to obtain higher risk-adjusted rates of return by26 Table of Contentspurchasing government-backed debt securities may cause a corresponding decline in demand for riskier investmentsgenerally, including yield based equity investments such as publicly traded partnership interests. Reduced demand for ourcommon units resulting from investors seeking other more favorable investment opportunities may cause the trading price ofour common units to decline. We may issue additional units without your approval, which would dilute your existing ownership interests. Our partnership agreement does not limit the number of additional limited partner interests that we may issue at any timewithout the approval of our unitholders. The issuance by us of additional common units, including pursuant to ourDistribution Reinvestment Plan (“DRIP”) or our continuous offering program, or other equity securities of equal or seniorrank, will have the following effects: ·our existing unitholders’ proportionate ownership interest in us will decrease; ·the amount of cash available for distribution on each unit may decrease; ·because a lower percentage of total outstanding units will be subordinated units during the subordination period, therisk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholderswill increase; ·the ratio of taxable income to distributions may increase; ·the relative voting strength of each previously outstanding unit may be diminished; and ·the market price of the common units may decline. USA Compression Holdings and Argonaut Private Equity, L.L.C. may sell units in the public or private markets, and suchsales could have an adverse impact on the trading price of the common units. USA Compression Holdings holds an aggregate of 5,020,177 common units and 14,048,588 subordinated units. All of thesubordinated units will convert into common units at the end of the subordination period and may convert earlier undercertain circumstances. Argonaut Private Equity, L.L.C. (“Argonaut”) holds an aggregate of 6,902,332 common units. Inaddition, USA Compression Holdings and Argonaut may acquire additional common units in connection with our DRIP. Wehave agreed to provide USA Compression Holdings and Argonaut with certain registration rights for any common andsubordinated units they own, as applicable. The sale of these units in the public or private markets could have an adverseimpact on the price of the common units or on any trading market that may develop. Our general partner has a call right that may require you to sell your units at an undesirable time or price. If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will havethe right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of thecommon units held by unaffiliated persons at a price that is not less than their then-current market price, as calculatedpursuant to the terms of our partnership agreement. As a result, you may be required to sell your common units at anundesirable time or price. You may also incur a tax liability upon a sale of your units. USA Compression Holdings owns anaggregate of approximately 16.0% of our outstanding common units. At the end of the subordination period, assuming noadditional issuances of common units (other than upon the conversion of the subordinated units), USA Compression Holdingswill own an aggregate of approximately 42.0% of our outstanding common units. Your liability may not be limited if a court finds that unitholder action constitutes control of our business. A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for thosecontractual obligations of the partnership that are expressly made without recourse to our general partner. Our partnership isorganized under Delaware law, and we conduct business in a number of other states. The limitations on the liability of holdersof limited partner interests for the obligations of a limited partnership have not been clearly27 Table of Contentsestablished in some of the other states in which we do business. You could be liable for any and all of our obligations as if youwere a general partner if a court or government agency were to determine that: ·we were conducting business in a state but had not complied with that particular state’s partnership statute; or ·your right to act with other unitholders to remove or replace our general partner, to approve some amendments to ourpartnership agreement or to take other actions under our partnership agreement constitute “control” of our business. Unitholders may have liability to repay distributions that were wrongfully distributed to them. Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. UnderSection 17-607 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”), we may not make adistribution to you if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law providesthat for a period of three years from the date of an impermissible distribution, limited partners who received the distributionand who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for thedistribution amount. Substituted limited partners are liable both for the obligations of the assignor to make contributions tothe partnership that were known to the substituted limited partner at the time it became a limited partner and for thoseobligations that were unknown if the liabilities could have been determined from the partnership agreement. Neither liabilitiesto partners on account of their partnership interest nor liabilities that are non-recourse to the partnership are counted forpurposes of determining whether a distribution is permitted. The NYSE does not require a publicly traded partnership like us to comply with certain of its corporate governancerequirements. Our common units are listed on the NYSE. Because we are a publicly traded partnership, the NYSE does not require us tohave a majority of independent directors on our general partner’s board of directors or to establish a compensation committeeor a nominating and corporate governance committee. Accordingly, unitholders do not have the same protections afforded toinvestors in certain corporations that are subject to all of the NYSE corporate governance requirements. Please readPart III, Item 10 (“Directors, Executive Officers and Corporate Governance”). Pursuant to certain federal securities laws, our independent registered public accounting firm will not be required to attestto the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes Oxley Act of2002 for so long as we are an emerging growth company. We are required to disclose changes made in our internal control over financial reporting on a quarterly basis, and we arerequired to assess the effectiveness of our controls annually. However, for as long as we are an “emerging growth company”under federal securities laws, our independent registered public accounting firm will not be required to attest to theeffectiveness of our internal control over financial reporting pursuant to Section 404. We could be an emerging growthcompany for up to five years from the date of our initial public offering, which occurred on January 18, 2013. Even if weconclude that our internal control over financial reporting is effective, our independent registered public accounting firm maystill decline to attest to our assessment or may issue a report that is qualified if it is not satisfied with our controls or the levelat which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differentlyfrom us. Tax Risks to Common Unitholders Our tax treatment depends on our status as a partnership for federal income tax purposes. If the IRS were to treat us as acorporation for federal income tax purposes, then our cash available for distribution would be substantially reduced. The anticipated after-tax economic benefit of an investment in the common units depends largely on our being treated asa partnership for federal income tax purposes. We have not requested a ruling from the IRS on this or any other tax matteraffecting us.28 Table of Contents Despite the fact that we are a limited partnership under Delaware law, it is possible in certain circumstances for apartnership such as ours to be treated as a corporation for federal income tax purposes. Although we do not believe based uponour current operations that we are or will be so treated, a change in our business or a change in current law could cause us to betreated as a corporation for federal income tax purposes or otherwise subject us to taxation as an entity. If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxableincome at the corporate tax rate, which is currently a maximum of 35%, and would likely pay state and local income tax atvarying rates. Distributions would generally be taxed again as corporate dividends (to the extent of our current andaccumulated earnings and profits), and no income, gains, losses, deductions or credits would flow through to you. Because atax would be imposed upon us as a corporation, our cash available for distribution 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 cashflow and after-tax return to our unitholders, likely causing a substantial reduction in the value of our common units. Our partnership agreement provides that, if a law is enacted or existing law is modified or interpreted in a manner thatsubjects us to taxation as a corporation or otherwise subjects us to entity level taxation for federal, state or local income taxpurposes, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect theimpact of that law on us. If we were subjected to a material amount of additional entity level taxation by individual states, it would reduce our cashavailable for distribution. Changes in current state law may subject us to additional entity level taxation by individual states. Because ofwidespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity leveltaxation through the imposition of state income, franchise and other forms of taxation. For example, we are required to payTexas franchise tax each year at a maximum effective rate of 0.7% of our gross income apportioned to Texas in the prior year.Imposition of any similar taxes by any other state may substantially reduce the cash available for distribution and, therefore,negatively impact the value of an investment in our common units. The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potentiallegislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis. The present federal income tax treatment of publicly traded partnerships, including us, or an investment in our commonunits may be modified by administrative, legislative or judicial interpretation at any time. For example, the Obamaadministration’s budget proposal for fiscal year 2016 recommends that certain publicly traded partnerships earning incomefrom activities related to fossil fuels be taxed as corporations beginning in 2021. From time to time, members of the U.S.Congress propose and consider such substantive changes to the existing federal income tax laws that affect publicly tradedpartnerships. If successful, the Obama administration’s proposal or other similar proposals could eliminate the qualifyingincome exception to the treatment of all publicly-traded partnerships as corporations upon which we rely for our treatment as apartnership for U.S. federal income tax purposes. Any modification to the U.S. federal income tax laws may be appliedretroactively and could make it more difficult or impossible for us to meet the exception for certain publicly tradedpartnerships to be treated as partnerships for U.S. federal income tax purposes. We are unable to predict whether any of thesechanges or other proposals will ultimately be enacted. Any such changes could negatively impact the value of an investmentin our common units. Our unitholders’ share of our income will be taxable to them for federal income tax purposes even if they do not receive anycash distributions from us. Because a unitholder will be treated as a partner to whom we will allocate taxable income that could be different inamount than the cash we distribute, a unitholder’s allocable share of our taxable income will be taxable to it, which mayrequire the payment of federal income taxes and, in some cases, state and local income taxes, on its share of our taxableincome even if it receives no cash distributions from us. Our unitholders may not receive cash distributions from us equal totheir share of our taxable income or even equal to the actual tax liability that results from that income. 29 Table of ContentsIf the IRS contests the federal income tax positions we take, the market for our common units may be adversely impactedand the cost of any IRS contest will reduce our cash available for distribution. We have not requested a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposesor any other matter affecting us. The IRS may adopt positions that differ from the positions we take, and the IRS’s positionsmay ultimately be sustained. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. A courtmay not agree with some or all of the positions we take. Any contest with the IRS, and the outcome of any IRS contest, mayhave a materially adverse impact on the market for our common units and the price at which they trade. In addition, our costsof any contest with the IRS will be borne indirectly by our unitholders and our general partner because the costs will reduceour cash available for distribution. Tax gain or loss on the disposition of our common units could be more or less than expected. If our unitholders sell common units, they will recognize a gain or loss for federal income tax purposes equal to thedifference between the amount realized and their tax basis in those common units. Because distributions in excess of theirallocable share of our net taxable income decrease their tax basis in their common units, the amount, if any, of such priorexcess distributions with respect to the common units a unitholder sells will, in effect, become taxable income to theunitholder if it sells such common units at a price greater than its tax basis in those common units, even if the price received isless than its original cost. Furthermore, a substantial portion of the amount realized on any sale of common units, whether ornot representing gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture. Inaddition, because the amount realized includes a unitholder’s share of our nonrecourse liabilities, a unitholder that sellscommon units may incur a tax liability in excess of the amount of cash received from the sale. Tax-exempt entities and non-U.S. persons face unique tax issues from owning our common units that may result in adversetax consequences to them. Investment in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts(“IRAs”), and non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated toorganizations that are exempt from federal income tax, including IRAs and other retirement plans, will be unrelated businesstaxable income and will be taxable to them. Distributions to non-U.S. persons will be subject to withholding taxes imposed atthe highest tax rate applicable to such non-U.S. persons, and each non-U.S. person will be required to file U.S. federal incometax returns and pay tax on its share of our taxable income. If you are a tax-exempt entity or a non-U.S. person, you shouldconsult a tax advisor before investing in our common units. We will treat each purchaser of common units as having the same tax benefits without regard to the actual common unitspurchased. The IRS may challenge this treatment, which could adversely affect the value of the common units. Because we cannot match transferors and transferees of common units and because of other reasons, we will adoptdepreciation and amortization positions that may not conform to all aspects of existing Treasury Regulations. A successfulIRS challenge to those positions could adversely affect the amount of tax benefits available to you. It also could affect thetiming of these tax benefits or the amount of gain from your sale of common units and could have a negative impact on thevalue of our common units or result in audit adjustments to your tax returns. We prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors andtransferees of our units each month based upon the ownership of our units on the first day of each month, instead of on thebasis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation ofitems of income, gain, loss and deduction among our unitholders. We will prorate our items of income, gain, loss and deduction for federal income tax purposes between transferors andtransferees of our units each month based upon the ownership of our units on the first day of each month, instead of on thebasis of the date a particular unit is transferred. The use of this proration method may not be permitted under existing TreasuryRegulations. The U.S. Treasury Department’s proposed Treasury Regulations allowing a similar30 Table of Contentsmonthly simplifying convention are not final and do not specifically authorize the use of the proration method we haveadopted. If the IRS were to challenge our proration method or new Treasury regulations were issued, we may be required tochange the allocation of items of income, gain, loss and deduction among our unitholders. A unitholder whose common units are the subject of a securities loan (e.g., a loan to a “short seller” to effect a short sale ofcommon units) may be considered as having disposed of those common units. If so, he would no longer be treated for federalincome tax purposes as a partner with respect to those common units during the period of the loan and may recognize gainor loss from the disposition. Because there are no specific rules governing the federal income tax consequences of loaning a partnership interest, aunitholder whose common units are the subject of a securities loan may be considered as having disposed of the loanedcommon units, he may no longer be treated for federal income tax purposes as a partner with respect to those common unitsduring the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition.Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those common units maynot be reportable by the unitholder and any cash distributions received by the unitholder as to those common units could befully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognitionfrom a securities loan are urged to consult a tax advisor to discuss whether it is advisable to modify any applicable brokerageaccount agreements to prohibit their brokers from loaning their common units. We have adopted certain valuation methodologies in determining unitholder’s allocations of income, gain, loss anddeduction. The IRS may challenge these methods or the resulting allocations, and such a challenge could adversely affectthe value of our common units. In determining the items of income, gain, loss and deduction allocable to our unitholders, we must routinely determinethe fair market value of our respective assets. Although we may from time to time consult with professional appraisersregarding valuation matters, we make many fair market value estimates using a methodology based on the market value of ourcommon units as a means to measure the fair market value of our respective assets. The IRS may challenge these valuationmethods and the resulting allocations of income, gain, loss and deduction. A successful IRS challenge to these methods or allocations could adversely affect the amount, character and timing oftaxable income or loss being allocated to our unitholders. It also could affect the amount of gain from our unitholders’ sale ofcommon units and could have a negative impact on the value of the common units or result in audit adjustments to ourunitholders’ tax returns without the benefit of additional deductions. The sale or exchange of 50% or more of our capital and profits interests during any twelve month period will result in thetermination of our partnership for federal income tax purposes. We will be considered to have technically terminated for federal income tax purposes if there is a sale or exchange of 50%or more of the total interests in our capital and profits within a twelve month period. For purposes of determining whether the50% threshold has been met, multiple sales of the same interest will be counted only once. Our technical termination would,among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax returns(and our unitholders could receive two Schedules K-1 if relief was not available, as described below) for one calendar year andcould result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a unitholderreporting on a taxable year other than a calendar year, the closing of our taxable year may also result in more than twelvemonths of our taxable income or loss being includable in his taxable income for the year of termination. A technicaltermination currently would not affect our classification as a partnership for federal income tax purposes, but instead we wouldbe treated as a new partnership for such tax purposes. If treated as a new partnership, we must make new tax elections andcould be subject to penalties if we are unable to determine that a termination occurred. The IRS has announced a publiclytraded partnership technical termination relief program whereby a publicly traded partnership that technically terminated mayrequest publicly traded partnership technical termination relief which, if granted by the IRS, among other things would permitthe partnership to provide only one Schedule K-1 to unitholders for the year notwithstanding two partnership tax years. 31 Table of ContentsAs a result of investing in our common units, you will likely become subject to state and local taxes and return filingrequirements in jurisdictions where we operate or own or acquire properties. In addition to federal income taxes, our unitholders will likely be subject to other taxes, including state and local taxes,unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions inwhich we conduct business or control property now or in the future, even if they do not live in any of those jurisdictions. Ourunitholders will likely be required to file state and local income tax returns and pay state and local income taxes in some or allof these various jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with thoserequirements. We currently conduct business in several states. Many of which currently impose a personal income tax onindividuals. Many of these states also impose an income tax on corporations and other entities. As we make acquisitions orexpand our business, we may control assets or conduct business in additional states or foreign jurisdictions that impose apersonal income tax. It is your responsibility to file all foreign, federal, state and local tax returns. ITEM 1B.Unresolved Staff Comments None. ITEM 2.Properties We do not currently own or lease any material facilities or properties for storage or maintenance of our compression units.As of December 31, 2014, our headquarters consisted of 18,167 square feet of leased space located at 100 Congress Avenue,Austin, Texas 78701. ITEM 3.Legal Proceedings Please refer to Note 13 of our consolidated financial statements included in this report for a description of our LegalProceedings. ITEM 4.Mine Safety Disclosures None. PART II ITEM 5.Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities Our Partnership Interests As of February 17, 2015, we had outstanding 32,036,276 common units, 14,048,588 subordinated units, a 1.7% generalpartner interest (“General Partner Interest”) and IDRs. As of February 17, 2015, USA Compression Holdings, LLC ownedapproximately 17.3% of our outstanding common units and 100% of our subordinated units. Our general partner currentlyowns a 1.7% general partner interest in us and all of our IDRs. As discussed below under “Selected Information from OurPartnership Agreement— General Partner Interest and IDRs,” the IDRs represent the right to receive increasing percentages, upto a maximum of 48%, of the cash we distribute from operating surplus (as defined below) in excess of $0.4888 per unit perquarter. Our common units, which represent limited partner interests in us, are listed on the New York Stock Exchange(“NYSE”) under the symbol “USAC.” 32 Table of ContentsThe following table sets forth high and low sales prices per common unit and cash distributions per common unit tocommon unitholders for the periods indicated. The last reported sales price for our common units on February 17, 2015, was$19.15. Cash Distribution Price Range Declared Per Period High Low Common Unit Date Paid First Quarter 2013(1) $20.00 $17.25 $0.348 (2)May 14, 2013 Second Quarter 2013 $23.72 $18.77 $0.44 August 14, 2013 Third Quarter 2013 $26.50 $22.50 $0.46 November 14, 2013 Fourth Quarter 2013 $27.12 $22.07 $0.48 February 14, 2014 First Quarter 2014 $28.73 $25.71 $0.49 May 15, 2014 Second Quarter 2014 $28.29 $24.52 $0.50 August 14, 2014 Third Quarter 2014 $26.44 $23.17 $0.505 November 14, 2014 Fourth Quarter 2014 $24.82 $14.45 $0.51 February 13, 2015 (1)Beginning on January 15, 2013 the first day our common units were traded on the NYSE.(2)Prorated to reflect 72 days of a quarterly cash distribution rate of $0.435 per unit. Holders At the close of business on February 17, 2015, based on information received from the transfer agent of the common units,we had 44 holders of record of our common units. The number of record holders does not include holders of common units in“street names” or persons, partnerships, associations, corporations or other entities identified in security position listingsmaintained by depositories. Selected Information from our Partnership Agreement Set forth below is a summary of the significant provisions of our partnership agreement that relate to available cash,minimum quarterly distributions, and the General Partner Interest and the IDRs. Available Cash Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our availablecash to unitholders of record on the applicable record date. Our partnership agreement generally defines available cash, foreach quarter, as cash on hand at the end of a quarter plus cash on hand resulting from working capital borrowings made afterthe end of the quarter less the amount of reserves established by our general partner to provide for the proper conduct of ourbusiness, comply with applicable law, our revolving credit facility or other agreements; and provide funds for distributions toour unitholders for any one or more of the next four quarters. Working capital borrowings are borrowings made under a creditfacility, commercial paper facility or other similar financing arrangement, and in all cases are used solely for working capitalpurposes or to pay distributions to partners and with the intent of the borrower to repay such borrowings within twelve monthsfrom sources other than working capital borrowings. Minimum Quarterly Distribution Our partnership agreement provides that, during the subordination period, the common units will have the right to receivedistributions of available cash from operating surplus each quarter in an amount equal to $0.425 per common unit, whichamount is defined in our partnership agreement as the minimum quarterly distribution, plus any arrearages in the payment ofthe minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash fromoperating surplus may be made on the subordinated units. These units are deemed “subordinated” because for a period of time,referred to as the subordination period, the subordinated units will not be entitled to receive33 Table of Contentsany distributions until the common units have received the minimum quarterly distribution plus any arrearages from priorquarters. Furthermore, no arrearages will be paid on the subordinated units. The practical effect of the subordinated units is toincrease the likelihood that during the subordination period there will be available cash to be distributed on the commonunits. On January 22, 2015, the Partnership announced a cash distribution of $0.51 per unit on its common and subordinatedunits. This fourth quarter distribution corresponds to an annualized distribution rate of $2.04 per unit. The distribution waspaid on February 13, 2015 to unitholders of record as of the close of business on February 3, 2015. USA CompressionHoldings, and Argonaut and certain other related unitholders elected to reinvest all of this distribution with respect to theirunits pursuant to the DRIP. Following the issuance of common units under the DRIP, USAC Compression Holdings owned42.5% of the Partnership’s outstanding limited partner interests, and Argonaut and the related parties participating in theDRIP, owned 16.5% of the Partnership’s outstanding limited partner interests. General Partner Interest and IDRs Our partnership agreement provides that our general partner is entitled to its General Partner Interest of all distributionsthat we make. Our general partner has the right, but not the obligation, to contribute a proportionate amount of capital to us tomaintain its General Partner Interest if we issue additional units. Our general partner’s General Partner Interest, and thepercentage of our cash distributions to which it is entitled, will be proportionately reduced if we issue additional units in thefuture (other than the issuance of common units upon conversion of outstanding subordinated units or the issuance ofcommon units upon a reset of the IDRs) and our general partner does not contribute a proportionate amount of capital to us inorder to maintain its General Partner Interest. Our partnership agreement does not require that our general partner fund itscapital contribution with cash and our general partner may fund its capital contribution by the contribution to us of commonunits or other property. IDRs represent the right to receive increasing percentages (13.0%, 23.0% and 48.0%) of quarterly distributions ofavailable cash from operating surplus after the minimum quarterly distribution and the target distribution levels have beenachieved. Our general partner currently holds the IDRs, but may transfer these rights separately from its General PartnerInterest and without the consent of our limited partners. Issuer Purchases of Equity Securities None. Sales of Unregistered Securities; Use of Proceeds from Sale of Securities None. Equity Compensation Plan For disclosures regarding securities authorized for issuance under equity compensation plans, see Part III, Item 12(“Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters”). ITEM 6.Selected Financial Data SELECTED HISTORICAL FINANCIAL DATA In the table below we have presented certain selected financial data for USA Compression Partners, LP for each of the fiveyears in the period ended December 31, 2014, which has been derived from our audited consolidated financial statements. Thefollowing information should be read together with Management’s Discussion and Analysis of Financial Condition andResults of Operations and the Financial Statements contained in Part II, Item 7. We were acquired by USA Compression Holdings on December 23, 2010, which we refer to as the Holdings Acquisition.In connection with this acquisition, our assets and liabilities were adjusted to fair value on the closing date by application of“push-down” accounting. Due to these adjustments, our audited consolidated financial statements are presented in twodistinct periods to indicate the application of two different bases of accounting between the periods34 Table of Contentspresented: (i) the periods prior to the acquisition date for accounting purposes, using a date of convenience of December 31,2010, are identified as “Predecessor,” and (ii) the periods from December 31, 2010 forward are identified as “Successor.” The following table includes the non-GAAP financial measure of gross operating margin, Adjusted EBITDA and Adjusteddistributable cash flow (or “Adjusted DCF”). For definitions of Gross Operating Margin, Adjusted EBITDA and Adjusted DCF,and reconciliations to such measures to their most directly comparable financial measures calculated and presented inaccordance with GAAP, please read “Non-GAAP Financial Measures” below. Successor(1) Predecessor Years Ended December 31, Year EndedDecember31, 2014 2013 2012 2011 2010 (in thousands, except for unit amounts) Revenues: Contract operations $217,361 $150,360 $116,373 $93,896 $89,785 Parts and service 4,148 2,558 2,414 4,824 2,243 Total revenues 221,509 152,918 118,787 98,720 92,028 Costs of operations, exclusive of depreciation andamortization: Cost of operations 74,035 48,097 37,796 39,605 33,292 Gross operating margin(2) 147,474 104,821 80,991 59,115 58,736 Other operating and administrative costs andexpenses: Selling, general and administrative 38,718 27,587 18,269 12,726 11,370 Restructuring charges(3) - - - 300 - Depreciation and amortization 71,156 52,917 41,880 32,738 24,569 (Gain) loss of sale of assets (2,233) 284 266 178 (90) Impairment of compression equipment 2,266 203 - - - Total other operating and administrative costs andexpenses 109,907 80,991 60,415 45,942 35,849 Operating income 37,567 23,830 20,576 13,173 22,887 Other income (expense): Interest expense, net (12,529) (12,488) (15,905) (12,970) (12,279) Other 11 9 28 21 26 Total other expense (12,518) (12,479) (15,877) (12,949) (12,253) Income before income tax expense 25,049 11,351 4,699 224 10,634 Income tax expense 103 280 196 155 155 Net income 24,946 11,071 4,503 69 10,479 Adjusted EBITDA(2) $114,409 $81,130 $63,484 $51,285 $51,987 Adjusted DCF(2) $85,927 $56,210 $34,928 $22,789 $25,861 Net income per common unit: Basic $0.60 $0.32 $ — $ — $ — Diluted $0.60 $0.32 $ — $ — $ — Cash distributions declared per common unit: $2.01 $1.73 $ — $ — $ — Other Financial Data: Capital expenditures(4) 387,914 159,547 179,977 133,264 18,886 Cash flows provided by (used in): Operating activities 101,891 68,190 41,974 33,782 38,572 Investing activities (380,523) (153,946) (178,589) (140,444) (18,768) Financing activities 278,631 85,756 136,618 106,662 (19,804) Balance Sheet Data (at period end): Working capital(5) $(44,064) $(24,177) $(12,076) $(11,295) $(3,984) Total assets 1,516,482 1,185,884 872,645 727,876 614,718 Long-term debt 594,864 420,933 502,266 363,773 255,491 Partners' equity 839,520 707,727 343,526 339,023 338,954 35 Table of Contents (1)Reflects the push-down of the purchase accounting for the Holdings Acquisition. (2)Please refer to “—Non-GAAP Financial Measures” section below. (3)During the year ended December 31, 2011, we incurred $0.3 million of restructuring charges for severance and retentionbenefits related to the termination of certain administrative employees. These charges are reflected as restructuringcharges in our consolidated statement of operations. These restructuring charges were paid in 2012. (4)On December 15, 2011, we purchased all of the compression units previously leased from Caterpillar for $43 million andterminated all of the lease schedules and covenants under the operating lease facility with Caterpillar. This amount isincluded in capital expenditures for the year ended December 31, 2011. On December 16, 2011, the Partnership enteredinto an agreement with a compression equipment supplier to reduce certain previously made progress payments from$10 million to $2 million. The Partnership applied this $8 million credit to new compression unit purchases from thissupplier in the year ended December 31, 2012. Before the application of this credit, capital expenditures were $188.0million for the year ended December 31, 2012. (5)Working capital is defined as current assets minus current liabilities. Non-GAAP Financial Measures Gross Operating Margin Gross operating margin is a non-GAAP financial measure. We define gross operating margin as revenue less cost ofoperations, exclusive of depreciation and amortization expense. We believe that gross operating margin is useful as asupplemental measure of our operating profitability. Gross operating margin is impacted primarily by the pricing trends forservice operations and cost of operations, including labor rates for service technicians, volume and per unit costs for lubricantoils, quantity and pricing of routine preventative maintenance on compression units and property tax rates on compressionunits. Gross operating margin should not be considered an alternative to, or more meaningful than, operating income or anyother measure of financial performance presented in accordance with GAAP. Moreover, gross operating margin as presentedmay not be comparable to similarly titled measures of other companies. Because we capitalize assets, depreciation andamortization of equipment is a necessary element of our costs. To compensate for the limitations of gross operating margin asa measure of our performance, we believe that it is important to consider operating income determined under GAAP, as well asgross operating margin, to evaluate our operating profitability. 36 Table of ContentsThe following table reconciles gross operating margin to operating income, its most directly comparable GAAP financialmeasure, for each of the periods presented: Successor(1)Predecessor Years Ended December 31, Year EndedDecember31, 2014 2013 2012 2011 2010 (in thousands) Revenues: Contract operations $217,361 $150,360 $116,373 $93,896 $89,785 Parts and service 4,148 2,558 2,414 4,824 2,243 Total revenues 221,509 152,918 118,787 98,720 92,028 Cost of operations, exclusive ofdepreciation and amortization 74,035 48,097 37,796 39,605 33,292 Gross operating margin 147,474 104,821 80,991 59,115 58,736 Other operating andadministrative costs andexpenses: Selling, general andadministrative 38,718 27,587 18,269 12,726 11,370 Restructuring charges - - - 300 -Depreciation andamortization 71,156 52,917 41,880 32,738 24,569 (Gain) loss on sale of assets (2,233) 284 266 178 (90)Impairment of compressionequipment 2,266 203 - - -Total other operating andadministrative costs andexpenses 109,907 80,991 60,415 45,942 35,849 Operating income $37,567 $23,830 $20,576 $13,173 $22,887 (1)Reflects the push-down of the purchase accounting for the Holdings Acquisition. Adjusted EBITDA We define EBITDA as net income before net interest expense, depreciation and amortization expense, and income taxes.We define Adjusted EBITDA as EBITDA plus impairment of compression equipment, interest income, unit basedcompensation expense, restructuring charges, management fees, expenses under our operating lease with Caterpillar, certainfees and expenses related to the Holdings Acquisition, (gain) loss on sale of assets, and transaction expenses. We viewAdjusted EBITDA as one of our primary management tools, and we track this item on a monthly basis both as an absoluteamount and as a percentage of revenue compared to the prior month, year-to-date, prior year and to budget. Adjusted EBITDAis used as a supplemental financial measure by our management and external users of our financial statements, such asinvestors and commercial banks, to assess: ·the financial performance of our assets without regard to the impact of financing methods, capital structure orhistorical cost basis of our assets; ·the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; ·the ability of our assets to generate cash sufficient to make debt payments and to make distributions; and ·our operating performance as compared to those of other companies in our industry without regard to the impact offinancing methods and capital structure. We believe that Adjusted EBITDA provides useful information to investors because, when viewed with our GAAP resultsand the accompanying reconciliations, it provides a more complete understanding of our performance than GAAP resultsalone. We also believe that external users of our financial statements benefit from having access to the same financialmeasures that management uses in evaluating the results of our business. 37 Table of ContentsAdjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, operating income,cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP asmeasures of operating performance and liquidity. Moreover, our Adjusted EBITDA as presented may not be comparable tosimilarly titled measures of other companies. Because we use capital assets, depreciation, impairment and the interest cost of acquiring compression equipment are alsonecessary elements of our costs. Expense related to unit-based compensation expense related to equity awards to employees isalso a necessary component of our business. Therefore, measures that exclude these elements have material limitations. Tocompensate for these limitations, we believe that it is important to consider both net income and net cash provided byoperating activities determined under GAAP, as well as Adjusted EBITDA, to evaluate our financial performance and ourliquidity. Our Adjusted EBITDA excludes some, but not all, items that affect net income and net cash provided by operatingactivities, and these measures may vary among companies. Management compensates for the limitations of Adjusted EBITDAas an analytical tool by reviewing the comparable GAAP measures, understanding the differences between the measures andincorporating this knowledge into management’s decision making processes. The following table reconciles Adjusted EBITDA to net income and net cash provided by operating activities, its mostdirectly comparable GAAP financial measures, for each of the periods presented (in thousands): Predecessor Successor(1) Year Ended Years Ended December 31, December 31, 2014 2013 2012 2011 2010Net income $24,946 $11,071 $4,503 $69 $10,479 Interest expense, net 12,529 12,488 15,905 12,970 12,279 Depreciation and amortization 71,156 52,917 41,880 32,738 24,569 Income taxes 103 280 196 155 155 EBITDA $108,734 $76,756 $62,484 $45,932 $47,482 Impairment of compression equipment(2) 2,266 203 - - -Interest income on capital lease 1,274 - - - -Unit-based compensation expense (3) 3,034 1,343 - - 382 Equipment operating lease expense(4) - - - 4,053 2,285 Riverstone management fee(5) - 49 1,000 1,000 -Restructuring charges(6) - - - 300 -Fees and expenses related to the Holdings Acquisition(7) - - - - 1,838 Transaction expenses for acquisitions (8) 1,299 2,142 - - -Loss(gain) on sale of assets and other (2,198) 637 - - -Adjusted EBITDA $114,409 $81,130 $63,484 $51,285 $51,987 Interest expense, net (12,529) (12,488) (15,905) (12,970) (12,279)Income tax expense (103) (280) (196) (155) (155)Interest income on capital lease (1,274) - - - -Equipment operating lease expense - - - (4,053) (2,285)Riverstone management fee - (49) (1,000) (1,000) -Restructuring charge - - - (300) -Fees and expenses related to the Holdings Acquisition - - - - (1,838)Transaction expenses for acquisitions (1,299) (2,142) - - -Other 1,189 1,839 (58) (920) 3,362 Changes in operating assets and liabilities 1,498 180 (4,351) 1,895 (220)Net cash provided by operating activities $101,891 $68,190 $41,974 $33,782 $38,572 (1)Reflects the push-down of the purchase accounting for the Holdings Acquisition. (2)Represents non-cash charges incurred to write down long-lived assets with recorded values that are not expected to berecovered through future cash flows. (3)For the years ended December 31, 2014 and December 31, 2013, unit-based compensation expense included $0.5 millionand $0, respectively, of cash payments related to quarterly payments of distribution equivalent rights on38 Table of Contentsoutstanding phantom unit awards and $0.3 million and $0, respectively, related to the cash portion of any settlement ofphantom unit awards upon vesting. The remainder of the unit-based compensation expense for 2014 is related to non-cashadjustments to the unit- based compensation liability, and for 2013 is related to the non-cash amortization of unit-basedcompensation in equity. (4)Represents expenses for the respective periods under the operating lease facility with Caterpillar, from whom wehistorically leased compression units and other equipment. On December 15, 2011, we purchased the compression unitsthat were previously leased from Caterpillar for $43 million and terminated all the lease schedules and covenants underthe operating lease facility. As such, we believe it is useful to investors to view our results excluding these leasepayments. (5)Represents management fees paid to Riverstone for services performed during 2013, 2012 and 2011. These fees were notpaid by us as a public company. As such, we believe it is useful to investors to view our results excluding these fees. (6)During the year ended December 31, 2011, we incurred $0.3 million of restructuring charges for severance and retentionbenefits related to the termination of certain administrative employees. These charges are reflected as restructuringcharges in our consolidated statement of operations. These restructuring charges were paid in 2012. We believe that it isuseful to investors to view our results excluding this non-core expense. (7)Represents one-time fees and expenses related to the Holdings Acquisition. These fees and expenses are not related to ouroperations, and we do not expect to incur similar fees or expenses in the future as a publicly traded partnership. (8)Represents the S&R Acquisition expenses incurred along with certain transaction expenses related to potentialacquisitions. Adjusted Distributable Cash Flow We define distributable cash flow as net income plus non-cash interest expense, depreciation and amortization expense,unit based compensation expense and impairment of compression equipment, less maintenance capital expenditures. Wedefine Adjusted DCF as distributable cash flow plus certain transaction fees and (gain) loss on sale of equipment. We believedistributable cash flow and Adjusted DCF are important measures of operating performance because they allow management,investors and others to compare basic cash flows we generate (prior to the establishment of any retained cash reserves by ourgeneral partner and the effect of the DRIP) to the cash distributions we expect to pay our unitholders. Using distributable cashflow and Adjusted DCF, management can quickly compute the coverage ratio of estimated cash flows to planned cashdistributions. Distributable cash flow and Adjusted DCF should not be considered an alternative to, or more meaningful than, netincome, operating income, cash flows from operating activities or any other measure of financial performance presented inaccordance with GAAP as measures of operating performance and liquidity. Moreover, our distributable cash flow andAdjusted DCF as presented may not be comparable to similarly titled measures of other companies. Because we use capital assets, depreciation and impairment of compression equipment, (gain) loss on sale of assets, andmaintenance capital expenditures are necessary elements of our costs. Expense related to unit-based compensation expenserelated to equity awards to employees is also a necessary component of our business. Therefore, measures that exclude theseelements have material limitations. To compensate for these limitations, we believe that it is important to consider both netincome and net cash provided by operating activities determined under GAAP, as well as Adjusted DCF, to evaluate ourfinancial performance and our liquidity. Our Adjusted DCF excludes some, but not all, items that affect net income and netcash provided by operating activities, and these measures may vary among companies. Management compensates for thelimitations of Adjusted DCF as an analytical tool by reviewing the comparable GAAP measures, understanding the differencesbetween the measures and incorporating this knowledge into management’s decision making processes. 39 Table of Contents The following table reconciles Adjusted DCF to net income and net cash provided by operating activities, its mostdirectly comparable GAAP financial measures, for each of the periods presented (in thousands): Predecessor Successor(1) Year Ended Years Ended December 31, December 31, 2014 2013 2012 2011 2010Net income $24,946 $11,071 $4,503 $69 $10,479 Plus: Non-cash interest expense 1,224 2,201 1,855 (1,057) 3,449 Plus: Depreciation and amortization 71,156 52,917 41,880 32,738 24,569 Plus: Unit-based compensation expense (2) 3,034 1,343 - - 382 Plus: Impairment of compression equipment 2,266 203 - - -Less: Maintenance capital expenditures(3) (15,800) (14,304) (13,310) (8,961) (13,018)Distributable cash flow $86,826 $53,431 $34,928 $22,789 $25,861 Transaction expenses for acquisitions (4) 1,299 2,142 - - -Loss (gain) on sale of assets and other (2,198) 637 - - -Adjusted distributable cash flow $85,927 $56,210 $34,928 $22,789 $25,861 Plus: Maintenance capital expenditures 15,800 14,304 13,310 8,961 13,018 Plus: Net gain on change in fair value of interest rate swap - - (2,180) (2,629) -Plus: Change in working capital 1,498 180 (4,351) 1,897 (218)Less: Transaction expenses for acquisitions (1,299) (2,142) - - -Less: Other (35) (362) 267 2,764 (89)Net cash provided by operating activities $101,891 $68,190 $41,974 $33,782 $38,572 (1)Reflects the push-down of the purchase accounting for the Holdings Acquisition. (2)For the years ended December 31, 2014 and December 31, 2013, unit-based compensation expense includes $0.5million and $0, respectively, of cash payments related to quarterly payments of distribution equivalent rights onphantom unit awards and $0.3 million and $0, respectively, related to the cash portion of any settlement of phantomunits upon vesting. The remainder of the unit-based compensation expense for 2014 is related to non-cashadjustments to the unit- based compensation liability, and for 2013 is related to the non-cash amortization of unit-based compensation in equity. (3)Reflects actual maintenance capital expenditures for the period presented. Maintenance capital expenditures arecapital expenditures made to replace partially or fully depreciated assets, to maintain the operating capacity of ourassets and extend their useful lives, or other capital expenditures that are incurred in maintaining our existingbusiness and related cash flow. (4)Represents the S&R Acquisition expenses incurred along with certain transaction expenses related to potentialacquisitions. 40 Table of ContentsThe following table summarizes certain coverage ratios for the periods presented. Years Ended December 31, 2014 2013Adjusted distributable cash flow $85,927 $56,210 GP interest in adjusted distributable cash flow 1,947 1,188 Pre-IPO distributable cash flow - 2,323 Adjusted distributable cash flow attributable to LP interest $83,980 $52,699 Distributions for coverage ratio(1) $85,098 $55,961 Distributions reinvested in the DRIP(2) $52,556 $36,694 Distributions for cash coverage ratio(3) $32,542 $19,267 Adjusted distributable cash flow coverage ratio 0.99 0.94 Cash coverage ratio 2.58 2.74 (1)Calculation reflects the value of the distribution for the weighted average common units outstanding for the yearsended December 31, 2014 and 2013. The adjusted distributable cash flow coverage ratio based on units outstandingat the record dates for each of the periods are 0.97x and 0.91x. For the year ended December 31, 2013, pre-IPOdistributable cash flow was not included in the calculation for the coverage ratio. (2)Represents distribution to holders enrolled in the Partnership's DRIP as of the record date for each period. (3)Calculation reflects the value of cash distributions declared for the weighted average of common and subordinatedunits not participating in the Partnership's DRIP for the year ended December 31, 2014. The cash coverage ratiobased on units outstanding at the record date for the period is 2.46x. For the year ended December 31, 2013, pre-IPOdistributable cash flow was not included in the calculation for the coverage ratio. ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read inconjunction with our consolidated financial statements, the notes thereto, and the other financial information appearingelsewhere in this report. The following discussion includes forward-looking statements that involve certain risks anduncertainties. See Part I (“Disclosure Regarding Forward-Looking Statements”) and Part I, Item 1A (“Risk Factors”). Overview We provide compression services in a number of shale plays throughout the U.S., including the Utica, Marcellus, PermianBasin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville and Fayetteville shales. The demand forour services is driven by the domestic production of natural gas and crude oil; as such, we have focused our activities in areasof attractive production growth, which are generally found in these shale and unconventional resource plays. According torecent studies promulgated by the Energy Information Agency (“EIA”), the production and transportation volumes in theseplays is expected to increase over time due to the comparably attractive economic returns versus returns achieved in manyconventional basins. Furthermore, the changes in production volumes and pressures of shale plays over time require a widerrange of compression services than in conventional basins. We believe the flexibility of our compression units positions uswell to meet these changing operating conditions. While our business focuses largely on compression services servinginfrastructure installations, including centralized natural gas gathering systems and processing facilities, utilizing largehorsepower compression units, typically in shale plays, we also provide compression services in more mature conventionalbasins, including crude oil wells targeted by horizontal drilling techniques. The recent advent of horizontal drilling hasallowed producers to produce incremental volumes of crude oil on economic terms that tend to remain attractive even inperiods of low commodity prices. 41 Table of ContentsGeneral Trends and Outlook A significant amount of our assets are utilized in infrastructure applications, primarily in centralized natural gas gatheringsystems and processing facilities. Given the project nature of these applications and long-term investment horizon of ourcustomers, we have generally experienced stability in rates since 2011 and expect to see continued stability over the medium-to-long term. A small portion of our fleet is used in connection with crude oil production using horizontal drillingtechniques. The recent advent of horizontal drilling has allowed producers to produce incremental volumes of crude oil oneconomic terms that tend to remain attractive even in periods of low commodity prices. In recent months, commodity priceshave declined significantly. As a result, we have experienced and expect to continue to experience some pressure on servicerates until such time as commodity prices return to higher levels. We are closely monitoring developments in our customerbase, but believe that there will continue to be demand for our services given the necessity of compression services inallowing for the transportation and processing of natural gas as well as the production of crude oil. We intend to prudentlygrow the number of compression units in our fleet in order to be positioned to take advantage of attractive marketopportunities, primarily through the purchase of larger horsepower units that tend to generate higher margins and commandlonger contract terms. Our ability to increase our revenues is dependent in large part on our ability to add new revenue generating compressionunits to our fleet while maintaining our utilization and contract rates. For the year ended December 31, 2014, we orderedapproximately 350,000 horsepower of new compression unit equipment, up from the 220,000 horsepower that we expected atyear end December 31, 2013 to be delivered during 2014. Revenue generating horsepower increased by 26.2% fromDecember 31, 2013 to December 31, 2014. We continue to have utilization rates in excess of 90%. Average revenuegenerating horsepower increased by 33.1% from the year ended December 31, 2013 to the year ended December 31, 2014. The EIA has projected that continued natural gas production growth will be supported in the coming years by increases indrilling efficiencies as well as a backlog of drilled but uncompleted wells in major supply areas, such as the Marcellus Shale.Additionally, domestic exports, both to Mexico and through the start-up of various liquefied natural gas (“LNG”) projects inlate 2015 and beyond, are expected to increase. The EIA projects that over 70% of the increased natural gas production tomeet such LNG export demand will come from shale resources. Due to the more pronounced volatility in the price of crudeoil, we expect to experience a general slowdown in the demand for our compression services for gas lift applications, and as aresult some customers have sought service rate relief until commodity prices recover. However, we remain confident thatthrough prudent management of our fleet we will be able to maintain strong utilization throughout 2015. During periods of lower crude oil and natural gas prices, crude oil and natural gas production growth could moderate ordecline in the U.S. A 1% decrease in average revenue generating horsepower of our active fleet during the year endedDecember 31, 2014 would have resulted in a decrease of approximately $2.2 million and $1.5 million in our revenue andgross operating margin, respectively. Gross operating margin is a non-GAAP financial measure. For a reconciliation of grossoperating margin to net income, its most directly comparable financial measure, calculated and presented in accordance withGAAP, please read Part II, Item 6 (“Non-GAAP Financial Measures”). Please also read Part I, Item 1A (“Risk Factors — RisksRelated to Our Business) — A long-term reduction in the demand for, or production of, natural gas or crude oil in the locationswhere we operate could adversely affect the demand for our services or the prices we charge for our services, which couldresult in a decrease in our revenues and cash available for distribution unitholders”). Factors That Affect Our Future Results Customers We provide compression services to major oil companies and independent producers, processors, gatherers andtransporters of natural gas and crude oil, and operate in a number of U.S. natural gas shale plays, including the Fayetteville,Marcellus, Woodford, Barnett, Eagle Ford, Utica, Permian Basin and Haynesville shales. Our customers use our servicesprimarily in large volume gathering systems, processing facilities and transportation applications as well as in gas-liftcompression for crude oil wells. Regardless of the application for which our services are provided, our customers rely upon theavailability of the equipment used to provide compression services and our expertise to help42 Table of Contentsgenerate the maximum throughput of product, reduce fuel costs and reduce emissions. While we are currently focused on ourexisting service areas, our customers have compression demands in other areas of the U.S. in conjunction with their fielddevelopment projects. We continually consider expansion of our areas of operation in the U.S. based upon the level ofcustomer demand. Our modern, flexible fleet of compression units, which have been designed to be rapidly deployed andredeployed throughout the country, provides us with continuing opportunities to expand into other areas with both new andexisting customers. Many of our customers have access to low-cost capital, made available by banks and equipment manufacturers, and haveelected to access this capital to add compression units to their owned compression fleets. Additional purchases of compressionequipment by our customers may result in reduced demand for our compression services by these customers, which couldmaterially reduce our results of operations and cash available for distribution. The recent volatility in commodity prices hascaused many of our customers to reconsider near-term capital budgets, which impacts large-scale natural gas infrastructure andcrude oil production activities. We expect the drop in natural gas prices will cause a delay or cancellation of some customers’projects, and as a result, we have reflected that possibility in our 2015 capital budget. Supply and Demand for Natural Gas and Crude Oil We believe that as a clean alternative to other fuels, natural gas will continue to be a fuel of choice for many years tocome for many industries and consumers. As mentioned above in “General Trends and Outlook,” the EIA continues to forecastrobust total growth in both overall U.S. natural gas production as well as production from shale formations. We believe thislong-term increasing demand for natural gas will create increasing demand for compression services, for both existing naturalgas fields as they age and for the development of new natural gas fields. Additionally, the shift to production of natural gasfrom shale, tight gas and coal bed formations that often have lower producing pressures than conventional reservoirs, results ina further increase in compression needs. In the short-term, changes in natural gas pricing, based primarily upon the supply ofnatural gas, will affect the development activities of natural gas producers based upon the costs associated with finding andproducing natural gas in the particular natural gas and oil fields in which they are active. Although declines in natural gasprices have a negative effect on the development activity in natural gas fields, periods of lower development activity tend toplace emphasis on improving production efficiency. As a result of our commitment to providing a high level of availability ofthe equipment used to provide compression services, we believe our service run times position us to satisfy the needs of ourcustomers. The continued development of horizontal drilling, particularly in crude oil wells, has allowed producers to produceincremental volumes of crude oil from tight oil formations on attractive economic terms. The EIA continues to forecast growthin both overall domestic crude oil production and production from tight oil formations. Gas lift and other artificial lifttechnologies are critical to the enhancement of production of oil from horizontal wells operating in tight shale plays. Gas liftis a process by which natural gas is injected into the production tubing, thus reducing the hydrostatic pressure and allowingthe oil to flow at a higher rate. We believe that our flexible fleet of smaller horsepower units that are primarily utilized in gaslift applications will enable us to capitalize on this growing market demand. While the recent volatility in global crude oilprices may lead to a decline in overall drilling activity, the EIA continues to project near-term crude oil production growth,albeit at a slower rate. This growth in production is expected to be supported by producers redirecting capital investment awayfrom marginal acreage and towards core areas of major tight oil plays. Access to External Expansion Capital In determining the amount of cash available for distribution, the board of directors of our general partner will determinethe amount of cash reserves to set aside for our operations, including reserves for future working capital, maintenance capitalexpenditures, expansion capital expenditures and other matters, which will impact the amount of cash we are able to distributeto our unitholders. However, we expect that we will rely primarily upon external financing sources, including borrowingsunder our revolving credit facility and issuances of debt and equity securities, rather than cash reserves, to fund our expansioncapital expenditures. To the extent we are unable to finance growth externally and are unwilling to establish cash reserves tofund future expansions, our cash available for distribution will not significantly increase. In addition, because we distribute allof our available cash, we may not grow as quickly as businesses that reinvest their available cash to expand ongoingoperations. To the extent we issue additional units in43 Table of Contentsconnection with any expansion capital expenditures, the payment of distributions on those additional units may increase therisk that we will be unable to maintain or increase our per unit distribution level. There are no limitations in our partnershipagreement or in the terms of our revolving credit facility on our ability to issue additional units, including units rankingsenior to the common units. Operating Highlights The following table summarizes certain horsepower and horsepower utilization percentages for the periods presented. Year Ended December 31, Percent Change Operating Data (unaudited): 2014 2013 2012 2014 2013 Fleet horsepower(1) 1,549,020 1,202,374 919,121 28.8 % 30.8 %Total available horsepower(2) 1,623,400 1,278,829 935,681 26.9 %36.7 %Revenue generating horsepower(3) 1,351,052 1,070,457 794,324 26.2 %34.8 %Average revenue generating horsepower(4) 1,200,851 902,168 749,821 33.1 %20.3 %Average revenue per revenue generating horsepower permonth $15.57 $14.15 $13.39 10.0 %5.7 %Revenue generating compression units 2,651 2,137 978 24.1 %118.5 %Average horsepower per revenue generating compressionunit(5) 505 720 791 (29.9)%(9.0)%Horsepower utilization(6): At period end 93.6 % 94.1 % 92.8 % (0.5)%1.4 %Average for the period(7) 94.0 % 93.8 % 94.5 %0.2 %(0.7)% (1)Fleet horsepower is horsepower for compression units that have been delivered to us (and excludes units on order). As ofDecember 31, 2014, we had approximately 230,000 horsepower on order for delivery which is expected to be deliveredprimarily in the first three quarters of 2015.(2)Total available horsepower is revenue generating horsepower under contract for which we are billing a customer,horsepower in our fleet that is under contract but is not yet generating revenue, horsepower not yet in our fleet that isunder contract but not yet generating revenue and that is subject to a purchase order, and idle horsepower. Total availablehorsepower excludes new horsepower on order for which we do not have a compression services contract.(3)Revenue generating horsepower is horsepower under contract for which we are billing a customer.(4)Calculated as the average of the month-end revenue generating horsepower for each of the months in the period.(5)Calculated as the average of the month-end horsepower per revenue generating compression unit for each of the monthsin the period.(6)Horsepower utilization is calculated as (i) the sum of (a) revenue generating horsepower, (b) horsepower in our fleet that isunder contract, but is not yet generating revenue, and (c) horsepower not yet in our fleet that is under contract not yetgenerating revenue and that is subject to a purchase order, divided by (ii) total available horsepower less idle horsepowerthat is under repair. Horsepower utilization based on revenue generating horsepower and fleet horsepower at eachapplicable period end was 87.2%, 89.0% and 86.4%, for the years ended December 31, 2014, 2013 and 2012,respectively.(7)Calculated as the average utilization for the months in the period based on utilization at the end of each month in theperiod. Average horsepower utilization based on revenue generating horsepower was 87.3%, 87.3% and 88.9% for eachyear ended December 31, 2014, 2013, and 2012, respectively. 44 Table of Contents The 28.8% increase in fleet horsepower as of December 31, 2014 is attributable to the compression units added to ourfleet to meet the incremental demand by new and current customers, as a result of increasing natural gas and, to a lesser extent,crude oil production. The 26.2% increase in revenue generating horsepower was primarily due to organic growth in our coremidstream fleet. The 29.9% decrease in average horsepower per revenue generating compression unit was primarily due to theaddition of a fleet of smaller horsepower units in connection with the S&R Acquisition in the fourth quarter of 2013, whichhad the effect of decreasing the average horsepower per revenue generating compression unit over the twelve month periodended December 31, 2014. The 30.8% increase in fleet horsepower as of December 31, 2013 was attributable to the compression units added to ourfleet to meet the incremental demand by new and current customers and the S&R Acquisition. The 34.8% increase in revenuegenerating horsepower was primarily due to organic growth in our core midstream fleet and acquiring compression units undercontract in connection with the S&R Acquisition. The average horsepower per revenue generating compression unit decreasedfrom 791 to 720, or 9.0%, over that same period, due to the smaller horsepower gas lift units that were added to the fleet in theS&R Acquisition. Year Ended December 31,Percent ChangeOther Financial Data: (1) 2014 2013 2012 2014 2013 (in thousands)Gross operating margin$147,474 $104,821 $80,991 40.7 % 29.4 %Gross operating margin percentage(2)66.6 % 68.5 % 68.2 % (2.9)%0.5 %Adjusted EBITDA$114,409 $81,130 $63,484 41.0 %27.8 %Adjusted EBITDA percentage(2)51.6 % 53.1 % 53.4 % (2.6)%(0.6)%Adjusted DCF$85,927 $34,928 $22,789 146.0 %53.3 %Adjusted DCF Coverage(3)0.99 x0.94 x -(5)4.8 % -(5)Cash Coverage(4)2.58 x2.74 x -(5)(5.6)% -(5)(1)Gross operating margin, Adjusted EBITDA, Adjusted DCF, Adjusted DCF Coverage and Cash Coverage are all non-GAAP financial measures. Definitions of each measure, as well as reconciliations of each measure to its most directlycomparable financial measurer(s) calculated and presented in accordance with GAAP, can be found under the caption“Non-GAAP Financial Measures” in Part II, Item 6. (2)Gross operating margin percentage and Adjusted EBITDA percentage are calculated as a percentage of revenue. (3)Adjusted DCF coverage is defined as Adjusted DCF available for limited partners for the period divided by distributionsdeclared to limited partner unitholders for the period, excluding cash distributions to the General Partner and incentivedistribution rights. (4)Cash Coverage ratio is defined as Adjusted DCF available for limited partners for the period divided by cash distributionspaid to limited partner unitholders after consideration of the DRIP, excluding cash distributions to our general partnerand the IDRs. (5)The Partnership did not complete its initial public offering until January 18, 2013. Therefore, coverage ratio informationis not applicable for the 2012 period. Adjusted EBITDA. The increase in Adjusted EBITDA during the year ended December 31, 2014 was primarilyattributable to higher gross operating margin as a result of a 26.2% increase in horsepower during 2014 and a full year impactof the horsepower added in 2013 both organically and through the S&R Acquisition, partially offset by higher selling, generaland administrative expense. The increase in Adjusted EBITDA during the year ended December 31, 2013 was primarily attributable to higher grossoperating margin as a result of a 34.8% increase in horsepower during 2013 in connection with the S&R45 Table of ContentsAcquisition, as well as organic growth. The S&R Acquisition accounted for $9.5 million of Adjusted EBITDA from the date ofacquisition (August 30, 2013) through December 31, 2013. Adjusted Distributable Cash Flow. The increase in Adjusted DCF during the year ended December 31, 2014 wasprimarily due to increases in the gross operating margin as a result of a 26.2% increase in horsepower during 2014 and a fullyear impact of the horsepower added in 2013 both organically and through the S&R Acquisition, partially offset by higherselling, general and administrative expense, higher maintenance capital expenditures, and higher cash interest expense, net. The increase in Adjusted DCF during the year ended December 31, 2013 was primarily attributable to higher grossoperating margin as a result of a 34.8% increase in horsepower during 2013 in connection with the S&R Acquisition, as wellas organic growth, and lower cash interest expense, partially offset by higher maintenance capital expenditures. The S&RAcquisition accounted for $9.2 million of Adjusted DCF from the date of acquisition (August 30, 2013) through December 31,2013. Financial Results of Operations Year ended December 31, 2014 compared to the year ended December 31, 2013 The following table summarizes our results of operations for the periods presented: Year Ended December 31, Percent 2014 2013 Change (in thousands) Revenues: Contract operations $217,361 $150,360 44.6 %Parts and service 4,148 2,558 62.2 %Total revenues 221,509 152,918 44.9 %Costs and expenses: Cost of operations, exclusive of depreciation and amortization 74,035 48,097 53.9 %Gross operating margin 147,474 104,821 40.7 %Other operating and administrative costs and expenses: Selling, general and administrative 38,718 27,587 40.3 %Depreciation and amortization 71,156 52,917 34.5 %(Gain) loss on sale of assets (2,233) 284 (886.3)%Impairment of compression equipment 2,266 203 1,016.3 %Total other operating and administrative costs and expenses 109,907 80,991 35.7 %Operating income 37,567 23,830 57.6 %Other income (expense): Interest expense, net (12,529) (12,488) 0.3 %Other 11 9 22.2 %Total other expense (12,518) (12,479) 0.3 %Income before income tax expense 25,049 11,351 120.7 %Income tax expense 103 280 (63.2)%Net income $24,946 $11,071 125.3 % Contract operations revenue. During 2014, we saw an increase in overall natural gas activity in the U.S. and experiencedan increase in demand for our compression services. Because the demand for our services is driven primarily by production ofnatural gas, we focus our activities in areas of attractive growth, which are generally found in certain shale andunconventional resource plays, as discussed above under the heading “Factors That Affect Our Future Results.” The 33.1%increase in average revenue generating horsepower was primarily due to organic growth along with the full year impact of theaddition of assets in connection with the S&R Acquisition in August 2013. Average revenue per revenue generatinghorsepower per month increased by 10.0%, primarily due to higher revenue per horsepower per month from the full yearimpact of the addition of smaller horsepower compression units in connection with the S&R46 Table of ContentsAcquisition and organic growth thereafter. Smaller horsepower compression units typically generate higher revenue perhorsepower per month than large horsepower compression units. The 24.1% increase in revenue generating compression unitsand the 26.2% increase in revenue generating horsepower as of December 31, 2014 was primarily due to organic growth. Parts and service revenue. Parts and service revenue was comprised of pass-through revenue and retail servicerevenue. Pass-through revenue was earned primarily on freight and crane charges that are directly reimbursable by ourcustomers, for which we earn no margin. Retail service revenue consisted of maintenance work on units at our customers’locations that are outside the scope of our core maintenance activities. We offered these services as a courtesy to ourcustomers and the demand fluctuates from period to period based on the varying needs of our customers. Cost of operations, exclusive of depreciation and amortization. The increase in cost of operations was primarilyattributable to the increase in our fleet size. Certain cost increases consisted of (1) a $9.2 million increase in direct laborexpenses, (2) a $4.5 million increase in lubrication oil expenses due to an 88.3% increase in gallons consumed, partially offsetby a 2.9% decrease in the average price per gallon paid, (3) a $3.1 million increase in property taxes, (4) a $2.7 millionincrease in maintenance parts, (5) a $2.0 million increase in retail parts and services, (6) a $1.7 million increase related to thevehicle fleet, and (7) a $0.9 million increase in training and safety expense. The 88.3% increase in gallons of lubrication oilconsumed was a result of an increase in the number of smaller horsepower gas lift units within our fleet for which we areresponsible for providing fluids. The cost of fluids was generally included in service fees quoted to customers. These factorswere primarily attributable to the increase in our fleet size due to organic growth, along with a full year of operations related toassets acquired in connection with the S&R Acquisition. Gross operating margin. The $42.7 million increase in gross operating margin was due to higher revenues offset byhigher operating expenses during the year. The 1.9% decrease in gross operating margin percentage from 68.5% for the yearended December 31, 2013 to 66.5% for the year ended December 31, 2014 was partially attributable to (1) an increase inproperty taxes for the units acquired in the S&R Acquisition, (2) higher parts costs associated with the larger horsepower unitsplaced in late 2013 and throughout 2014, and (3) an increase in remote monitoring expenses as we continue to add themonitoring service to more compression units in our fleet. Selling, general and administrative expense. Approximately $6.0 million of the increase in selling, general andadministrative expense was related to a rise in salaries and benefits related to (i) an increase in employee headcount to supportoperations and sales management and (ii) the addition of certain additional executive positions. Additionally, we expensed anadditional $1.7 million of unit-based compensation expense related to the issuance of phantom units in 2014 under our 2013Long-Term Incentive Plan (the “LTIP”), along with a $0.5 million increase in professional fees. The selling, general andadministrative employee headcount was 110 as of December 31, 2014, a 37.5% increase from December 31, 2013. The selling,general and administrative employee headcount increased to support the continued growth of the business, including growthresulting from the S&R Acquisition. Depreciation and amortization expense. The $17.9 million increase in depreciation expense was related to an increase ingross property and equipment balances during 2014 and a full year impact of depreciation expense on assets acquired inconnection with the S&R Acquisition. The $0.4 million increase in amortization expense was primarily due to a full year ofamortization expense on intangible assets acquired in connection with the S&R Acquisition. Impairment of compression equipment. During 2014 we evaluated the future deployment of our idle fleet and, as a result,recognized impairment on certain compression units and reduced the book value of each such unit to its estimated fair value. The fair value of each such unit was estimated based on an analysis of the expected net sale proceeds compared to otherrecently sold compression units in our fleet, other units recently offered for sale by third parties, and the estimated componentvalue of the compression units of a similar type remaining in our fleet. Interest expense, net. The increase in net interest expense was attributable to the impact of a $127.9 million increase inaverage outstanding borrowings, offset by a $0.9 million decrease in amortization of deferred loan costs, $1.3 million ofinterest income related to the Capital Lease Transaction (as defined in Note 5 of our consolidated financial statements) andlower interest rates. Average borrowings outstanding under our revolving credit facility were $498.7 million for the47 Table of Contentsyear ended December 31, 2014 compared to $370.8 million for the year ended December 31, 2013. Our revolving creditfacility had an average interest rate of 2.22% and 2.43% during December 31, 2014 and 2013, respectively. Income tax expense. This line item represents the Texas franchise tax (applicable to income apportioned to Texas). Weincurred $102,738 and $279,972 in franchise tax for the years ended December 31, 2014 and 2013, respectively, as a result ofthe Texas franchise tax. Year ended December 31, 2013 compared to the year ended December 31, 2012 The following table summarizes our results of operations for the periods presented: Year Ended December 31, Percent 2013 2012 Change (in thousands) Revenues: Contract operations $150,360 $116,373 29.2 %Parts and service 2,558 2,414 6.0 %Total revenues 152,918 118,787 28.7 %Costs and expenses: Cost of operations, exclusive of depreciation and amortization 48,097 37,796 27.3 %Gross operating margin 104,821 80,991 Other operating and administrative costs and expenses: Selling, general and administrative 27,587 18,269 51.0 %Depreciation and amortization 52,917 41,880 26.4 %(Gain) loss on sale of assets 284 266 6.8 %Impairment of compression equipment 203 Total other operating and administrative costs and expenses 80,991 60,415 34.1 %Operating income 23,830 20,576 15.8 %Other income (expense): Interest expense (12,488) (15,905) (21.5)%Other 9 28 (67.9)%Total other expense (12,479) (15,877) (21.4)%Income before income tax expense 11,351 4,699 141.6 %Income tax expense 280 196 42.9 %Net income $11,071 $4,503 145.9 % Contract operations revenue. The increase in revenue was attributable to both organic growth as well as the S&RAcquisition. During 2013, we saw an increase in overall natural gas activity in the U.S. and experienced a correspondingincrease in demand for our compression services. Because the demand for our services is driven primarily by production ofnatural gas, we focus our activities in areas of attractive growth, which were generally found in certain shale andunconventional resource plays, as discussed above under the heading “Factors that Affect Our Future Results”. The S&RAcquisition accounted for $14.5 million of revenue from the date of acquisition (August 30, 2013) through December 31,2013. The 20.3% increase in average revenue generating horsepower was primarily due to 13.8% organic growth and 6.5%due to the addition of assets in connection with the S&R Acquisition. Average revenue per revenue generating horsepower permonth increased by 5.7%, of which 4.7% was due to higher revenue per horsepower per month from the addition of assets inconnection with the S&R Acquisition. Revenue generating compression units increased by 118.5%, of which 109.8% was dueto the addition of assets in connection with the S&R Acquisition and 8.7% was due to organic growth. Revenue generatinghorsepower increased by 34.8%, of which 15.7% was due to organic growth and 19.1% was due to the addition of assets inconnection with the S&R Acquisition. Parts and service revenue. Parts and service revenue was $2.6 million for the year ended December 31, 2013 compared to$2.4 million in 2012, or a 6.0% increase. 48 Table of ContentsCost of operations, exclusive of depreciation and amortization. The increase was primarily attributable to the increase inour fleet size as a result of the organic growth described above and the S&R Acquisition. The following costs increased as aresult of the growth in our fleet size (1) a $1.5 million increase in lubrication oil expenses due to a 21.7% increase in gallonsconsumed, partially offset by a 3.9% decrease in the average price per gallon paid, (2) a $2.4 million increase in direct laborexpenses, (3) a $0.9 million increase in training and safety expense, (4) a $0.2 million increase related to vehicle tools andgasoline and (5) a $4.4 million increase in cost of operations due to the S&R Acquisition. In addition, business and propertyinsurance increased by $0.4 million primarily due to certain insurance claims on our compression units and the increase in thesize of our fleet. The cost of operations was 31.5% of revenue for the year ended December 31, 2013 as compared to 31.8% forthe year ended December 31, 2012. Gross operating margin. The $23.8 million increase in gross operating margin was due to higher revenues offset byoperating expenses during the year. The gross operating margin percentage was materially consistent with 2012. Selling, general and administrative expense. Approximately $3.1 million of the increase in selling, general andadministrative expense was related to a rise in salaries and benefits due to (i) an increase in employee headcount to supportoperations and sales management and (ii) the addition of certain executive positions to operate as a public company.Additionally, the Partnership expensed $1.3 million of unit-based compensation expense related to the issuance of phantomunits in 2013 under the LTIP. Other significant increases included (1) a $0.5 million due to increased sales support costs,(2) $3.8 million of increased professional fees, including $2.1 million related to the S&R Acquisition and (3) $0.3 million ofincreased computer hardware and software expenses, all of which were attributable to increased employee headcount andsupport services and (4) $0.6 million increase in expenses due to the S&R Acquisition, primarily related to personnel costs. Inaddition, business and property insurance increased by $0.6 million due to certain insurance claims on our compression unitsand the increase in the size of our fleet and were offset by a $1.0 million decrease in management fees that are no longer owedby the Partnership subsequent to its initial public offering. The selling, general and administrative employee headcount was86 (including 6 as a result of the S&R Acquisition) at December 31, 2013, a 45.8% increase from December 31, 2012. Theselling, general and administrative employee headcount increased to support the continued growth of the business, includingthe S&R Acquisition. Selling, general and administrative expense represented 18.0% and 15.4% of revenue for the yearsended December 31, 2013 and 2012, respectively. Depreciation and amortization expense. The 26.4% increase in depreciation and amortization expense was related to anincrease in property, plant and equipment, including the S&R Acquisition, of 39.8% for the year ended December 31, 2013 ascompared to December 31, 2012. For the period of August 30, 2013 to December 31, 2013 the S&R Acquisition accounted for$3.7 million of depreciation and amortization. Interest expense. Included in interest expense was amortization of deferred loan costs of $2.2 million and $1.9 million forthe years ended December 31, 2013 and 2012, respectively. Interest expense for both periods was related to borrowings underour revolving credit facility. Average borrowings outstanding under our revolving credit facility were $370.8 million for theyear ended December 31, 2013 compared to $442.1 million for the year ended December 31, 2012. Our revolving creditfacility had an interest rate of 2.17% and 2.96% at December 31, 2013 and 2012, respectively, and an average interest rate of2.43% and 2.99%, excluding the effects from the interest rate swap instruments discussed below for 2012. The composite fixedinterest rate for $140 million of notional coverage under three interest rate swap instruments was 2.52% at December 31, 2011plus the applicable margin of 2.75%. These interest rate swaps expired during 2012. We did not designate our swapagreements as cash flow hedges. As a result, amounts paid or received from the interest rate swaps were charged or credited tointerest expense. For the year ended December 31, 2012, we recorded a fair value gain of $2.2 million, with respect to theseswaps as a reduction in interest expense. Income tax expense. We incurred approximately $279,972 and $196,040 in franchise tax for the years endedDecember 31, 2013 and 2012, respectively, as a result of the Texas franchise tax. 49 Table of ContentsLiquidity and Capital Resources Overview We operate in a capital-intensive industry, and our primary liquidity needs are to finance the purchase of additionalcompression units and other capital expenditures, service our debt, fund working capital, and pay distributions. As describedbelow, our revolving credit facility contains a financial covenant requiring us to maintain leverage below a maximumleverage ratio. As a result of our need to comply with such financial covenant, we expect borrowings under our revolvingcredit facility, cash generated from operations and issuance of debt securities will likely be insufficient to fund all of our short-term liquidity needs and that we will likely need to issue equity securities in the next twelve months. We expect, however, tobe able to remain in compliance with such financial covenant by one or more of the following actions: delay a discretionaryportion of our capital expenditures; issue equity in conjunction with the acquisition of another business; issue equity in apublic or private offering; or request an equity infusion pursuant to the terms of our revolving credit facility. In addition to organic growth, we may also consider a variety of assets or businesses for potential acquisition. Because wedistribute all of our available cash, we expect to fund any future capital expenditures or acquisitions primarily with capitalfrom external financing sources, such as borrowings under our revolving credit facility and issuances of debt and equitysecurities. In addition, as our fleet matures and expands, our long-term maintenance capital expenditures will likely increase.We are not aware of any regulatory changes or environmental liabilities that we currently expect to have a material impact onour current or future operations. Please see “—Capital Expenditures” below. Cash Flows The following table summarizes our sources and uses of cash for the years ended December 31, 2014, 2013 and 2012: Year Ended December 31, 2014 2013 2012 (in thousands)Net cash provided by operating activities $101,891 $68,190 $41,974 Net cash used in investing activities (380,523) (153,946) (178,589)Net cash provided by financing activities 278,631 85,756 136,618 Net cash provided by operating activities. The increase in net cash provided by operating activities from the year endedDecember 31, 2013 to the year ended December 31, 2014 relates primarily to higher gross operating margin offset by higherselling, general and administrative expenses. Net cash provided by operating activities increased for the year ended December 31, 2013 from the year endedDecember 31, 2012. The increase relates primarily to an increase in net income during the year ended December 31, 2013, dueto the increase in the size of our operating fleet, and a $4.5 million increase in working capital in 2013 due to increasedpurchases and timing of payments for new compression units and related equipment. Net cash used in investing activities. For the year ended December 31, 2014, net cash used in investing activitiesrelated primarily to the purchase of new compression units in response to increased demand, partially offset by $1.4 million ofproceeds from the sale of equipment during 2014. For the year ended December 31, 2013, net cash used in investing activities related primarily to the purchase of newcompression units, partially offset by (1) $2.2 million of proceeds from the sale of equipment during the 2013 and (2) cashreceived as part of a purchase price adjustment related to the S&R Acquisition of $3.4 million during 2013. Net cash provided by financing activities. During 2014, we borrowed, on a net basis, $173.9 million primarily to supportour purchases of new compression units and related equipment, as described above. During May 2014, we50 Table of Contentscompleted an equity offering and utilized the net proceeds of $138.0 million to pay down our revolving credit facility. During2014, we also made distributions to our unitholders of $32.3 million. For the year ended December 31, 2013, we paid down, on a net basis, $81 million on our revolving credit facility dueprimarily to the application of $180.6 million in proceeds from our initial public offering, offset by approximately $100million in net borrowings to support our purchases of new compression units and related equipment. During 2013, we alsomade distributions to our unitholders of $14.7 million. Capital Expenditures The compression business is capital intensive, requiring significant investment to maintain, expand and upgrade existingoperations. Our capital requirements have consisted primarily of, and we anticipate that our capital requirements will continueto consist primarily of, the following: ·maintenance capital expenditures, which are capital expenditures made to replace partially or fully depreciatedassets, to maintain the operating capacity of our assets and extend their useful lives, or other capital expenditures thatare incurred in maintaining our existing business and related cash flow; and ·expansion capital expenditures, which are capital expenditures made to expand the operating capacity or revenuegenerating capacity of existing or new assets, including by acquisition of compression units or through modificationof existing compression units to increase their capacity. We classify capital expenditures as maintenance or expansion on an individual asset basis. We expect that ourmaintenance capital expenditure requirements will continue to increase as the overall size and age of our fleet increases. Ouraggregate maintenance capital expenditures for the years ended December 31, 2014 and 2013 were $15.8 million and $14.3million, respectively. We currently plan to spend approximately $20 million in maintenance capital expenditures during2015. Given our growth objectives and anticipated demand from our customers as a result of the increasing natural gas activitydescribed above under the heading “—General Trends and Outlook,” we anticipate that we will continue to make significantexpansion capital expenditures. Without giving effect to any equipment we may acquire pursuant to any future acquisitions,we currently expect to spend between $250 million and $270 million in expansion capital expenditures during 2015. Ourexpansion capital expenditures for the years ended December 31, 2014 and 2013 were $372.1 million and $323.7 million,respectively. Of the $323.7 million in 2013, $178.5 million (including $120.0 million of fixed assets, $7.6 million ofintangible assets and $51.0 million of goodwill) related to the S&R Acquisition and was financed through the issuance of7,425,261 common units to S&R’s owners. Description of Revolving Credit Facility As of December 31, 2014, we had outstanding borrowings of $594.9 million, borrowing availability based on ourborrowing base of $255.1 million and, subject to financial covenants as of December 31, 2014, borrowing availability underour revolving credit facility of $133.3 million. The borrowing base consists of eligible accounts receivable, inventory andcompression units. Financial covenants permitted a maximum leverage ratio of 5.50 to 1.0 as of December 31, 2014 and 5.95to 1.0 as of March 31, 2015. As of February 17, 2015, we had outstanding borrowings of $657.4 million. For a detailed description of our revolving credit facility including the covenants and restrictions contained therein,please see Note 7 to our consolidated financial statements. Sale of Common Units In May 2014, we sold 5,600,000 common units at a price to the public of $25.59 per common units, resulting in proceeds,net of underwriting discounts and offering expenses of $138.0 million. We primarily used the proceeds from this offering toreduce borrowings under our revolving credit facility. In connection with this offering, certain selling51 Table of Contentsunitholders, including USA Compression Holdings and Argonaut, sold a combined total of 1,990,000 common units. We didnot receive any proceeds from the common units sold by such selling unitholders. Distribution Reinvestment Plan The DRIP provides our common unitholders a means by which they can increase the number of common units they ownby reinvesting the quarterly cash distributions, which they would otherwise receive in cash, into the purchase of additionalcommon units. As of February 17, 2015, a total of 3,882,146 common units had been issued pursuant to the DRIP. Continuous Offering Program On November 12, 2014, we entered into an Equity Distribution Agreement with the sales agents party thereto, whichestablished our continuous offering program whereby we may issue common units having an aggregate offering amount of upto $150 million (the “COP”). We did not issue any common units or receive any proceeds under the COP in the year endedDecember 31, 2014. Total Contractual Cash Obligations The following table summarizes our total contractual cash obligations as of December 31, 2014: Payments Due by Period More than Contractual Obligations Total 1 year 2 - 3 years 4 - 5 years 5 years (in thousands) Long-term debt(1) $594,864 $— $— $594,864 $— Interest on long-term debt obligations(2) 63,611 12,849 25,698 25,064 — Equipment/capital purchases(3) 233,126 233,126 — — — Operating lease obligations(4) 6,173 1,563 2,568 2,042 — Total contractual cash obligations $897,774 $247,538 $28,266 $621,970 $ — (1)Represents future principal repayments under our revolving credit facility. (2)Represents future interest payments under our revolving credit facility based on the interest rate as of December 31, 2014of 2.16%. (3)Represents commitments for new compression units that are being fabricated, and is a component of our overall projectedexpansion capital expenditures during 2015 of $250 million to $270 million. (4)Represents commitments for future minimum lease payments on noncancelable leases. Effects of Inflation. Our revenues and results of operations have not been materially impacted by inflation and changingprices in the past three fiscal years. Off-Balance Sheet Arrangements Please refer to Note 13 of our consolidated financial statements included in this report for a description of ourcommitments and contingencies, including off-balance sheet arrangements. Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based upon our financial statements.These financial statements were prepared in conformity with GAAP. As such, we are required to make certain estimates,judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the52 Table of Contentsfinancial statements and the reported amounts of revenue and expenses during the periods presented. We base our estimates onhistorical experience, available information and various other assumptions we believe to be reasonable under thecircumstances. On an ongoing basis, we evaluate our estimates; however, actual results may differ from these estimates underdifferent assumptions or conditions. The accounting policies that we believe require management’s most difficult, subjectiveor complex judgments and are the most critical to its reporting of results of operations and financial position are as follows: Business Combinations and Goodwill Goodwill acquired in connection with business combinations represents the excess of consideration over the fair value ofnet assets acquired. Certain assumptions and estimates are employed in determining the fair value of assets acquired andliabilities assumed, as well as in determining the allocation of goodwill to the appropriate reporting unit. Goodwill is notamortized, but is reviewed for impairment annually based on the carrying values as of October 1, or more frequently ifimpairment indicators arise that suggest the carrying value of goodwill may not be recovered. Goodwill—Impairment Assessments We test for potential impairment of goodwill annually on October 1 of the fiscal year and additionally wheneverindicators of impairment arise. The timing of the annual test may result in charges to our statement of operations in our fourthfiscal quarter that could not have been reasonably foreseen in prior periods. As described in Note 1 to our consolidated financial statements in order to estimate the fair value of goodwill we use aweighted combination of a discounted cash flow model, distributable cash flow, and a multiple of EBITDA (known as theincome approach) and calculation of our market capitalization (known as the market capitalization approach). The incomeapproach requires us to use a number of assumptions, including market factors specific to the business, the amount and timingof estimated future cash flows to be generated by the business over an extended period of time, long-term growth rates for thebusiness, and a rate of return that considers the relative risk of achieving the cash flows and the time value of money. We haveone reporting unit and evaluate cash flows at the reporting unit level. Although the assumptions we use in our discountedcash flow model are consistent with the assumptions we use to generate our internal strategic plans and forecasts, significantjudgment is required to estimate the amount and timing of future cash flows and the relative risk of achieving those cashflows. When using the market capitalization approach, we make judgments about the comparability of publicly tradedpartnerships engaged in similar businesses. We base our judgments on factors such as size, growth rates, profitability, risk,control premium, and return on investment. We had a total of $208.1 million in goodwill on our balance sheet as of December31, 2014, all of which is allocated to our single reporting unit. On October 1, 2014, we performed our annual goodwill impairment test. We updated our impairment test as of December31, 2014 as certain potential impairment indicators were identified during the fourth quarter. As described in Note1, “Description of Business and Summary of Significant Accounting Policies – Goodwill,” in step one of that test wecompared the estimated fair value of each reporting unit to its carrying value. The estimated fair value of our reporting unit of$1.5 billion as of December 31, 2014 exceeded its carrying value of $1.4 billion by approximately 7%, or $100 million, andwe concluded that it was not impaired. Consequently, we recorded no goodwill impairment charges for the twelve monthsended December 31, 2014. As discussed above, estimates of fair value can be affected by a variety of external and internal factors. The recent crudeoil price volatility has caused disruptions in global energy industries and markets. Potential events or circumstances thatcould reasonably be expected to negatively affect the key assumptions we used in estimating the fair value of our reportingunit include the consolidation or failure of crude oil and natural gas producers, which may result in a smaller market forservices and may cause us to lose key customers, and cost-cutting efforts by crude oil and natural gas producers, which maycause us to lose current or potential customers or achieve less revenue per customer. If the estimated fair value of our reportingunit declines due to any of these factors, we may be required to record future goodwill impairment charges. 53 Table of ContentsLong-Lived Assets Long-lived assets, which include property and equipment, and intangible assets, comprise a significant amount of ourtotal assets. Long-lived assets to be held and used by us are reviewed to determine whether any events or changes incircumstances, including the removal of compression units from our active fleet, indicate the carrying amount of the asset maynot be recoverable. For long-lived assets to be held and used, we base our evaluation on impairment indicators such as thenature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and otherexternal market conditions or factors that may be present. If such impairment indicators are present or other factors exist thatindicate the carrying amount of the asset may not be recoverable, we determine whether an impairment has occurred throughthe use of an undiscounted cash flows analysis. If an impairment has occurred, we recognize a loss for the difference betweenthe carrying amount and the estimated fair value of the asset. The fair value of the asset is measured using quoted marketprices or, in the absence of quoted market prices, is based on an estimate of discounted cash flows, the expected net saleproceeds compared to other fleet units we recently sold, a review of other units recently offered for sale by third parties, or theestimated component value of similar equipment we plan to continue to use. We recorded $2.3 million and $0.2 million inimpairment of compression equipment for the years ended December 31, 2014 and 2013, respectively. We did not recordimpairment of long-lived assets in 2012. Potential events or circumstances that could reasonably be expected to negatively affect the key assumptions we used inestimating whether or not the carrying value of our long-lived assets are recoverable include the consolidation or failure ofcrude oil and natural gas producers, which may result in a smaller market for services and may cause us to lose key customers,and cost-cutting efforts by crude oil and natural gas producers, which may cause us to lose current or potential customers orachieve less revenue per customer. If our projections of cash flows associated with our units decline, we may have to record animpairment of compression equipment in future periods. Allowances and Reserves We maintain an allowance for bad debts based on specific customer collection issues and historical experience. On anongoing basis, we conduct an evaluation of the financial strength of our customers based on payment history and specificidentification of customer bad debt and make adjustments to the allowance as necessary. The allowance for doubtful accountswas $374,198, $246,410 and $259,638 as of December 31, 2014, 2013 and 2012, respectively. Revenue Recognition Revenue is recognized by us using the following criteria: (i) persuasive evidence of an arrangement, (ii) delivery hasoccurred or services have been rendered, (iii) the customer’s price is fixed or determinable and (iv) collectability is reasonablyassured. Revenue from compression services is recognized as earned under our fixed fee contracts. Compression services generallyare billed monthly in advance of the service period, except for certain customers which are billed at the beginning of theservice month, and are recognized as deferred revenue on the balance sheet until earned. Recent Accounting Pronouncements We qualify as an emerging growth company under Section 109 of the Jumpstart Our Business Startups, (“JOBS”) Act. Anemerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of theSecurities Act for complying with new or revised accounting standards. In other words, an emerging growth company candelay the adoption of certain accounting standards until those standards would otherwise apply to private companies.However, we have chosen to “opt out” of such extended transition period, and as a result, are compliant with new or revisedaccounting standards on the relevant dates on which adoption of such standards is required for non-emerging growthcompanies. Section 108 of the JOBS Act provides that our decision to opt out of the extended transition period for complyingwith new or revised accounting standards is irrevocable. For more discussion on specific recent accounting pronouncements affecting us, please see Note 12 to our consolidatedfinancial statements.54 Table of Contents ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk Commodity Price Risk Market risk is the risk of loss arising from adverse changes in market rates and prices. We do not take title to any naturalgas or crude oil in connection with our services and, accordingly, have no direct revenue exposure to fluctuating commodityprices. However, the demand for our compression services depends upon the continued demand for, and production of, naturalgas and crude oil. Lower natural gas prices or crude oil prices over the long term could result in a decline in the production ofnatural gas or crude oil, which could result in reduced demand for our compression services. Please read Part I, Item 1A (“RiskFactors — Risks Related to Our Business”). We do not intend to hedge our indirect exposure to fluctuating commodity prices. Historically, crude oil and natural gas prices in the U.S. have been volatile. Global crude oil prices have fallen recentlycompared to levels seen over the past 18 months. West Texas Intermediate crude oil spot prices as of December 31, 2014 were50% and 46% lower than prices at June 30, 2014 and December 31, 2013, respectively. Periods of lower crude oil and naturalgas prices could potentially have a negative impact on the demand for our compression services. A 1% decrease in averagerevenue generating horsepower of our active fleet during the year ended December 31, 2014 would have resulted in a decreaseof approximately $2.2 million and $1.5 million in our revenue and gross operating margin, respectively. Gross operatingmargin is a non-GAAP financial measure. For a reconciliation of gross operating margin to net income, its most directlycomparable financial measure, calculated and presented in accordance with GAAP, please read Part II, Item 6 (“— Non-GAAPFinancial Measures”). Interest Rate Risk We are exposed to market risk due to variable interest rates under our financing arrangements. As of December 31, 2014 we had approximately $594.9 million of variable-rate outstanding indebtedness at a weighted-average interest rate of 2.22%. A 1% increase in the effective interest rate on our variable-rate outstanding debt as ofDecember 31, 2014 would result in an annual increase in our interest expense of approximately $5.9 million. For further information regarding our exposure to interest rate fluctuations on our debt obligations, see Note 7 to ourconsolidated financial statements. We may, in the future, hedge all or a portion of our variable rate debt. Credit Risk Our credit exposure generally relates to receivables for services provided. If any significant customer of ours should havecredit or financial problems resulting in a delay or failure to repay the service fees owed to us, this could have a materialadverse effect on our business, financial condition, results of operations or cash flows. ITEM 8.Financial Statements and Supplementary Data The financial statements and supplementary information specified by this Item are presented in Part IV, Item 15. ITEM 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. 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 participationof our management, including our principal executive officer and principal financial officer, the55 Table of Contentseffectiveness 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 aredesigned to provide reasonable assurance that the information required to be disclosed by us in reports that we file under theExchange Act is accumulated and communicated to our management, including our principal executive officer and principalfinancial 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 upon the evaluation, ourprincipal executive officer and principal financial officer have concluded that, except with respect to the event describedbelow, our disclosure controls and procedures were effective as of December 31, 2014 at the reasonable assurance level. In connection with another filing, we identified that the Partnership had not timely filed a Current Report on Form 8-Krelating to the appointment by the board of directors of our general partner of Michael D. Lenox as principal accountingofficer of the Partnership, The Partnership filed the Current Report on Form 8-K promptly after such identification, and ourmanagement has designed additional controls and procedures to provide reasonable assurance that we timely file futureCurrent Reports on Form 8-K within the time periods specified in the rules and forms of the SEC relating to such reports. 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 ofour published financial statements. There are inherent limitations to the effectiveness of any control system, however well designed, including the possibilityof human error and the possible circumvention or overriding of controls. Further, the design of a control system must reflectthe fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Managementmust make judgments with respect to the relative cost and expected benefits of any specific control measure. The design of acontrol system also is based in part upon assumptions and judgments made by management about the likelihood of futureevents, and there can be no assurance that a control will be effective under all potential future conditions. As a result, even aneffective system of internal control over financial reporting can provide no more than reasonable assurance with respect to thefair 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, 2014. Inmaking this assessment, management used the criteria set forth by the 2013 Committee of Sponsoring Organizations of theTreadway Commission in Internal Control — Integrated Framework. Based on this assessment, our management believes that,as of December 31, 2014, our internal control over financial reporting was effective. This report does not include an attestationreport of the company’s registered public accounting firm due to a transition period established by rules of the SEC foremerging growth companies. 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) and15d-15(f)) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internalcontrol over financial reporting. ITEM 9B.Other Information None. 56 Table of ContentsPART III ITEM 10.Directors, Executive Officers and Corporate Governance Board of Directors Our general partner, USA Compression GP, LLC, manages our operations and activities. Our general partner is not electedby our unitholders and is not subject to re-election on a regular basis in the future. Our general partner has a board of directorsthat manages our business. The board of directors of our general partner is comprised of eight members, all of whom have been designated by USACompression Holdings and three of whom are independent as defined under the independence standards established by theNYSE. The NYSE does not require a listed limited partnership like us to have a majority of independent directors on the boardof directors of our general partner or to establish a compensation committee or a nominating committee. The non-management directors regularly meet in executive session without management directors. Mr. Long is currentlyour only management director. Forrest E. Wylie presides at such meetings. Interested parties can communicate directly withnon-management directors by mail in care of the General Counsel and Secretary at USA Compression Partners, LP, 100Congress Avenue, Suite 450, Austin, Texas 78701. Such communications should specify the intended recipient or recipients.Commercial solicitations or communications will not be forwarded. Independent Directors. The board of directors of our general partner has determined that Robert F. End, John D. Chandlerand Forrest E. Wylie are independent directors under the standards established by the NYSE and the Exchange Act. The boardof directors of our general partner considered all relevant facts and circumstances and applied the independent guidelines ofthe NYSE and the Exchange Act in determining that none of these directors has any material relationship with us, ourmanagement, our general partner or its affiliates or our subsidiaries. In addition, in October 2014, Mr. Chandler was appointed to serve on the board of directors and the audit committee ofCONE Midstream GP, LLC (“CONE”). During the period of Mr. Chandler’s appointment for the year ended December 31,2014, subsidiaries of CONE made compression service payments to us of approximately $1.7 million. The board of directorsof our general partner made a determination that the CONE relationship did not preclude the independence of Mr. Chandler. Audit Committee. The board of directors of our general partner has appointed an audit committee comprised solely ofdirectors who meet the independence and experience standards established by the NYSE and the Exchange Act. The auditcommittee consists of Robert F. End, John D. Chandler and Forrest E. Wylie. Mr. Chandler serves as chairman of the auditcommittee. The board of directors of our general partner has determined that Mr. Chandler is an “audit committee financialexpert” as defined in Item 407(d)(5)(ii) of SEC Regulation S-K, and that each of Messrs. End, Chandler and Wylie is“independent” within the meaning of the applicable NYSE and Exchange Act rules regulating audit committee independence.The audit committee assists the board of directors of our general partner in its oversight of the integrity of our financialstatements and our compliance with legal and regulatory requirements and corporate policies and controls. The auditcommittee has the sole authority to retain and terminate our independent registered public accounting firm, approve allauditing services and related fees and the terms thereof, and pre-approve any non-audit services to be rendered by ourindependent registered public accounting firm. The audit committee is also responsible for confirming the independence andobjectivity of our independent registered public accounting firm. Our independent registered public accounting firm will begiven unrestricted access to the audit committee. A copy of the charter of the audit committee is available under the InvestorRelations tab on our website at www.usacpartners.com. We also will provide a copy of the charter of the audit committee toany of our unitholders without charge upon written request to Investor Relations, 100 Congress Avenue, Suite 450, Austin, TX78701. Compensation Committee. The NYSE does not require a listed limited partnership like us to have a compensationcommittee. However, the board of directors of our general partner has established a compensation committee to, among otherthings, oversee the compensation plans described below in Part III, Item 11 (“Executive Compensation”). The57 Table of Contentscompensation committee establishes and reviews general policies related to our compensation and benefits. Thecompensation committee has the responsibility to determine and make recommendations to the board of directors of ourgeneral partner with respect to, the compensation and benefits of the board of directors and executive officers of our generalpartner. A copy of the charter of the compensation committee is available under the Investor Relations tab on our website atwww.usacpartners.com. We also will provide a copy of the charter of the compensation committee to any of our unitholderswithout charge upon written request to Investor Relations, 100 Congress Avenue, Suite 450, Austin, TX 78701. Conflicts Committee. As set forth in the limited liability company agreement of our general partner, our general partnermay, from time to time, establish a conflicts committee to which the board of directors of our general partner will appointindependent directors and which may be asked to review specific matters that the board of directors of our general partnerbelieves may involve conflicts of interest between us, our limited partners and USA Compression Holdings. The conflictscommittee will determine the resolution of the conflict of interest in any manner referred to it in good faith. The members ofthe conflicts committee may not be officers or employees of our general partner or directors, officers or employees of itsaffiliates, including USA Compression Holdings, and must meet the independence and experience standards established bythe NYSE and the Exchange Act to serve on an audit committee of a board of directors of our general partner, and certain otherrequirements. Any matters approved by the conflicts committee in good faith will be conclusively deemed to be fair andreasonable to us, approved by all of our partners and not a breach by our general partner of any duties it may owe us or ourunitholders. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires the board of directors and executive officers of our general partner, andpersons who own more than 10 percent of a registered class of our equity securities, to file with the SEC and any exchange orother system on which such securities are traded or quoted initial reports of ownership and reports of changes in ownership ofour common units and other equity securities. Officers, directors and greater than 10 percent unitholders are required by theSEC’s regulations to furnish to us and any exchange or other system on which such securities are traded or quoted with copiesof all Section 16(a) forms they filed with the SEC. To our knowledge, based solely on a review of the copies of such reportsfurnished to us, we believe that all reporting obligations of the officers and directors of our general partner and greater than 10percent unitholders under Section 16(a) were satisfied during the year ended December 31, 2014. Corporate Governance Guidelines and Code of Ethics The board of directors of our general partner has adopted Corporate Governance Guidelines that outline importantpolicies and practices regarding our governance and provide a framework for the function of the board of directors of ourgeneral partner and its committees. The board of directors of our general partner has also adopted a Code of Business Conductand Ethics (the “Code”) that applies to our general partner and its subsidiaries and affiliates, including us, and to all of its andtheir directors, employees and officers, including its principal executive officer, principal financial officer and principalaccounting officer. Copies of the Corporate Governance Guidelines and the Code are available under the Investor Relationstab on our website at www.usacpartners.com. We also will provide copies of the Corporate Governance Guidelines and theCode to any of our unitholders without charge upon written request to Investor Relations, 100 Congress Avenue, Suite 450,Austin, TX 78701. Reimbursement of Expenses of Our General Partner Our general partner will not receive any management fee or other compensation for its management of us. Our generalpartner and its affiliates will be reimbursed for all expenses incurred on our behalf, including the compensation of employeesof our general partner or its affiliates that perform services on our behalf. These expenses include all expenses necessary orappropriate to the conduct of our business and that are allocable to us. Our partnership agreement provides that our generalpartner will determine in good faith the expenses that are allocable to us. There is no cap on the amount that may be paid orreimbursed to our general partner or its affiliates for compensation or expenses incurred on our behalf. 58 Table of ContentsDirectors and Executive Officers The following table shows information as of February 17, 2015 regarding the current directors and executive officers ofUSA Compression GP, LLC. Name Age Position with USA Compression GP, LLCEric D. Long 56 President and Chief Executive Officer and DirectorMatthew C. Liuzzi 40 Vice President, Chief Financial Officer and TreasurerJ. Gregory Holloway 57 Vice President, General Counsel and SecretaryDavid A. Smith 52 Vice President and President, Northeast RegionWilliam G. Manias 52 Vice President and Chief Operating OfficerJohn D. Chandler 45 DirectorJim H. Derryberry 70 DirectorRobert F. End 59 DirectorWilliam H. Shea, Jr. 60 DirectorAndrew W. Ward 48 DirectorOlivia C. Wassenaar 35 DirectorForrest E. Wylie 51 Director The directors of our general partner hold office until the earlier of their death, resignation, removal or disqualification oruntil their successors have been elected and qualified. Officers serve at the discretion of the board of directors of our generalpartner. There are no family relationships among any of the directors or executive officers of our general partner. Eric D. Long has served as our President and Chief Executive Officer since September 2002 and has served as a director ofUSA Compression GP, LLC since June 2011. Mr. Long co-founded USA Compression in 1998 and has over 30 years ofexperience in the oil and gas industry. From 1980 to 1987, Mr. Long served in a variety of technical and managerial roles forseveral major pipeline and oil and natural gas producing companies, including Bass Enterprises Production Co. and TexasOil & 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 directorsof the Wiser Oil Company, an 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 aregistered Professional Engineer in the state of Texas. As a result of his professional background, Mr. Long brings to us executive level strategic, operational and financialskills. These skills, combined with his over 30 years of experience in the oil and natural gas industry, including in particularhis experience in the compression services sector, make Mr. Long a valuable member of the board of directors of our generalpartner. Matthew C. Liuzzi has served as our Vice President, Chief Financial Officer and Treasurer since January 2015. Prior tosuch time, Mr. Liuzzi served as our Senior Vice President – Strategic Development since joining us in April 2013. Mr. Liuzzijoined us after nine years in investment banking, since 2008 at Barclays, where he was most recently a Director in the GlobalNatural Resources Group in Houston. At Barclays, Mr. Liuzzi worked primarily with midstream clients on a variety ofinvestment banking assignments, including initial public offerings, public and private debt and equity offerings, as well asstrategic advisory assignments. He holds a B.A. and an M.B.A., both from the University of Virginia. J. Gregory Holloway has served as our Vice President, General Counsel and Secretary since joining us in June 2011. FromSeptember 2005 through June 2011, Mr. Holloway was a partner at Thompson & Knight LLP in its Austin office. His areas ofpractice at the firm included corporate, securities and merger and acquisition law. Mr. Holloway received his B.A. from RiceUniversity and his J.D., with honors, from the University of Texas School of Law. 59 Table of ContentsDavid A. Smith has served as our President, Northeast Region since joining us in November 1998 and was appointedcorporate Vice President in June 2011. Mr. Smith has approximately 20 years of experience in the natural gas compressionindustry, primarily in operations and sales. From 1985 to 1989, Mr. Smith was a sales manager for McKenzie Corporation, acompression fabrication company. From 1989 to 1996, Mr. Smith held positions of General Manager and Regional Managerof Northeast Division with Compressor Systems Inc., a fabricator and supplier of compression services. Mr. Smith was theRegional Manager in the northeast for Global Compression Services, Inc., a compression services company, and served in thatcapacity from 1996 to 1998. Mr. Smith received an associates degree in Automotive and Diesel Technology from RosedaleTechnical Institute. William G. Manias has served as our Vice President and Chief Operating Officer since July 2013. He served as a directorof our general partner from February 2013 to July 2013. From October 2009 until January 2013, Mr. Manias served as SeniorVice President and Chief Financial Officer of Crestwood Midstream Partners LP and its affiliates, where his generalresponsibilities included managing the partnership’s financial and treasury activities. Before joining Crestwood inJanuary 2009, Mr. Manias was the Chief Financial Officer of TEPPCO Partners, L.P. starting in January 2006. FromSeptember 2004 until January 2006, he served as Vice President of Business Development and Strategic Planning atEnterprise Product Partners L.P. He previously served as Vice President and Chief Financial Officer of GulfTerra EnergyPartners, L.P. from February 2004 to September 2004 at which time GulfTerra Energy Partners, L.P. was merged with EnterpriseProduct Partners L.P. Prior to GulfTerra Energy Partners, L.P., Mr. Manias held several executive management positions withEl Paso Corporation. Prior to El Paso, he worked as an energy investment banker for J.P. Morgan Securities Inc. and itspredecessor companies from May 1992 to August 2001. Mr. Manias earned a B.S.E. in civil engineering from PrincetonUniversity in 1984, a M.S. in petroleum engineering from Louisiana State University in 1986 and an M.B.A. from RiceUniversity in 1992. John D. Chandler has served as a director of USA Compression GP, LLC since October 2013. Mr. Chandler has alsoserved on the board of directors and the audit committee of CONE since October 2014. From 2009 to March 2014,Mr. Chandler served as Senior Vice President and Chief Financial Officer of Magellan GP, LLC, the general partner ofMagellan Midstream Partners, LP. From 2003 until 2009, he served in the same capacities for the general partner of MagellanMidstream Holdings, L.P. From 1999 to 2002, Mr. Chandler was Director of Financial Planning and Analysis and Director ofStrategic Development for a subsidiary of The Williams Companies, Inc. From 1992 to 1999, Mr. Chandler held variousaccounting and finance positions with MAPCO Inc. Mr. Chandler received his B.S. and B.A. in accounting and finance fromthe University of Tulsa. Mr. Chandler’s experience in the energy industry, particularly through his position as the Chief Financial Officer of thegeneral partner of Magellan Midstream Partners, LP, will provide additional industry perspective to the board of directors ofour general partner. He will bring us helpful perspective regarding company growth, having been an officer at Magellan sinceits spin-off from the Williams Companies in 2003. In addition, his understanding of the midstream master limited partnershipsector in particular and of the unique issues related to operating publicly traded limited partnerships should help him makevaluable contributions to us. Jim H. Derryberry has served as a director of USA Compression GP, LLC since January 2013. From February 2005 toOctober 2006, Mr. Derryberry served on the board of directors of Magellan GP, LLC, the general partner of MagellanMidstream Partners, L.P. Mr. Derryberry served as chief operating officer and chief financial officer of Riverstone Holdings,LLC until 2006 and currently serves as a special advisor. Prior to joining Riverstone, Mr. Derryberry was a managing directorof J.P. Morgan, where he served as head of the Natural Resources and Power Group. Before joining J.P. Morgan, Mr. Derryberrywas in the Goldman Sachs Global Energy and Power Group where he was responsible for mergers and acquisitions, capitalmarkets financing and the management of relationships with major energy companies. He has also served as an advisor to theRussian government for energy privatization. Mr. Derryberry has served as a member of the Board of Overseers for the HooverInstitution at Stanford University and is a member of the Engineering Advisory Board at the University of Texas at Austin. Hereceived his B.S. and M.S. degrees in engineering from the University of Texas at Austin and earned an M.B.A. from StanfordUniversity. Mr. Derryberry brings significant knowledge and expertise to the board of directors of our general partner from his serviceon other boards and his years of experience in our industry including his useful insight into investments and60 Table of Contentsproven leadership skills as a managing director of Riverstone Holdings, LLC. As a result of his experience and skills, webelieve Mr. Derryberry is a valuable member of the board of directors of our general partner. Robert F. End has served as a director of USA Compression GP, LLC since November 2012. Mr. End served as a directorof Hertz Global Holdings, Inc. from December 2005 until August 2011. Mr. End was a Managing Director of TransportationResource Partners (“TRP”), a private equity firm from 2009 through 2011. Prior to joining TRP in 2009, Mr. End had been aManaging Director of Merrill Lynch Global Private Equity Division (“MLGPE”), the private equity arm of Merrill Lynch &Co., Inc., where he served as Co-Head of the North American Region, and a Managing Director of Merrill Lynch GlobalPrivate Equity, Inc., the Manager of ML Global Private Equity Fund, L.P., a proprietary private equity fund which he joined in2004. Previously, Mr. End was a founding Partner and Director of Stonington Partners Inc., a private equity firm established in1994. Prior to leaving Merrill Lynch in 1994, Mr. End was a Managing Director of Merrill Lynch Capital Partners, MerrillLynch’s private equity group. Mr. End joined Merrill Lynch in 1986 and worked in the Investment Banking Division beforejoining the private equity group in 1989. Mr. End received his A.B. from Dartmouth College and his M.B.A. from the TuckSchool of Business Administration at Dartmouth College. Mr. End brings significant knowledge and expertise to the board of directors of our general partner from his service onother boards and his years of experience with private equity groups, including his useful insight into investments and businessdevelopment and proven leadership skills as Managing Director of MLGPE. As a result of this experience and resulting skillsset, we believe Mr. End is a valuable member of the board of directors of our general partner. William H. Shea, Jr. has served as a director of USA Compression GP, LLC since June 2011. Mr. Shea is also thechairman of the board of directors, President and Chief Executive Officer of Niska Gas Storage Partners LLC and has served insuch role since May 2014. Previously, Mr. Shea served as the President and Chief Operating Officer of Buckeye GP LLC andits predecessor entities (“Buckeye”), from July 1998 to September 2000, as President and Chief Executive Officer of Buckeyefrom September 2000 to July 2007, and Chairman from May 2004 to July 2007. From August 2006 to July 2007, Mr. Sheaserved as Chairman of MainLine Management LLC, the general partner of Buckeye GP Holdings, L.P., and as President andChief Executive Officer of MainLine Management LLC from May 2004 to July 2007. Mr. Shea served as a director of PennVirginia Corp. from July 2007 to March 2010, and as President and Chief Executive Officer of the general partner of PennVirginia GP Holdings, L.P. from March 2010 to October 2013 and as Chief Executive Officer of the general partner of PVRPartners, L.P. (“PVR”), from March 2010 to October 2013. Mr. Shea has also served as a director of Kayne Anderson EnergyTotal Return Fund, Inc., and Kayne Anderson MLP Investment Company since March 2008 and Niska Gas Storage PartnersLLC since May 2010. Mr. Shea has an agreement with Riverstone, pursuant to which he has agreed to serve on the boards ofcertain Riverstone portfolio companies. Mr. Shea received his B.A. from Boston College and his M.B.A. from the University ofVirginia. Mr. Shea’s experiences as an executive with both PVR and Buckeye, energy companies that operate across a broadspectrum of sectors, including coal, natural gas gathering and processing and refined petroleum products transportation, havegiven him substantial knowledge about our industry. In addition, Mr. Shea has substantial experience overseeing the strategyand operations of publicly traded partnerships. As a result of this experience and resulting skill set, we believe Mr. Shea is avaluable member of the board of directors of our general partner. Andrew W. Ward has served as a director of USA Compression GP, LLC since June 2011. Mr. Ward has served as aPrincipal of Riverstone from 2002 until 2004, as a Managing Director since January 2005 and as a Partner and ManagingDirector since July 2009, where he focuses on the firm’s investment in the midstream sector of the energy industry. Mr. Wardserved on the boards of directors of Buckeye and MainLine Management LLC from May 2004 to June 2006. Mr. Ward hasalso served on the board of directors of Gibson Energy Inc. since 2008 and Niska Gas Storage Partners LLC since May 2006.Mr. Ward received his A.B. from Dartmouth College and received his M.B.A. from the UCLA Anderson School ofManagement. Mr. Ward’s experience in evaluating the financial performance and operations of companies in our industry make him avaluable member of the board of directors of our general partner. In addition, Mr. Ward’s work with Gibson Energy, Inc.,Buckeye and Niska Gas Storage Partners LLC has given him both an understanding of the midstream sector of the energybusiness and of the unique issues related to operating publicly traded limited partnerships. 61 Table of ContentsOlivia C. Wassenaar has served as a director of USA Compression GP, LLC since June 2011. Ms. Wassenaar was anAssociate with Goldman, Sachs & Co. in the Global Natural Resources investment banking group from July 2007 toAugust 2008, where she focused on mergers, equity and debt financings and leveraged buyouts for energy, power andrenewable energy companies. Ms. Wassenaar joined Riverstone in September 2008 as Vice President, and has served as aPrincipal since May 2010. In this capacity, she invests in and monitors investments in the midstream, exploration &production, and solar sectors of the energy industry. Ms. Wassenaar has also served on the board of directors of NorthernBlizzard Resources Inc. since June 2011 and on the board of directors of Talos Energy LLC. Ms. Wassenaar received her A.B.,magna cum laude, from Harvard College and earned an M.B.A. from the Wharton School of the University of Pennsylvania. Ms. Wassenaar’s experience in evaluating financial and strategic options and the operations of companies in our industryand as an investment banker make her a valuable member of the board of directors of our general partner. Forrest E. Wylie has served as a director of USA Compression GP, LLC since March 2013. Mr. Wylie served as the Non-Executive Chairman of the board of directors of Buckeye GP LLC, the general partner of Buckeye Partners, L.P., fromFebruary 2012 to August 2014. He served as Chairman of the Board, CEO and a director of Buckeye GP LLC from June 2007to February 2012. Mr. Wylie also served as a director of the general partner of Buckeye GP Holdings L.P., the former parentcompany of Buckeye (“BGH”) from June 2007 until the merger of BGH with Buckeye Partners, L.P. on November 2010. Priorto his appointment, he served as Vice Chairman of Pacific Energy Management LLC, an entity affiliated with Pacific EnergyPartners, L.P., a refined product and crude oil pipeline and terminal partnership, from March 2005 until Pacific EnergyPartners, L.P. merged with Plains All American, L.P. in November 2006. Mr. Wylie was President and CFO of NuCoastalCorporation, a midstream energy company, from May 2002 until February 2005. From November 2006 to June 2007,Mr. Wylie was a private investor. Mr. Wylie served on the board of directors and the audit committee of Coastal EnergyCompany, a publicly traded entity, until April 2011. Mr. Wylie also served on board of directors and compensation andnominating and corporate governance committees of Eagle Bulk Shipping Inc. until May 2010. Mr. Wylie’s experience in the energy industry, through his prior position as the CEO of a publicly traded partnership andthe past employment described above, has given him both an understanding of the midstream sector of the energy businessand of the unique issues related to operating publicly traded limited partnerships that make him a valuable member of theboard of directors of our general partner. ITEM 11.Executive Compensation As is commonly the case for many publicly traded limited partnerships, we have no employees. Under the terms of ourpartnership agreement, we are ultimately managed by our general partner. All of our employees, including our executiveofficers are employees of USAC Management, a wholly owned subsidiary of our general partner. We sometimes refer herein toUSAC Management’s management and executive officers as “our management” and “our executive officers,” respectively. Executive Compensation We are an “emerging growth company” as defined under the Jumpstart Our Business Startups (JOBS) Act. As such, we arepermitted to meet the disclosure requirements of Item 402 of Regulation S-K by providing the reduced disclosure required of a“smaller reporting company.” Executive Summary This Executive Compensation disclosure provides an overview of the executive compensation program for our namedexecutive officers identified below. Our general partner intends to provide our named executive officers with compensationthat is significantly performance based. For the year ended December 31, 2014, our named executive officers (“NEOs”), were: ·Eric D. Long, President and Chief Executive Officer; 62 Table of Contents·Joseph C. Tusa, Jr., Vice President, Chief Financial Officer and Treasurer; and ·J. Gregory Holloway, Vice President, General Counsel and Secretary. On January 10, 2015, Joseph C. Tusa, Jr. resigned as Vice President, Chief Financial Officer and Treasurer for personalreasons. On January 10, 2015, the board of directors of our general partner appointed Matthew C. Liuzzi as Vice President,Chief Financial Officer and Treasurer. We expect Mr. Liuzzi to be a named executive officer for the year ending December 31,2015. Summary Compensation Table The following table sets forth certain information with respect to the compensation paid to our NEOs for the years endedDecember 31, 2013 and 2014. All Other Unit Awards Compensation Name and Principal Position Year Salary ($) Bonus ($) (1) ($)(2) ($) Total ($)Eric D. Long 2014 488,462 650,500 1,000,000 270,562 (3) 2,409,524 President and Chief Executive Officer 2013 400,000 450,000 1,200,000 36,966 (4) 2,086,966 Joseph C. Tusa, Jr. 2014 297,115 — 600,000 120,957 (5) 1,018,072 Vice President, Chief Financial Officer andTreasurer 2013 275,000 225,000 700,000 10,650 (6) 1,210,650 J. Gregory Holloway(7) 2014 244,231 227,750 500,000 88,058 (8) 1,060,039 Vice President, General Counsel andSecretary (1)Represents the awards earned under annual cash incentive bonus program for the years ended December 31, 2013 and2014. For a discussion of the determination of the 2014 bonus amounts, see “—Annual Performance BasedCompensation for 2014” below. (2)On February 20, 2014, each of our NEOs received an award of phantom units under our LTIP. Each phantom unit is theeconomic equivalent of one common unit. Mr. Tusa forfeited all unvested phantom units in connection with hisresignation on January 10, 2015. The phantom unit values reflect the grant date fair value of the awards calculated inaccordance with FASB ASC Topic 718. For a detailed discussion of the assumptions utilized in coming to these values,please see Note 7 to our consolidated financial statements. (3)Includes $223,465 of distribution equivalent rights, $18,000 of automobile allowance, $8,818 of club membership dues,$7,800 of employer contributions under the 401(k) plan, $3,248 of parking, $7,231 of personal administrative assistantsupport and $2,000 of personal tax support. Please see a description of the distribution equivalent rights under “—Discretionary Long-Term Equity Incentive Awards” below. (4)Includes $18,000 of automobile allowance, $8,316 of club membership dues, $7,650 of employer contributions under the401(k) plan and $3,000 of parking. (5)Includes $107,909 of distribution equivalent rights, $7,800 of employer contributions under the 401(k) plan, $3,248 ofparking and $2,000 of personal tax support. (6)Includes $7,650 of employer contributions under the 401(k) plan and $3,000 of parking. (7)Mr. Holloway was not an NEO for the 2013 fiscal year, therefore we have not reported his compensation for the 2013fiscal year. 63 Table of Contents(8)Includes $76,978 of distribution equivalent rights, $7,327 of employer contributions under the 401(k) plan, $1,754 ofparking and $2,000 of personal tax support. Narrative Disclosure to Summary Compensation Table Elements of the Compensation Program Compensation for our NEOs consists primarily of the elements, and their corresponding objectives, identified in thefollowing table. Compensation Element Primary Objective Base salary To recognize performance of job responsibilities and toattract and retain individuals with superior talent. Annual performance-based compensation To promote near-term performance objectives and rewardindividual contributions to the achievement of thoseobjectives. Discretionary long-term equity incentive awards To emphasize long-term performance objectives, encouragethe maximization of unitholder value and retain keyexecutives by providing an opportunity to participate in theownership of our partnership. Severance benefits To encourage the continued attention and dedication of keyindividuals and to focus the attention of such keyindividuals when considering strategic alternatives. 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-efficientmanner by providing benefits with high perceived values atrelatively low cost. Base Compensation For 2014 and 2015 Base salaries for our NEOs have generally been set at a level deemed necessary to attract and retain individuals withsuperior talent. Base salary increases are determined based upon the job responsibilities, demonstrated proficiency andperformance of the executive officers and market conditions, each as assessed by the board of directors of our general partneror the chief executive officer (for non-chief executive officer compensation) in conjunction with the compensation committee.No formulaic base salary increases are provided to the NEOs. For 2014 and 2015, in connection with determining base salariesfor each of our NEOs, the board of directors of our general partner, compensation committee and chief executive officerworked with a compensation consultant to determine comparable salaries for our peer group, which we identified based on areview of companies in our industry with similar characteristics. Based upon the information provided by the compensation consultant with respect to a review of base salary informationof companies within our peer group, the board of directors of our general partner determined during 2014 to move towardstargeting base salaries more directly in-line with our peer group. For 2015, the board of directors of our general partnerdetermined that base salary should be set at approximately the 50 percentile of the peer group. The64 thTable of Contents2014 and current 2015 base salaries for our NEOs, including for our Chief Executive Officer, are set forth in the followingtable: 2014 Base SalaryCurrent 2015Base SalaryName and Principal Position ($)($)Eric D. Long President and Chief Executive Officer 500,000 590,000 Joseph C. Tusa, Jr., former Vice President, Chief Financial Officer and Treasurer 300,000 N/AJ. Gregory Holloway Vice President, General Counsel and Secretary 250,000 305,000 Annual Performance-Based Compensation For 2014 In February 2014, the board of directors of our general partner approved the adoption of an Annual Cash Incentive Plan(the “Cash Plan”). Each of our NEOs is entitled to participate in the Cash Plan and their potential bonus is governed both bythe Cash Plan and their employment agreement. The compensation committee acts as the administrator of the Cash Plan underthe supervision of the full board of directors of our general partner, and has the discretion to amend, modify or terminate theCash Plan at any time upon approval by the board of directors of our general partner. The board of directors of our general partner sets a target bonus amount (the “Target Bonus”) for each NEO prior to orduring the first quarter of the calendar year. For the year ended December 31, 2014, the Target Bonus for each NEO was$500,000 for Mr. Long, $250,000 for Mr. Tusa and $175,000 for Mr. Holloway. In connection with his resignation, Mr. Tusaforfeited his bonus. The Target Bonus is generally subject to the satisfaction of both a partnership performance goal and anindividual performance goal. Fifty percent (50%) of the Target Bonus is subject to our achievement of our budgeted adjusteddistributable cash flow level (“Adjusted DCF”) for the year, as determined by our board of directors of our generalpartner. Payouts with respect to the portion of the bonus subject to Adjusted DCF (the “Adjusted DCF Bonus”) generally donot occur unless we have satisfied the threshold set for Adjusted DCF. For 2014, the board of directors of our general partnerset the threshold for Adjusted DCF at $81 million. The threshold, target and maximum requirements for the Adjusted DCFtarget for each year, as well as the portion of the Adjusted DCF Bonus that could become payable if performance was satisfiedfor the year, are set forth below: Adjusted DCF as a Percentage of Percentage of Budgeted Adjusted DCF Levels of Adjusted Adjusted DCF for Bonus that would DCF Bonus the 2015 Year be Paid Threshold 80 % 50 %Target 100 % 100 %Maximum 110 % 200 % If Adjusted DCF performance falls in between threshold and target, or between target and maximum, the amounts payableare adjusted ratably using straight line interpolation. If Adjusted DCF is satisfied above maximum levels, the potentialpayment of the Adjusted DCF Bonus is capped at the maximum level of 200%. The remaining fifty percent (50%) of the Target Bonus is subject to individual objectives specific to each eligibleindividual’s role at USAC (the “Individual Bonus”). The individual objectives are agreed upon in advance between the NEOand his immediate supervisor (or, with respect to the chief executive officer, between the board of directors of our generalpartner and the chief executive officer) and such objectives address the key priorities for that NEO’s position. They mayinclude key operating objectives as well as personal development criteria. The Individual Bonus is subject to a maximumpayout of 100% of the targeted Individual Bonus amount, although the board of directors of our general partner has discretionto pay out smaller amounts ranging from 0% to 100%, at their sole discretion, after analyzing the individual’s personalperformance for the year. In connection with the Individual Bonus for the year ended December 31, 2014, each of the NEOsmet with their immediate supervisor (or, with respect to the chief executive officer, the board of directors of our generalpartner) to set individual objectives that reflected the responsibilities and priorities of their position. 65 Table of ContentsIn the aggregate, the maximum amount payable with respect to a Target Bonus under the Plan is 150%, as the AdjustedDCF Bonus is capped at 200% of target and the Individual Bonus is capped at 100% of target. Target Bonuses, if any, arepaid within one week following delivery by our independent auditor of the audit of our financial statements for the year inwhich the Target Bonus relates, but in no case later than March 15 of the year following the year in which the Target Bonusrelates. For the year ended December 31, 2014, Adjusted DCF exceeded the target threshold by slightly in excess of 6%, whichresulted in the Adjusted DCF portion of the Cash Plan (comprising one-half of the overall Bonus) being paid to each NEO(except Mr. Tusa who forfeited his bonus upon resignation) at a rate of approximately 160% for such portion of theBonus. With respect to the Individual Bonus portion of the overall Bonus, each NEO (except Mr. Tusa who forfeited hisbonus upon resignation) was determined by his immediate supervisor (which in the case of the chief executive officer is theboard of directors of our general partner) to have satisfied his individual objectives and therefore was entitled to receive 100%of the Individual Bonus. The board of directors of our general partner exercised its discretion to make immaterial adjustmentsto the bonus amounts for the 2014 year, thus awards made pursuant to the Cash Plan with respect to the 2014 year were: Eric D. Long $650,500 J. Gregory Holloway$227,750 As Mr. Tusa resigned prior to the delivery of the audit of our financial statements for the year ending December 31, 2014,he forfeited his award under the Cash Plan. Benefit Plans and Perquisites We provide our executive officers, including our NEOs, with certain personal benefits and perquisites, which we do notconsider to be a significant component of executive compensation but which we recognize are an important factor inattracting and retaining talented executives. Executive officers are eligible under the same plans as all other employees withrespect to our medical, dental, vision, disability and life insurance plans and a defined contribution plan that is tax-qualifiedunder Section 401(k) of the Internal Revenue Code and that we refer to as the 401(k) Plan. We also provide certain executiveofficers with an annual automobile allowance. We provide these supplemental benefits to our executive officers due to therelatively low cost of such benefits and the value they provide in assisting us in attracting and retaining talented executives.The value of personal benefits and perquisites we provide to each of our NEOs is set forth above in our “—SummaryCompensation Table.” Discretionary Long-Term Equity Incentive Awards In connection with our initial public offering, our board of directors of our general partner adopted the LTIP. The LTIPwas designed to promote our interests, as well as the interests of our unitholders, by rewarding the officers, employees anddirectors of us, our subsidiaries and our general partner for delivering desired performance results, as well as by strengtheningour and our general partner’s ability to attract, retain and motivate qualified individuals to serve as officers, employees anddirectors. The LTIP provides for the grant, from time to time at the discretion of the board of directors of our general partner,of unit awards, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights and otherunit-based awards, although in 2014, as well as in 2013, we only granted phantom unit awards pursuant to the LTIP. Theoutstanding LTIP awards held by our NEOs are reflected in the table below. During the years ended December 31, 2013 and 2014, our board of directors of our general partner granted phantom unitawards to certain key employees, including our NEOs. Each phantom unit award vests in three equal annual installments, withthe first installment vesting on the first anniversary of the date of grant. In the event of cessation of an employee’s service forany reason, all phantom units that have not vested prior to or in connection with such cessation of service shall automaticallybe forfeited. Each phantom unit granted to an employee, including the NEOs, is granted in tandem with a correspondingdistribution equivalent right, which is paid quarterly on the distribution date from the grant date until the earlier of the vestingor the forfeiture of the related phantom units. Each distribution equivalent right entitles the participant to receive payments inthe amount equal to any distribution made by us following the grant date in66 Table of Contentsrespect of the grant date in respect of the common unit underlying the phantom unit to which such distribution equivalentright relates. Prior to the Holdings Acquisition, our NEOs historically received various forms of equity compensation, in the form ofboth capital and profits interests in us and our predecessor entities, and in connection with the Holdings Acquisition, each ofour NEOs (other than Mr. Holloway, who joined us after the Holdings Acquisition) re-invested a substantial portion of thecash proceeds received in respect of his prior equity interests in certain classes of capital or profit interest units in USACompression Holdings. Our NEOs were also granted Class B Units of USA Compression Holdings at the time of the Holdings Acquisition or, withrespect to Mr. Holloway, at the time of his employment. The grants the NEOs received had time-based vesting requirements(which, for Mr. Long and Mr. Tusa, were satisfied in full as of December 31, 2013) and are designed not only to compensatebut also to motivate and retain the recipients by providing an opportunity for equity ownership by our NEOs. The grants toour NEOs also provide our NEOs with meaningful incentives to increase unitholder value over time. The Class B Units areprofits interests that allow our NEOs to participate in the increase in value of USA Compression Holdings over and above an8% annual and cumulative preferred return hurdle. Available cash will be distributed to the USA Compression Holdingsmembers at such times as determined by its board of managers, at which time the holders of Class B Units could receivedistributions if the cash distributed reaches the required distribution hurdles. Distributions to the Class B Unit holders couldalso occur in connection with a sale or liquidation event of USA Compression Holdings. To date, our NEOs have not receiveddistributions with respect to these awards. Outstanding Equity Awards as of December 31, 2014 The following table provides information regarding the Class B Units in USA Compression Holdings held by the NEOs asof December 31, 2014. None of our NEOs held any option awards that were outstanding as of December 31, 2013 and 2014.Also reflected within the table are the outstanding phantom units that were granted to our NEOs from the LTIP during theyears ended December 31, 2013 and 2014, respectively. Unit Awards Number of Class Number of Class B Units That B Units ThatAre Have Vested but Unvested and Market Value of Number of Market Value of Are Still Outstanding Class B Units Outstanding Outstanding Outstanding That Have Not Phantom Units Phantom UnitsName (#)(1) (#)(2) Vested ($)(3) (#) ($)(6)Eric D. Long 462,500 2013 Grant — 40,816 (4)677,137 2014 Grant 37,893 (5)628,645 Joseph C.Tusa, Jr. 125,000 2013 Grant — 23,809 (4)394,991 2014 Grant 22,735 (5)377,174 J. GregoryHolloway 54,688 7,813 2013 Grant — 11,904 (4)197,487 2014 Grant 18,946 (5)314,314 (1)Represents the number of Class B Units in USA Compression Holdings that became vested but had not been settled as ofDecember 31, 2014. These Class B Units vested 25% on the one-year anniversary of the date of grant and 1/48 monthlythereafter; provided that with respect to Mr. Long and Mr. Tusa ½ of the unvested portion of Class B Units vested at thetime of the Partnership’s initial public offering, which occurred on January 18, 2013. (2)Represents the number of Class B Units in USA Compression Holdings that have not yet vested. The remainder of Mr.Holloway’s awards will vest pro rata each month through June 3, 2015. (3)As described under the heading “—Discretionary Long-Term Equity Incentive Awards,” the Class B Units are intended toallow recipients to receive a percentage of profits generated by USA Compression Holdings over and67 Table of Contentsabove certain return hurdles. The Class B Units had no recognizable value as of December 31, 2014 and the holders of theClass B Units had not received any distributions with respect to those awards during the 2014 year. (4)Represents the number of phantom units issued on March 11, 2013 pursuant to the LTIP that have not vested as ofDecember 31, 2014. Each phantom unit is the economic equivalent of one common unit. The phantom units shall vestin three equal annual installments on the anniversary of the date of grant. The first installment vested on March 11, 2014.The next installment will vest on March 11, 2015. In the event of cessation of the NEO’s service for any reason, allphantom units that have not vested prior to or in connection with such cessation of service shall automatically beforfeited. In connection with his resignation on January 10, 2015, Mr. Tusa forfeited all of his unvested phantom units. (5)Represents the number of phantom units issued on February 20, 2014 pursuant to the LTIP that had not vested as ofDecember 31, 2014. Each phantom unit is the economic equivalent of one common unit. The phantom units shall vestin three equal annual installments on each subsequent February 15, with the first installment vesting on February 15,2015. In the event of cessation of the NEO’s service for any reason, all phantom units that have not vested prior to or inconnection with such cessation of service shall automatically be forfeited. In connection with his resignation on January10, 2015, Mr. Tusa forfeited all of his unvested phantom units. (6)Market value is calculated using the value of $16.59, which was the closing price of our common units on December 31,2014. Severance and Change in Control Arrangements Our NEOs are entitled to severance payments and benefits upon certain terminations of employment and, in certain cases,in connection with a change in control of Holdings. Each NEO currently has an employment agreement with USAC Management that provides for severance benefits upon atermination of employment. On January 1, 2013, we entered into the services agreement with USAC Management, pursuant towhich USAC Management provides to us and our general partner management, administrative and operating services andpersonnel to manage and operate our business. Pursuant to the services agreement, we will reimburse USAC Management forthe allocable expenses for the services performed, including the salary, bonus, cash incentive compensation and otheramounts paid to our NEOs. See Part III, Item 13 (“Certain Relationships and Related Transactions, and DirectorIndependence”). Severance Arrangements Each NEO’s employment agreement had an initial term that has been extended on a year-to-year basis and will beextended automatically for successive twelve month periods thereafter unless either party delivers written notice to the otherwithin ninety days prior to the expiration of the then-current employment term. Upon termination of an NEO’s employmentfor any reason, all earned, unpaid annual base salary and vacation time (and, with respect to the chief executive officer,accrued, unused sick time off) shall be paid to the NEO within thirty (30) days of the date of the NEO’s termination ofemployment. Upon termination of an NEO’s employment either by us for convenience or due to the NEO’s resignation forgood reason, subject to the timely execution of a general release of claims, the NEO is entitled to receive (i) an amount equalto one times his annual base salary (plus, in the case of Mr. Long, an amount equal to one times his target annual bonus),payable in equal semi-monthly installments over one year following termination (the “Severance Period”) (or, if suchtermination occurs within two years following a change in control, in a lump sum within thirty days following the terminationof employment), subject to acceleration upon the NEO’s death during the Severance Period, and (ii) continued coverage fortwenty-four (24) months (or, with respect to Mr. Long, thirty (30) months) under our group medical plan in which theexecutive and any of his dependents were participating immediately prior to his termination. Continued coverage under ourgroup medical plan is subsidized for the first twelve (12) months following termination, after which time continued coverageshall be provided at the NEO’s sole expense (except with respect to Mr. Long, who is entitled to reimbursement by us to theextent the cost of such coverage exceeds $1,200 per month) for the remainder of the applicable period. Additionally, upon atermination of an NEO’s employment by us for convenience, by the NEO for good reason, or due to the NEO’s death ordisability, the NEO is entitled to receive (i) an68 Table of Contentsamount equal to one times his annual bonus (up to his target annual bonus) for the immediately preceding year and (ii) a pro-rata portion of any earned annual bonus for the year in which termination occurs. During employment and for two yearsfollowing termination, each NEO’s employment agreement prohibits him from competing with our business. As used in the NEOs’ employment agreements, a termination for “convenience” means an involuntary termination for anyreason, including a failure to renew the employment agreement at the end of an initial term or any renewal term, other than atermination for “cause.” “Cause” is defined in the NEOs’ employment agreements to mean (i) any material breach of theemployment agreement or the Holdings Operating Agreement, by the executive, (ii) the executive’s breach of any applicableduties of loyalty to us or any of our affiliates, gross negligence or misconduct, or a significant act or acts of personaldishonesty or deceit, taken by the executive, in the performance of the duties and services required of the executive that has amaterial adverse effect on us or any of our affiliates, (iii) conviction or indictment of the executive of, or a plea of nolocontendere by the executive to, a felony, (iv) the executive’s willful and continued failure or refusal to perform substantiallythe executive’s material obligations pursuant to the employment agreement or the Holdings Operating Agreement or followany lawful and reasonable directive from the board of managers of USA Compression Holdings or, as applicable, the chiefexecutive officer, other than as a result of the executive’s incapacity, or (v) a pattern of illegal conduct by the executive that ismaterially injurious to us or any of our affiliates or our or their reputation. “Good reason” is defined in the NEOs’ employment agreements to mean (i) a material breach by us of the employmentagreement, the Holdings Operating Agreement, or any other material agreement with the executive, (ii) any failure by us topay to the executive the amounts or benefits to which he is entitled, other than an isolated and inadvertent failure notcommitted in bad faith, (iii) a material reduction in the executive’s duties, reporting relationships or responsibilities, (iv) amaterial reduction by us in the facilities or perquisites available to the executive or in the executive’s base salary, other than areduction that is generally applicable to all similarly situated employees, or (v) the relocation of the geographic location ofthe executive’s principal place of employment by more than fifty miles from the location of the executive’s principal place ofemployment as of December 23, 2010. With respect to Mr. Long’s employment agreement, “good reason” also means thefailure to appoint and maintain Mr. Long in the office of President and Chief Executive Officer. Each of the Class B Units held by the NEOs would be forfeited for no consideration if the NEO was terminated forcause. A termination for “Cause” under the USA Compression Holdings limited liability company agreement is definedsubstantially the same as the term used within the employment agreements described above. In the event that the NEO’semployment is terminated for any reason, however, USA Compression Holdings (or its nominee) shall have the right, but notthe obligation, to repurchase any vested Class B Units held by the terminated NEO for then-current fair market value or otheragreed value. On January 10, 2015, Mr. Tusa announced his resignation as Vice President, Chief Financial Officer and Treasurer, whichresignation became effective immediately. Consistent with a voluntary resignation under his employment agreement and hisphantom unit award agreements, Mr. Tusa did not receive any severance or other post-employment compensation under hisemployment agreement, nor did he receive any acceleration of vesting of his equity awards. Change in Control Benefits We generally have double- trigger change in control benefits for our outstanding LTIP awards. If a change in controloccurs, and our NEOs are also terminated without cause or for good reason (each term as defined in the NEO’s employmentagreement) in connection with that change in control event, the current LTIP phantom units would become fully vested. Theone exception to this practice is with respect to our CEO, who would receive immediate vesting of any outstanding phantomunits upon the change in control event. Director Compensation For the year ended December 31, 2014, our NEOs who also served as directors did not receive additional compensationfor their service as directors. Only the independent members of the board of directors of our general partner receivecompensation for their service as directors. 69 Table of ContentsThe following table shows the total compensation earned by each independent director during 2014. Fees Earned or All Other Paid in Cash Unit Awards Compensation TotalName ($) ($) (1) ($)(2) ($)John D. Chandler 122,000 18,750 5,965 146,715 Robert F. End 140,000 75,000 4,775 219,775 Forrest E. Wylie 90,867 (3)75,000 10,033 175,900 (1)Represents the grant date fair value of our phantom units, calculated in accordance with ASC 718. For a detaileddiscussion of the assumptions utilized in coming to these values, please see Note 9 to our consolidated financialstatements. As of December 31, 2014, the independent members of the board of directors of our general partner held thefollowing number of outstanding equity awards under the LTIP: Mr. Chandler, 699 phantom units; Mr. End, 2,796phantom units; and Mr. Wylie, 2,796 phantom units.(2)Amounts in this column reflect the value of distribution equivalent rights (“DERs”), received by the directors withrespect to their outstanding phantom unit awards.(3)Mr. Wylie elected to receive his annual cash retainer of $75,000 in phantom units that vested in quarterly installments oneach of March 31, 2014, June 30, 2014, September 30, 2014 and December 31, 2014. Officers, employees or paid consultants or advisors of us or our general partner or its affiliates who also serve as directorsdo not receive additional compensation for their service as directors. Our directors who are not officers, employees or paidconsultants or advisors of us or our general partner or its affiliates receive cash and equity based compensation for theirservices as directors. Our director compensation program consists of the following and will be subject to revision by the boardof directors of our general partner from time to time: ·an annual cash retainer of $75,000, ·an additional annual retainer of $15,000 for service as the chair of any standing committee, ·meeting attendance fees of $2,000 per meeting attended, and ·an annual equity based award in the form of phantom units that will be granted under the LTIP, having a value as ofthe grant date of $75,000. Phantom unit awards are expected to be subject to vesting conditions (which, for the 2014phantom unit grants was a one year vesting period). DERs will be paid either on a current or deferred basis, in eachcase as will be determined at the time of grant of the awards; the 2014 phantom unit awards provided for deferredDERs. Directors will also receive reimbursement for out-of-pocket expenses associated with attending such board or committeemeetings and director and officer liability insurance coverage. Each director will be fully indemnified by us for actionsassociated with being a director to the fullest extent permitted under Delaware law. ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters Security Ownership of Certain Beneficial Owners and Management The following table sets forth the beneficial ownership of our units as of February 17, 2015 held by: ·each person who beneficially owns 5% or more of our outstanding units; ·all of the directors of USA Compression GP, LLC; ·each named executive officer of USA Compression GP, LLC; and70 Table of Contents ·all directors and officers of USA Compression GP, LLC as a group. Except as indicated by footnote, the persons named in the table below have sole voting and investment power withrespect to all units shown as beneficially owned by them and their address is 100 Congress Avenue, Suite 450, Austin, Texas78701. Percentage of Percentage ofPercentage ofCommon and CommonCommonSubordinatedSubordinatedSubordinated UnitsUnitsUnitsUnitsUnits BeneficiallyBeneficiallyBeneficiallyBeneficiallyBeneficially Name of Beneficial OwnerOwnedOwnedOwnedOwnedOwned USA Compression Holdings(1) 5,541,572 17.3 % 14,048,588 100 % 42.5 %Argonaut Private Equity, L.L.C.(2) 7,091,062 22.1 % — —15.4 %Oppenheimer Funds, Inc.(3) 3,460,980 10.8 % — —7.5 %Eric D. Long(4) 80,651 *— —*Joseph C. Tusa, Jr. 3,307 *— —*J. Gregory Holloway(5) 17,985 *— —*John D. Chandler 3,719 *— —*Jim H. Derryberry — —— ——William H. Shea, Jr. — —— ——Robert F. End 16,622 *— —*Andrew W. Ward — —— ——Olivia C. Wassenaar — —— ——Forrest E. Wylie 14,290 *— —*All directors and executive officersas a group (12 persons)(6)172,917 0.5 %— —**Less than 1%. (1)Eric D. Long, Matthew C. Liuzzi, William G. Manias, J. Gregory Holloway and David A. Smith, each of whom areexecutive officers of our general partner, Aladdin Partners, L.P., a limited partnership affiliated with Mr. Long, and R/C IVUSACP Holdings, L.P. (“R/C Holdings”), own equity interests in USA Compression Holdings. USA CompressionHoldings is managed by a three person board of managers consisting of Mr. Long, Mr. Ward and Ms. Wassenaar. Theboard of managers exercises investment discretion and control over the units held by USA Compression Holdings. R/C Holdings is the record holder of approximately 97.4% of the limited liability company interests of USA CompressionHoldings and is entitled to elect a majority of the members of the board of managers of USA Compression Holdings. R/CHoldings is an investment partnership affiliated with Riverstone/Carlyle Global Energy and Power Fund IV, L.P. (“R/CIV”). Management and control of R/C Holdings is vested in its general partner, which is in turn managed and controlledby its general partner, R/C Energy GP IV, LLC. R/C Energy GP IV, LLC is managed by an eight person managementcommittee that includes Andrew W. Ward. The principal business address of R/C Energy GP IV, LLC is 712 Fifth Avenue,51st Floor, New York, New York 10019. Mr. Long, Mr. Ward and Ms. Wassenaar, each of whom is a member of the board of managers of USA CompressionHoldings and a member of the board of directors of our general partner, disclaims beneficial ownership of the units ownedby USA Compression Holdings.71 Table of Contents (2)Argonaut Private Equity, L.L.C. has sole voting and dispositive power of 7,091,062 common units. The principalbusiness address of Argonaut Private Equity, L.L.C. is 6733 South Yale Avenue, Tulsa, Oklahoma 74136. (3)Oppenheimer Funds, Inc. has the shared power to vote or to direct the vote, and the shared power to dispose or to directthe disposition of, 3,460,980 common units, including 3,429,769 common units held by Oppenheimer SteelPath MLPIncome Fund, based on Amendment No. 4 to Schedule 13G filed on February 10, 2015 with the SEC. The principalbusiness address of Oppenheimer Funds, Inc. is Two World Financial Center, 225 Liberty Street, New York, New York10281, and the principal business address of Oppenheimer SteelPath MLP Income Fund is 6803 South Tucson Way,Centennial, Colorado 80112. (4)Includes 22,822 common units held directly by Mr. Long, 4,173 common units held by Aladdin Partners, L.P., a limitedpartnership affiliated with Mr. Long, 17,642 common units held by certain trusts of which Mr. Long is the trustee, 1,707common units held by Mr. Long’s spouse and 33,039 common units that Mr. Long has the right to acquire within 60 daysupon the vesting and/or settlement of his phantom units. (5)Includes 12,268 common units that Mr. Holloway has the right to acquire within 60 days upon the vesting and/orsettlement of his phantom units. (6)Includes 66,237 common units that certain of our directors and executive officers have the right to receive within 60 daysupon the vesting and/or settlement of phantom units held by such directors and executive officers. Securities Authorized for Issuance Under Equity Compensation Plans In connection with the consummation of our IPO on January 18, 2013, the board of directors of our general partneradopted the LTIP. The following table provides certain information with respect to this plan as of December 31, 2014: Number of securities remaining available for future issuance under Number of securities to Weighted-average equity compensation be issued upon exercise exercise price of plan (excluding securities of outstanding options, outstanding options, reflected in the firstPlan Category warrants and rights warrants and rights column)Equity compensation plans approved by security holders — N/A —Equity compensation plans not approved by securityholders 269,102 N/A 1,052,191 For more information about our LTIP, please see Note 9 to our consolidated financial statements. ITEM 13.Certain Relationships and Related Transactions, and Director Independence Certain Relationships And Related Party Transactions In connection with our formation and IPO, we and other parties have entered into the following agreements. Theseagreements were not the result of arm’s length negotiations, and they, or any of the transactions that they provide for, may notbe effected on terms as favorable to the parties to these agreements as could have been obtained from unaffiliated third parties. Services Agreement We entered into a services agreement with USAC Management, effective on January 1, 2013, pursuant to which USACManagement provides to us and our general partner management, administrative and operating services and personnel tomanage and operate our business. We or one of our subsidiaries pays USAC Management for the allocable72 Table of Contentsexpenses 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 otherexpenses allocated by USAC Management to us. USAC Management has substantial discretion to determine in good faithwhich expenses to incur on our behalf and what portion to allocate to us. The services agreement has an initial term of five years, at which point it automatically renews for additional one yearterms. The services agreement may be terminated at any time by (i) the board of directors of our general partner upon 120days’ written notice for any reason in its sole discretion or (ii) USAC Management upon 120 days’ written notice if (a) we orour general partner experience a change of control, (b) we or our general partner breach the terms of the services agreement inany 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 our general partner’s property or an order is made to wind up ouror our general partner’s business; (d) a final judgment, order or decree that materially and adversely affects the ability of us orour general partner to perform under the services agreement is obtained or entered against us or our general partner, and suchjudgment, order or decree is not vacated, discharged or stayed; or (e) certain events of bankruptcy, insolvency orreorganization of us or our general partner occur. USAC Management will not be liable to us for their performance of, orfailure to perform, services under the services agreement unless its acts or omissions constitute gross negligence or willfulmisconduct. Relationship with PVR Partners William Shea, who has served as a director of our general partner since June 2011, also served as a director and the chiefexecutive officer of the general partner of PVR Partners, L.P. (“PVR”) starting in March 2010. On March 21, 2014, PVRmerged with and into Regency Energy Partners LP, a Delaware limited partnership (“Regency”), with Regency as thesurviving limited partnership (the “Merger”). As a result of the Merger, the separate limited partnership existence of PVRceased, and Regency continued its existence as the surviving limited partnership. For the years ended December 31, 2014and 2013, subsidiaries of PVR made compression service payments to us of approximately $0.6 million and $3.0 million,respectively. Procedures for Review, Approval and Ratification of Related Person Transactions The board of directors of our general partner adopted a code of business conduct and ethics in connection with theclosing of our initial public offering that provides that the board of directors of our general partner or its authorized committeewill periodically review all related person transactions that are required to be disclosed under SEC rules and, whenappropriate, initially authorize or ratify all such transactions. If the board of directors of our general partner or its authorizedcommittee considers ratification of a related person transaction and determines not to so ratify, the code of business conductand ethics provides that our management will make all reasonable efforts to cancel or annul the transaction. The code of business conduct and ethics provides that, in determining whether or not to recommend the initial approvalor ratification of a related person transaction, the board of directors of our general partner or its authorized committee shouldconsider all of the relevant facts and circumstances available, including (if applicable) but not limited to: (i) whether there isan appropriate business justification for the transaction; (ii) the benefits that accrue to us as a result of the transaction; (iii) theterms available to unrelated third parties entering into similar transactions; (iv) the impact of the transaction on a director’sindependence (in the event the related person is a director, an immediate family member of a director or an entity in which adirector or an immediately family member of a director is a partner, shareholder, member or executive officer); (v) theavailability of other sources for comparable products or services; (vi) whether it is a single transaction or a series of ongoing,related transactions; and (vii) whether entering into the transaction would be consistent with the code of business conduct andethics. The code of business conduct and ethics described above was adopted in connection with the closing of our initial publicoffering, and as a result the transactions described above were not reviewed under such policy. The transactions describedabove were not approved by an independent committee of our board of directors of our general partner and the terms weredetermined by negotiation among the parties. 73 Table of ContentsConflicts of Interest Conflicts of interest exist and may arise in the future as a result of the relationships between our general partner and itsaffiliates, including USA Compression Holdings, on the one hand, and our partnership and our limited partners, on the otherhand. The directors and officers of our general partner have fiduciary duties to manage our general partner in a mannerbeneficial to its owners. At the same time, our general partner has a fiduciary duty to manage our partnership in a mannerbeneficial to us and our unitholders. Whenever a conflict arises between our general partner or its affiliates, on the one hand, and us and our limited partners,on the other hand, our general partner will resolve that conflict. Our partnership agreement contains provisions that modifyand limit our general partner’s fiduciary duties to our unitholders. Our partnership agreement also restricts the remediesavailable to our unitholders for actions taken by our general partner that, without those limitations, might constitute breachesof its fiduciary duty. Our general partner will not be in breach of its obligations under our partnership agreement or its fiduciary duties to us orour unitholders if the resolution of the conflict is: ·approved by the conflicts committee of our general partner, although our general partner is not obligated to seeksuch approval; ·approved by the vote of a majority of the outstanding common units, excluding any common units owned by ourgeneral partner or any of its affiliates; ·on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or ·fair and reasonable to us, taking into account the totality of the relationships among the parties involved, includingother transactions that may be particularly favorable or advantageous to us. Our general partner may, but is not required to, seek the approval of such resolution from the conflicts committee of itsboard of directors. In connection with a situation involving a conflict of interest, any determination by our general partnerinvolving the resolution of the conflict of interest must be made in good faith, provided that, if our general partner does notseek approval from the conflicts committee and its board of directors determines that the resolution or course of action takenwith respect to the conflict of interest satisfies either of the standards set forth in the third and fourth bullet points above, thenit will conclusively be deemed that, in making its decision, the board of directors acted in good faith. Unless the resolution ofa conflict is specifically provided for in our partnership agreement, our general partner or the conflicts committee mayconsider any factors that it determines in good faith to be appropriate when resolving a conflict. When our partnershipagreement provides that someone act in good faith, it requires that person to reasonably believe he is acting in the bestinterests of the partnership. Director Independence Please see Part III, Item 10 (“Directors, Executive Officers and Corporate Governance—Board of Directors”) for adiscussion of director independence matters. ITEM 14.Principal Accountant Fees and Services The following table presents fees for professional services rendered by our independent registered public accounting firm,KPMG LLP during the years ended December 31, 2014 and 2013: 74 Table of Contents Year Ended December31, 2014 2013 (in millions)Audit Fees (1) $0.5 $0.7 Audit-Related Fees — —Tax Fees — —All Other Fees — —Total $0.5 $0.7 (1)Expenditures classified as “Audit Fees” above were billed to USA Compression Partners, LP and include the audits of ourannual financial statements, work related to the registration statement on Form S-1 filed in connection with our IPO, workrelated to the pro forma financial statements in connection with the S&R Acquisition, reviews of our quarterly financialstatements, and fees associated with comfort letters and consents related to equity offerings and registration statements. Our audit committee has adopted an audit committee charter, which is available on our website and which requires theaudit committee to pre-approve all audit and non-audit services to be provided by our independent registered publicaccounting firm. The audit committee does not delegate its pre-approval responsibilities to management or to an individualmember of the audit committee. 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: ExhibitNumber Description2.1 Contribution Agreement dated August 12, 2013 by and among USA Compression Partners, LP, S&RCompression, LLC and Argonaut Private Equity, L.L.C. (incorporated by reference to Exhibit 2.1 to thePartnership’s Quarterly Report on Form 10-Q (File No. 001-35779) filed on August 14, 2013) 3.1 Certificate of Limited Partnership of USA Compression Partners, LP (incorporated by reference to Exhibit3.1 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 First 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 January 18, 2013) 4.1 Registration Rights Agreement dated August 30, 2013 (incorporated by reference to Exhibit 4.1 to thePartnership’s Current Report on Form 8-K (File No. 001-35779) filed on September 5, 2013) 10.1 Fourth Amended and Restated Credit Agreement (incorporated by reference to Exhibit 10.9 toAmendment No. 6 of the Partnership’s registration statement on Form S-1 (Registration No. 333-174803)filed on June 8, 2012) 75 Table of Contents10.2 First Amendment to Fourth Amended and Restated Credit Agreement (incorporated by reference toExhibit 10.10 to Amendment No. 10 of the Partnership’s registration statement on Form S-1 (RegistrationNo. 333-174803) filed on January 7, 2013) 10.3 Fifth Amended and Restated Credit Agreement dated as of December 13, 2013, by and among USACompression Partners, LP, USAC OpCo 2, LLC and USAC Leasing 2, LLC, as guarantors, USACompression Partners, LLC and USAC Leasing, LLC, as borrowers, the lenders party thereto from time totime, JPMorgan Chase Bank, N.A., as agent and LC issuer, J.P. Morgan Securities LLC, as lead arrangerand sole book runner, Wells Fargo Bank, N.A., as documentation agent, and Regions Bank, as syndicationagent (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No.001-35779) filed on December 17, 2013) 10.4 Letter Agreement by and among USA Compression Partners, LLC, USAC Leasing, LLC, USA CompressionPartners, LP, USAC Leasing 2, LLC, USAC OpCo 2, LLC, the Lenders party thereto and JPMorgan ChaseBank, N.A., in its capacity as administrative agent for the Lenders, dated as of June 30, 2014 (incorporatedby reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed onJuly 3, 2014). 10.5 Second Amendment to the Fifth Amended and Restated Credit Agreement, dated as of January 6, 2015, byand among USA Compression Partners, LP, as guarantor, USA Compression Partners, LLC, USAC Leasing,LLC, USAC OpCo 2, LLC and USAC Leasing 2, LLC, as borrowers, the lenders party thereto andJPMorgan Chase Bank, N.A., as agent and LC issuer (incorporated by reference to Exhibit 10.1 to thePartnership’s Current Report on Form 8-K (File No. 001-35779) filed on January 9, 2015) 10.6† Long-Term Incentive Plan of USA Compression Partners, LP (incorporated by reference to Exhibit 10.1 tothe Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on January 18, 2013) 10.7† Employment Agreement, dated December 23, 2010, between USA Compression Partners, LLC and Eric D.Long (incorporated by reference to Exhibit 10.5 to Amendment No. 4 of the Partnership’s registrationstatement on Form S-1 (Registration No. 333-174803) filed on February 13, 2012) 10.8† Employment Agreement, dated December 23, 2010, between USA Compression Partners, LLC and JosephC. Tusa, Jr. (incorporated by reference to Exhibit 10.6 to Amendment No. 4 of the Partnership’sregistration statement on Form S-1 (Registration No. 333-174803) filed on February 13, 2012). 10.9† Employment Agreement, dated April 17, 2013, between USA Compression Management Services, LLCand Matthew C. Liuzzi (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report onForm 8-K (File No. 001-35779) filed on January 15, 2015). 10.10*† Employment Agreement, dated June 3, 2011, between USA Compression Partners, LLC and J. GregoryHolloway. 10.11 Services Agreement, dated effective January 1, 2013, by and among USA Compression Partners, LP, USACompression GP, LLC and USA Compression Management Services, LLC (incorporated by reference toExhibit 10.11 to Amendment No. 10 of the Partnership’s registration statement on Form S-1 (RegistrationNo. 333-174803) filed on January 7, 2013) 10.12† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Director Phantom UnitAgreement (incorporated by reference to Exhibit 10.8 to the Partnership’s Annual Report on Form 10-Kfor 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 Employee Phantom UnitAgreement (incorporated by reference to Exhibit 10.10 to the Partnership’s Annual Report on Form 10-Kfor the year ended December 31, 2013 (File No. 001-35779) filed on February 20, 2014) 10.14† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Director Phantom UnitAgreement (in lieu of Annual Cash Retainer) (incorporated by reference to Exhibit 10.10 to thePartnership’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-35779) filed on March 28, 2013). 76 Table of Contents10.15† USAC Compression Partners, LP Annual Cash Incentive Program (incorporated by reference to Exhibit10.12 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). 21.1* List of subsidiaries of USA Compression Partners, LP 23.1* Consent of KPMG LLP 31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of1934 31.2* Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of1934 32.1# Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 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 Section906 of the Sarbanes-Oxley Act of 2002 101.INS* XBRL Instance Document 101.SCH* XBRL Extension Schema Document 101.CAL* XBRL Calculation Linkbase Document 101.DEF* XBRL Definition Linkbase Document 101.LAB* XBRL Label Linkbase Document 101.PRE* XBRL Presentation Linkbase Document*Filed Herewith.#Furnished herewith; not considered to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 orotherwise subject to the liabilities of that section.†Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report onForm 10-K pursuant to Item 15(b).77 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 causedthis report to be signed on its behalf by the undersigned, thereunto duly authorized. USA COMPRESSION PARTNERS, LP By:USA Compression Partners, LP, its General Partner By:/s/ Eric D. Long Eric D. Long President and Chief Executive Officer (Principal Executive Officer) Date:February 19, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of the registrant and in the capacities indicated on February 19, 2015. Name Title /s/ Eric D. Long President and Chief Executive Officer and DirectorEric D. Long (Principal Executive Officer) /s/ Matthew C. Liuzzi Vice President, Chief Financial Officer and TreasurerMatthew C. Liuzzi (Principal Financial Officer) /s/ Michael D. Lenox Vice President—Finance and Chief Accounting OfficerMichael D. Lenox (Principal Accounting Officer) /s/ John D. Chandler John D. Chandler Director /s/ Jim H. Derryberry Jim H. Derryberry Director /s/ Robert F. End Robert F. End Director /s/ William H. Shea, Jr. William H. Shea, Jr. Director /s/ Andrew W. Ward Andrew W. Ward Director /s/ Olivia C. Wassenaar Olivia C. Wassenaar Director /s/ Forrest E. Wylie Forrest E. Wylie Director 78 Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-1Consolidated Balance Sheets as of December 31, 2014 and 2013 F-2Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012 F-3Consolidated Statements of Changes in Partners’ Capital for the years ended December 31, 2014, 2013 and 2012 F-4Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012 F-5Notes to Consolidated Financial Statements F-6Supplemental Selected Quarterly Financial Data S-1 Table of ContentsReport of Independent Registered Public Accounting Firm The PartnersUSA Compression Partners, LP: We have audited the accompanying consolidated balance sheets of USA Compression Partners, LP (a Delaware limitedpartnership) and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of operations,changes in partners’ capital, and cash flows for each of the years in the three-year period ended December 31, 2014. Theseconsolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express anopinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financialposition of USA Compression Partners, LP and subsidiaries as of December 31, 2014 and 2013, and the results of theiroperations and their cash flows for each of the years in the three-year period ended December 31, 2014, in conformity withU.S. generally accepted accounting principles. /s/ KPMG LLP Dallas, TexasFebruary 19, 2015 F-1 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Balance SheetsDecember 31, 2014 and 2013(in thousands, except for unit amounts) 2014 2013 Assets Current assets: Cash and cash equivalents $6 $7 Accounts receivable: Trade 25,159 20,079 Other 2,926 350 Inventory 8,923 9,940 Prepaid expenses 1,020 2,400 Total current assets 38,034 32,776 Property and equipment, net 1,162,637 852,966 Installment receivable 20,241 — Identifiable intangible assets 82,357 85,941 Goodwill 208,055 208,055 Other assets 5,158 6,146 Total assets $1,516,482 $1,185,884 Liabilities and Partners’ Capital Current liabilities: Accounts payable $44,535 $34,629 Accrued liabilities 21,708 10,412 Deferred revenue 15,855 11,912 Total current liabilities 82,098 56,953 Long-term debt 594,864 420,933 Other liabilities — 271 Partners’ capital: Limited partner interest: Common units, 31,307,116 and 23,561,780 units issued and outstanding, respectively 600,401 447,562 Subordinated units, 14,048,588 units issued and outstanding each period 225,221 245,592 General partner interest 13,898 14,573 Total partners’ capital 839,520 707,727 Total liabilities and partners’ capital $1,516,482 $1,185,884 See accompanying notes to consolidated financial statements. F-2 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Statements of OperationsYears ended December 31, 2014, 2013 and 2012(in thousands, except per unit amounts) 2014 2013 2012 Revenues: Contract operations $217,361 $150,360 $116,373 Parts and service 4,148 2,558 2,414 Total revenues 221,509 152,918 118,787 Costs and expenses: Cost of operations, exclusive of depreciation and amortization 74,035 48,097 37,796 Selling, general and administrative 38,718 27,587 18,269 Depreciation and amortization 71,156 52,917 41,880 (Gain) loss on sale of assets (2,233) 284 266 Impairment of compression equipment 2,266 203 — Total costs and expenses 183,942 129,088 98,211 Operating income 37,567 23,830 20,576 Other income (expense): Interest expense, net (12,529) (12,488) (15,905) Other 11 9 28 Total other expense (12,518) (12,479) (15,877) Net income before income tax expense 25,049 11,351 4,699 Income tax expense 103 280 196 Net income $24,946 $11,071 $4,503 Less: Earnings allocated to general partner prior to initial public offering on January 18, 2013 $ — $5 $45 Earnings available for limited partners prior to initial public offering on January 18, 2013 $ — $530 $4,458 Net income subsequent to initial public offering on January 18, 2013 $24,946 $10,536 $— Net income subsequent to initial public offering allocated to: General partner’s interest in net income $760 $211 $— Limited partners’ interest in net income: Common units $16,811 $5,805 $— Subordinated units $7,375 $4,520 $— Weighted average common units outstanding: Basic 28,087,498 18,043,075 — Diluted 28,146,446 18,086,745 — Weighted average subordinated units outstanding: Basic and diluted 14,048,588 14,048,588 — Net income per common unit: Basic $0.60 $0.32 $— Diluted $0.60 $0.32 $— Net income per subordinated unit: Basic and diluted $0.52 $0.32 $— Distributions declared per limited partner unit in respective periods $2.01 $1.73 $— See accompanying notes to consolidated financial statements. F-3 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Statements of Changes in Partners’ CapitalYears ended December 31, 2014, 2013 and 2012(in thousands) Partners’ CapitalTotal GeneralLimitedCommon UnitsSubordinated UnitsGeneral Partner UnitsPartners’ Partners Partners Units Amount Units Amount Amount Capital Partners’ capital, December 31, 2011$2,351 336,672 — — — — — 339,023 Net Income 45 4,458 — — — — — 4,503 Partners’ capital, December 31, 2012 2,396 341,130 — — — — — 343,526 Net income January 1, 2013 —January 18, 2013 5 530 — — — — — 535 Conversion of Partners’ capital forcommon and subordinatedunits, Incentive Distribution Rights,and General Partner interest (2,401) (341,660) 4,049 74,526 14,049 258,605 10,930 —Issuance of common units in initialpublic offering — — 11,000 180,555 — — — 180,555 Vesting of phantom units — — 4 — — — — —General partner contribution — — — — — — 4,251 4,251 Cash distributions and DERs — — — (22,872) — (17,533) (819) (41,224)Proceeds from issuance of commonunits — — 1,084 26,286 — — — 26,286 Unit-based compensation — — — 1,343 — — — 1,343 Acquisition of S&R compressionassets — — 7,425 181,919 — — — 181,919 Net income January 19, 2013 —December 31, 2013 — — — 5,805 — 4,520 211 10,536 Partners’ capital, December 31, 2013$—$— 23,562 $447,562 14,049 $245,592 $14,573 $707,727 Vesting of phantom units — — 76 1,707 — — — 1,707 General partner contribution — — — — — — 294 294 Cash distributions and DERs — — — (53,854) — (27,746) (1,729) (83,329)Proceeds from issuance of commonunits — — 7,669 188,992 — — — 188,992 Unit-based compensation — — — 353 — — — 353 Modification of unit-basedcompensation — — — (1,170) — — — (1,170)Net income — — — 16,811 — 7,375 760 24,946 Partners’ capital, December 31, 2014$ —$ — 31,307 $600,401 14,049 $225,221 $13,898 $839,520 See accompanying notes to consolidated financial statements. F-4 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Statements of Cash FlowsYears ended December 31, 2014, 2013 and 2012(in thousands) 2014 2013 2012 Cash flow from operating activities: Net Income $24,946 $11,071 $4,503 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 71,156 52,917 41,880 Amortization of debt issue costs, discount 1,224 2,192 1,856 Unit-based compensation expense 3,034 1,343 — Net (gain) loss on sale of assets (2,233) 284 266 Net gain on change in fair value of interest rate swap — — (2,180) Impairment of compression equipment 2,266 203 — Changes in assets and liabilities: Accounts receivable and advances to employees (2,659) (11,674) 169 Inventory (4,942) (5,725) (1,004) Prepaids 1,380 (600) (153) Other noncurrent assets (39) 3,824 (1,315) Accounts payable (1,431) 8,132 (5,340) Accrued liabilities and deferred revenue 9,189 6,223 3,292 Net cash provided by operating activities 101,891 68,190 41,974 Cash flow from investing activities: Capital expenditures (381,943) (159,547) (179,977) Proceeds from sale of property and equipment 1,420 2,227 1,388 Acquisitions, net of cash — 3,374 — Net cash used in investing activities (380,523) (153,946) (178,589) Cash flows from financing activities: Proceeds from long-term debt 538,644 243,501 261,135 Payments on long-term debt (364,714) (324,834) (122,681) Net proceeds from issuance of common units 138,047 180,555 — Cash paid for taxes related to net settlement of unit-based awards (334) — — Distributions (32,345) (14,669) — General Partner contribution 294 4,251 — Financing cost and registration fees (961) (3,048) (1,835) Net cash provided by financing activities 278,631 85,756 136,619 Increase (decrease) in cash and cash equivalents (1) — 4 Cash and cash equivalents, beginning of year 7 7 3 Cash and cash equivalents, end of year $6 $7 $7 Supplemental cash flow information: Cash paid for interest $12,622 $10,603 $16,086 Cash paid for taxes $115 $196 $155 Supplemental non-cash transactions: Non-cash distributions to certain limited partners (DRIP) $51,707 $26,286 $ — Change in capital expenditures included in accounts payable and accruedliabilities $16,515 $15,846 $5,940 Capital Lease Transaction: Installment receivable $(24,820) $— $— Property and equipment write-off $22,134 $— $— (Gain) on transaction $(2,686) $ — $ — See accompanying notes to consolidated financial statements. F-5 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 (1) The Partnership, Nature of Business, and Recent Transactions USA Compression Partners, L.P., a Texas limited partnership (the “Former Partnership”), was formed on July 10, 1998. InOctober 2008, the Former Partnership entered into several transactions through which the Former Partnership was reorganizedinto a holding company, USA Compression Holdings, LP (the “Partnership”). The owners of the Former Partnership caused thePartnership to be formed as a Texas limited partnership to conduct its affairs as the holding company of an operating andleasing structure of entities. The Former Partnership’s owners then transferred their equity interests in the Former Partnership tothe Partnership in exchange for identical interests in the Partnership. The Former Partnership became a wholly-ownedsubsidiary of the Partnership, and was converted into USA Compression Partners, LLC, a Delaware, single-member, limitedliability company (the “Operating Subsidiary”) to continue providing compression services to customers of the FormerPartnership. Concurrently, the Operating Subsidiary formed a wholly-owned subsidiary, USAC Leasing, LLC, as a Delawarelimited liability company (the “Leasing Subsidiary”), and agreed to sell its then existing compressor fleet to the LeasingSubsidiary for assumption of debt relating to the then existing fleet. On June 7, 2011, the Partnership converted from a Texaslimited partnership into a Delaware limited partnership and changed its name from USA Compression Holdings, LP to USACompression Partners, LP. USA Compression GP, LLC, a Delaware limited liability Company and the general partner of thePartnership, is referred to herein as the “General Partner.” In connection with the S&R Acquisition (as defined below), thePartnership acquired all of the membership interests in USAC OpCo 2, LLC, a Texas limited liability company (“OpCo 2”),which owned all of the membership interests in USAC Leasing 2, LLC, a Texas limited liability company (“LeaseCo 2”).LeaseCo 2 owns all of the compression assets acquired in the S&R Acquisition. Each of Leasing Subsidiary and LeaseCo 2leases its compressor fleet to Operating Subsidiary and OpCo 2, respectively, for use in providing compression services tocustomers. The Partnership is a guarantor to Operating Subsidiary’s revolving credit facility and each of Leasing Subsidiary,OpCo2 and LeaseCo2 are co-borrowers on the revolving credit facility (see Note 7). The accompanying consolidated financialstatements include the accounts of the Partnership, the Operating Subsidiary, the Leasing Subsidiary, OpCo 2 and LeaseCo 2,and all intercompany balances and transactions have been eliminated in consolidation. The Operating Subsidiary, the LeasingSubsidiary, OpCo 2 and LeaseCo 2, are collectively referred to herein, as the “Operating Subsidiaries.” The Partnership, through the Operating Subsidiaries, primarily provides natural gas compression services under termcontracts with customers in the oil and gas industry, using natural gas compressor packages that it designs, engineers, owns,operates and maintains. Partnership net income (loss) is allocated to the partners, both general and limited, in proportion to their respectiveinterest in the Partnership. (2) Summary of Significant Accounting Policies (a)Cash and Cash Equivalents Cash and cash equivalents consist of all cash balances. The Partnership considers investments in highly liquid financialinstruments purchased with an original maturity of 90 days or less to be cash equivalents. (b)Trade Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtfulaccounts of $374,198 and $246,410 as of December 31, 2014 and 2013, respectively, is the Partnership’s best estimate of theamount of probable credit losses in the Partnership’s existing accounts receivable. The Partnership determines the allowancebased upon historical write-off experience and specific identification of certain customers. The Partnership does not have anyoff-balance-sheet credit exposure related to its customers. (c)Inventories Inventories are valued at the lower of cost or market using the specific identification method. Inventory consists ofserialized parts used in the repair of compression units. Purchases of these assets are considered operating activities inF-6 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 the consolidated statement of cash flows. The reserve for slow moving and obsolete inventory was $0.4 million as ofDecember 31, 2014 and 2013. (d)Property and Equipment Property and equipment are carried at cost. Overhauls and major improvements that increase the value or extend the life ofcompressor equipment are capitalized and depreciated over 3 to 5 years. Ordinary maintenance and repairs are charged toincome. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows: Compression equipment 25 years Furniture and fixtures 7 years Vehicles and computer equipment 3 - 7 years Leasehold improvements 5 years Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $67.6 million, $49.7 million and $38.9million, respectively. (e)Impairments of Long-Lived Assets During the year ended December 31, 2014, the Partnership evaluated the future deployment of its idle fleet anddetermined that certain compression equipment was no longer going to be utilized in the operating fleet. This compressionequipment was written down to its respective fair value, measured using quoted market prices or, in the absence of quotedmarket prices, based on an estimate of discounted cash flows, or the expected net sale proceeds compared to other fleet unitsthe Partnership recently sold or a review of other units recently offered for sale by third parties, or the estimated componentvalue of the equipment the Partnership plans to use. The Partnership recorded $2.3 million and $0.2 million in impairment ofcompression equipment for the years ended December 31, 2014 and 2013, respectively. The Partnership did not recordimpairment of long-lived assets in 2012. (f)Revenue Recognition Revenue from contract operations is recorded when earned over the period of the contract, which generally ranges fromone month to five years. Parts and service revenue is recorded as parts are delivered or services are performed for the customer. (g)Income Taxes The Partnership elected to be treated under SubChapter K of the Internal Revenue Code. Under SubChapter K, apartnership return is filed annually reflecting each partner’s allocable share of the partnership’s income or loss. Therefore, noprovision has been made for federal income tax. Partnership net income (loss) is allocated to the partners in proportion to theirrespective interest in the Partnership. As a partnership, all income, gains, losses, expenses, deductions and tax credits generated by the Partnership generallyflow through to its unitholders. However, Texas imposes an entity-level income tax on partnerships. The State of Texas’ margin tax became effective for tax reports originally due on or after January 1, 2008. This margin taxrequires partnerships and other forms of legal entities to pay a tax of approximately 1.0% on its "margin,” as defined in thelaw, based on annual results. The margin tax base to which the tax rate is applied is the lesser of (1) 70% of total revenues forfederal income tax purposes, (2) total revenue less cost of goods sold, or (3) total revenue less compensation for federal incometax purposes. For the years ended December 31, 2014, 2013 and 2012, the Partnership recorded expense related to the Texasmargin tax of $102,738, $279,972 and $196,040, respectively. F-7 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 (h)Fair Value Measurements Accounting standards on fair value measurements establish a framework for measuring fair value and stipulate disclosuresabout fair value measurements. The standards apply to recurring and nonrecurring financial and non-financial assets andliabilities that require or permit fair value measurements. Among the required disclosures is the fair value hierarchy of inputsthe Partnership uses 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 the Partnership hasthe ability to access at the measurement date. Level 2 inputs are inputs 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, 2014 and 2013, the Partnership’s financial instruments consisted primarily of cash and cashequivalents, trade accounts receivable, trade accounts payable and long-term debt. The book values of cash and cashequivalents, trade accounts receivable, and trade accounts payable are representative of fair value due to their short-termmaturity. The carrying amount of long-term debt approximates fair value due to the floating interest rates associated with thedebt. Phantom unit awards granted to employees under the USA Compression Partners, LP 2013 Long-Term Incentive Plan (the“LTIP”) are accounted for as liabilities and the liability is re-measured on a quarterly basis. The liability is based on thepublicly quoted price of the Partnership’s common units, which is considered a Level 1 input. (i)Pass Through Taxes Sales taxes incurred on behalf of, and passed through to, customers are accounted for on a net basis. (j)Use of Estimates The preparation of the consolidated financial statements of the Partnership in conformity with accounting principlesgenerally accepted in the United States of America (“GAAP”) requires the management of the Partnership to make estimatesand assumptions that affect the amounts reported in these consolidated financial statements and the accompanying results.Although these estimates are based on management’s available knowledge of current and expected future events, actualresults could differ from these estimates. (k)Identifiable Intangible Assets As of December 31, 2014 and 2013, identifiable intangible assets consisted of the following (in thousands): Customer Relationships Trade Names Non-compete Total Gross Balance at December 31, 2012 $72,000 $15,600 $ - $87,600 Additions 6,700 — 900 7,600 Accumulated Amortization (7,312) (1,872) (75) (9,259) Net Balance at December 31, 2013 $71,388 $13,728 $825 $85,941 Gross Balance at December 31, 2013 78,700 15,600 900 95,200 Additions — — — — Accumulated Amortization (10,047) (2,496) (300) (12,843) Net Balance at December 31, 2014 $68,653 $13,104 $600 $82,357 Identifiable intangible assets are amortized on a straight-line basis over their estimated useful lives, which is the periodover which the assets are expected to contribute directly or indirectly to the Partnership’s future cash flows. TheF-8 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 estimated useful lives range from 4 to 30 years. Aggregate amortization expense for the years ended December 31, 2014, 2013and 2012 was $3.6 million, $3.2 million and $3.0 million, respectively. The expected amortization of the identifiableintangible assets for each of the five succeeding years is as follows (in thousands): Year ending December 31, Total 2015 $3,584 2016 3,584 2017 3,509 2018 3,359 2019 3,359 The Partnership assesses identifiable intangible assets for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. The Partnership did not record any impairment ofidentifiable intangible assets in 2014, 2013 or 2012. (l)Goodwill Goodwill represents consideration paid in excess of the fair value of the identifiable net assets acquired in a businesscombination. Goodwill is not amortized, but is reviewed for impairment annually based on the carrying values as of October 1,or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered. As of October 1, 2014, a quantitative assessment was performed to determine whether the fair value of the Partnership’ssingle reporting unit was greater than its carrying value. As of October 1, 2014, the fair value was determined to be in excessof the carrying value. Due to the identification of certain impairment indicators during the fourth quarter of 2014: (1) thedecline in the Partnership’s unit price traded on the New York Stock Exchange, (2) the decline in global crude oil prices, and(3) the decline in performance of the Alerian MLP Index, the Partnership prepared a quantitative assessment as of December31, 2014. Although the calculated fair value was less than the fair value calculated as of October 1, 2014, the calculated fairvalue was still in excess of the carrying value. Therefore, the Partnership did not prepare Step 2 of the impairment analyses nor did it record an impairment of goodwillfor the year ended December 31, 2014. No impairment of goodwill was recorded in the years ended December 31, 2013 and2012. (m)Capitalized Interest For the year ended December 31, 2014, the Partnership capitalized $0.3 million of interest expense in accordance withASC 835-20 for interest costs incurred during the period related to upfront payments required in acquiring certaincompression units. The Partnership capitalized no interest during the years ended December 31, 2013 or 2012. (n)Operating Segment The Partnership operates in a single business segment, the compression services business. (3) Acquisition On August 30, 2013, the Partnership completed the acquisition of assets and certain liabilities related to S&RCompression, LLC’s (“S&R”) business of providing gas lift compression services to third parties engaged in the exploration,production, gathering, processing, transportation or distribution of oil and gas in exchange for 7,425,261 common units,which were valued at $181.9 million at the time of issuance (the “S&R Acquisition”). The S&R Acquisition was consummatedpursuant to the contribution agreement with S&R and Argonaut Private Equity L.L.C. (“Argonaut”). The S&R Acquisition hadan effective date (from a standpoint of settling working capital) of June 30, 2013. The consolidated financial statements reflectthe operating results of the S&R Acquisition for the period subsequent to the August 30, 2013 acquisition. At the time of theclosing of the acquisition, the common units issued in the S&R Acquisition were not registered pursuant to the Securities Actof 1933, as amended, or any applicable stateF-9 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 securities laws, and, at the time of issuance, were restricted securities under the federal securities laws. The resale of thecommon units issued in the S&R Acquisition was registered pursuant to the Shelf Registration Statement (as defined below).The effective purchase price of $178.5 million reflects customary effective-date adjustments such as a $3.4 million purchaseprice adjustment due to working capital changes from the effective date to the closing date. The transaction was accounted for in accordance with Accounting Standards Codification 805, Business Combinations.The purchase price allocation as of August 30, 2013 is comprised of the following components (in thousands): Issuance of limited partner units $181,919 Less cash received for working capital adjustment (3,374) Total consideration $178,545 Trucks and Trailers $2,158 Compression equipment 117,784 Computers 23 Intangibles Customer relationships 6,700 Non-compete 900 Total intangibles 7,600 Goodwill 50,980 Allocation of Purchase Consideration $178,545 Expenses associated with acquisition activities and transaction activities related to the S&R Acquisition for the yearended December 31, 2013 were $2.1 million and were included in selling, general and administrative expenses (“SG&A”). Theacquisition was recorded at fair value, which was determined using the cost and market approaches for the fixed assets, themulti-period excess earnings method for the customer relationships asset and the with-and-without method for the non-compete agreement. In applying these accounting principles, the Partnership estimated the fair value of the S&R assetsacquired to be $127.6 million. This measurement resulted in the recognition of goodwill totaling approximately $51.0million. Goodwill was calculated as the excess of the consideration transferred to acquire S&R over the acquisition dateestimated fair value of the assets acquired. Goodwill recorded in the S&R Acquisition primarily represents the value of theopportunity to expand into gas lift operations with a high quality fleet, the experience and technical expertise of former S&Remployees who have joined the Partnership and the addition of strategic areas of operations in which the Partnership did notpreviously have a significant presence. The intangible asset customer relationships will be amortized over a life of 20 yearsand the intangible asset non-compete will be amortized over the 4-year term of the agreement. Revenue, Net Income and Pro Forma Financial Information — Unaudited For the period of August 30, 2013 to December 31, 2013, the S&R Acquisition accounted for $14.5 million of revenue,$4.4 million of direct operating expenses, and $0.6 million of SG&A and $3.7 million of depreciation and amortization,resulting in $5.8 million of net income. The net income attributable to these assets does not reflect certain expenses, such ascertain SG&A and interest expense; therefore, this information is not intended to report results as if these operations weremanaged on a stand-alone basis. The unaudited pro forma financial information was prepared assuming the S&R Acquisition occurred on January 1, 2012.The financial information was derived from the Partnership’s audited historical consolidated financial statements for the yearsended December 31, 2013 and 2012, S&R’s audited historical consolidated financial statements for the year endedDecember 31, 2012, and S&R’s unaudited interim financial statements from January 1, 2013 through August 30, 2013. The pro forma adjustments were based on currently available information and certain estimates and assumptions bymanagement. If the S&R Acquisition had been in effect on the dates or for the periods indicated, the results may have beensubstantially different. For example, the Partnership may have operated the assets differently than S&R, realizedF-10 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 revenue may have been different and costs of operation of the compression assets may have been different. This pro formafinancial information is provided for illustrative purposes only and may not provide an indication of results in the future. Thefollowing table presents a summary of pro forma financial information (in thousands, except for unit amounts): Year Ended December 31, 2013 2012 (unaudited) Total revenues $176,254 $143,985 Net income 15,919 8,312 Net income allocated to: General partner’s interest in net income 318 — Limited partner’s interest in net income: Common units 10,054 — Subordinated units 5,546 — Basic and diluted net income per common unit $0.39 — Basic and diluted net income per subordinated unit $0.39 — In preparing the pro forma financial information, certain information was derived from financial records and certaininformation was estimated. The sources of information and significant assumptions are described below: (a)Revenues and direct operating expenses for S&R were derived from the historical financial records of S&R.Incremental revenue adjustments related to the S&R Acquisition were $27.1 million and $25.2 million for theyears ended December 31, 2013 and 2012, respectively. Incremental operating costs related to the S&RAcquisition were $12.2 million and $12.4 million for the years ended December 31, 2013 and 2012,respectively. (b)Depreciation and amortization was estimated using the straight-line method and reflects the incrementaldepreciation and amortization expense incurred due to adding the compression assets and intangible fair valueassets acquired from S&R. Incremental depreciation and amortization was estimated at $9.7 million for the yearsended December 30, 2013 and 2012. (c)Incremental transaction expenses related to the S&R Acquisition were $2.1 million and were assumed to befunded from cash on hand. (d)The S&R Acquisition was financed solely with common units issued in consideration for the assets andliabilities acquired as part of the S&R Acquisition. (e)The capital contribution made by the General Partner to maintain its then 2% general partner interest in thePartnership in connection with the issuance of common units in the S&R Acquisition was used to pay down thePartnership’s revolving credit facility resulting in a reduction of interest expense. Incremental interest expensereductions were estimated at $90,000 and $111,000 for the years ended December 31, 2013 and 2012,respectively.F-11 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 (4) Property and Equipment Property and equipment consisted of the following at December 31 (in thousands): 2014 2013 Compression equipment $1,311,943 $950,823 Furniture and fixtures 619 706 Automobiles and vehicles 17,303 12,476 Computer equipment 11,913 5,636 Leasehold improvements 858 116 Total 1,342,636 969,757 Less: accumulated depreciation and amortization (179,999) (116,791) Total $1,162,637 $852,966 As of December 31, 2014 and 2013, there was $32.4 million and $15.8 million, respectively, of property and equipmentpurchases in accounts payable and accrued liabilities. For the year ended December 31, 2014, non-cash transfers of inventory to and from property and equipment totaled $5.9million. These transfers have been treated as non-cash inventory activities in the Consolidated Statements of Cash Flows. (5) Installment Receivable On June 30, 2014, the Partnership entered into a FMV Bargain Purchase Option Grant Agreement (the “Capital LeaseTransaction”) with a customer, pursuant to which the Partnership granted a bargain purchase option to the customer withrespect to certain compressor packages leased to the customer (each a “Subject Compressor Package”). The bargain purchaseoption provides the customer with an option to acquire the equipment at a value significantly less than the fair market value atthe end of the lease term. The Capital Lease Transaction was accounted for as a sales type lease and resulted in a current installment receivable of$2.8 million included in other accounts receivable and a long-term installment receivable of $20.2 million as of December 31,2014. Additionally, the Partnership recorded a $2.6 million gain on sale of assets related to the Capital Lease Transaction forthe year ended December 31, 2014. (6) Accrued Liabilities Other current liabilities included accrued payroll and benefits and accrued property taxes. The Partnership recognized$5.5 million and $2.2 million of accrued payroll and benefits as of December 31, 2014 and 2013, respectively. ThePartnership recognized $4.8 million and $3.2 million of accrued property taxes as of December 31, 2014 and 2013,respectively. (7) Long-Term Debt The long-term debt of the Partnership consisted of the following as of December 31 (in thousands): 2014 2013 Senior debt $594,864 $420,933 (a)Senior Debt On June 1, 2012, the Partnership entered into a Fourth Amended and Restated Credit Agreement in order to provide acovenant structure that is more appropriate for a public company than was the prior credit agreement, including a reduction ofthe applicable margin for BBA London Interbank Offering Rate (“LIBOR”) loans to a range of 175 to 250 basis points aboveLIBOR, depending on the Partnership’s leverage ratio. This amended and restated credit agreementF-12 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 became effective on January 18, 2013, the closing date of the Partnership’s initial public offering, continued to be secured bya first priority lien against the Partnership’s assets and had a scheduled maturity of October 5, 2015. On December 10, 2012,the Partnership amended the Fourth Amended and Restated Credit Agreement to extend the periods during which themaximum funded debt to EBITDA ratio thresholds would apply. During 2012, the Partnership paid various loan fees andincurred costs in respect of the third amendment to the credit agreement and the Fourth Amended and Restated CreditAgreement in the amount of $1.6 million. On December 13, 2013, the Partnership entered into a Fifth Amended and Restated Credit Agreement (the “revolvingcredit facility”) whereby the aggregate commitment under the facility increased from $600 million to $850 million (subject toavailability under the Partnership’s borrowing base and a further potential increase of $100 million) and reduced theapplicable margin for LIBOR loans to a range of 150 to 225 basis points above LIBOR, depending on the Partnership’sleverage ratio. The Partnership’s revolving credit facility is secured by a first priority lien against its assets and had ascheduled maturity of December 13, 2018, at which point all amounts outstanding would become due. On June 30, 2014, the Partnership entered into a letter agreement regarding a limited consent, amendment andsubordination relating to the revolving credit facility to (a) permit the Capital Lease Transaction, (b) permit the customer’slien with respect to the Subject Compressor Packages, (c) to subordinate the lien of JPMorgan Chase Bank, N.A., asadministrative agent under our revolving credit facility, for the benefit of itself and the lenders under the revolving creditfacility, to the lien and purchase option of the customer with respect to the Subject Compressor Packages, (d) authorize therelease of the lien of the administrative agent, for the benefit of itself and the lenders, upon the exercise by the customer of itspurchase option with respect to a specific Subject Compressor Package and (e) amend certain other provisions of the revolvingcredit facility. On January 6, 2015, the Partnership entered into a Second Amendment to our revolving credit facility, whereby, theaggregate commitment under the revolving credit facility increased from $850.0 million to $1.1 billion (subject toavailability under our borrowing base), with a further potential increase of $200 million and the maturity date of the revolvingcredit facility was extended to January 6, 2020. In addition, this Second Amendment provided additional flexibility under thefinancial covenants of the revolving credit facility. The revolving credit facility permits the Partnership to make distributions of available cash to unitholders so long as(a) no default under the facility has occurred, is continuing or would result from the distribution, (b) immediately prior to andafter giving effect to such distribution, the Partnership is in compliance with the facility’s financial covenants and(c) immediately after giving effect to such distribution, the Partnership has availability under the revolving credit facility of atleast $20 million. In addition, the revolving credit facility contains various covenants that may limit, among other things, thePartnership’s 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 the Partnership’s assets; or ·make certain acquisitions. The revolving credit facility also contains various financial covenants, including covenants requiring the Partnership tomaintain: ·a minimum EBITDA to interest coverage ratio of 2.5 to 1.0; andF-13 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 ·a maximum funded debt to EBITDA ratio, determined as of the last day of each fiscal quarter, for the annualizedtrailing three months of (a) 5.50 to 1.0 through December 31, 2014, (b) 5.95 to 1.0 through the end of the fiscalquarter ending June 30, 2015, (c) 5.50 to 1.0 through the end of the fiscal quarter ending June 30, 2016 and (d) 5.00to 1.0 thereafter, in each case subject to a provision for increases to such thresholds by 0.5 in connection with certainfuture acquisitions for the six consecutive month period following the period in which any such acquisition occurs. If a default exists under the revolving credit facility, the lenders will be able to accelerate the maturity on the amount thenoutstanding and exercise other rights and remedies. The Partnership paid various loan fees and incurred costs in respect of the revolving credit facility in the amount of $0.2million in 2014, which were capitalized to loan costs and will be amortized through January 2020. The Partnership wrote off$0.3 million in 2013 related to certain third parties that exited the credit facility. As of December 31, 2014 and 2013, the Partnership was in compliance with all of its covenants under the revolving creditfacility. As of December 31, 2014, the Partnership had outstanding borrowings of $594.9 million, borrowing availability based onthe Partnership’s borrowing base of $255.1 million and, subject to financial covenants, borrowing availability under therevolving credit facility of $133.3 million. The borrowing base consists of eligible accounts receivable, inventory andcompression units. The largest component, representing 94% of the borrowing base at each of December 31, 2014 and 2013,was eligible compression units. Eligible compression units consist of compressor packages that are leased, rented or underservice contracts to customers and carried in the financial statements as fixed assets. The Partnership’s effective interest rate ineffect for all borrowings under its revolving credit facility as of December 31, 2014 and 2013 was 2.16% and 2.17%,respectively, with an average interest rate of 2.22%, 2.43%, and 2.99% during 2014, 2013 and 2012, respectively, excludingthe effects from the interest rate swap instruments discussed below for 2012. There were no letters of credit issued as ofDecember 31, 2014 and 2013. In the event that any of the Operating Subsidiaries guarantees any series of the debt securities as described in thePartnership’s registration statement filed on Form S-3 (Reg. No. 333-193724), such guarantees will be full and unconditionaland made on a joint and several basis for the benefit of each holder and the Trustee. However, such guarantees are subject torelease, subject to certain limitations, as follows (i) upon the sale, exchange or transfer, whether by way of a merger orotherwise, to any Person that is not an Affiliate of the Partnership, of all the Partnership’s direct or indirect limited partnershipor other equity interest in such Subsidiary Guarantor; or (ii) upon the Partnership’s or USA Compression Finance Corp.’s(together, the “Issuers”) delivery of a written notice to the Trustee of the release or discharge of all guarantees by suchSubsidiary Guarantor of any Debt of the Issuers other than obligations arising under this Indenture and any Debt Securitiesissued hereunder, except a discharge or release by or as a result of payment under such guarantees. Capitalized terms in thisparagraph are defined in the Form of Indenture filed as exhibit 4.1 to such registration statement. The revolving credit facility matures in January 2020 and the Partnership expects to maintain this facility for the term.The facility is a “revolving credit facility” that includes a “springing” lock box arrangement, whereby remittances fromcustomers are forwarded to a bank account controlled by the Partnership, and the Partnership is not required to use suchremittances to reduce borrowings under the facility, unless there is a default or excess availability under the facility is reducedbelow $20 million. As the remittances do not automatically reduce the debt outstanding absent the occurrence of a default or areduction in excess availability below $20 million, the debt has been classified as long-term as of December 31, 2014 and2013. F-14 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 Maturities of long-term debt (in thousands): Year ending December 31, 2015 — 2016 — 2017 — 2018 — 2019 — 2020 594,864 Total Debt $594,864 (b)Hedging and Use of Derivative Instruments During 2012, the Partnership had only limited involvement with derivative financial instruments and used themprincipally to manage well-defined interest rate risk. Interest rate swap agreements are used to reduce the potential impact offluctuations in interest rates on variable rate long-term debt. The swaps were not used for trading or speculative purposes. The swap agreements entitled the Partnership to pay or receive from the counter-party, monthly, the amount by which thecounter-party’s variable rate (reset monthly) was less than or exceeded the Partnership’s fixed rate under the agreements withrespect to the notional amount. Under the swaps, the Partnership received fixed rates of 3%, 1.9% and 2.055% on the notionalamounts of $75 million, $35 million and $30 million, respectively, in exchange for a floating rate tied to the LIBOR. Theswaps minimized interest rate exposure on the revolving credit facility, and in effect, converted variable interest payments onthe aggregate notional amount to fixed interest payments. Amounts paid or received from the interest rate swap were chargedor credited to interest expense and matched with the cash flow and interest expense of the senior debt being hedged, resultingin an adjustment to the effective interest rate. The swap payments for the year ended December 31, 2012 was $2.3 million.During 2012, interest expense was reduced by $2.2 million, due to changes in the fair value of the interest rate swaps. Therewere no interest rate swap agreements in 2013 or 2014. (8) Partner’s Capital As of February 17, 2015, USA Compression Holdings held 5,541,573 common units and 14,048,588 subordinated unitsand the General Partner held a 1.7% general partner interest (the “General Partner’s Interest”) and the incentive distributionrights (“IDRs”). See the condensed consolidated statement of changes in Partners’ Capital. Subordinated Units All of the subordinated units are held by USA Compression Holdings. The partnership agreement provides that, duringthe subordination period, the common units have the right to receive distributions of Available Cash from Operating Surplus(each as defined in the Partnership’s agreement) each quarter in an amount equal to $0.425 per common unit (the “MinimumQuarterly Distribution”), plus any arrearages in the payment of the Minimum Quarterly Distribution from Operating Surpluson the common units from prior quarters, before any distributions of Available Cash from Operating Surplus may be made onthe subordinated units. These units are deemed “subordinated” because for a period of time, referred to as the subordinationperiod, the subordinated units will not be entitled to receive any distributions from Operating Surplus until the common unitshave received the Minimum Quarterly Distribution plus any arrearages from prior quarters. The practical effect of thesubordinated units is to increase the likelihood that during the subordination period there will be Available Cash fromOperating Surplus to be distributed on the common units. The subordination period will end on the first business day after thePartnership has earned and paid at least (i) $1.70 (the Minimum Quarterly Distribution on an annualized basis) on eachoutstanding unit and the corresponding distribution on the General Partner’s Interest, for each of three consecutive, non-overlapping four-quarter periods ending on or after December 31, 2015 or (ii) $2.55 (150.0% of the annualized MinimumQuarterly Distribution) on each outstanding unit and the corresponding distributions on the General Partner’s Interest and therelated distribution on the incentive distribution rights for the four-quarter period immediately preceding that date. When thesubordination period ends, all subordinated units will convert into common units on a one-for-one basis, and all commonunits thereafter will no longer be entitled to arrearages.F-15 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 Incentive Distribution Rights The General Partner holds all of the IDRs. The following table illustrates the percentage allocations of available cash fromoperating surplus between the unitholders and the General Partner based on the specified target distribution levels. Theamounts set forth under “Marginal Percentage Interest in Distributions” are the percentage interests of the General Partner andthe unitholders in any available cash from operating surplus the Partnership distributes up to and including the correspondingamount in the column “Total Quarterly Distribution per Unit.” The percentage interests shown for the Partnership’sunitholders and the General Partner for the minimum quarterly distribution are also applicable to quarterly distributionamounts that are less than the minimum quarterly distribution. The percentage interests set forth below for the General Partnerinclude its General Partner’s Interest, assume the General Partner has contributed any additional capital necessary to maintainits General Partner’s Interest, the General Partner has not transferred the IDRs and there are no arrearages on common units. Marginal Percentage Interest in Total Quarterly Distributions Distributions per Unit Unitholders General Partner Minimum Quarterly Distribution $0.425 98.31 % 1.69 %First Target Distribution up to $0.4888 98.31 % 1.69 %Second Target Distribution above $0.4888 up to $0.5313 85.31 % 14.69 %Third Target Distribution above $0.5313 up to $0.6375 75.31 % 24.69 %Thereafter above $0.6375 50.31 % 49.69 % Cash Distributions The Partnership has declared quarterly distributions per unit to unitholders of record, including holders of common,subordinated and phantom units and the General Partner’s Interest held by the General Partner as follows (in millions, exceptdistribution per unit): Distribution per Amount Paid to Amount Paid to Amount Paid to Limited Partner Common Subordinated General Total Payment Date Unit Unitholders Unitholder Partner Distribution May 15, 2013 $0.348 (1) $5.2 $4.9 $0.2 $10.3 August 14, 2013 0.44 6.7 6.2 0.3 13.2 November 14, 2013 0.46 10.6 6.5 0.3 17.4 February 14, 2014 0.48 11.3 6.7 0.4 18.4 May 15, 2014 0.49 11.8 6.9 0.4 19.1 August 14, 2014 0.50 15.1 7.0 0.5 22.6 November 14, 2014 0.505 15.5 7.1 0.5 23.1 (1)Prorated to reflect 72 days of quarterly cash distribution rate of $0.435 per unit. The Partnership’s partnership agreement requires that, within 45 days after the end of each quarter, the Partnershipdistribute all of its Available Cash (as defined in the partnership agreement) to the partners of record on the applicable recorddate. Certain limited partners, including USA Compression Holdings, and Argonaut and certain related parties, have elected toreceive distributions in the form of additional common units in accordance with the Partnership’s Distribution ReinvestmentPlan (the “DRIP”). Such distributions, which are treated as non-cash transactions in the accompanying Statements of CashFlows, totaled $51.7 million, $26.3 million, and $0 for the years ended December 31, 2014, 2013 and 2012, respectively. On January 22, 2015, the Partnership announced a cash distribution of $0.51 per unit on its common units andsubordinated units. The distribution was paid on February 13, 2015 to unitholders of record as of the close of business onFebruary 3, 2015. USA Compression Holdings, the owner of 42.0% of the Partnership’s outstanding limited partner interests,and Argonaut and certain of its related parties, the owners of 16.3% of the Partnership’s outstanding limitedF-16 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 partner interests, have elected to reinvest all of this distribution with respect to their units pursuant to the Partnership’s DRIP.Following the issuance of common units under the DRIP, USAC Compression Holdings owned 42.5% of the Partnership’soutstanding limited partner interests, and Argonaut and its related parties participating in the DRIP, owned 16.5% of thePartnership’s outstanding limited partner interests. As of December 31, 2014, a total of 3,152,985 common units had been issued pursuant to the DRIP. As of February 17,2014 an additional 729,159 common units had been issued pursuant to the DRIP. Equity Offering On April 23, 2014, the Partnership’s registration statement on Form S-3 (Reg. No. 333-193724) (as amended, the “ShelfRegistration Statement”) was declared effective by the Securities and Exchange Commission. Under the Shelf RegistrationStatement, the Partnership registered the offer and sale of (1) up to $1.0 billion aggregate principal amount of Partnershipsecurities, including common units and other classes of units representing limited partner interests in the Partnership, debtsecurities and guarantees of debt securities and (2) up to 27,074,118 common units held by certain selling unitholders and upto 6,266,024 common units that may be issued to such selling unitholders under the Partnership’s DRIP. On May 19, 2014, the Partnership closed a public offering of 6,600,000 common units, of which 5,600,000 common unitswere sold by the Partnership and 1,000,000 common units were sold by certain selling unitholders, including USACompression Holdings and Argonaut (the “Selling Unitholders”), at a price to the public of $25.59. USA CompressionHoldings and Argonaut granted the underwriters an option to purchase up to an additional 990,000 common units to coverover-allotments, which was exercised by the underwriters in full and closed on May 27, 2014. The Partnership used the netproceeds of $138.0 million (net of underwriting discounts and commissions and offering expenses) to reduce the indebtednessoutstanding under the revolving credit facility. Earnings Per Common and Subordinated Unit The computations of earnings per common and subordinated unit are based on the weighted average number of commonand subordinated units, respectively, outstanding during the applicable period. The Partnership’s subordinated units and theGeneral Partner’s Interest (including its IDRs) meet the definition of participating securities as defined by the FinancialAccounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 260 Earnings Per Share;therefore, the Partnership is required to use the two-class method in the computation of earnings per unit. Basic earnings percommon and subordinated unit are determined by dividing net income allocated to the common and subordinated units,respectively, after deducting the amount allocated to the General Partner (including distributions to the General Partner on itsIDRs), by the weighted average number of outstanding common and subordinated units, respectively, during the period. Netincome is allocated to the common units, subordinated units and the General Partner based on their respective shares of thedistributed and undistributed earnings for the period. To the extent cash distributions exceed net income for the period, theexcess distributions are allocated to all participating units outstanding based on their respective ownership percentages.Diluted earnings per unit are computed using the treasury stock method, which considers the potential issuance of limitedpartner units associated with the LTIP. Unvested phantom units are not included in basic earnings per unit, as they are notconsidered to be participating securities, but are included in the calculation of diluted earnings per unit. (9) Unit-Based Compensation Class B Units During 2011 and 2013, USA Compression Holdings issued to certain employees and members of its management, whoprovide services to the Partnership, Class B non-voting units. These Class B units are liability-classified profits interest awardswhich have a service condition. The holders of Class B units in USA Compression Holdings are entitled to a cash payment of 10% of net proceedsprimarily from a monetization event, as defined under the provisions of the Amended and Restated Limited LiabilityCompany Agreement of USA Compression Holdings, or the Holdings Operating Agreement, related to these Class BF-17 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 unit awards, in excess of USA Compression Holdings’ Class A unitholder’s capital contributions and an 8% return on eachClass A unitholder’s capital account, compounded annually, (both of which are due upon a monetization event) to the extentof vested units over total units of the respective class. Each holder of Class B units is then allocated their pro-rata share of therespective class of unit’s entitlement based on the number of units held over the total number of units in that class of units.The Class B units vest 25% on the first anniversary date of the grant date and then monthly for the next three years (at the rateof 1/48 per month) subject to certain continued employment. The units have no expiry date provided the employee remainsemployed with USA Compression Holdings or one of its subsidiaries. The Class B units vesting schedule consisted of the following at December 31 (in thousands, except unit amounts): Class B Interest Units Unit-based Grant date fair compensation value per unit Vested Unvested expense Balance of awards as of December 31, 2011 250,000 937,500 Issuance of profit interest units $— — — Vesting 320,313 (320,313) Forfeitures — — Balance of awards as of December 31, 2012 570,313 617,187 Expense recorded in 2012 $— Issuance of profit interest units $— — 187,500 Vesting 531,250 (531,250) Forfeitures (62,500) (62,500) Balance of awards as of December 31, 2013 1,039,063 210,937 Expense recorded in 2013 $— Issuance of profit interest units $— — — Vesting 80,078 (80,078) Forfeitures — — Balance of awards as of December 31, 2014 1,119,141 130,859 Expense recorded in 2014 $— Fair value of the Class B units is based on enterprise value calculated by a predetermined formula. As of December 31,2014, there was no unit-based compensation expense or liability recorded related to these Class B units. The Partnership’s IPO constituted a qualified public offering for purposes of certain vesting provisions of the employeeholder’s Class B Units, which resulted in 50% of certain employee’s unvested Class B Units vesting. Any remaining unvestedClass B Units generally (i) vest 25% percent on the first anniversary date of the grant date and (ii) with respect to theremaining Class B Units, will vest monthly for the next three years (at the rate of 1/48 per month) subject to the employee’scontinued employment on each applicable vesting date. If any employee holder’s employment is terminated by the GeneralPartner without cause or the employee resigns for good reason, the remaining unvested Class B Units will vest in full. As usedin the Holdings Operating Agreement, “good reason” and “cause” have the meanings set forth in each employee’semployment agreement. Long-Term Incentive Plan In connection with the Partnership’s IPO, the board of directors of the General Partner (the “Board”) adopted the LTIP foremployees, consultants and directors of the General Partner and any of its affiliates who perform services for the Partnership.The LTIP consists of unit options, unit appreciation rights, restricted units, phantom units, DERs, unit awards, profits interestunits and other unit-based awards. The LTIP initially limits the number of common units that may be delivered pursuant toawards under the plan to 1,410,000 common units. Awards that are forfeited, cancelled, paid or otherwise terminate or expirewithout the actual delivery of units will be available for delivery pursuant to other awards. The LTIP is administered by theBoard or a committee thereof. In February 2014, the Board approved a modification to all of the phantom unit awards that were granted pursuant to theLTIP during the 2013 fiscal year. The modification provided all employees with phantom unit awards grantedF-18 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 during 2013 with an option of settling a portion of their award in cash and a portion in units. The amount that can be settledin cash is in excess of the employee’s minimum statutory tax-withholding rate. ASC Topic 718, Compensation-StockCompensation, requires the entire amount of an award with such features to be accounted for as a liability. Liabilityaccounting requires the Partnership to re-measure the fair value of the award at each financial statement date until the award isvested or cancelled. The fair value is re-measured at the end of each reporting period using the market price of the commonunits. During the requisite service period, compensation cost is recognized using the proportionate amount of the award’s fairvalue that has been earned through service to date. The total incremental compensation cost recorded in February 2014 as aresult of the modification was $1.2 million. During the year ended December 31, 2014, an aggregate of 187,856 phantom units (including the corresponding DERs)were granted under the LTIP to the General Partner’s executive officers and employees and independent directors. Thephantom units granted in 2014 provide the employees with an option of settling a portion of their award in cash and a portionin units. The phantom units (including the corresponding DERs) awarded are subject to restrictions on transferability,customary forfeiture provisions and time vesting provisions generally in which, for employees, one-third of each award vestson the first, second, and third anniversaries of the date of grant. Grants of phantom units to the independent directors of theGeneral Partner generally vest in full on the one year anniversary of the grant date. Award recipients do not have all the rightsof a unitholder in the partnership with respect to the phantom units until the units have vested. Phantom units granted duringthe years ended December 31, 2013 and 2014 are accounted for as a liability and are re-measured at the end of each reportingperiod using the market price of the common units. During the requisite service period, compensation cost is recognized usingthe proportionate amount of the award’s fair value that has been earned through service to date. The General Partner’s executive officers, employees and independent directors were granted these awards to incentivizethem to help drive the Partnership’s future success and to share in the economic benefits of that success. The compensationcosts associated with these awards are recorded as SG&A. During the year ended December 31, 2014, the Partnershiprecognized $3.0 million of compensation expense associated with these awards, net of expense related to forfeited units.During the year ended December 31, 2014, amounts paid by the Partnership for income tax withholdings related to the vestingof awards under the LTIP were $0.2 million and the value of phantom units that vested and were redeemed by the Partnershipfor cash was $0.1 million. The total fair value and intrinsic value of the phantom units vested under the LTIP was $2.4 millionduring the year ended December 31, 2014. The following table summarizes information regarding phantom unit awards for the periods presented: Weighted-Average Grant Date Fair Number of Units Value per Unit(1) Phantom units outstanding at December 31, 2012 — $— Granted 269,521 19.96 Vested 3,816 19.65 Forfeited 35,714 19.60 Phantom units outstanding at December 31, 2013 229,991 $20.02 Granted 187,856 26.29 Vested 88,707 17.20 Forfeited 60,038 18.81 Phantom units outstanding at December 31, 2014 269,102 $23.65 (1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued. The unrecognized compensation cost associated with phantom unit awards was an aggregate $3.5 million as of December31, 2014. The Partnership expects to recognize the unrecognized compensation cost for these awards on a weighted-averagebasis over a period of 1.8 years. Each phantom unit granted to an independent director is granted in tandem with a corresponding DER, which shallremain outstanding and unpaid from the grant date until the earlier of the payment or forfeiture of the related phantomF-19 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 units. Each vested DER shall entitle the participant to receive payments in the amount equal to any distributions made by thePartnership following the grant date in respect of the common unit underlying the phantom unit to which such DER relates.Accumulated but unpaid DERs are never paid if the underlying phantom unit award is forfeited. Each phantom unit granted to an executive officer or an employee is granted in tandem with a corresponding DER, whichis paid quarterly on the distribution date from the grant date until the earlier of the vesting or the forfeiture of the relatedphantom units. (10) Employee Benefit Plans A 401(k) plan is available to all of the Partnership’s current employees. The plan permits employees to makecontributions up to 20% of their salary, up to statutory limits, which was $17,500 in 2014. The plan provides for discretionarymatching contributions by the Partnership on an annual basis. Aggregate matching contributions made by the Partnershipwere $0.7 million, $0.6 million, and $0.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. (11) Transactions with Related Parties For the year ended December 31, 2013, the Partnership incurred $49,315 of expenses related to management fees under anagreement between USA Compression Holdings and certain of its affiliates, for services provided to the Partnership for theperiod from January 1, 2013 through January 17, 2013. After the completion of the Partnership’s IPO on January 18, 2013, thePartnership and its subsidiaries were no longer required to pay this management fee. William Shea, Jr., who has served as a director of USA Compression GP, LLC since June 2011, served as Chief ExecutiveOfficer of the general partner of PVR Partners, L.P. (“PVR”) from March 2010 to October 2013. On March 21, 2014, PVRmerged with and into Regency Energy Partners LP, a Delaware limited partnership (“Regency”), with Regency as thesurviving limited partnership (the “Merger”). As a result of the Merger, the separate limited partnership existence of PVRceased, and Regency continued its existence as the surviving limited partnership. For the years ended December 31, 2014,2013 and 2012, subsidiaries of PVR made compression service payments to us of approximately $0.6 million, $3.0 millionand $2.2 million, respectively. John Chandler, who has served as a director of USA Compression GP, LLC since October 2013, served as member of theboard of directors for CONE Midstream GP, LLC (“CONE”) since October 2014. During the period of Mr. Chandler’sappointment for the year ended December 31, 2014, CONE made compression service payments to us of approximately $1.7million. The Partnership provides compression services to affiliated entities controlled by Riverstone, who owns a majority of themembership interest in USA Compression Holdings. As of February 17, 2015, USA Compression Holdings owned andcontrolled the Partnership’s General Partner and owned 42.5% of the limited partner interests. For the years ended December31, 2014, 2013 and 2012, such controlled entities made compression service payments to the Partnership of approximately$0.4 million, $0.5 million and $0.8 million, respectively. The Partnership may provide compression services to additionalentities controlled by Riverstone in the future, and any significant transactions will be disclosed. (12) Recent Accounting Pronouncement In May 2014, the FASB issued an update to the authoritative guidance related to clarifying the principles for recognizingrevenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The standardis updated in order to: ·remove inconsistencies and weaknesses in revenue requirements;·provide a more robust framework for addressing revenue issues;·improve comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets;·provide more useful information to users of financial statements through improved disclosure requirements; andF-20 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2014, 2013 and 2012 ·simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. The amendments in this update are effective for annual reporting periods beginning after December 15, 2016, includinginterim periods within that reporting period. Early adoption is not permitted. The Partnership is currently evaluating theimpact, if any, of this standard on the consolidated financial statements. (13) Commitments and Contingencies (a) Operating Leases Rent expense for office space, warehouse facilities and certain corporate equipment for the years ended December 31,2014, 2013 and 2012 was $2.3 million, $1.6 million and $1.1 million, respectively. Commitments for future minimum leasepayments for non-cancelable leases are as follows (in thousands): 2015 $1,563 2016 1,322 2017 1,246 2018 1,073 2019 969 Thereafter — Total $6,173 (b) Major Customers The Partnership had revenue from one customer representing 11.6%, 14.3% and 14.5% of total revenue for the yearsended December 31, 2014, 2013 and 2012, respectively. (c) Litigation From time to time, the Partnership and its subsidiaries may be involved in various claims and litigation arising in theordinary course of business. In management’s opinion, the resolution of such matters is not expected to have a materialadverse effect on the Partnership’s consolidated financial position, results of operations or cash flows. (d) Equipment Purchase Commitments The Partnership’s future capital commitments are comprised of binding commitments under purchase orders for newcompression units ordered but not received. The commitments as of December 31, 2014 were $233.1 million, all of which areexpected to be settled within the next twelve months. (14) Subsequent Events (a) Phantom Units On February 13, 2015, an aggregate of 15,729 phantom units (including the corresponding DERs) were granted under theLTIP to the independent directors of the Partnership’s General Partner. The phantom units (including the correspondingDERs) awarded are subject to restrictions on transferability, customary forfeiture provisions and will vest in full onFebruary 15, 2016. F-21 Table of ContentsSupplemental Selected Quarterly Financial Data(Unaudited) In the opinion of the Partnership’s management, the summarized quarterly financial data below (in thousands, except perunit amounts) contains all appropriate adjustments, all of which are normally recurring adjustments, considered necessary topresent fairly the Partnership’s financial position and the results of operations for the respective periods. March 31, June 30, September 30, December 31, 2014 2014 2014 2014 Revenue $50,202 $53,266 $57,045 $60,995 Gross profit (1) 32,485 35,269 37,615 42,105 Net income 3,915 7,518 5,013 8,501 Income per common unit - basic and diluted $0.10 $0.20 $0.11 $0.18 Income per subordinated unit - basic and diluted 0.10 0.14 0.11 0.18 March 31, June 30, September 30, December 31, 2013 2013 2013 (2) 2013 Revenue $32,604 $33,310 $38,362 $48,642 Gross profit 22,184 23,179 26,440 33,018 Net income 2,521 2,401 1,712 4,437 Income per common unit - basic and diluted $0.07 $0.08 $0.05 $0.12 Income per subordinated unit - basic and diluted 0.07 0.08 0.05 0.12 (1)Gross profit is defined as revenue less cost of operations, exclusive of depreciation and amortization expense.(2)During the third quarter of 2013, the Partnership completed the S&R Acquisition (see Note 3). S-1Exhibit 10.10EMPLOYMENT AGREEMENT This Employment Agreement (“Agreement”) is made and entered into as of June 3, 2011 (the “Effective Date”) byand between USA Compression Partners, LLC, a Delaware limited liability company (hereafter the “Company”), and J.Gregory Holloway (“Employee”). WHEREAS, Employee and the Company desire to enter into this Agreement as set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, Employee andthe Company, intending to be legally bound, do hereby agree as follows: 1.Employment. During the Employment Period (as defined in Section 4 below), the Company shall employEmployee, and Employee shall serve, as Vice President, General Counsel and Secretary of the Company. 2.Duties and Responsibilities of Employee. (a)During the Employment Period, Employee shall: (i) devote all of Employee’s business time andattention to the business of the Company and its Affiliates (as defined below) (collectively, the“Company Group”, which term shall include, for the avoidance of doubt, any subsidiaries or otherentities that become Affiliates of the Company from and after the date hereof), as applicable,(ii) will act in the best interests of the Company Group and (iii) will perform with due careEmployee’s duties and responsibilities. Employee’s duties will include those normally incidentalto the positions of Vice President, General Counsel and Secretary, as well as whatever additionalduties may be assigned to Employee by the board of managers of USA Compression Holdings, LLC(the “Board”), which duties may include, without limitation, providing services to members of theCompany Group in addition to the Company. Employee agrees to cooperate fully with the Boardand not to engage in any activity that interferes with the performance of Employee’s dutieshereunder. During the Employment Period, Employee will not hold any type of outsideemployment, engage in any type of consulting or otherwise render services to or for any otherperson or business concern without the advance written consent of the Board; provided that theforegoing shall not preclude Employee from managing private investments, participating inindustry and/or trade groups, engaging in volunteer civic, charitable or religious activities, servingon boards of directors of charitable not-for-profit entities or, with the consent of the Board, whichconsent is not to be unreasonably withheld, serving on the board of directors of other entities, ineach case as long as such activities, individually or in the aggregate, do not materially interfere orconflict with Employee’s responsibilities to the Company. (b)Employee represents and covenants that Employee is not the subject of or a party to anyemployment agreement, non-competition covenant, nondisclosure agreement, or any otheragreement, covenant, understanding, or restriction that would prohibit Employee from executingthis Agreement or the Amended and Restated Limited Liability Company Agreement of USACompression Holdings, LLC, dated as of December 23, 2010 (as amended, the “OperatingAgreement”) and fully performing Employee’s duties and responsibilities hereunder or thereunder,or would in any manner, directly or indirectly, limit or affect the duties and responsibilities thatmay now or in the future be assigned to Employee hereunder. (c)Employee acknowledges and agrees that Employee owes the Company Group a duty of loyalty as afiduciary of the Company Group, and that the obligations described in this Agreement are inaddition to, and not in lieu of, the obligations Employee owes the Company Group under thecommon law. 1 3.Compensation. (a)During the Employment Period, the Company shall pay to Employee an annualized base salary of$200,000 (the “Base Salary”) in consideration for Employee’s services under this Agreement,payable on a bi-weekly basis, in conformity with the Company’s customary payroll practices forsimilarly situated employees. The Board will annually review the Base Salary, which may beincreased but not decreased during the Employment Period based on Employee’s performance andmarket conditions. (b)During the Employment Period, Employee shall be entitled to participate in the bonus programsestablished for employees of the Company, as may be amended from time to time. The performancetargets that must be achieved in order to be eligible for certain bonus levels shall be established bythe Board each year within 90 days following the start of the applicable fiscal year, in its solediscretion, and communicated to Employee. If the Board determines that Employee meets theperformance targets established for a particular fiscal year, then his bonus for that year (the “AnnualBonus”) will be in an amount up to $50,000 (the “Target Annual Bonus”), in accordance with theterms of the bonus program in effect for the applicable year. In addition, in the event Employeeoutperforms and exceeds the performance targets established for a particular fiscal year, Employeemay receive an additional outperformance bonus for the applicable year, in an amount determinedin the sole discretion of the Board (an “Outperformance Bonus”). The Annual Bonus and anyOutperformance Bonus shall be paid no later than March 15 of the year following the year in whichthe Annual Bonus or Outperformance Bonus is earned, and shall not be payable unless Employeeremains employed by the Company on the date that such bonus is paid, except in the case of atermination of Employee due to the death or Disability of Employee, by the Company forconvenience, or a resignation by Employee for Good Reason, in which case Employee will beentitled to (i) the entire amount of any earned Annual Bonus for the year preceding the year inwhich Employee dies, becomes Disabled, is terminated by the Company for convenience or resignsfor Good Reason and (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 Employee dies, becomes Disabled, is terminatedby the Company for convenience or resigns for Good Reason in each case in the year following theyear to which the applicable bonus relates. 4.Term of Employment. The initial term of this Agreement shall be for the period beginning on the EffectiveDate and ending on the second anniversary of the Effective Date (the “Initial Term”). On the second anniversary of theEffective Date and on each subsequent anniversary thereafter, this Agreement shall automatically renew and extend for aperiod of twelve (12) months (each such twelve (12)-month period being a “Renewal Term”) unless written notice of non-renewal is delivered from either party to the other not less than ninety (90) days prior to the expiration of the then-existingInitial Term or Renewal Term. Notwithstanding any other provision of this Agreement, Employee’s employment pursuant tothis Agreement may be terminated at any time in accordance with Section 6. The period from the Effective Date through theexpiration of this Agreement or, if sooner, the termination of Employee’s employment pursuant to this Agreement, regardlessof the time or reason for such termination, shall be referred to herein as the “Employment Period.” 5.Benefits. Subject to the terms and conditions of this Agreement, Employee shall be entitled to the followingbenefits during the Employment Period: (a)Reimbursement of Business Expenses. Subject to Section 24 hereof (regarding section 409Acompliance), the Company agrees to reimburse Employee for Employee’s reasonable business-related expenses incurred in the performance of Employee’s duties under this Agreement; providedthat Employee timely submits all documentation for such reimbursement, as required by Companypolicy in effect from time-to-time. Employee is not permitted to receive a payment in lieu ofreimbursement under this Section 5(a).2  (b)Benefits. During the Employment Period, Employee and where applicable Employee’s spouse anddependents shall be eligible to participate in the same benefit plans or fringe benefit policies, otherthan severance programs, such as health, dental, life insurance, vision, and 401(k), as are offered tomembers of the Company’s executive management and in each case on no less favorable than theterms of benefits generally available to the employees of the Company (based on seniority andsalary level), subject to applicable eligibility requirements and the terms and conditions of all plansand policies. (c)Paid Time Off. During the Employment Period, Employee shall accrue paid time off (“Paid TimeOff”) at a rate of fifteen (15) days per calendar year during the Employment Period; provided,however, that Employee shall cease accruing Paid Time Off once Employee has accrued fifteen (15)unused days worth of Paid Time Off, and such accrual will begin again only after Employee hasused accrued Paid Time Off such that Employee’s accrued entitlement to Paid Time Off is onceagain less than fifteen (15) days. Employee shall take Paid Time Off in accordance with allCompany policies and with due regard for the needs of the Company Group. 6.Termination of Employment. (a)Company’s Right to Terminate Employee’s Employment for Cause. The Company shall have theright to terminate Employee’s employment hereunder at any time for “Cause.” For purposes of thisAgreement, “Cause” shall mean: (i)any material breach of this Agreement or the Operating Agreement by Employee,including, without limitation, the material breach of any representation, warranty orcovenant made under this Agreement or the Operating Agreement by Employee; (ii)Employee’s breach of any applicable duties of loyalty to the Company or any of itsAffiliates, gross negligence or material misconduct, or a significant act or acts of personaldishonesty or deceit, taken by Employee, in the performance of duties and servicesrequired of Employee that is demonstrably and significantly injurious to the Company orany of its Affiliates; (iii)conviction of Employee of a felony or crime involving moral turpitude; (iv)Employee’s willful and continued failure or refusal to perform substantially Employee’smaterial obligations pursuant to this Agreement or the Operating Agreement or follow anylawful and reasonable directive from the Chief Executive Officer or the Board, other thanas a result of Employee’s incapacity; or (v)a violation of a federal, state or local law or regulation applicable to the business of theCompany that is demonstrably and significantly injurious to the Company. Prior to Employee’s termination for Cause, the Company must give written notice to Employeedescribing the act or omission of Employee giving rise to the determination of Cause and, inrespect of circumstances capable of cure, such circumstances must remain uncured for fifteen (15)days following receipt by Employee of such written notice, provided that Employee shall not beentitled to cure any such acts or omissions if Employee has previously cured any acts or omissionsin the immediately preceding six months. (b)Company’s Right to Terminate for Convenience.3  The Company shall have the right to terminate Employee’s employment for convenience at anytime and for any reason, or no reason at all, with written notice to Employee, subject to theprovisions of Section 6(g) regarding the severance benefits. For purposes of this Agreement, theCompany’s failure to renew the Agreement at the end of Initial Term or a Renewal Term shall bedeemed a termination of Employee’s employment for convenience. (c)Employee’s Right to Terminate for Good Reason. Employee shall have the right to terminateEmployee’s employment with the Company at any time for “Good Reason.” For purposes of thisAgreement, “Good Reason” shall mean: (i)a material breach by the Company of any of its covenants or obligations under thisAgreement, the Operating Agreement or any other material agreement with Employee; (ii)any material reduction in Employee’s Base Salary, other than a reduction that is generallyapplicable to all similarly situated employees of the Company; (iii)a material reduction by the Company in Employee’s duties, authority, responsibilities, jobtitle or reporting relationships as in effect immediately prior to such reduction, or theassignment to Employee of such reduced duties, authority, responsibilities, job title orreporting relationships; (iv)a material reduction of the facilities and perquisites available to Employee immediatelyprior to such reduction, other than a reduction that is generally applicable to all similarlysituated employees of the Company; (v)the relocation of the geographic location of Employee’s principal place of employmentby more than fifty (50) miles from the location of Employee’s principal place ofemployment as of the Effective Date. Notwithstanding the foregoing provisions of this Section 6(c) or any other provision of thisAgreement to the contrary, any assertion of Employee of a termination for Good Reason shall notbe effective unless all of the following conditions are satisfied: (A) the condition giving rise toEmployee’s termination of employment must have arisen without Employee’s written consent; (B)Employee must provide written notice to the Board of such condition within thirty (30) days of theinitial existence of the condition; (C) the condition specified in such notice must remainuncorrected for thirty (30) days after receipt of such notice by the Board; and (D) the date ofEmployee’s termination of employment must occur within the ninety (90)-day period after theinitial existence of the condition specified in such notice, in which case, if Good Reason is found toexist and Employee otherwise complies with Section 6(g), Employee will be entitled to receive theseverance benefits provided in Section 6(g). (d)Death or Disability. Upon the death or Disability (as defined below) of Employee, Employee’semployment with Company shall terminate and the Company shall have no further obligation toEmployee, or Employee’s successor(s) in interest; provided that the Company shall pay toEmployee or the estate of Employee the amounts set forth in Section 6(h), plus any Annual Bonusor Outperformance Bonus provided for in Section 3(b). For purposes of this Agreement, “Disability”shall mean that Employee is unable to perform the essential functions of Employee’s position, withreasonable accommodation, due to an illness or physical or mental impairment or other incapacitywhich continues for a period in excess of twenty (20) consecutive weeks. The determination ofDisability will be made by a physician selected by Employee and acceptable to the Company or itsinsurers, with such agreement to the acceptability not to be unreasonably withheld.4  (e)Employee’s Right to Terminate for Convenience. Employee shall have the right to terminateEmployee’s employment with the Company for convenience at any time and for any reason, or noreason at all, upon thirty (30) days advance written notice to the Company. (f)Termination upon Non-Renewal of the Agreement. Except as otherwise mutually agreed betweenthe Company and Employee, if the Company or Employee provides the other party with a writtennotice of non-renewal of this Agreement in accordance with Section 4, Employee’s employmentwith Company shall automatically terminate upon the expiration of the then-applicable InitialTerm or Renewal Term, as applicable. (g)Effect of Termination for Convenience or Good Reason Resignation. If Employee incurs aSeparation from Service (as defined below) due to Employee’s employment terminating pursuant toSections 6(b) or 6(c) (regarding termination for convenience and resignation for Good Reason)above and Employee: (x) executes within forty-five (45) days following the date of Employee’sSeparation from Service, and does not revoke, a release of all claims in a form satisfactory to theCompany, which such form will be promptly provided by Company to Employee on or before hisSeparation from Service substantially in the form of release contained at Exhibit A (the “Release”);and (y) abides by Employee’s continuing obligations hereunder, including, without limitation, theprovisions of Sections 8 and 9 hereof (regarding confidentiality and non-competition), thenEmployee shall be entitled to the following, in addition to the amounts described in Section 6(h),and any Annual Bonus or Outperformance Bonus provided for in Section 3(b): (i)Severance Pay. The Company shall make severance payments to Employee in anaggregate amount equal to one times Employee’s Base Salary as in effect as of the date ofEmployee’s termination of employment (or Base Salary for any preceding year in theEmployment Period, if greater) (the “Severance Payment”). If payable, the SeverancePayment will be made, as applicable, in equal semi-monthly installments over the one (l)-year period following the date of Employee’s Separation from Service (the “SeverancePeriod”), in accordance with the Company’s regular payroll practices, provided that anysuch installment payments that would otherwise be paid prior to the Company’s firstregular payroll date that occurs on or after the sixtieth (60) day following the date ofEmployee’s Separation from Service (the “First Pay Date”) shall be paid on the First PayDate. Notwithstanding the foregoing, in the event of Employee’s death during theSeverance Period, all remaining Severance Payments due him shall be paid in a lump sumwithin thirty (30) days of Employee’s death. Likewise, notwithstanding the otherprovisions of this Section 6(g)(i), in the event of a termination for convenience by theCompany or termination by Employee for Good Reason within two (2) years following theoccurrence of a “change in control event” within the meaning of Treasury RegulationSection 1.409A-3(i)(5), the Severance Payment shall be paid in a lump sum within thirty(30) days of the date of Employee’s Separation from Service. (ii)Continued Health Insurance Benefits. For a period of twenty-four (24) months followingEmployee’s Separation from Service (which period of twenty-four (24) months shallinclude and run concurrently with any so-called COBRA continuation period applicableto Employee and/or his eligible dependents under Section 4980B of the Code, and may besubject to Employee and/or his eligible dependents electing such continuation coverage),provided, however, that (A) during the first twelve (12) months of such coverage, theCompany shall continue to provide health insurance benefits to Employee and anyeligible dependents at the Company’s expense (other than Employee’s monthly cost-sharing contribution under the Company’s group5 thhealth plan, as in effect on the date of Employee’s Separation from Service), and (B) duringthe remaining twelve (12) months of such coverage, the Company shall continue toprovide health insurance benefits to Employee and any eligible dependents at Employee’sexpense. Notwithstanding the previous sentence, if the Company determines in its solediscretion that it cannot provide the foregoing benefit without potentially violatingapplicable law (including, without limitation, Section 2716 of the Public Health ServiceAct and any applicable non-discrimination requirement thereunder or otherwise), theCompany shall in lieu thereof provide to Employee a taxable monthly payment in anamount equal to the monthly COBRA premium that Employee would be required to pay tocontinue his and his covered dependents’ group health coverage in effect on the Date ofTermination for the twelve (12) month period following the date of Employee’s Separationfrom Service (which amount shall be based on the premium for the first month of COBRAcoverage), less the amount of Employee’s monthly cost-sharing contribution under theCompany’s group health plan, as in effect on the date of Employee’s Separation fromService at employee rates in effect thereunder as of the Separation from Service. (h)Effect of Termination. Subject to Section 24 hereof (regarding section 409A compliance), upon thetermination of Employee’s employment for any reason, all earned, unpaid Base Salary and allaccrued, unused Paid Time Off shall be paid to Employee within thirty (30) days of the date ofEmployee’s termination of employment, or earlier if required by law. With the exception of anypayments to which Employee may be entitled pursuant to Section 5(a)(regarding businessexpenses) and Section 6(g) (regarding severance benefits), the Company shall have no furtherobligation under this Agreement to make any payments to Employee. 7.Conflicts of Interest. Employee agrees that Employee shall promptly disclose to the Board any conflict ofinterest involving Employee upon Employee becoming aware of such conflict. 8.Confidentiality. Employee acknowledges and agrees that, in the course of Employee’s employment with theCompany and the performance of Employee’s duties on behalf of the Company Group hereunder, Employee will be providedwith, and have access to, valuable Confidential Information (as defined below) of the Company Group and in exchange forother valuable consideration provided hereunder, Employee agrees to comply with this Section 8 and Section 9. (a)Employee covenants and agrees, both during the term of the Employment Period and thereafterthat, except as expressly permitted by this Agreement or by directive of the Board, Employee shallnot disclose any Confidential Information to any person or entity and shall not use anyConfidential Information except for the benefit of the Company Group. Employee shall take allreasonable precautions to protect the physical security of all documents and other materialcontaining Confidential Information (regardless of the medium on which the ConfidentialInformation is stored). This covenant shall apply to all Confidential Information, whether nowknown or later to become known to Employee during the Employment Period. (b)Notwithstanding Section 8(a), Employee may make the following disclosures and uses ofConfidential Information: (i)disclosures to other employees of the Company Group in connection with the faithfulperformance of duties for the Company Group; (ii)disclosures to customers and suppliers when, in the reasonable and good faith belief ofEmployee, such disclosure is in connection with Employee’s performance of servicesunder this Agreement and is in the best interests of the Company Group;6  (iii)disclosures and uses that are approved by the Board; (iv)disclosures to a person or entity that has been retained by the Company Group to provideservices to the Company Group, and has agreed in writing to abide by the terms of aconfidentiality agreement; (v)disclosures for the purpose of complying with any applicable laws or regulatoryrequirements; (vi)disclosures to Employee’s legal, tax or financial advisors for the purpose of assisting suchadvisors in providing advice to Employee, provided, however, that such advisors agree tomaintain the confidentiality of such disclosures; or (vii)disclosures that Employee is legally compelled to make by deposition, interrogatory,request for documents, subpoena, civil investigative demand, order of a court of competentjurisdiction, or similar process, or otherwise by law; provided, however, that, prior to anysuch disclosure, Employee shall, to the extent legally permissible: (A)provide the Board with prompt notice of such requirements so that the Boardmay seek a protective order or other appropriate remedy or waive compliancewith the terms of this Section; (B)consult with the Board on the advisability of taking steps to resist or narrow suchdisclosure; and (C)cooperate with the Board (at the Company’s cost and expense) in any attemptthe Board may make to obtain a protective order or other appropriate remedy orassurance that confidential treatment will be afforded the ConfidentialInformation; and in the event such protective order or other remedy is notobtained, Employee agrees (1) to furnish only that portion of the ConfidentialInformation that is legally required to be furnished, as advised by counsel toEmployee, and (2) to exercise (at the Company’s reasonable cost and expense) allreasonable efforts to obtain assurance that confidential treatment will be accordedsuch Confidential Information. (c)Upon the expiration of the Employment Period and at any other time upon request of theCompany, Employee shall surrender and deliver to the Company all documents (including withoutlimitation electronically stored information) and other material of any nature containing orpertaining to all Confidential Information in Employee’s possession and shall not retain any suchdocument or other material. Within ten (10) days of any such request, Employee shall certify to theCompany in writing that all such materials have been returned to the Company. (d)All non-public information, designs, ideas, concepts, improvements, product developments,discoveries and inventions, whether patentable or not, that are conceived, made, developed oracquired by Employee, individually or in conjunction with others, during the Employment Period(whether during business hours or otherwise and whether on the Company’s premises or otherwise)that relate to the Company Group’s businesses or properties, products or services (including,without limitation, all such information relating to corporate opportunities, business plans,strategies for developing business and market share, research, financial and sales data, pricingterms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers ortheir requirements, the identity of key contacts within customers’ organizations or within theorganization of acquisition prospects, or marketing and7 merchandising techniques, prospective names and marks) is defined as “ConfidentialInformation.” Moreover, all documents, videotapes, written presentations, brochures, drawings,memoranda, notes, records, files, correspondence, manuals, models, specifications, computerprograms, e-mail, voice mail, electronic databases, maps, drawings, architectural renditions, modelsand all other writings or materials of any type including or embodying any of such information,ideas, concepts, improvements, discoveries, inventions and other similar forms of expression areand shall be the sole and exclusive property of the Company Group and be subject to the samerestrictions on disclosure applicable to all Confidential Information pursuant to this Agreement. 9.Non-Competition. (a)The Company shall provide Employee access to the Confidential Information for use only duringthe Employment Period, and Employee acknowledges and agrees that the Company Group will beentrusting Employee, in Employee’s unique and special capacity, with developing the goodwill ofthe Company Group, and in consideration thereof and in consideration of the access toConfidential Information, has voluntarily agreed to the covenants set forth in this Section.Employee further agrees and acknowledges that the limitations and restrictions set forth herein,including but not limited to geographical and temporal restrictions on certain competitiveactivities, are reasonable and not oppressive and are material and substantial parts of thisAgreement intended and necessary to prevent unfair competition and to protect the CompanyGroup’s Confidential Information and substantial and legitimate business interests and goodwill. (b)During the Employment Period and for a period of two (2) years (the “Restricted Period”)following the termination of the Employment Period for any reason, Employee shall not, forwhatever reason and with or without cause, either individually or in partnership or jointly or inconjunction with any other Person or Persons as principal, agent, employee, shareholder (other thanholding equity interests listed on a United States stock exchange or automated quotation systemthat do not exceed five percent (5%) of the outstanding shares so listed), owner, investor, partner orin any other manner whatsoever, directly or indirectly, engage in or compete with the Businessanywhere in the world. (c)During the Restricted Period, Employee shall not (A) knowingly induce or attempt to induce anyother Person known to Employee to be a customer of the Company or its affiliates (each, a“Customer”) to cease doing any business with the Company or its affiliates anywhere in the worldor (B) solicit business involving the Business from, or provide services related to the Business to,any Customer. (d)During the Restricted Period, Employee shall not solicit the employment of any individual who isan employee of the Company or its affiliates, except that Employee shall not be precluded fromsoliciting the employment of, or hiring, any such individual (i) whose employment with theCompany or one of its affiliates has been terminated before entering into employment discussionswith such Seller, (ii) who initiates discussions with Employee regarding employment opportunitieswith Employee or (iii) responds to a general advertisement or other similarly broad form ofsolicitation for employees. (e)For purposes of this Section 9, the following terms shall have the following meanings: (i)“Business” shall mean the business of providing natural gas compression services throughthe deployment and maintenance of on-site compressor packages and any other line ofbusiness in which the Company Group is engaged at the time of termination or has takensubstantial steps to enter during the Employment Period and is actively pursuing at thetime of termination.8  (ii)“Person” means any individual, corporation, partnership, limited liability company,association, trust, incorporated organization, other entity or group (as defined in Section13(d)(3) of the Securities Exchange Act of 1934, as amended). (f)Because of the difficulty of measuring economic losses to the Company Group as a result of abreach of the foregoing covenants, and because of the immediate and irreparable damage that couldbe caused to the Company Group for which it would have no other adequate remedy, Employeeagrees that the foregoing covenant may be enforced by the Company, in the event of breach byEmployee, by injunctions and restraining orders and that such enforcement shall not be theCompany’s exclusive remedy for a breach but instead shall be in addition to all other rights andremedies available to the Company. (g)The covenants in this Section 9 are severable and separate, and the unenforceability of any specificcovenant shall not affect the provisions of any other covenant. Moreover, in the event anyarbitrator or court of competent jurisdiction shall determine that the scope, time or territorialrestrictions set forth are unreasonable, then it is the intention of the parties that such restrictions beenforced to the fullest extent which the panel or court deems reasonable, and this Agreement shallthereby be reformed. (h)All of the covenants in this Section 9 shall be construed as an agreement independent of any otherprovision in this Agreement, and the existence of any claim or cause of action of Employee againstthe Company, whether predicated on this Agreement or otherwise, shall not constitute a defense tothe enforcement by the Company of such covenants. 10.Ownership of Intellectual Property. Employee agrees that the Company shall own, and Employee agrees toassign and does hereby assign, all right, title and interest (including but not limited to patent rights, copyrights, trade secretrights, mask work rights, trademark rights, and all other intellectual and industrial property rights of any sort throughout theworld) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, ideas andinformation authored, created, contributed to, made or conceived or reduced to practice, in whole or in part, by Employeeduring the Employment Period which either (a) relate, at the time of conception, reduction to practice, creation, derivation ordevelopment, to the Company Group’s businesses or actual or anticipated research or development, or (b) were developed onany amount of the Company’s time or with the use of any of the Company Group’s equipment, supplies, facilities or tradesecret information (all of the foregoing collectively referred to herein as “Company Intellectual Property”), and Employeewill promptly disclose all Company Intellectual Property to the Company. All of Employee’s works of authorship andassociated copyrights created during the Employment Period and in the scope of Employee’s employment shall be deemed tobe “works made for hire” within the meaning of the Copyright Act. Employee agrees to perform, during and after theEmployment Period, all reasonable acts deemed necessary by the Company Group to assist the Company, at the Company’sexpense, in obtaining and enforcing its rights throughout the world in the Company Intellectual Property. Such acts mayinclude, but are not limited to, execution of documents and assistance or cooperation (i) in the filing, prosecution, registration,and memorialization of assignment of any applicable patents, copyrights, mask work, or other applications, (ii) in theenforcement of any applicable patents, copyrights, mask work, moral rights, trade secrets, or other proprietary rights, and (iii)in other legal proceedings related to the Company Intellectual Property. 11.Arbitration. (a)Subject to Section 11(b), any dispute, controversy or claim between Employee and the Companyarising out of or relating to this Agreement or Employee’s employment with the Company will befinally settled by arbitration in Austin, Texas before, and in accordance with the rules for theresolution of employment disputes then in effect of, the American Arbitration Association (“AAA”).The arbitration award shall be final and binding on both parties. 9 (b)Any arbitration conducted under this Section 11 shall be heard by a single arbitrator (the“Arbitrator”) selected in accordance with the then-applicable rules of the AAA. The Arbitrator shallexpeditiously (and, if possible, within 90 days after the selection of the Arbitrator) hear and decideall matters concerning the dispute. Except as expressly provided to the contrary in this Agreement,the Arbitrator shall have the power to (i) gather such materials, information, testimony and evidenceas he or she deems relevant to the dispute before him or her (and each party will provide suchmaterials, information, testimony and evidence requested by the Arbitrator, except to the extent anyinformation so requested is subject to an attorney-client or other privilege and, if the information sorequested is proprietary or subject to a third party confidentiality restriction, the arbitrator shallenter an order providing that such material will be subject to a confidentiality agreement), and (ii)grant injunctive relief and enforce specific performance. The decision of the Arbitrator shall berendered in writing, be final, non-appealable and binding upon the disputing parties and the partiesagree that judgment upon the award may be entered by any court of competent jurisdiction;provided that the parties agree that the Arbitrator and any court enforcing the award of theArbitrator shall not have the right or authority to award punitive or exemplary damages to anydisputing party. (c)Each side shall share equally the cost of the arbitration and bear its own costs and attorneys feesincurred in connection with any arbitration, unless the Arbitrator determines that compellingreasons exist for allocating all or a portion of such costs and fees to the other side. (d)Notwithstanding Section 11(a), an application for emergency or temporary injunctive relief byeither party shall not be subject to arbitration under this Section; provided, however, that theremainder of any such dispute (beyond the application for emergency or temporary injunctiverelief) shall be subject to arbitration under this Section. (e)By entering into this Agreement and entering into the arbitration provisions of this Section 11,THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT THEY AREKNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVING THEIR RIGHTS TO AJURY TRIAL. (f)Nothing in this Section 11 shall prohibit a party to this Agreement from (i) instituting litigation toenforce any arbitration award, or (ii) joining another party to this Agreement in a litigation initiatedby a person or entity which is not a party to this Agreement. 12.Defense of Claims. Employee agrees that, during the Employment Period and thereafter, upon request fromthe Company, Employee will reasonably cooperate with the Company Group in the defense of any claims or actions that maybe made by or against the Company Group that relate to Employee’s actual or prior areas of responsibility, except ifEmployee’s reasonable interests are adverse to the Company or its Affiliate(s), as applicable, in such claim or action. TheCompany agrees to pay or reimburse Employee for all of Employee’s reasonable travel and other direct expenses incurred, orto be reasonably incurred, to comply with Employee’s obligations under this Section, provided Employee provides reasonabledocumentation of same and obtains the Company’s prior approval for incurring such expenses. After the expiration of oneyear following the date of Employee’s Separation from Service, the Company will compensate Employee for the timeEmployee spends on reasonable cooperation and assistance at the Company’s request at a rate per hour calculated by dividinghis annualized Base Salary at the end of the Employment Period by two thousand eighty (2080). 13.Withholdings; Deductions. The Company may withhold and deduct from any payments made or to bemade pursuant to this Agreement (a) all federal, state, local and other taxes or other amounts as may be required pursuant toany law or governmental regulation or ruling and (b) any deductions consented to in writing by Employee. 14.Title and Headings; Construction. Titles and headings to Sections hereof are for the purpose of referenceonly and shall in no way limit, define or otherwise affect the provisions hereof. Any and all Exhibits or10 Attachments referred to in this Agreement are, by such reference, incorporated herein and made a part hereof for all purposes.The words “herein”, “hereof, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement and notto any particular provision hereof. 15.Applicable Law; Submission to Jurisdiction. This Agreement shall in all respects be construed accordingto the laws of the State of Texas. With respect to any claim or dispute related to or arising under this Agreement, the partieshereby consent to the arbitration provisions of Section 11 above and recognize and agree that should any resort to a court benecessary and permitted under this Agreement, then they consent to the exclusive jurisdiction, forum and venue of the stateand federal courts located in Austin, Texas. 16.Entire Agreement and Amendment. This Agreement, including the Operating Agreement, the terms ofwhich are incorporated herein by reference, contains the entire agreement of the parties with respect to the matters coveredherein; moreover, this Agreement supersedes all prior and contemporaneous agreements and understandings, oral or written,between the parties hereto concerning the subject matter hereof; provided, however, that, notwithstanding anything to thecontrary in the Operating Agreement, the definitions of “Cause” and “Good Reason” in this Agreement shall apply in lieu ofthose same defined terms in the Operating Agreement when and to the extent those defined terms are applicable to Employeeunder the Operating Agreement. This Agreement may be amended only by a written instrument executed by both partieshereto. 17.Waiver of Breach. Any waiver of this Agreement must be executed by the party to be bound by suchwaiver. No waiver by either party hereto of a breach of any provision of this Agreement by the other party, or of compliancewith any condition or provision of this Agreement to be performed by such other party, will operate or be construed as awaiver of any subsequent breach by such other party or any similar or dissimilar provision or condition at the same or anysubsequent time. The failure of either party hereto to take any action by reason of any breach will not deprive such party of theright to take action at any time while such breach continues. 18.Assignment. This Agreement is personal to Employee, and neither this Agreement nor any rights orobligations hereunder shall be assignable or otherwise transferred by Employee. The Company may assign this Agreement toany member of the Company Group and to any successor (whether by merger, purchase or otherwise) to all or substantially allof the equity, assets or businesses of the Company, if such successor expressly agrees to assume the obligations of theCompany hereunder. 19.Affiliates. For purposes of this Agreement, the term “Affiliates” means any person or entity Controlling,Controlled by or Under Common Control with such person or entity, but with respect to the Company, specifically does notmean Riverstone, the entities Controlling it, and its investment funds, partners of its investment funds, and its portfoliocompanies other than the Company and its subsidiaries. The term “Control,” including the correlative terms “Controlling”“Controlled by,” and “Under Common Control with” means possession, directly or indirectly, of the power to direct or causethe direction of management or policies (whether through ownership of securities or any Company or other ownership interest,by contract or otherwise) of a person or entity. For the purposes of the preceding sentence, Control shall be deemed to existwhen a person or entity possesses, directly or indirectly, through one or more intermediaries (a) in the case of a corporationmore than fifty percent (50%) of the outstanding voting securities thereof; (b) in the case of a limited liability company,partnership or joint venture, the right to more than fifty percent (50%) of the distributions therefrom (including liquidatingdistributions); or (c) in the case of any other person or entity, more than fifty percent (50%) of the economic or beneficialinterest therein. 20.Notices. Notices provided for in this Agreement shall be in writing and shall be deemed to have been dulyreceived (a) when delivered in person or sent by facsimile transmission, (b) on the first business day after such notice is sent byair express overnight courier service, or (c) on the third business day following deposit in the United States mail, registered orcertified mail, return receipt requested, postage prepaid and addressed, to the following address, as applicable: 11 (1)If to the Company, addressed to: USA Compression Partners, LLC100 Congress Avenue, Suite 450Austin, TX 78701Attn: Eric D. LongFacsimile: (512)473-2616 and a copy to: R/C IV USACP Holdings, L.P.c/o Riverstone Holdings, LLC712 Fifth Avenue, 51 FloorNew York, NY 10019Attn: Andrew W. WardFacsimile: 212-993-0077 and a copy to: Latham & Watkins LLP555 Eleventh Street, NWSuite 1000Washington, DC 20004Attn: David T. Della RoccaFacsimile: (202) 637-2201 (2)If to Employee, addressed to: J. Gregory Holloway207 ExplorerLakeway, Texas 78734 21.Counterparts. This Agreement may be executed in any number of counterparts, including by electronicmail or facsimile, each of which when so executed and delivered shall be an original, but all such counterparts shall togetherconstitute one and the same instrument. Each counterpart may consist of a copy hereof containing multiple signature pages,each signed by one party, but together signed by both parties hereto. 22.Deemed Resignations. Unless otherwise agreed to in writing by the Company and Employee prior to thetermination of Employee’s employment, any termination of Employee’s employment shall constitute: (i) an automaticresignation of Employee as an officer of the Company and each member of the Company Group, as applicable, and (ii) anautomatic resignation of Employee from the Board (if applicable), from the board of directors or managers of any member ofthe Company Group (if applicable) and from the board of directors or managers or any similar governing body of anycorporation, limited liability entity or other entity in which the Company or any Affiliate holds an equity interest and withrespect to which board or similar governing body Employee serves as the Company’s or such Affiliate’s designee or otherrepresentative (if applicable). 23.Key Person Insurance. At any time during the Employment Period, the Company shall have the right toinsure the life of Employee for the Company’s sole benefit. The Company shall have the right to determine the amount ofinsurance and the type of policy. Employee shall cooperate with the Company in obtaining such insurance by submitting tophysical examinations, by supplying all information reasonably required by any insurance carrier and by executing allnecessary documents reasonably required by any insurance carrier. Employee shall incur no financial obligation by executingany required document, and shall have no interest in any such policy. 12 st24.Compliance with Section 409A. (a)The severance pay and benefits provided under this Agreement are intended to be exempt from orcomply with Section 409A of the Internal Revenue Code (the “Code”), and any ambiguousprovision shall be construed in a manner consistent with such intent. For purposes of thisAgreement, a “Separation from Service” shall mean Employee’s “separation from service” as suchterm is defined in Treasury Regulation Section 1.409A-1(h) or any successor regulation. Eachseparate severance payment and each severance installment payment shall be treated as a separatepayment under this Agreement for all purposes. To the extent that Employee is a “specifiedemployee” within the meaning of Section 1.409A-1(i)(1) of the Department of TreasuryRegulations, any amounts that would otherwise be payable by reason of such separation fromservice and are not otherwise exempt from the provisions of Section 409A of the Code will delayedfor a period of six (6) months from the date of such Separation from Service, in which case thepayments that would otherwise have been paid during such six (6) month period shall be paid in alump sum on the first day of the seventh (7th) month after the date of the Separation from Serviceand the remainder of such payments, if any, will be made pursuant to their terms. (b)Notwithstanding anything to the contrary in this Agreement, in-kind benefits and reimbursementsprovided under this Agreement during any calendar year shall not affect in-kind benefits orreimbursements to be provided in any other calendar year, other than an arrangement providing forthe reimbursement of medical expenses referred to in Section 105(b) of the Code, and are notsubject to liquidation or exchange for another benefit. Notwithstanding anything to the contrary inthis Agreement, reimbursement requests must be timely submitted by Employee and, if timelysubmitted, reimbursement payments shall be promptly made to Employee following suchsubmission, but in no event later than December 31st of the calendar year following the calendaryear in which the expense was incurred. In no event shall Employee be entitled to anyreimbursement payments after December 31st of the calendar year following the calendar year inwhich the expense was incurred. This paragraph shall only apply to in-kind benefits andreimbursements that would result in taxable compensation income to Employee. (c)If any amount payable hereunder would be subject to additional taxes and interest under Section409A of the Code because the timing of such payment is not delayed as provided in Section409A(a)(2)(B) of the Code, then the payment of such amount shall be delayed and paid, withoutinterest, in a lump sum on the earliest of: (i) Employee’s death, (ii) the date that is six (6) monthsafter the date of Employee’s Separation from Service with the Company (or if such payment datedoes not fall on a business day of Company, the next following business day of the Company), or(iii)such earlier date upon which such payment can be paid under Section 409A of the Codewithout being subject to such additional taxes and interest. [Signature page follows] 13 IN WITNESS WHEREOF, Employee and the Company each have caused this Agreement to be executed in itsname and on its behalf, as of the Effective Date. EMPLOYEE: /s/ J. Gregory HollowayJ. Gregory Holloway USA COMPRESSION PARTNERS, LLC By:/s/ Eric D. LongEric D. LongPresident and Chief Executive Officer SIGNATURE PAGE TO EMPLOYMENT AGREEMENT EXHIBIT A FORM OF RELEASE AGREEMENT RELEASE AGREEMENT This Release Agreement (this “Agreement”) constitutes the release referred to in that certain EmploymentAgreement (the “Employment Agreement”) dated as of 20 , by and among (“Employee”) and USA Compression Partners, LLC(the “Company”). (a)For good and valuable consideration, including the Company’s provision of a severance paymentto Employee in accordance with Section 6(f) of the Employment Agreement, Employee hereby releases, dischargesand forever acquits each member of the Company Group and their respective Affiliates (each as defined in theEmployment Agreement, provided, however, that for purposes of this Agreement, “Affiliates” shall expressly includeRiverstone, the entities Controlling it, and its investment funds, partners of its investment funds, and its and theirportfolio companies other than the Company) and subsidiaries and the past, present and future stockholders,members, partners, directors, managers, employees, agents, attorneys, heirs, representatives, successors and assigns ofthe foregoing, in their personal and representative capacities (collectively, the “Company Parties”), from liability for,and hereby waives, any and all claims, damages, or causes of action of any kind related to Employee’s employmentwith any Company Party, the termination of such employment, and any other acts or omissions related to any matteron or prior to the date of the execution of this Agreement including without limitation any alleged violation throughthe date of this Agreement of: (i) the Age Discrimination in Employment Act of 1967, as amended; (ii) Title VII of theCivil Rights Act of 1964, as amended; (iii) the Civil Rights Act of 1991; (iv) Section 1981 through 1988 of Title 42of the United States Code, as amended; (v) Employee Retirement Income Security Act of 1974, as amended; (vi) theImmigration Reform Control Act, as amended; (vii) the Americans with Disabilities Act of 1990, as amended; (viii)the National Labor Relations Act, as amended; (ix) the Occupational Safety and Health Act, as amended; (x) theFamily and Medical Leave Act of 1993; (xi) any state anti-discrimination law; (xii) any state wage and hour law;(xiii) any other local, state or federal law, regulation or ordinance; (xiv) any public policy, contract, tort, or commonlaw claim; (xv) any allegation for costs, fees, or other expenses including attorneys’ fees incurred in these matters;(xvi) any and all rights, benefits or claims Employee may have under any employment contract, incentivecompensation plan or stock option plan with any Company Party or to any ownership interest in any Company Partyexcept as expressly provided in the Employment Agreement and any stock option or other equity compensationagreement between Employee and the Company or USA Compression Holdings, LLC and (xvii) any claim forcompensation or benefits of any kind not expressly set forth in the Employment Agreement or any such stock optionor other equity compensation agreement (collectively, the “Released Claims”). In no event shall the Released Claimsinclude (a) any claim which arises after the date of this Agreement, (b) any claim to vested benefits under anemployee benefit plan, (c) any claims for contractual payments under the Employment Agreement, or (d) any claimsunder the Operating Agreement of the Company. This Agreement is not intended to indicate that any such claimsexist or that, if they do exist, they are meritorious. Rather, Employee is simply agreeing that, in exchange for theconsideration recited in the first sentence of this paragraph, any and all potential claims of this nature that Employeemay have against the Company Parties, regardless of whether they actually exist, are expressly settled, compromisedand waived. By signing this Agreement, Employee is bound by it. Anyone who succeeds to Employee’s rights andresponsibilities, such as heirs or the executor of Employee’s estate, is also bound by this Agreement. This release alsoapplies to any claims brought by any person or agency or class action under which Employee may have a right orbenefit. Notwithstanding the release of liability contained herein, nothing in this Agreement prevents Employee fromfiling any non-legally waivable claim (including a challenge to the validity of this Agreement) with the EqualEmployment Opportunity Commission (“EEOC”) or comparable state or local agency or participating in anyinvestigation or proceeding conducted by the EEOC or comparable state or local agency; however, Employeeunderstands and agrees that Employee is waiving any and all rights to recover any monetary or personal relief orrecovery as a result of such EEOC or comparable state or local agency proceeding or subsequent legal actions. THISRELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE(WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THECOMPANY PARTIES. (b)Employee agrees not to bring or join any lawsuit against any of the Company Parties in any courtrelating to any of the Released Claims. Employee represents that Employee has not brought or joined any lawsuit orfiled any charge or claim against any of the Company Parties in any court or before any government agency and hasmade no assignment of any rights Employee has asserted or may have against any of the Company Parties to anyperson or entity, in each case, with respect to any Released Claims. (c)By executing and delivering this Agreement, Employee acknowledges that: (i)He has carefully read this Agreement; (ii)He has had at least [twenty-one (21)] [forty-five (45)] days to consider this Agreementbefore the execution and delivery hereof to the Company [Add if 45 days applies: , and heacknowledges that attached to this Agreement are (1) a list of the positions and ages ofthose employees selected for termination (or participation in the exit incentive or otheremployment termination program); (2) a list of the ages of those employees not selectedfor termination (or participation in such program); and (3) information about the unitaffected by the employment termination program of which his termination was a part,including any eligibility factors for such program and any time limits applicable tosuch program]; (iii)He has been and hereby is advised in writing that he may, at his option, discuss thisAgreement with an attorney of his choice and that he has had adequate opportunity to doso; (iv)He fully understands the final and binding effect of this Agreement; the only promisesmade to him to sign this Agreement are those stated in the Employment Agreement andherein; and he is signing this Agreement voluntarily and of his own free will, and that heunderstands and agrees to each of the terms of this Agreement; and (v)With the exception of any sums that he may be owed pursuant to Section 6(f)(i) of theEmployment Agreement, he has been paid all wages and other compensation to which heis entitled under the Agreement and received all leaves (paid and unpaid) to which he wasentitled during the Employment Period (as defined in the Employment Agreement). Notwithstanding the initial effectiveness of this Agreement, Employee may revoke the delivery (and therefore theeffectiveness) of this Agreement within the seven-day period beginning on the date Employee delivers this Agreement to theCompany (such seven day period being referred to herein as the “Release Revocation Period”). To be effective, suchrevocation must be in writing signed by Employee and must be delivered to [name, address] before 11:59 p.m., Austin, Texastime, on the last day of the Release Revocation Period. If an effective revocation is delivered in the foregoing manner andtimeframe, this Agreement shall be of no force or effect and shall be null and void ab initio. No consideration shall be paid ifthis Agreement is revoked by Employee in the foregoing manner. Executed on this day of , . [Employee Name] EXHIBIT APage 2Exhibit 21.1 List of Subsidiaries USA Compression Finance Corp., a Delaware corporation USA Compression Partners, LLC, a Delaware limited liability company USAC Leasing, LLC, a Delaware limited liability company USAC OpCo 2, LLC, a Texas limited liability company USAC Leasing 2, LLC, a Texas limited liability company Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The PartnersUSA Compression Partners, LP: We consent to the incorporation by reference in the registration statements on Form S-8 (No. 333-187166) and Form S-3(No. 333-193724 and No. 333-195526) of USA Compression Partners, LP of our report dated February 19, 2015, with respectto the consolidated balance sheets of USA Compression Partners, LP as of December 31, 2014 and 2013, and the relatedconsolidated statements of operations, changes in partners’ capital, and cash flows for each of the years in the three-yearperiod ended December 31, 2014, which report appears in the December 31, 2014 annual report on Form 10-K of USACompression Partners, LP. /s/ KPMG LLP Dallas, TexasFebruary 19, 2015 Exhibit 31.1 CERTIFICATION I, Eric D. Long, certify that: 1. I have reviewed this Annual Report on Form 10-K of USA Compression Partners, LP (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, theperiods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period coveredby this report based on such evaluation; and d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarizeand report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significant role inthe registrant’s internal control over financial reporting. /s/ Eric D. Long Name:Eric D. Long Title:President and Chief Executive Officer Dated: February 19, 2015Exhibit 31.2 CERTIFICATION I, Matthew C. Liuzzi, certify that: 1. I have reviewed this Annual Report on Form 10-K of USA Compression Partners, LP (the “registrant”); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, theperiods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared; b)designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period coveredby this report based on such evaluation; and d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions): a)all significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarizeand report financial information; and b)any fraud, whether or not material, that involves management or other employees who have a significant role inthe registrant’s internal control over financial reporting. /s/ Matthew C. Liuzzi Name:Matthew C. Liuzzi Title:Vice President, Chief Financial Officer and Treasurer Dated: February 19, 2015Exhibit 32.1 USA COMPRESSION PARTNERS, LPCERTIFICATION PURSUANT TO18 U.S.C. §1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of USA Compression Partners, LP (the “Partnership”) for the yearended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Eric D.Long, as President and Chief Executive Officer of the Partnership’s general partner, hereby certifies, pursuant to 18 U.S.C.§1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Partnership. /s/ Eric D. Long Eric D. Long President and Chief Executive Officer Dated: February 19, 2015 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, orotherwise adopting the signature that appears in typed form within the electronic version of this written statement required bySection 906, has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities andExchange Commission or its staff upon request. Exhibit 32.2 USA COMPRESSION PARTNERS, LPCERTIFICATION PURSUANT TO18 U.S.C. §1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of USA Compression Partners, LP (the “Partnership”) for the yearended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), MatthewC. Liuzzi, as Vice President, Chief Financial Officer and Treasurer of the general partner of the Partnership’s general partner,hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, tohis knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Partnership. /s/ Matthew C. Liuzzi Matthew C. Liuzzi Vice President, Chief Financial Officer and Treasurer Dated: February 19, 2015 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, orotherwise adopting the signature that appears in typed form within the electronic version of this written statement required bySection 906, has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities andExchange Commission or its staff upon request. 

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