USA Compression Partners
Annual Report 2015

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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, 2015 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, 2015, the last business day ofthe registrant’s most recently completed second fiscal quarter was $303,972,286. This calculation does not reflect a determination that such persons are affiliates forany other purpose. As of February 9, 2016, there were 38,556,245 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 Factors14 Item 1B.Unresolved Staff Comments35 Item 2.Properties35 Item 3.Legal Proceedings35 Item 4.Mine Safety Disclosures35 PART II 35 Item 5.Market For Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities35 Item 6.Selected Financial Data38 Item 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations45 Item 7A.Quantitative and Qualitative Disclosures About Market Risk58 Item 8.Financial Statements and Supplementary Data59 Item 9.Changes in and Disagreements With Accountants on Accounting and FinancialDisclosure59 Item 9A.Controls and Procedures59 Item 9B.Other Information60 PART III 61 Item 10.Directors, Executive Officers and Corporate Governance61 Item 11.Executive Compensation66 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters74 Item 13.Certain Relationships and Related Transactions, and Director Independence77 Item 14.Principal Accountant Fees and Services79 PART IV 80 Item 15.Exhibits and Financial Statement Schedules80 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 inthis report are forward-looking statements, including, without limitation, statements regarding our plans, strategies, prospectsand expectations 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; ·the deterioration of the financial condition of our customers; ·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 reportand speak only as of the date of this report. Except as required by law, we undertake no obligation to publicly update orrevise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequentwritten and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in theirentirety by the foregoing cautionary statements.1 Table of ContentsITEM 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” referto USA 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. References to “Argonaut” refer to Argonaut Private Equity, L.L.C. and, where applicable, related entities. 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, 2015, we had1,712,196 horsepower in our fleet and 15,400 horsepower on order for expected delivery during 2016. We providecompression services to our customers primarily in connection with infrastructure applications, including both allowing forthe processing and transportation of natural gas through the domestic pipeline system and enhancing crude oil productionthrough artificial lift processes. As such, our compression services play a critical role in the production, processing andtransportation 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,Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara andFayetteville shales. The demand for our services is driven by the domestic production of natural gas and crude oil; as such,we have focused our activities in areas with attractive natural gas and crude oil production growth, which are generally foundin these shale and unconventional resource plays. According to recent studies promulgated by the Energy InformationAgency (“EIA”), the production and transportation volumes in these shale plays are expected to increase over the long termdue to the comparatively attractive economic returns versus returns achieved in many conventional basins. Furthermore, thechanges in production volumes and pressures of shale plays over time require a wider range of compression services than inconventional basins. We believe the flexibility of our compression units positions us well to meet these changing operatingconditions. While our business focuses largely on compression services serving infrastructure installations, includingcentralized natural gas gathering systems and processing facilities, which utilize large horsepower compression units,typically in shale plays, we also provide compression services in more mature conventional basins, including gaslift applications on crude oil wells targeted by horizontal drilling techniques. Gas lift and other artificial lift technologies arecritical to the enhancement of production of oil from horizontal wells operating in tight shale plays. Gas lift is a process bywhich natural gas is injected into the production tubing of an existing producing well, thus reducing the hydrostatic pressureand allowing the oil to flow at a higher rate. 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 usto operate our units across a broad range of operating conditions. The design flexibility of our units, particularly inmidstream applications, allows us to enter into longer-term contracts and reduces the redeployment risk of our horsepower inthe field. Our modern and standardized fleet, decentralized field level operating structure and technical proficiency inpredictive and preventive maintenance and overhaul operations have enabled us to achieve average service run timesconsistently at or above the levels 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. Focusing on the needs of our customers and providing them with2 Table of Contentsreliable and flexible compression services in geographic areas of attractive growth helps us to generate stable cash flows forour unitholders. We 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 or crude oil involved inour services and because the natural gas used as fuel by our compression units is supplied by our customers without cost tous. We provide compression services to major oil companies and independent producers, processors, gatherers andtransporters of natural gas and crude oil. Regardless of the application for which our services are provided, our customersrely upon the availability of the equipment used to provide compression services and our expertise to help generate themaximum throughput of product, reduce fuel costs and minimize emissions. While we are currently focused on our existingservice areas, our customers have compression demands in other areas of the U.S. in conjunction with their field developmentprojects. We continually consider expansion of our areas of operation in the U.S. based upon the level of customer demand.Our modern, flexible fleet of compression units, which have been designed to be rapidly deployed and redeployedthroughout the country, provides us with opportunities to expand into other areas with both new and existing customers. 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. Weexpect additional demand for compression services to result from the continuing shift of natural gas production todomestic shale plays as well as the declining production pressures of aging conventional basins. The EIA continuesto expect overall natural gas production and transportation volumes, and in particular volumes from domestic shaleplays, to increase over the long term. Furthermore, the changes in production volumes and pressures of shale playsover time require a wider range and increased level of compression services than in conventional basins.Additionally, while oil prices have decreased substantially, resulting in less new drilling activity, the EIA expectscrude oil production in the economically attractive tight oil plays to continue due to the favorable economics ofexisting wells. As a result, the use of, and thus demand for, artificial lift techniques required in such productioncontinues to be an attractive business for us. Our fleet of modern, flexible compression units is capable of beingrapidly deployed and redeployed and designed to operate in multiple compression stages, which will enable us tocapitalize on these opportunities both in emerging shale plays and conventional fields. ·Continue to execute on attractive organic growth opportunities. From 2005 to 2015, we grew the horsepower in ourfleet of compression units and our compression revenues at a compound annual growth rate of 21% and 26%,respectively, primarily through organic growth. We believe organic growth opportunities will continue to be ourmost attractive source of near-term growth, although we expect such organic growth will be reduced in 2016compared to prior periods. 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. 3 Table of Contents·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. For example in 2013, we completed the acquisition of assets and certain liabilitiesrelated to S&R Compression, LLC’s (“S&R”) business of providing gas lift compression services to third partiesengaged in the exploration, production, gathering, processing, transportation or distribution of oil and gas (the“S&R Acquisition”). ·Focus on asset utilization. We seek to actively manage our business in a manner that allows us to continue toachieve high utilization rates at attractive service rates while providing us with the most financial flexibilitypossible. From time to time, we expect the crude oil and natural gas industry to be impacted by the cyclicality ofcommodity prices. During downturns in commodity prices, producers and midstream operators may reduce theircapital spending, which in turn can hinder the demand for compression services. We have the ability, in response toindustry conditions, to drastically and rapidly reduce our capital spending, which allows us to avoid financingorganic growth with outside capital and aligns our capital spending with the demand for compression services. Byreducing organic growth and avoiding new unit deliveries during downturns, we are able to conserve capital andinstead focus on the deployment and re-deployment of our existing asset base. With higher utilization, we are betterpositioned to continue to generate attractive rates of return on our already-deployed capital. ·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 issuances of equity securities to fund capital expenditures to expand our compression services business.This approach has allowed us to significantly grow our fleet and the amount of cash we generate, while maintainingour debt at levels we believe are manageable for our business. We believe the appropriate management of ourfinancial position and the resulting access to capital positions us to take advantage of future growth opportunities asthey 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 at or above the levels required by our customers. In general, our team of field servicetechnicians services only our compression fleet. In limited circumstances for established customers, we will agree to servicethird-party owned equipment. 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. andcompressor frames and cylinders manufactured by Ariel Corporation. Our units can be rapidly and cost effectively modifiedfor specific customer applications. Approximately 97% of our fleet horsepower as of December 31, 2015 was purchased newand the average age of our compression units was approximately four years. Our modern, standardized4 Table of Contentscompression unit fleet is powered primarily by the Caterpillar 3400, 3500 and 3600 engine classes, which range from 401 to4,735 horsepower per unit. These larger horsepower units, which we define as 400 horsepower per unit or greater, represented80.4% of our total fleet horsepower (including compression units on order) as of December 31, 2015. In addition, a portionof our fleet consists of smaller horsepower units ranging from 30 horsepower to 390 horsepower that are primarily used in gaslift applications. We believe the young age and overall composition of our compressor fleet results in fewer mechanicalfailures, lower fuel usage, and reduced environmental emissions. The following table provides a summary of our compression units by horsepower as of December 31, 2015: Unit Horsepower FleetHorsepowerNumberofUnits Horsepoweron Order (1)Numberof Unitson Order TotalHorsepowerNumberofUnits Percentage ofTotalHorsepower Percentage ofTotalUnits Small horsepower <400 338,9882,149 - - 338,9882,149 19.6%65.9%Large horsepower >400 and <1,000 167,189296 - - 167,189296 9.7%9.1%>1,000 1,206,019809 15,400 7 1,221,419816 70.7%25.0%Total 1,712,1963,254 15,400 7 1,727,5963,261 100.0%100.0% (1)As of December 31, 2015, we had 15,400 horsepower on order for delivery during 2016. The following table sets forth certain information regarding our compression fleet as of the dates and for the periodsindicated: Year Ended Percent December 31, Change Operating Data (unaudited): 2015 2014 2013 2015 2014 Fleet horsepower (at period end) (1) 1,712,196 1,549,020 1,202,374 10.5% 28.8% Total available horsepower (at period end) (2) 1,712,196 1,623,400 1,278,829 5.5% 26.9% Revenue generating horsepower (at period end) (3) 1,424,537 1,351,052 1,070,457 5.4% 26.2% Average revenue generating horsepower (4) 1,408,689 1,200,851 902,168 17.3% 33.1% Revenue generating compression units (at period end) 2,737 2,651 2,137 3.2% 24.1% Average horsepower per revenue generating compressionunit (5) 517 505 720 2.4%(29.9)% Horsepower utilization (6): At period end 89.2% 93.6% 94.1% (4.7)% (0.5)% Average for the period (7) 90.5% 94.0% 93.8% (3.7)% 0.2% (1)Fleet horsepower is horsepower for compression units that have been delivered to us (and excludes units on order). As ofDecember 31, 2015, we had 15,400 horsepower on order for delivery during 2016. (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. Totalavailable horsepower 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 revenue generating horsepower per revenue generating compression unit foreach of the months in the period. 5 Table of Contents(6)Horsepower utilization is calculated as (i) the sum of (a) revenue generating horsepower, (b) horsepower in our fleet thatis under 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 idlehorsepower that is under repair. Horsepower utilization based on revenue generating horsepower and fleet horsepower ateach applicable period end was 83.2%, 87.2% and 89.0% for the years ended December 31, 2015, 2014 and 2013,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 and fleet horsepower was 85.1%,87.3% and 87.3% for each year ended December 31, 2015, 2014, and 2013, respectively. A growing number of our compression units contain 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 2016 where beneficial from an operating and financialstandpoint. All of our compression units are designed to automatically 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 allowour customers, subject to a defined protocol, to start, stop, accelerate and slow down compression units in response to fieldconditions. 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 haveproprietary 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.The timing of these major overhauls depends on multiple factors, including run time and operating conditions. A majoroverhaul involves the periodic rebuilding of the unit to materially extend its economic useful life or to enhance the unit’sability to fulfill broader or more diversified compression applications. Because our compression fleet is comprised of units ofvarying horsepower that have been placed into service with staggered initial on-line dates, we are able to schedule overhaulsin a way to 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 compressionruntimes, which translates into increased volumes of either natural gas or crude oil production and, therefore, increasedrevenues. Utilizing our compression services also allows our customers to reduce their operating, maintenance andequipment costs by allowing us to efficiently manage their changing compression needs. In many of our service contracts, weguarantee our customers 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 of between six months and five years, depending onthe application 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 customer upon notice as provided for in the applicablecontract. As of December 31, 2015, approximately 39% of our compression services on a horsepower basis (and 43% on arevenue basis for the year ended December 31, 2015) were provided on a month-to-month basis to customers who continue toutilize our services following expiration of the primary term of their contracts with us. Availability. Our contracts often provide a guarantee of specified availability. We define availability as the percentageof time in a given period that our compression services are being provided or are capable of being provided.6 Table of ContentsAvailability is reduced by instances of “down-time” that are attributable to anything other than events of force majeure oracts or failures to act by the customer. Down-time under our contracts usually begins when our services stop being providedor when we receive notice from the customer of the problem. Down-time due to scheduled maintenance is also excluded fromour availability commitment. Our failure to meet a stated availability guarantee may result in a service fee credit to thecustomer. As a consequence of our availability guarantee, we are incentivized to perform predictive and preventivemaintenance on our fleet as well as promptly respond to a problem to meet our contractual commitments and ensure ourcustomers the compression availability on which their business and our service relationship are based. For service contractsthat do not have a stated availability guarantee, we work with those customers to ensure that our compression services meettheir 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 servicemonth, and they are generally due 30 days from the date of the invoice. We are not responsible for acts of force majeure, andour customers 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,although certain fees and expenses are the responsibility of our customers under the terms of their contracts. For example, allfuel gas is provided by our customers without cost to us, and in many cases customers are required to provide all water andelectricity. At the customer’s option, we can provide fluids necessary to run the unit to the customer for an additional fee. Weprovide such fluids for a substantial majority of the compression units deployed in gas lift applications. We are alsoreimbursed by our customers for certain ancillary expenses such as trucking and crane operation, depending on the termsagreed to in the applicable contract, resulting in little to no gross operating margin. Service 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 in order to meetour customers’ requirements. Our contracts do not specify the specific compression equipment we will use; instead, inconsultation with the customer, we determine what equipment 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,and we 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 team 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 quicklyidentify and respond to our customers’ compression requirements. We currently focus on geographic areas where we canachieve economies 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. We did not have revenuefrom any single customer greater than 10% of total revenue for the year ended December 31, 2015. Southwestern EnergyCorporation and its subsidiaries accounted for 11.6% of our revenue for the year ended December 31, 2014. No othercustomer accounted for greater than 10% of total revenue for the year ended December 31, 2014. Our ten largestcustomers accounted for 45% and 46% of our revenue for the years ended December 31, 2015 and 2014, respectively.7 Table of Contents Suppliers and Service Providers The principal manufacturers of components for our natural gas compression equipment include 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. We also relyprimarily on four vendors, A G Equipment Company, Alegacy Equipment, LLC, Standard Equipment Corp. and S&R, topackage and assemble our compression units. Although we rely primarily on these suppliers, we believe alternative sourcesfor natural gas compression equipment are generally available if needed. However, relying on alternative sources mayincrease our costs and change the standardized nature of our fleet. We have not experienced any material supply problems todate. Although lead-times for new Caterpillar engines and new Ariel compressor frames have in the past been in excess of oneyear due to increased demand and supply allocations imposed on equipment packagers and end-users, lead-times for suchengines and frames are currently substantially shorter. Please read Part I, Item 1A (“Risk Factors—Risks Related to OurBusiness—We depend on a limited number of suppliers and are vulnerable to product shortages and price increases, whichcould 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 our customers. We believe that we competeeffectively on the basis of price, equipment availability, customer service, flexibility in meeting customer needs, quality andreliability of our compressors and related services. Please read Part I, Item 1A (“Risk Factors—Risks Related to Our Business—We face significant competition that may cause us to lose market share and reduce 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 inthe energy services industry, we review our safety equipment and procedures and carry insurance against most, but not all,risks of our business. Losses and liabilities not covered by insurance would increase our costs. The compression business canbe hazardous, 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 ofmaterials into the environment or otherwise relating to protection of human health, safety and the environment. Theseregulations include compliance obligations for air emissions, water quality, wastewater discharges and solid and hazardouswaste disposal, as well as regulations designed for the protection of human health and safety and threatened or8 Table of Contentsendangered species. Compliance with these environmental laws and regulations may expose us to significant costs andliabilities and cause us to incur significant capital expenditures in our operations. We are often obligated to assist customersin obtaining permits or approvals in our operations from various federal, state and local authorities. Permits and approvalscan be denied or delayed, which may cause us to lose potential and current customers, interrupt our operations and limit ourgrowth and revenue. Moreover, failure to comply with these laws and regulations may result in the assessment ofadministrative, civil and criminal penalties, imposition of remedial obligations and the issuance of injunctions delaying orprohibiting operations. Private parties may also have the right to pursue legal actions to enforce compliance as well as toseek damages for non-compliance with environmental laws and regulations or for personal injury or property damage. Whilewe believe that our operations are in substantial compliance with applicable environmental laws and regulations and thatcontinued compliance with current requirements would not have a material adverse effect on us, there is no assurance thatthis trend of compliance will continue in the future. In addition, the clear trend in environmental regulation is to place morerestrictions on activities that may adversely affect the environment. Thus, any changes in, or more stringent enforcement of,these laws and regulations that result in more stringent and costly pollution control equipment, waste handling, storage,transport, disposal or remediation requirements 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”). 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 toreduce air emissions of nitrogen oxides and other pollutants from internal combustion engines in transmission service havebeen enacted by governmental authorities. For example, in 2010, the U.S. Environmental Protection Agency (“EPA”)published new regulations under the CAA to control emissions of hazardous air pollutants from existing stationary reciprocalinternal combustion engines, also known as Quad Z regulations. In 2012, the EPA proposed amendments to the final rule inresponse to several petitions for reconsideration, which were finalized and became effective in 2013. The rule requires us toundertake certain expenditures and activities, including purchasing and installing emissions control equipment on certaincompressor engines 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 October 26, 2015, the EPA published the finalized rule strengthening the National Ambient Air Quality Standard(“NAAQs”) for ground level ozone. The rule became effective on December 28, 2015. The final rule updates both the primaryozone standard and the secondary standard. Both standards are 8-hour concentration standards of 70 parts per billion (“ppb”).In addition, in 2013, the EPA promulgated a final rule revising the annual standard for fine particulate matter, or PM 2.5, bylowering the level from 15 to 12 micrograms per cubic meter. On December 18, 2014, the EPA issued final area designationsfor the 2012 NAAQs for PM 2.5. Designation of new non-attainment areas for the revised ozone or PM 2.5 NAAQS may resultin additional federal and state regulatory actions that may impact our customers’ operations and increase the cost ofadditions to property, plant, and equipment. 9 Table of ContentsIn 2012, the EPA finalized rules that establish new air emission controls for oil and natural gas production and naturalgas processing operations. Specifically, the EPA’s rule package included New Source Performance Standards to addressemissions of sulfur dioxide and volatile organic compounds (“VOCs”) and a separate set of emission standards to addresshazardous air pollutants frequently associated with oil and natural gas production and processing activities. Therules established specific new requirements regarding emissions from compressors and controllers at natural gas processingplants, dehydrators, storage tanks and other production equipment as well as the first federal air standards for natural gaswells that are hydraulically fractured. In addition, the rules established leak detection requirements for natural gas processingplants at 500 ppm. In 2013, the EPA issued a final update to the VOC performance standards for storage tanks used in crudeoil and natural gas production and transmission. On July 31, 2015, the EPA finalized amendments to the definition of low-pressure wells and references to tanks connected to one another in the 2012 New Source Performance Standards. On August18, 2015, the EPA also proposed updates to the New Source Performance Standards and Draft Control Techniques Guidelinesin addition to proposing a Source Determination Rule, all of which are intended to cut methane and VOC emissions from theoil and natural gas industry. These rules may require a number of modifications to our operations, including the installationof new equipment to control emissions from our compressors at initial startup. Compliance with such rules may result insignificant costs, including increased capital expenditures 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 will consider expanding application of the new airpermit program statewide. At this point, we cannot predict the cost to comply with such requirements if the geographic scopeis expanded. A ruling by a panel of administrative law judges in a case before the Pennsylvania Environmental Hearing Board, towhich we are not a party, may have implications for the permitting of projects where our customers seek to use our services.In this case, National Fuel Gas Midstream Corporation et al. v. Commonwealth of Pennsylvania, a panel of administrativelaw judges on December 29, 2015, dismissed an appeal from a determination by the Pennsylvania Department ofEnvironmental Protection that the operations of two separate companies on parcels of land that were not adjoining and wereactually separated by forest land but were in close proximity should be aggregated as a single source under the state airpermitting regime. The implications of aggregating different sources into a single source is that the overall emissionsincrease and may increase enough to trigger a more onerous permitting regime and require more stringent controls. The courtdetermined that this outcome was appropriate because, among other reasons, the two companies were owned by a commonparent and had several interlocking officers and directors. But it was unclear whether the common parent in fact exercisedcontrol over the two companies’ operations. Unless this ruling is overturned on further appeal, application of this ruling toother permit applications where the parties intend to use our services may lead to a permitting regime that is moreburdensome, time-consuming and costly to our customers, who typically obtain permits. Moreover, we may be required toinstall lower emission engines or additional pollution controls and may not be able to recoup all of the associated costs fromour customers. 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 ofnatural gas, are examples of greenhouse gases. In recent years, the U.S. Congress has considered legislation to reduceemissions of greenhouse gases. It presently appears unlikely that comprehensive climate legislation will be passed by eitherhouse of Congress in the near future, although energy legislation and other initiatives are expected to be proposed that maybe relevant to greenhouse gas emissions issues. However, almost half of the states have begun to address greenhouse gasemissions, primarily through the planned development of emission inventories or regional greenhouse10 Table of Contentsgas cap and trade programs. Depending on the particular program, we could be required to control greenhouse gas emissionsor to purchase and surrender allowances 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. Thesefindings by the EPA allowed the agency to proceed with the adoption and implementation of regulations that restrictemissions of greenhouse gases under existing provisions of the CAA. In 2009, the EPA adopted rules regarding regulation ofgreenhouse emissions from motor vehicles. In addition, on September 22, 2009, the EPA issued a final rule requiring thereporting of greenhouse gas emissions in the United States beginning in 2011 for emissions occurring in 2010 from specifiedlarge greenhouse gas emission sources. On November 30, 2010, the EPA published a final rule expanding its existinggreenhouse gas emissions reporting rule for petroleum and natural gas facilities, including natural gas transmissioncompression facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year. The rule, which went intoeffect on December 30, 2010, requires reporting of greenhouse gas emissions by such regulated facilities to the EPA bySeptember 2012 for emissions during 2011 and annually thereafter. In 2010, the EPA also issued a final rule, known as the“Tailoring Rule,” that made certain large stationary sources and modification projects subject to permitting requirements forgreenhouse gas emissions under 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. The EPA has also sought to directly regulate methane emissions by proposing regulations to expand on Subpart OOOOof the CAA and target methane emissions from new and modified sources, including hydraulically fractured wells. If the finalrule is promulgated along the lines of the proposal, these requirements may add to our costs of doing business and we maynot be able to recoup all of these costs from our customers. On August 3, 2015, the EPA published standards of performance for greenhouse gas emissions from new power plants.The final rule establishes a performance standard for integrated gasification combined cycled units and utility boilers basedon the use of the best system of emission reduction that EPA has determined has been adequately demonstrated for each typeof unit. The rule also sets limits for stationary natural gas combustion turbines based on the use of natural gas combinedcycle technology. Finally, on June 2, 2014, the EPA proposed the Clean Power Plan rule, which is intended to reduce carbon emissionsfrom existing power plants by 32 percent from 2005 levels by 2030. Twenty-nine states and various industry groups havechallenged the EPA’s authority to regulate carbon dioxide emissions from existing coal-fired power plants under Section111(d) of the Clean Air Act in the United States Court of Appeals in Washington, D.C. (the “Circuit Court”). In January2016, the parties asked the United States Supreme Court to stay the plan while the lawsuit proceeds through the courtappeals. On February 9, 2016, the U.S. Supreme Court granted a stay of the implementation of the Clean Power Plan beforethe Circuit Court even issued a decision. By its terms, this stay will remain in effect throughout the pendency of the appealsprocess including at the Circuit Court and the Supreme Court through any certiorari petition that may be granted. The staysuspends the rule, including the requirement that states must start submitting implementation plans by 2018. It is not yetclear how the either the Circuit Court or the Supreme Court will ultimately rule on the legality of the Clean Power Plan. In addition to the EPA, the Bureau of Land Management (“BLM”) also promulgated rules to regulate hydraulicfracturing. The BLM rule establishes new requirements relating to well construction, water management, and chemicaldisclosure for companies drilling on federal and tribal land. This rule has been challenged in the District of Wyoming. TheDistrict Court issued a preliminary ruling enjoining enforcement of the BLM rule and holding that the agency lackedauthority to regulate hydraulic fracturing. Environmental groups have appealed this ruling to the Court of Appeals for theTenth Circuit. The case is likely to be heard in 2016.11 Table of Contents 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 areasin which we conduct business could result in increased compliance costs or additional operating restrictions or reduceddemand for our services, and could have a material adverse effect on our business, financial condition and results ofoperations. 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 penaltiesas well 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 amendthe Safe 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, preliminary results of which were released for public comment in June 2015, which stated that EPA hadnot found evidence of widespread, systemic impacts on drinking water resources from hydraulic fracturing operations. Thisreport has not yet been finalized, and the EPA’s ultimate conclusions may be impacted by recent comments from the EPA’sScience Advisory Board regarding the sufficiency of the data underlying some of the EPA’s conclusions. The EPA also hasannounced that it believes hydraulic fracturing using fluids containing diesel fuel can be regulated under the SDWAnotwithstanding the SDWA’s general exemption for hydraulic fracturing. Several states have also proposed or adoptedlegislative or regulatory restrictions on hydraulic fracturing, including prohibitions on the practice. We cannot predict thefuture of such legislation and what additional, if any, provisions would be included. If additional levels of regulation,restrictions and permits were required through the adoption of new laws and regulations at the federal or state level or thedevelopment of new interpretations of those requirements by the agencies that issue the permits, that could lead to delays,increased operating costs and process prohibitions that could reduce demand for our compression services, which wouldmaterially adversely affect our revenue and results of operations. Solid waste. The Resource Conservation and Recovery Act (“RCRA”) and comparable state laws control themanagement and 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 disposalfor these types 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 conducton certain classes of persons that contributed to the release of a hazardous substance into the environment. These12 Table of Contentspersons include the owner and operator of a disposal site where a hazardous substance release occurred and any company thattransported, disposed of or arranged for the transport or disposal of hazardous substances released at the site. Under CERCLA,such persons may be liable for the costs of remediating the hazardous substances that have been released into theenvironment, for damages to natural resources, and for the costs of certain health studies. In addition, where contaminationmay be present, it is not uncommon for the neighboring landowners and other third parties to file claims for personal injury,property damage and recovery of response costs. While we generate materials in the course of our operations that may beregulated as hazardous substances, we have not received notification that we may be potentially responsible for cleanupcosts under CERCLA at any site. 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 futureuse of those properties may result in spills or releases of petroleum hydrocarbons, wastes or other regulated substances intothe environment 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,including our executive officers, are employees of USAC Management. As of December 31, 2015, USAC Management had478 full time employees. None of our employees are subject to collective bargaining agreements. We consider our employeerelations to be good. Available Information Our website address is usacompression.com. We make available, free of charge at the “Investor Relations” portion of ourwebsite, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and allamendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”), as soon as reasonably practicable after such reports are electronically filed with, or furnishedto, the SEC. The information contained on our website does not constitute part of this report. The SEC maintains a website that contains these reports at sec.gov. Any materials we file with the SEC also may be reador copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information concerning theoperation of the Public Reference Room may be obtained by calling the SEC at (800) 732-0330.13 Table of ContentsITEM 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. Although the risk factors described below discuss potential risksand factors related to our outstanding subordinated units, all of our outstanding subordinated units will convert tocommon units on a one-for-one basis on February 16, 2016 upon the payment of our quarterly distribution on February 12,2016. 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 our unitholders. In order to make cash distributions at our current distribution rate of $0.525 per unit per quarter, or $2.10 per unit peryear, we will require available cash of $28.0 million per quarter, or $112.1 million per year, based on the number of commonunits, subordinated units and the 1.46% general partner interest outstanding as of February 9, 2016. Under our cashdistribution policy, the amount of cash we can distribute to our unitholders principally depends upon the amount of cash wegenerate from our 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; ·the financial condition of our customers;14 Table of Contents·our ability to borrow funds and access the capital markets; and ·the amount of cash reserves established by our general partner. A 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 to unitholders. 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 fordistribution. In particular, lower natural gas or crude oil prices over the long term could result in a decline in the production of naturalgas or crude oil, respectively, resulting in reduced demand for our compression services. For example, the North American rigcount, as measured by Baker Hughes, hit a 2014 peak of 1,931 rigs on September 12, 2014, and at that time, Henry Hubnatural gas spot prices were $3.82 per MMBtu and West Texas Intermediate (“WTI”) crude oil spot prices were $92.18 perbarrel. By December 31, 2014, Henry Hub natural gas prices had decreased by 18% while WTI crude prices decreased by42%; however the total rig count only decreased by 6% to 1,811 rigs. Over the course of the year ended December 31, 2015,commodity prices deteriorated further (natural gas prices and crude oil prices were 27% and 31% lower than at December 31,2014, respectively). This continued decline in commodity prices had a more pronounced effect on drilling activity levels, asthe total rig count decreased 61% to a total of 698 rigs over the same time period. As a result of the slowdown in new drillingactivity in certain operating areas, as well as slowing or flattening of production growth in other areas, we expect to see andare experiencing pressure on service rates for new and existing services and a decline in utilization relative to the recent past.In addition, a small portion of our fleet is used in connection with crude oil production using horizontal drillingtechniques. Given the more pronounced decrease in the price of crude oil, we have also experienced pressure on service ratesfrom our customers in gas lift applications, and expect that this trend could continue if prices remain depressed and activitylevels remain low. Additionally, an increasing percentage of natural gas and crude oil production comes from unconventional sources, suchas shales, tight sands and coalbeds. Such sources can be less economically feasible to produce in low commodity priceenvironments, in part due to costs related to compression requirements, and a reduction in demand for natural gas or gas liftfor crude oil may cause such sources of natural gas or crude oil to be uneconomic to drill and produce, which could in turnnegatively impact the demand for our services. Further, if demand for our services decreases, we may be asked to renegotiateour service contracts at lower rates. In addition, governmental regulation and tax policy may impact the demand for naturalgas or crude oil or impact the economic feasibility of development of new fields or production of existing fields, which areimportant 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 customersmay have a greater effect on our financial results than for a company with a more diverse customer base. We did not haverevenue from any single customer greater than 10% of total revenue for the year ended December 31, 2015. SouthwesternEnergy Corporation and its subsidiaries accounted for 11.6% of our revenue for the year ended December 31, 2014. No othercustomer accounted for greater than 10% of total revenue for the year ended December 31, 2014. Our ten largestcustomers accounted for 45% and 46% of our revenue for the years ended December 31, 2015 and 2014, respectively. Theloss of all or even a portion of the compression services we provide to our key customers, as a result of competition orotherwise, could have a material adverse effect on our business, results of operations, financial condition and cash availablefor distribution. 15 Table of ContentsThe deterioration of the financial condition of our customers could adversely affect our business. During times when the natural gas or crude 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 significantdecline 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 course of our business we hold accountsreceivable from our customers. In the event that any such customer was to enter into bankruptcy, we could lose all or aportion of such outstanding accounts receivable associated with that customer. Further, if a customer was to enter intobankruptcy, it could also result in the cancellation of all or a portion of our service contracts with such customer atsignificant expense to us. 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 fleetsthat would create additional competition for us. All of these competitive pressures could have a material adverse effect on ourbusiness, results of operations, financial condition and reduce our cash available for distribution. Our customers may choose to vertically integrate their operations by purchasing and operating their own compressionfleet, expanding the amount of compression units they currently own or using alternative technologies for enhancing crudeoil production. 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 of between six months and five years, depending on the application andlocation of the compression unit. After the expiration of the applicable term, the contract continues on a month-to-month orlonger basis until terminated by us or our customers upon notice as provided for in the applicable contract. As ofDecember 31, 2015, approximately 39% of our compression services on a horsepower basis (and 43% on a revenue basis forthe year ended December 31, 2015) were provided on a month-to-month basis to customers who continue to utilize ourservices following expiration of the primary term of their contracts with us. These customers can generally terminate theirmonth-to-month compression services contracts on 30-days’ written notice. If a significant number of these customers were toterminate their month-to-month services, or attempt to renegotiate their month-to-month contracts at substantially lowerrates, it could have a material adverse effect on our business, results of operations, financial condition and cash available fordistribution.16 Table of Contents We may be unable to grow our cash flows if we are unable to expand our business, which could limit our ability tomaintain or increase distributions to our unitholders. A principal focus of our strategy is to continue to grow the per unit distribution on our units by expanding our businessover time. Our future growth will depend upon a number of factors, some of which we cannot control. These factors includeour ability 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; ·maintain or increase the fees we charge, and the margins we realize, from our compression services; ·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 on favorable terms for our existing and new operations; and ·meet customer specific contract requirements or pre-qualifications. If 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 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. While we have reviewed acquisition opportunities in the past and willcontinue to do so in the future, we may not be able to identify attractive acquisition opportunities or successfully acquireidentified targets. In addition, we may not be successful in integrating any future acquisitions into our existing operations,which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionateamount of our management’s attention. Even if we are successful in integrating future acquisitions into our existingoperations, we may not derive the benefits, such as operational or administrative synergies, that we expected from suchacquisitions, which may result in the commitment of our capital resources without the expected returns on such capital.Furthermore, competition for acquisition opportunities may escalate, increasing our cost of making acquisitions or causingus to refrain from making acquisitions. Our inability to make acquisitions, or to integrate acquisitions successfully into ourexisting operations, may adversely impact our operations and limit 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 prudentoperating reserves. We expect that we will rely primarily upon cash generated by operating activities and, where necessary,borrowings under our revolving credit facility and the issuance of debt and equity securities, to fund expansion capitalexpenditures. However, we may not be able to obtain equity or debt financing on terms favorable to us, or at all. To theextent we are unable to efficiently finance growth externally, our ability to increase distributions to our unitholders could besignificantly impaired. In addition, because we distribute all of our available cash, which excludes prudent operatingreserves, we may not grow as quickly as businesses that reinvest their available cash to expand ongoing operations. To theextent we issue additional units in connection with other expansion capital expenditures, the payment of distributions onthose additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level.There are no limitations in our partnership agreement on our ability to issue additional units,17 Table of Contentsincluding units ranking senior to the common units. Similarly, the incurrence of borrowings or other debt by us to financeour 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 andpaying distributions. We have a $1.1 billion revolving credit facility that matures in January 2020. In addition, we have the option to increasethe 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, 2015, we had outstanding borrowings of $729.2million with a leverage ratio of 4.8x, borrowing base availability (based on our borrowing base) of $370.8 million and,subject to compliance with the applicable financial covenants, available borrowing capacity under the revolving creditfacility of $101.0 million. Financial covenants permit a maximum leverage ratio of 5.50 to 1.0 through the end of the fiscalquarter ending June 30, 2016 and 5.00 to 1.0 thereafter. As of February 9, 2016, we had outstanding borrowings of $740.2million. 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; and ·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 ofwhich are beyond our control. In addition, our ability to service our debt under the revolving credit facility could beimpacted by market interest rates, as all of our outstanding borrowings are subject to interest rates that fluctuate withmovements in interest rate markets. A substantial increase in the interest rates applicable to our outstanding borrowingscould have a material impact on our cash available for distribution. If our operating results are not sufficient to service ourcurrent or future indebtedness, we could be forced to take actions such as reducing distributions, reducing or delaying ourbusiness activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt orseeking 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; 18 Table of Contents·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, orif we 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 $35.9 million of goodwill and $78.8 million of other intangible assets as of December 31, 2015.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 of futurecash 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. For the year ended December 31, 2015, we recognized a $172.2 millionimpairment of goodwill due primarily to the decline in our unit price, the sustained decline in global commodity prices,expected reduction in the capital budgets of certain of our customers and the impact these factors have on our expectedfuture cash flows (see Note 2 of our consolidated financial statements). There was no impairment recorded for otherintangible assets for the year ended December 31, 2015. There was no impairment recorded for goodwill or other intangibleassets for the years ended December 31, 2014. Impairment in the carrying value of long-lived assets could reduce our earnings. We have a significant amount of long-lived assets on our consolidated balance sheet. Under GAAP, long-lived assets arerequired to be reviewed for impairment when events or circumstances indicate that its carrying value may not be recoverableor will no longer be utilized in the operating fleet. The carrying value of a long-lived asset is not recoverable if it exceeds thesum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If businessconditions or other factors cause the expected undiscounted cash flows to decline, we may be required to record non-cashimpairment charges. Events and conditions that could result in impairment in the value of our long-lived assets includechanges in the industry in which we operate, competition, advances in technology, adverse changes in the regulatoryenvironment, or other factors leading to reduction in expected long-term profitability. For example, during the fiscal yearended December 31, 2015, we evaluated the future deployment of our idle fleet under then-current market conditions anddetermined to retire and either sell or re-utilize the key components of 166 compressor units, or approximately 58,000horsepower, that were previously used to provide services in our business, resulting in approximately $27.3 millionimpairment of long-lived assets. 19 Table of ContentsOur 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 havea significant negative effect on our business, operating results, financial condition and on our ability to compete effectivelyin the 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, the competition for experienced operational and field technicians increases as other energy andmanufacturing companies’ needs for the same personnel increases. Our ability to grow or even to continue our current levelof service to our current customers could be adversely impacted if we are unable to successfully hire, train and retain theseimportant 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 havelong-term contracts with these suppliers or packagers, and a partial or complete loss of any of these sources could have anegative impact on our results of operations and could damage our customer relationships. Some of these suppliersmanufacture the components we purchase in a single facility and any damage to that facility could lead to significant delaysin delivery of completed 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 lawsand regulations 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 to equipmentoperations, 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 operateunder various 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 be20 Table of Contentsnotified of technical violations of certain requirements existing in various permits or other authorizations. We could besubject to penalties for any noncompliance 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 wasteshave been taken for disposal. These properties may be subject to investigatory, remediation and monitoring requirementsunder federal, 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 October 26, 2015, the EPA published the finalized rule strengthening the NAAQs for ground level ozone. The rulebecame effective on December 28, 2015. The final rule updates both the primary ozone standard and the secondary standard.Both standards are 8-hour concentration standards of 70 ppb. In addition, in 2013, the EPA promulgated a final rule revisingthe annual 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 thatmay 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 naturalgas processing operations. Specifically, the EPA’s rule package included New Source Performance Standards to addressemissions of sulfur dioxide and VOCs and a separate set of emission standards to address hazardous air pollutants frequentlyassociated with oil and natural gas production and processing activities. The rules established specific new requirementsregarding emissions from compressors and controllers at natural gas processing plants, dehydrators, storage tanks and otherproduction equipment as well as the first federal air standards for natural gas wells that are hydraulically fractured. Inaddition, the rules established leak detection requirements for natural gas processing plants at 500 ppm. In 2013, the EPAissued a final update to the VOC performance standards for storage tanks used in crude oil and natural gas production andtransmission. On July 31, 2015, the EPA finalized amendments to the definition of low-pressure wells and references to tanksconnected to one another in the 2012 New Source Performance Standards. On August 18, 2015, the EPA also proposedupdates to the New Source Performance Standards and Draft Control Techniques Guidelines in addition to proposing aSource Determination Rule, all of which are intended to cut methane and VOC emissions from the oil and natural gasindustry. These rules may require a number of modifications to our operations, including the installation of new equipmentto control emissions from our compressors at initial startup. Compliance with such rules could result in significant costs,including increased capital expenditures and operating costs, and could adversely impact our business. 21 Table of ContentsIn 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,the TCEQ 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. A ruling by a panel of administrative law judges in a case before the Pennsylvania Environmental Hearing Board, towhich we are not a party, may have implications for the permitting of projects where our customers seek to use our services.In this case, National Fuel Gas Midstream Corporation et al. v. Commonwealth of Pennsylvania, a panel of administrativelaw judges on December 29, 2015, dismissed an appeal from a determination by the Pennsylvania Department ofEnvironmental Protection that the operations of two separate companies on parcels of land that were not adjoining and wereactually separated by forest land but were in close proximity should be aggregated as a single source under the state airpermitting regime. The implications of aggregating different sources into a single source is that the overall emissionsincrease and may increase enough to trigger a more onerous permitting regime and require more stringent controls. The courtdetermined that this outcome was appropriate because, among other reasons, the two companies were owned by a commonparent and had several interlocking officers and directors. But it was unclear whether the common parent in fact exercisedcontrol over the two companies’ operations. Unless this ruling is overturned on further appeal, application of this ruling toother permit applications where the parties intend to use our services may lead to a permitting regime that is moreburdensome, time-consuming and costly to our customers, who typically obtain permits. Moreover, we may be required toinstall lower emission engines or additional pollution controls and may not be able to recoup all of the associated costs fromour customers. 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 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 berelevant to greenhouse gas emissions issues. However, almost half of the states have begun to address greenhouse gasemissions, primarily through the planned development of emission inventories or regional greenhouse gas cap and tradeprograms. Depending on the particular program, we could be required to control greenhouse gas emissions or to purchase andsurrender allowances 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, 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 facilitiesthat emit 25,000 metric tons or more of carbon dioxide equivalent per year. The rule, which went into effect inDecember 2010, requires reporting of greenhouse gas emissions by such22 Table of Contentsregulated facilities to the EPA by September 2012 for emissions during 2011 and annually thereafter. In 2010, the EPA alsoissued a final rule, known as the “Tailoring Rule,” that makes certain large stationary sources and modification projectssubject to permitting requirements for greenhouse gas emissions under 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. The EPA has also sought to directly regulate methane emissions by proposing regulations to expand on Subpart OOOOof the CAA and target methane emissions from new and modified sources, including hydraulically fractured wells. If the finalrule is promulgated along the lines of the proposal, these requirements may add to our costs of doing business and we maynot be able to recoup all of these costs from our customers. Finally, on June 2, 2014, the EPA proposed the Clean Power Plan rule, which is intended to reduce carbon emissionsfrom existing power plants by 32 percent from 2005 levels by 2030. Twenty-nine states and various industry groups havechallenged the EPA’s authority to regulate carbon dioxide emissions from existing coal-fired power plants under Section111(d) of the Clean Air Act in the Circuit Court. In January 2016, the parties asked the United States Supreme Court to staythe plan while the lawsuit proceeds through the court appeals. On February 9, 2016, the U.S. Supreme Court granted a stay ofthe implementation of the Clean Power Plan before the Circuit Court even issued a decision. By its terms, this stay willremain in effect throughout the pendency of the appeals process including at the Circuit Court and the Supreme Courtthrough any certiorari petition that may be granted. The stay suspends the rule, including the requirement that states muststart submitting implementation plans by 2018. It is not yet clear how the either the Circuit Court or the Supreme Court willultimately rule on the legality of the Clean Power Plan. While not directly applicable to our operations, in the near term thisrule may have the effect of expanding the use of natural gas to produce electricity. Any such expansion of the use of naturalgas for this purpose may increase the need for additional infrastructure, which may increase demand for our products. In thelonger term, however, the Clean Power Plan rule may also lead to reductions in the use of fossil fuels including natural gas,which may have adverse effects on our business. 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 areasin which we conduct business could result in increased compliance costs or additional operating restrictions or reduceddemand for our services, and could have a material adverse effect on our business, financial condition and results ofoperations. 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 forhydraulic fracturing from the definition of “underground injection” and require federal permitting and regulatory control ofhydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used inthe fracturing process, were proposed in past sessions of Congress. The U.S. Congress continues to consider legislation toamend the SDWA. Scrutiny of hydraulic fracturing activities continues in other ways, with the EPA having commenced amulti-year study of the potential environmental impacts of hydraulic fracturing, the preliminary results of which werereleased for public comment in June 2015. While the EPA stated that it had found no evidence of widespread systemicimpacts on drinking water sources from hydraulic fracturing operations, the draft report has not been finalized yet. The EPAalso has announced that it believes hydraulic fracturing using fluids containing diesel fuel can be regulated under the SDWAnotwithstanding the SDWA’s general exemption for hydraulic fracturing. Several states have also proposed or adoptedlegislative or regulatory restrictions on hydraulic fracturing, including prohibitions on the practice. We cannot predict ifadditional legislation will be enacted and if so, what its provisions would be. If additional levels of regulation, restrictionand permits are required through the adoption of new laws and23 Table of Contentsregulations, or the development of new regulatory interpretations at the federal or state level, that could lead to delays,increased operating costs and process prohibitions for our customers that could reduce demand for our compression services,which could have a material adverse effect on our business, financial condition, results of operations and cash available fordistribution. 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 disastersthat can 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 ata time when we are not able to obtain liability insurance, our business, results of operations and financial condition could beadversely affected. Terrorist attacks, the threat of terrorist attacks or other sustained military campaigns may adversely impact our results ofoperations. The long-term impact of terrorist attacks and the magnitude of the threat of future terrorist attacks on the energy industryin general and on us in particular are not known at this time. Uncertainty surrounding sustained military campaigns mayaffect our operations in unpredictable ways, including disruptions of crude oil and natural gas supplies and markets for crudeoil, natural gas and natural gas liquids and the possibility that infrastructure facilities could be direct targets of, or indirectcasualties of, an act of terror. Changes in the insurance markets attributable to terrorist attacks may make certain types ofinsurance more difficult for us to obtain, if we choose to do so. Moreover, the insurance that may be available to us may besignificantly more expensive than our existing insurance coverage. Instability in the financial markets as a result of terrorismor war could also affect our ability to raise capital. 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 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 requires us, among other things, toreview 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 orcause us to fail to meet our reporting obligations. Given the difficulties inherent in the design and operation of internalcontrols over financial reporting, we can provide no assurance as to our independent registered public accounting firm’sconclusions about the effectiveness of our internal controls, and we may incur significant costs in our efforts to comply withSection 404. Ineffective internal controls will subject us to regulatory scrutiny and a loss of confidence in our reportedfinancial information, which could have an adverse effect on our business and would likely have a negative effect on thetrading price of our units. 24 Table of ContentsRisks 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 mattersaffecting our business and, therefore, limited ability to influence management’s decisions regarding our business.Unitholders have no right to elect our general partner or its board of directors. USA Compression Holdings is the sole memberof our general partner and has the right to appoint our general partner’s entire board of directors, including its independentdirectors. If the unitholders are dissatisfied with the performance of our general partner, they have little ability to remove ourgeneral partner. As a result of these limitations, the price of our common units may be diminished because of the absence orreduction of a takeover premium in the trading price. Furthermore, our partnership agreement also contains provisionslimiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisionslimiting the unitholders’ ability to influence the manner or direction of management. USA 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 andour 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,our general 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 unitholders. These conflicts include the followingsituations, among others: ·neither our partnership agreement nor any other agreement requires USA Compression Holdings to pursue abusiness strategy 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 ofadditional partnership interests and the creation, reduction or increase of reserves, each of which can affect theamount of cash that 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; 25 Table of Contents·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 incentivedistributions or 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 as operating surplus from non-operating sources on our subordinated units orto our general partner in respect of its General Partner Interest (as defined under Part II, Item 5 (“Market forRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities”) or theincentive 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; ·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 the IDRs without the approval of the conflicts committee of the board of directors ofour general partner or our unitholders. This election may result in lower distributions to our common unitholders incertain 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 our unitholders. 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 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;26 Table of Contents ·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 unit, a unitholder agrees to become bound by the provisions in the partnership agreement, including theprovisions discussed above. Even 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 41% 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 automaticallybe converted into common units. A removal of our general partner under these circumstances would adversely affect ourcommon units by prematurely eliminating their distribution and liquidation preference over our subordinated units, whichwould otherwise have continued until we had met certain distribution and performance tests (upon the payment of ourquarterly distribution on February 12, 2016, we will meet these distribution and performance tests and all of our outstandingsubordinated units will convert to common units on a one-for-one basis on February 16, 2016). Cause is narrowly defined inour partnership agreement to mean that a court of competent jurisdiction has entered a final, non-appealable judgmentfinding our general partner liable for actual fraud or willful misconduct in its capacity as our general partner. Generally, poormanagement of 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 inits capacity as our general partner, our general partner is required to make such determination, or take or decline totake such other action, in good faith, and will not be subject to any higher 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 itscapacity as a general partner so long as such decisions are made in good faith, meaning that it believed that thedecisions were in 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-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officersand directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of acriminal matter, acted with knowledge that the conduct was criminal; and 27 Table of Contents·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. In 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 targetdistribution levels related to its IDRs, without the approval of the conflicts committee of its board of directors of ourgeneral partner or the holders of our common units. This could result in lower distributions to holders of our commonunits. 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 basedon percentage 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 theprior two quarters equal to the average of the distributions to our general partner on the IDRs in the prior two quarters. Ourgeneral partner’s general partner interest in us (currently 1.46%) will be maintained at the percentage that existedimmediately prior to the reset election. Our general partner could exercise this reset election at a time when it is experiencing,or expects to experience, declines in the cash distributions it receives related to its IDRs and may, therefore, desire to beissued common units rather than retain the right to receive incentive distributions based on the initial target distributionlevels. As a result, a reset election may cause our common unitholders to experience a reduction in the amount of cashdistributions that our common unitholders would have otherwise received had we not issued new common units to ourgeneral partner in connection 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, itsaffiliates, their direct transferees and their indirect transferees approved by our general partner (which approval may begranted in its sole discretion) and persons who acquired such units with the prior approval of our general partner, cannot voteon any matter.28 Table of Contents 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 substantiallyall of its assets without the consent of the unitholders. Furthermore, our partnership agreement does not restrict the ability ofUSA Compression Holdings to transfer all or a portion of its ownership interest in our general partner to a third party. Thenew owner of our general partner would then be in a position to replace the board of directors and officers of our generalpartner with its own designees and thereby exert significant control over the decisions made by the board of directors andofficers of our 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 acceptingthese risks, investors may expect to receive a higher rate of return than would otherwise be obtainable from lower-riskinvestments. Accordingly, as interest rates rise, the ability of investors to obtain higher risk-adjusted rates of return bypurchasing 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 or timing of additional limited partner interests that we may issuewithout 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,the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our commonunitholders will increase; ·the ratio of taxable income to distributions may increase; ·the relative voting strength of each previously outstanding unit may be diminished; ·the market price of the common units may decline; and ·assuming the distribution per unit remains unchanged or increases, the cash distributions to the holder of the IDRswill increase. USA Compression Holdings and Argonaut may sell units in the public or private markets, and such sales could have anadverse impact on the trading price of the common units. USA Compression Holdings holds an aggregate of 7,267,511 common units and 14,048,588 subordinated units. All ofour outstanding subordinated units will convert to common units on a one-for-one basis on February 16, 2016 upon thepayment of our quarterly distribution on February 12, 2016. Argonaut holds an aggregate of 7,715,948 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 any29 Table of Contentscommon and subordinated units they own, as applicable. The sale of these units in the public or private markets could havean adverse impact 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 19% 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 CompressionHoldings will own an aggregate of approximately 41% of our outstanding common units. All of our outstandingsubordinated units will convert to common units on a one-for-one basis on February 16, 2016 upon the payment of ourquarterly distribution on February 12, 2016. 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 ofholders of limited partner interests for the obligations of a limited partnership have not been clearly established in some ofthe other states in which we do business. You could be liable for any and all of our obligations as if you were a generalpartner 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 toour partnership agreement or to take other actions under our partnership agreement constitute “control” of ourbusiness. 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. Neitherliabilities to partners on account of their partnership interest nor liabilities that are non-recourse to the partnership arecounted for purposes 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”). 30 Table of ContentsPursuant 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 firmmay still decline to attest to our assessment or may issue a report that is qualified if it is not satisfied with our controls or thelevel at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirementsdifferently from 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. 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 basedupon our current operations that we are or will be so treated, a change in our business or a change in current law could causeus to be treated 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 anticipatedcash flow 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 paythe Revised Texas Franchise Tax each year at a maximum effective rate of 0.75% of our “margin”, as defined in the law,apportioned to Texas in the prior year. Imposition of any similar taxes by any other state may substantially reduce the cashavailable for distribution and, therefore, negatively impact the value of an investment in our common units. 31 Table of ContentsThe 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 changes or differing interpretation at any time. For example,the Obama administration’s budget proposal for fiscal year 2017 recommends that certain publicly traded partnershipsearning income from activities related to fossil fuels be taxed as corporations beginning in 2022. From time to time, membersof the U.S. Congress propose and consider such substantive changes to the existing federal income tax laws that affectpublicly traded partnerships. If successful, the Obama administration’s proposal or other similar proposals could eliminatethe qualifying income exception to the treatment of all publicly-traded partnerships as corporations upon which we rely forour treatment as a partnership for U.S. federal income tax purposes. In addition, the Internal Revenue Service, on May 5, 2015, issued proposed regulations concerning which activities giverise to qualifying income within the meaning of Section 7704 of the Internal Revenue Code. We do not believe the proposedregulations affect our ability to qualify as a publicly traded partnership. However, finalized regulations could modify theamount of our gross income that we are able to treat as qualifying income for the purposes of the qualifying incomerequirement. Any modification to the U.S. federal income tax laws may be applied retroactively and could make it more difficult orimpossible for us to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federalincome tax purposes. We are unable to predict whether any of these changes or other proposals will ultimately be enacted.Any such changes could negatively impact the value of an investment in our common units. Our unitholders’ share of our income will be taxable to them for federal income tax purposes even if they do not receiveany cash 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. We may engage in transactions to de-lever the Partnership and manage our liquidity that may result in income and gainto our unitholders. For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures,you may be allocated taxable income and gain resulting from the sale. Further, taking advantage of opportunities to reduceour existing debt, such as debt exchanges, debt repurchases, or modifications of our existing debt could result in“cancellation of indebtedness income” (also referred to as “COD income”) being allocated to our unitholders as taxableincome. Unitholders may be allocated COD income, and income tax liabilities arising therefrom may exceed cashdistributions. The ultimate effect of any such allocations will depend on the unitholder's individual tax position with respectto its units. Unitholders are encouraged to consult their tax advisors with respect to the consequences of potential CODincome or other transactions that may result in income and gain to unitholders. If 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. Recently enacted legislation alters theprocedures for assessing and collecting taxes due for taxable years beginning after December 31, 2017, in a manner thatcould substantially reduce cash available for distribution to you. We have not requested a ruling from the IRS with respect to our treatment as a partnership for federal income taxpurposes or any other matter affecting us. The IRS may adopt positions that differ from the positions we take, and the IRS’spositions may ultimately be sustained. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. Acourt may not agree with some or all of the positions we take. Any contest with the IRS, and the outcome of any IRS contest,may have a materially adverse impact on the market for our common units and the price at which they trade. In addition, ourcosts of any contest with the IRS will be borne indirectly by our unitholders and our general partner because the costs willreduce our cash available for distribution.32 Table of Contents Recently enacted legislation applicable to us for taxable years beginning after December 31, 2017 alters the proceduresfor auditing large partnerships and also alters the procedures for assessing and collecting taxes due (including applicablepenalties and interest) as a result of an audit. Unless we are eligible to (and choose to) elect to issue revised Schedules K-1 toour partners with respect to an audited and adjusted return, the IRS may assess and collect taxes (including any applicablepenalties and interest) directly from us in the year in which the audit is completed under the new rules. If we are required topay taxes, penalties and interest as the result of audit adjustments, cash available for distribution to our unitholders may besubstantially reduced. In addition, because payment would be due for the taxable year in which the audit is completed,unitholders during that taxable year would bear the expense of the adjustment even if they were not unitholders during theaudited taxable year. 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 receivedis less than its original cost. Furthermore, a substantial portion of the amount realized on any sale of common units, whetheror not representing gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture.In addition, 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 imposedat the highest tax rate applicable to such non-U.S. persons, and each non-U.S. person will be required to file U.S. federalincome tax returns and pay tax on its share of our taxable income. If you are a tax-exempt entity or a non-U.S. person, youshould consult 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 allocationof items 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 U.S. Department of the Treasury recently adopted final TreasuryRegulations allowing a similar monthly simplifying convention for taxable years beginning on or after August 3, 2015.However, such regulations do not specifically authorize the use of the proration method we have adopted for our 2015taxable year and may not specifically authorize all aspects of our proration method thereafter. If the IRS were to33 Table of Contentschallenge our proration method, we may be required to change the allocation of items of income, gain, loss and deductionamong 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 forfederal income tax purposes as a partner with respect to those common units during the period of the loan and mayrecognize gain or 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 ofour common units as a means to measure the fair market value of our respective assets. The IRS may challenge thesevaluation methods 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 of50% or more of the total interests in our capital and profits within a twelve-month period. For purposes of determiningwhether the 50% threshold has been met, multiple sales of the same interest will be counted only once. Our technicaltermination would, among other things, result in the closing of our taxable year for all unitholders, which would result in usfiling two tax returns (and our unitholders could receive two Schedules K-1 if relief was not available, as described below) forone calendar year and could result in a deferral of depreciation deductions allowable in computing our taxable income. In thecase of a unitholder reporting on a taxable year other than a calendar year, the closing of our taxable year may also result inmore than twelve months of our taxable income or loss being includable in his taxable income for the year of termination. Atechnical termination currently would not affect our classification as a partnership for federal income tax purposes, butinstead we would be treated as a new partnership for such tax purposes. If treated as a new partnership, we must make new taxelections and could be subject to penalties if we are unable to determine that a termination occurred. The IRS has announceda publicly traded partnership technical termination relief program whereby a publicly traded partnership that technicallyterminated may request publicly traded partnership technical termination relief which, if granted by the IRS, among otherthings would permit the partnership to provide only one Schedule K-1 to unitholders for the year notwithstanding twopartnership tax years. 34 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 orall of 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 compressionunits. As of December 31, 2015, our headquarters consisted of 18,167 square feet of leased space located at 100 CongressAvenue, Austin, Texas 78701. ITEM 3.Legal Proceedings Please refer to Note 14 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 9, 2016, we had outstanding 38,556,245 common units, 14,048,588 subordinated units, a 1.46% generalpartner interest (“General Partner Interest”) and the IDRs. USA Compression Holdings owns a 100% membership interest inour general partner. As of February 9, 2016, USA Compression Holdings owned approximately 19% of our outstandingcommon units and 100% of our subordinated units, all of which will convert to common units on February 16, 2016 upon thepayment of our quarterly distribution on February 12, 2016. Our general partner currently owns the General Partner Interestin us and all of the IDRs. As discussed below under “Selected Information from Our Partnership Agreement—General PartnerInterest and IDRs,” the IDRs represent the right to receive increasing percentages, up to a maximum of 48%, of the cash wedistribute from operating surplus (as defined below) in excess of $0.4888 per unit per quarter. Our common units, whichrepresent limited partner interests in us, are listed on the New York Stock Exchange (“NYSE”) under the symbol “USAC.” 35 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 9, 2016, was$8.25. Cash Distribution Price Range Declared Per Period High Low CommonUnit Date Paid First Quarter 2014 $28.73 $25.71 $0.490 May 15, 2014 Second Quarter 2014 $28.29 $24.52 $0.500 August 14, 2014 Third Quarter 2014 $26.44 $23.17 $0.505 November 14, 2014 Fourth Quarter 2014 $24.82 $14.45 $0.510 February 13, 2015 First Quarter 2015 $21.60 $15.57 $0.515 May 15, 2015 Second Quarter 2015 $24.30 $18.33 $0.525 August 14, 2015 Third Quarter 2015 $20.95 $13.26 $0.525 November 13, 2015 Fourth Quarter 2015 $18.89 $10.19 $0.525 February 12, 2016 Holders At the close of business on February 9, 2016, based on information received from the transfer agent of the commonunits, we had 57 holders of record of our common units. The number of record holders does not include holders of commonunits in “street names” or persons, partnerships, associations, corporations or other entities identified in security positionlistings maintained 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 twelvemonths from 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 toreceive distributions of available cash from operating surplus each quarter in an amount equal to $0.425 per common unit,which amount is defined in our partnership agreement as the minimum quarterly distribution, plus any arrearages in thepayment of the minimum quarterly distribution on the common units from prior quarters, before any distributions ofavailable cash from operating 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 receive anydistributions 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 the36 Table of Contentscommon units. On January 21, 2016, the Partnership announced a cash distribution of $0.525 per unit on its common andsubordinated units. This fourth quarter distribution corresponds to an annualized distribution rate of $2.10 per unit. Thedistribution will be paid on February 12, 2016 to unitholders of record as of the close of business on February 2, 2016. USACompression Holdings elected to reinvest all of this distribution with respect to their units pursuant to the DRIP. All of ouroutstanding subordinated units will convert to common units on a one-for-one basis on February 16, 2016 upon the paymentof our quarterly distribution on February 12, 2016. 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 usto maintain 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. The 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”).37 Table of Contents 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 thefive years in the period ended December 31, 2015, which has been derived from our audited consolidated financialstatements. The following information should be read together with Management’s Discussion and Analysis of FinancialCondition and Results of Operations and the Financial Statements contained in Part II, Item 7. The following table includes the non-GAAP financial measure of gross operating margin, Adjusted EBITDA andDistributable Cash Flow (or “DCF”). For definitions of Gross Operating Margin, Adjusted EBITDA and DCF, andreconciliations to such measures to their most directly comparable financial measures calculated and presented in accordancewith GAAP, please read “Non-GAAP Financial Measures” below. Year Ended December 31, 2015 2014 2013 2012 2011 (in thousands, except for unit amounts)Revenues:Contract operations$263,816$217,361$150,360$116,373$93,896Parts and service6,7294,1482,5582,4144,824Total revenues270,545221,509152,918118,78798,720Costs of operations, exclusive of depreciation and amortization:Cost of operations81,53974,03548,09737,79639,605Gross operating margin (1)189,006147,474104,82180,99159,115Other operating and administrative costs and expenses:Selling, general and administrative40,95038,71827,58718,26912,726Restructuring charges (2) — — — —300Depreciation and amortization85,23871,15652,91741,88032,738Loss (gain) of sale of assets(1,040)(2,233)284266178Impairment of compression equipment27,2742,266203 — —Impairment of goodwill172,189 — — — —Total other operating and administrative costs and expenses324,611109,90780,99160,41545,942Operating income (loss)(135,605)37,56723,83020,57613,173Other income (expense):Interest expense, net(17,605)(12,529)(12,488)(15,905)(12,970)Other221192821Total other expense(17,583)(12,518)(12,479)(15,877)(12,949)Income (loss) before income tax expense(153,188)25,04911,3514,699224Income tax expense1,085103280196155Net income (loss)(154,273)24,94611,0714,50369Adjusted EBITDA (1)$153,572$114,409$81,130$63,484$51,285DCF (1)(3)$120,850$85,927$56,210$34,928$22,789 Net income (loss) per common unit:Basic$(3.15)$0.60$0.32$ —$ —Diluted$(3.15)$0.60$0.32$ —$ —Cash distributions declared per common unit:$2.09$2.01$1.73$ —$ — Other Financial Data:Capital expenditures (4)285,054387,914159,547179,977133,264Cash flows provided by (used in):Operating activities117,401101,89168,19041,97433,782Investing activities(278,158)(380,523)(153,946)(178,589)(140,444)Financing activities160,758278,63185,756136,618106,662 Balance Sheet Data (at period end):Working capital (5)$(8,455)$(44,064)$(24,177)$(12,076)$(11,295)Total assets1,509,7711,516,4821,185,884872,645727,876Long-term debt729,187594,864420,933502,266363,773Partners' equity718,288839,520707,727343,526339,02338 Table of Contents (1)Please refer to “—Non-GAAP Financial Measures” section below. (2)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. (3)DCF was previously presented as Adjusted DCF. The definition of DCF is identical to the definition of Adjusted DCFpreviously presented. For the definition of DCF, please refer to “—Non-GAAP Financial Measures” section below. (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 forlubricant oils, quantity and pricing of routine preventative maintenance on compression units and property tax rates oncompression units. Gross operating margin should not be considered an alternative to, or more meaningful than, operatingincome (loss) or any other measure of financial performance presented in accordance with GAAP. Moreover, gross operatingmargin as presented may not be comparable to similarly titled measures of other companies. Because we capitalize assets,depreciation and amortization of equipment is a necessary element of our costs. To compensate for the limitations of grossoperating margin as a measure of our performance, we believe that it is important to consider operating income (loss)determined under GAAP, as well as gross operating margin, to evaluate our operating profitability. 39 Table of ContentsThe following table reconciles gross operating margin to operating income (loss), its most directly comparable GAAPfinancial measure, for each of the periods presented (in thousands): Year Ended December 31, 2015 2014 2013 2012 2011Revenues: Contract operations $263,816 $217,361 $150,360 $116,373 $93,896Parts and service 6,729 4,148 2,558 2,414 4,824Total revenues 270,545 221,509 152,918 118,787 98,720Cost of operations, exclusive ofdepreciation and amortization 81,539 74,035 48,097 37,796 39,605Gross operating margin 189,006 147,474 104,821 80,991 59,115Other operating and administrativecosts and expenses: Selling, general and administrative 40,950 38,718 27,587 18,269 12,726Restructuring charges - - - - 300Depreciation and amortization 85,238 71,156 52,917 41,880 32,738Loss (gain) on sale of assets (1,040) (2,233) 284 266 178Impairment of compressionequipment 27,274 2,266 203 - -Impairment of goodwill 172,189 - - - -Total other operating andadministrative costs andexpenses 324,611 109,907 80,991 60,415 45,942Operating income (loss) $(135,605) $37,567 $23,830 $20,576 $13,173 Adjusted EBITDA We define EBITDA as net income (loss) before net interest expense, depreciation and amortization expense, and incometaxes. We define Adjusted EBITDA as EBITDA plus impairment of compression equipment, impairment of goodwill, interestincome, unit-based compensation expense, restructuring charges, management fees, expenses under our operating lease withCaterpillar, certain transaction fees, loss (gain) on sale of assets, and transaction expenses. We view Adjusted EBITDA as oneof our primary management tools, and we track this item on a monthly basis both as an absolute amount and as a percentageof revenue compared to the prior month, year-to-date, prior year and to budget. Adjusted EBITDA is used as a supplementalfinancial measure by our management and external users of our financial statements, such as investors 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. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operatingincome (loss), cash flows from operating activities or any other measure of financial performance presented in40 Table of Contentsaccordance with GAAP as measures of operating performance and liquidity. Moreover, our Adjusted EBITDA as presentedmay not be comparable to similarly titled measures of other companies. Because we use capital assets, depreciation, impairment of compression equipment and the interest cost of acquiringcompression equipment are also necessary elements of our costs. Expense related to unit-based compensation expense relatedto 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 (loss) and net cash provided by operating activities determined under GAAP, as well as Adjusted EBITDA, toevaluate our financial performance and our liquidity. Our Adjusted EBITDA excludes some, but not all, items that affect netincome (loss) and net cash provided by operating activities, and these measures may vary among companies. Managementcompensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measures,understanding the differences between the measures and incorporating this knowledge into management’s decision makingprocesses. The following table reconciles Adjusted EBITDA to net income (loss) and net cash provided by operating activities, itsmost directly comparable GAAP financial measures, for each of the periods presented (in thousands): Year Ended December 31, 2015 2014 2013 2012 2011Net income (loss) $(154,273) $24,946 $11,071 $4,503 $69Interest expense, net 17,605 12,529 12,488 15,905 12,970Depreciation and amortization 85,238 71,156 52,917 41,880 32,738Income taxes 1,085 103 280 196 155EBITDA $(50,345) $108,734 $76,756 $62,484 $45,932Impairment of compression equipment (1) 27,274 2,266 203 - -Impairment of goodwill (2) 172,189 - - - -Interest income on capital lease 1,631 1,274 - - -Unit-based compensation expense (3) 3,863 3,034 1,343 - -Equipment operating lease expense (4) - - - - 4,053Riverstone management fee (5) - - 49 1,000 1,000Restructuring charges (6) - - - - 300Transaction expenses for acquisitions (7) - 1,299 2,142 - -Loss (gain) on sale of assets and other (1,040) (2,198) 637 - -Adjusted EBITDA $153,572 $114,409 $81,130 $63,484 $51,285Interest expense, net (17,605) (12,529) (12,488) (15,905) (12,970)Income tax expense (1,085) (103) (280) (196) (155)Interest income on capital lease (1,631) (1,274) - - -Equipment operating lease expense - - - - (4,053)Riverstone management fee - - (49) (1,000) (1,000)Restructuring charge - - - - (300)Transaction expenses for acquisitions - (1,299) (2,142) - -Amortization of deferred financing costs and other 1,702 1,189 1,839 (58) (920)Changes in operating assets and liabilities (17,552) 1,498 180 (4,351) 1,895Net cash provided by operating activities $117,401 $101,891 $68,190 $41,974 $33,782(1)Represents non-cash charges incurred to write down long-lived assets with recorded values that are not expected to berecovered through future cash flows. (2)For further discussion of our goodwill impairment recorded for the year ended December 31, 2015, please refer to Item 7(“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical AccountingPolicies and Estimates—Goodwill Impairment Assessments”). (3)For the years ended December 31, 2015, 2014 and 2013, unit-based compensation expense included $0.9 million, $0.5million and $0, respectively, of cash payments related to quarterly payments of distribution equivalent rights on41 Table of Contentsoutstanding phantom unit awards and $0.2 million, $0.3 million and $0, respectively, related to the cash portion of anysettlement of phantom unit awards upon vesting. The remainder of the unit-based compensation expense for 2015 and 2014is related to non-cash adjustments to the unit-based compensation liability, and for 2013 is related to the non-cashamortization of unit-based compensation 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. We are no longerresponsible for these fees following the closing of our initial public offering in January 2013. As such, we believe it isuseful 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 the S&R Acquisition expenses incurred along with certain transaction expenses related to potentialacquisitions and other items. The Partnership believes it is useful to investors to exclude these fees. Distributable Cash Flow We define DCF as net income (loss) plus non-cash interest expense, non-cash income tax expense, depreciation andamortization expense, unit-based compensation expense, impairment of compression equipment, impairment of goodwill,certain transaction fees, and (gain) loss on sale of equipment, less maintenance capital expenditures. The definition of DCF isidentical to the definition of Adjusted DCF previously presented. We believe DCF is an important measure of operating performance because it allows management, investors and othersto compare basic cash flows we generate (prior to the establishment of any retained cash reserves by our general partner andthe effect of the DRIP) to the cash distributions we expect to pay our unitholders. Using DCF, management can quicklycompute the coverage ratio of estimated cash flows to planned cash distributions. DCF should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss),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 DCF as presented may not be comparable to similarly titledmeasures 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 (loss) and net cash provided by operating activities determined under GAAP, as well as DCF, to evaluate ourfinancial performance and our liquidity. Our DCF excludes some, but not all, items that affect net income (loss) and net cashprovided by operating activities, and these measures may vary among companies. Management compensates for thelimitations of DCF as an analytical tool by reviewing the comparable GAAP measures, understanding the differences betweenthe measures and incorporating this knowledge into management’s decision making processes. 42 Table of Contents The following table reconciles DCF to net income (loss) and net cash provided by operating activities, its most directlycomparable GAAP financial measures, for each of the periods presented (in thousands): Year Ended December 31, 2015 2014 2013 2012 2011Net income (loss) $(154,273) $24,946 $11,071 $4,503 $69Plus: Non-cash interest expense 1,702 1,224 2,201 1,855 (1,057)Plus: Non-cash income tax expense 874 - - - -Plus: Depreciation and amortization 85,238 71,156 52,917 41,880 32,738Plus: Unit-based compensation expense (1) 3,863 3,034 1,343 - -Plus: Impairment of compression equipment 27,274 2,266 203 - -Plus: Impairment of goodwill 172,189 - - - -Plus: Transaction expenses for acquisitions (2) - 1,299 2,142 - -Plus: Loss (gain) on sale of assets and other 117 (2,198) 637 - -Less: Maintenance capital expenditures (3) (16,134) (15,800) (14,304) (13,310) (8,961)DCF (4) $120,850 $85,927 $56,210 $34,928 $22,789Plus: Maintenance capital expenditures 16,134 15,800 14,304 13,310 8,961Plus: Net gain on change in fair value of interest rate swap - - - (2,180) (2,629)Plus: Change in working capital (17,552) 1,498 180 (4,351) 1,897Less: Transaction expenses for acquisitions - (1,299) (2,142) - -Less: Other (2,031) (35) (362) 267 2,764Net cash provided by operating activities $117,401 $101,891 $68,190 $41,974 $33,782(1)For the years ended December 31, 2015, 2014 and 2013, unit-based compensation expense includes $0.9 million,$0.5 million and $0, respectively, of cash payments related to quarterly payments of distribution equivalent rightson phantom unit awards and $0.2 million, $0.3 million and $0, respectively, related to the cash portion of anysettlement of phantom units upon vesting. The remainder of the unit-based compensation expense for 2015 and2014 is related to non-cash adjustments to the unit-based compensation liability, and for 2013 is related to the non-cash amortization of unit-based compensation in equity. (2)Represents the S&R Acquisition expenses incurred along with certain transaction expenses related to potentialacquisitions and other items. The Partnership believes it is useful to investors to exclude these fees. (3)Reflects maintenance capital expenditures for the period presented. Maintenance capital expenditures are capitalexpenditures made to maintain the operating capacity of our assets and extend their useful lives, to replace partiallyor fully depreciated assets or other capital expenditures that are incurred in maintaining our existing business andrelated operating income. (4)DCF was previously presented as Adjusted DCF. Coverage Ratios DCF Coverage Ratio is defined as DCF less cash distributions to the Partnership’s general partner and IDRs, divided bydistributions declared to limited partner unitholders for the period. Cash Coverage Ratio is defined as DCF less cashdistributions to the Partnership’s general partner and IDRs divided by cash distributions paid to limited partner unitholders,after taking into account the non-cash impact of the DRIP. We believe DCF Coverage Ratio and Cash Coverage Ratio areimportant measures of operating performance because they allow management, investors and others to gauge our ability topay cash distributions to limited partner unitholders using the cash flows that we generate. Our DCF Coverage Ratio andCash Coverage Ratio as presented may not be comparable to similarly titled measures of other companies. 43 Table of ContentsThe following table summarizes certain coverage ratios for the periods presented (dollars in thousands). Year Ended December 31, 2015 2014 2013DCF (1) $120,850 $85,927 $56,210General partner interest in DCF 2,658 1,947 1,188Pre-IPO DCF - - 2,323DCF attributable to limited partner interest $118,192 $83,980 $52,699 Distributions for DCF coverage ratio (2) $101,266 $85,098 $55,961 Distributions reinvested in the DRIP (3) $55,489 $52,556 $36,694 Distributions for Cash Coverage Ratio (4) $45,777 $32,542 $19,267 DCF Coverage Ratio (5) 1.17 0.99 0.94 Cash Coverage Ratio (6) 2.58 2.58 2.74(1)DCF was previously presented as Adjusted DCF. (2)Represents distributions to the holders of the Partnership’s units, after giving effect to the weighted averagecommon units outstanding, due to our May 2014 and September 2015 public equity offerings and S&R Acquisitionin August 2013, for the years ended December 31, 2015, 2014 and 2013, as applicable. (3)Represents distributions to holders enrolled in the DRIP as of the record date for each period. (4)Represents cash distributions declared for common and subordinated units not participating in the DRIP, aftergiving effect to the weighted average of units outstanding for each period due to our May 2014 and September2015 public equity offerings and the S&R Acquisition, as applicable, for the years ended December 31, 2015, 2014and 2013. (5)For the years ended December 31, 2015, 2014 and 2013, the DCF Coverage Ratio based on units outstanding at therespective record dates was 1.15x, 0.97x and 0.91x, respectively. For the year ended December 31, 2013, pre-initialpublic offering DCF was not included in the calculation for the DCF Coverage Ratio. (6)For the years ended December 31, 2015, 2014 and 2013, the Cash Coverage Ratio based on units outstanding at therespective record dates was 2.48x, 2.46x and 2.74x, respectively. For the year ended December 31, 2013, pre-initialpublic offering DCF was not included in the calculation for the Cash Coverage Ratio. 44 Table of Contents 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,Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara andFayetteville shales. The demand for our services is driven by the domestic production of natural gas and crude oil; as such,we have focused our activities in areas of attractive production growth, which are generally found in these shale andunconventional resource plays. According to recent studies promulgated by the Energy Information Agency (“EIA”), theoverall natural gas production and transportation volumes from domestic shale plays are expected to increase over the longterm due to the comparably attractive economic returns versus returns achieved in many conventional basins. Furthermore,the changes in production volumes and pressures of shale plays over time require a wider range of compression services thanin conventional basins. We believe the flexibility of our compression units positions us well to meet these changingoperating conditions. While our business focuses largely on compression services serving infrastructure installations,including centralized natural gas gathering systems and processing facilities, which utilize large horsepower compressionunits, typically in shale plays, we also provide compression services in more mature conventional basins, including gas liftapplications on crude oil wells targeted by horizontal drilling techniques. Gas lift and other artificial lift technologies arecritical to the enhancement of production of oil from horizontal wells operating in tight shale plays. Gas lift is a process bywhich natural gas is injected into the production tubing of an existing producing well, thus reducing the hydrostatic pressureand allowing the oil to flow at a higher rate. General Trends and Outlook Since late 2014, both crude oil and natural gas prices have declined significantly and have remained depressed. Ourbusiness depends on the production of natural gas and crude oil. While our business does not have direct exposure tocommodity prices, the current price environment has resulted in a slowdown in activity in many domestic producing regions,particularly in those plays where producers target oil or other liquids and natural gas plays with relatively higher productioncosts. We believe this decreased level of operating activity has led, and could continue to lead, to less, or more delayed,incremental demand for compression services than in the recent past. However, existing production will continue to requirecompression, so we expect our customers will continue to seek our infrastructure-oriented compression services. A significant amount of our assets is utilized in natural gas infrastructure applications, primarily in centralized 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 and higher sustained utilization rates relative to other businessesmore tied to drilling activity and wellhead economics. As a result of the slowdown in new drilling activity in certainoperating areas, as well as slowing or flattening of production growth in other areas, we expect to see and are experiencingpressure on service rates for new and existing services and a decline in utilization relative to the recent past. In addition, asmall portion of our fleet is used in connection with crude oil production using horizontal drilling techniques. Given themore pronounced decrease in the price of crude oil, we have also experienced pressure on service rates from our customers ingas lift applications, and expect that this trend could continue if prices remain depressed and activity levels remain low. Forthose gas lift contracts where we have made rate concessions, we have typically been able to secure some combination offuture order commitments and exclusive service provider status agreements from our customers to help offset the decrease inpricing. We continue to monitor developments in our customer base, and we believe that there will continue to be demand forour services given the necessity of compression services in allowing for the transportation and processing of natural gas aswell as the production of crude oil, although management cannot predict any possible changes in such demand withreasonable certainty. The steep decline in commodity prices has caused many of our customers to reconsider near-45 Table of Contentsterm capital budgets as well as to reexamine and optimize their compression needs, which impacts the associated demand forcompression related to large-scale natural gas infrastructure and crude oil production activities. Due to the general slowdownin new activity and this lack of visibility as to our customers’ needs in 2016, we intend to significantly scale back capitalspending for new compression units and continue to focus on keeping our existing fleet of infrastructure-oriented equipmenthighly utilized. We intend to direct our growth opportunities to the projects with the highest economic returns – typicallyrepresented by the large horsepower units that tend to generate higher margins and command longer contract terms.Additionally, we plan to utilize currently idle or recently-returned and refurbished compression units to meet customerdemand, to the extent possible. However, in the event that commodity prices and activity levels rebound quickly, we believewe will be able to quickly respond to such changes in demand given current general compression equipment trends,including lead times and fabrication capacity. Although lead-times for new engines and new compressor frames have in thepast been in excess of one year, lead-times for such components are currently substantially shorter, and our fabricators havegenerally had ample availability in their queues. 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, 2015, we increasedour fleet size while maintaining high utilization and economically attractive service rates. Revenue generating horsepowerincreased by 5.4% from December 31, 2014 to December 31, 2015. Average revenue generating horsepower increased by17.3% from the year ended December 31, 2014 to the year ended December 31, 2015. Average revenue per revenuegenerating horsepower per month increased approximately 2% from the year ended December 31, 2014 to the year endedDecember 31, 2015. Average utilization decreased approximately 4% from the year ended December 31, 2014 to the yearended December 31, 2015. The decrease in utilization is attributable to both an increase in the amount of time contractingnew compression units and an increase in the amount of compression units returned to us. We believe this is the result of adelay in planned projects of certain of our customers and continued optimization of existing compression servicerequirements. The EIA has projected that natural gas production growth will continue in the coming years due to increases in drillingefficiencies as well as a backlog of drilled but uncompleted wells in major supply areas, such as the Marcellus Shale.Additionally, according to the EIA, domestic exports, both to Mexico and through the start-up of various liquefied naturalgas (“LNG”) projects in late 2015 and beyond, will increase and this increased demand should keep pace with increasingsupply growth. The EIA projects that approximately 70% of the increase in natural gas production through 2040 will comefrom shale plays, which typically require greater compression horsepower than conventional production. 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. In the short-term, changes in natural gas pricing,based primarily upon the supply of natural gas, will affect the development activities of natural gas producers based upon thecosts associated with finding and producing natural gas in the particular natural gas and oil fields in which they are active.Although declines in natural gas prices have a negative effect on the development activity in natural gas fields, periods oflower development activity tend to place emphasis on improving production efficiency. As a result of our commitment toproviding a high level of availability of the equipment used to provide compression services, we believe our service runtimes position us to satisfy the needs of our customers. The continued development of horizontal drilling, particularly in crude oil wells, has allowed producers to produceincremental volumes of crude oil from tight oil formations. We believe that our flexible fleet of smaller horsepower units thatare primarily utilized in gas lift applications will enable us to capitalize on this market demand. While the sharp decline inglobal crude oil prices has led to a decline in overall drilling activity, domestic producers’ efficiency gains and drilling andcompletion cost reductions have resulted in a slower corresponding decline in crude oil production. After overall domesticcrude oil production began to fall in mid-2015, the EIA now expects domestic crude production to continue to declinethrough 2017. However, it expects to see continued drilling activity in the core areas of the major tight oil plays in 2016, dueto the economic benefit of the aforementioned efficiency gains and declines in drilling and completion costs. 46 Table of ContentsOperating Highlights The following table summarizes certain horsepower and horsepower utilization percentages for the periods presented. Year Ended December 31, Percent Change Operating Data (unaudited): 2015 2014 2013 2015 2014 Fleet horsepower (at period end) (1) 1,712,196 1,549,020 1,202,374 10.5% 28.8%Total available horsepower (at period end) (2) 1,712,196 1,623,400 1,278,829 5.5%26.9%Revenue generating horsepower (at period end) (3) 1,424,537 1,351,052 1,070,457 5.4%26.2%Average revenue generating horsepower (4) 1,408,689 1,200,851 902,168 17.3%33.1%Average revenue per revenue generating horsepower permonth $15.90 $15.57 $14.15 2.1%10.0%Revenue generating compression units (at period end) 2,737 2,651 2,137 3.2%24.1%Average horsepower per revenue generating compression unit(5) 517 505 720 2.4%(29.9)%Horsepower utilization (6): At period end 89.2% 93.6% 94.1% (4.7)%(0.5)%Average for the period (7) 90.5% 94.0% 93.8%(3.7)%0.2%(1)Fleet horsepower is horsepower for compression units that have been delivered to us (and excludes units on order). As ofDecember 31, 2015, we had 15,400 horsepower on order for delivery during 2016.(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. Totalavailable horsepower 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 revenue generating horsepower per revenue generating compression unit foreach of the months in the period.(6)Horsepower utilization is calculated as (i) the sum of (a) revenue generating horsepower, (b) horsepower in our fleet thatis under 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 idlehorsepower that is under repair. Horsepower utilization based on revenue generating horsepower and fleet horsepower ateach applicable period end was 83.2%, 87.2% and 89.0%, for the years ended December 31, 2015, 2014 and 2013,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 85.1%, 87.3% and 87.3% for eachyear ended December 31, 2015, 2014 and 2013, respectively. The 10.5% increase in fleet horsepower as of December 31, 2015 over the fleet horsepower as of December 31, 2014 wasattributable to new compression units added to our fleet to meet anticipated demand by new and current customers. The 5.4%increase in revenue generating horsepower as of December 31, 2015 over December 31, 2014 was primarily due to organicgrowth in our active fleet. The 2.4% increase in average horsepower per revenue generating compression unit as of December31, 2015 over December 31, 2014 was primarily due to the addition of large horsepower compression units in the operatingfleet over the year ended December 31, 2015. The 28.8% increase in fleet horsepower as of December 31, 2014 over the fleet horsepower as of December 31, 2013 wasattributable to new compression units added to our fleet to meet the incremental demand by new and current47 Table of Contentscustomers. The 26.2% increase in revenue generating horsepower as of December 31, 2014 over December 31, 2013 wasprimarily due to organic growth in our large horsepower fleet. The 29.9% decrease in average horsepower per revenuegenerating compression unit as of December 31, 2014 over December 31, 2013 was primarily due to the addition of a fleet ofsmaller horsepower units in connection with the S&R Acquisition in the fourth quarter of 2013, which had the effect ofdecreasing the average horsepower per revenue generating compression unit over the year ended December 31, 2014. Year Ended December 31,Percent ChangeOther Financial Data: (1) 2015 2014 2013 2015 2014 (in thousands) Gross operating margin $189,006 $147,474 $104,821 28.2% 40.7%Gross operating marginpercentage (2) 69.9% 66.6% 68.5% 4.9%(2.9)%Adjusted EBITDA $153,572 $114,409 $81,130 34.2%41.0%Adjusted EBITDA percentage(2) 56.8% 51.6% 53.1% 9.9%(2.6)%DCF (3) $120,850 $85,927 $56,210 40.6%52.9%DCF Coverage Ratio (3) 1.17x 0.99x 0.94 18.3%4.8%Cash Coverage Ratio 2.58x 2.58x 2.74 0.0%(5.6)%(1)Gross operating margin, Adjusted EBITDA, DCF, DCF Coverage and Cash Coverage are all non-GAAP financialmeasures. Definitions of each measure, as well as reconciliations of each measure to its most directly comparablefinancial 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)DCF and DCF Coverage Ratio were previously presented as Adjusted DCF and Adjusted DCF Coverage Ratio,respectively. The definitions of DCF and DCF Coverage Ratio are identical to the definition of Adjusted DCF andAdjusted DCF Coverage Ratio, respectively, as previously presented. Definitions of DCF and DCF Coverage Ratiocan be found under the caption “Non-GAAP Financial Measures” in Part II, Item 6. Adjusted EBITDA. The increase in Adjusted EBITDA during the year ended December 31, 2015 was primarilyattributable to higher gross operating margin as a result of a 17.3% increase in average revenue generating horsepower during2015 and an approximate 3.3% increase in gross operating margin percentage due primarily to certain cost savingsinitiatives, timing of certain preventative maintenance activities and lower fuel costs. The increase in Adjusted EBITDA during the year ended December 31, 2014 was primarily attributable to higher grossoperating margin as a result of a 33.1% increase in average revenue generating horsepower during 2014 and a full yearimpact of the horsepower added in 2013 both organically and through the S&R Acquisition, partially offset by higherselling, general and administrative expense. Distributable Cash Flow. The increase in DCF during the year ended December 31, 2015 was primarily due to increasesin the gross operating margin as a result of a 17.3% increase in average revenue generating horsepower during 2015 and anapproximate 3.3% increase in gross operating margin percentage due primarily to certain cost savings initiatives, timing ofcertain preventative maintenance activities and lower fuel costs, partially offset by higher selling, general and administrativeexpense, higher maintenance capital expenditures, and higher cash interest expense, net. The increase in DCF during the year ended December 31, 2014 was primarily due to increases in the gross operatingmargin as a result of a 33.1% increase in average revenue generating horsepower during 2014 and a full year impact of thehorsepower added in 2013 both organically and through the S&R Acquisition, partially offset by higher selling, general andadministrative expense, higher maintenance capital expenditures, and higher cash interest expense, net. 48 Table of ContentsFinancial Results of Operations Year ended December 31, 2015 compared to the year ended December 31, 2014 The following table summarizes our results of operations for the periods presented (dollars in thousands): Year Ended December 31, Percent 2015 2014 Change Revenues: Contract operations $263,816 $217,361 21.4%Parts and service 6,729 4,148 62.2%Total revenues 270,545 221,509 22.1%Costs and expenses: Cost of operations, exclusive of depreciation and amortization 81,539 74,035 10.1%Gross operating margin 189,006 147,474 28.2%Other operating and administrative costs and expenses: Selling, general and administrative 40,950 38,718 5.8%Depreciation and amortization 85,238 71,156 19.8%Loss (gain) on sale of assets (1,040) (2,233) (53.4)%Impairment of compression equipment 27,274 2,266 1,103.6%Impairment of goodwill 172,189 - * Total other operating and administrative costs and expenses 324,611 109,907 195.4%Operating income (loss) (135,605) 37,567 (461.0)%Other income (expense): Interest expense, net (17,605) (12,529) 40.5%Other 22 11 100.0%Total other expense (17,583) (12,518) 40.5%Income (loss) before income tax expense (153,188) 25,049 (711.6)%Income tax expense 1,085 103 953.4%Net income (loss) $(154,273) $24,946 (718.4)%* Not meaningful. Contract operations revenue. During 2015, we experienced an increase in demand for our compression services drivenby an increase in overall natural gas production in the U.S., resulting in a 17.3% increase in average revenue generatinghorsepower and a $46.5 million increase in our contract operations revenue. Average revenue per revenue generatinghorsepower per month increased from $15.57 for the year ended December 31, 2014 to $15.90 for the year ended December31, 2015, an increase of 2.1%, attributable, in part, to growth in the small horsepower fleet, which earns higher revenue perhorsepower, in addition to improved pricing in the large horsepower fleet. Because the demand for our services is drivenprimarily by production of natural gas, we focus our activities in areas of attractive growth, which are generally found incertain shale and unconventional resource plays, as discussed above under the heading “Overview.” Parts and service revenue. Parts and service revenue was earned primarily on freight and crane charges that are directlyreimbursable by our customers, for which we earn little to no margin, and maintenance work on units at our customers’locations that are outside the scope of our core maintenance activities, for which we earn lower margins than our contractoperations. We offered these services as a courtesy to our customers and the demand fluctuates from period to period basedon the varying needs of our customers. Cost of operations, exclusive of depreciation and amortization. The $7.5 million increase in cost of operations wasprimarily attributable to the increase in our active fleet size due to organic growth. Certain cost increases consisted of (1) a$3.9 million increase in direct labor expenses, (2) a $3.1 million increase in direct expenses such as parts and serviceexpenses, which have a corresponding increase in parts and service revenue, and (3) a $1.9 million increase in indirectexpenses, the majority of which were higher property taxes, offset by a $1.1 million decrease in fuel costs.49 Table of Contents Gross operating margin. The $41.5 million increase in gross operating margin was due to higher revenues partiallyoffset by higher operating expenses during the year ended December 31, 2015. The 3.3% increase in gross operatingmargin percentage from 66.6% for the year ended December 31, 2014 to 69.9% for the year ended December 31, 2015 wasattributable to (1) certain cost savings initiatives, (2) timing of certain preventative maintenance activities and (3) lower fuelcosts. Selling, general and administrative expense. The $2.2 million increase in selling, general and administrative expensefor the year ended December 31, 2015 was primarily attributable to a $3.0 million increase in salaries and benefits expensesand a $1.5 million increase in bad debt expense offset by a $1.3 million decrease in transaction expenses and a $1.0 milliondecrease in professional fees. Depreciation and amortization expense. The $14.1 million increase in depreciation expense was related to an increase ingross property and equipment balances during the year ended December 31, 2015 compared to gross balances during the yearended December 31, 2014. There is no variance in amortization expense between the periods, as intangible assets areamortized on a straight-line basis and there has been no change in gross identifiable intangible assets between the periods. (Gain) on sale of assets. The $1.0 million gain on sale of assets during the year ended December 31, 2015 was primarilyattributable to $1.2 million cash insurance recoveries on previously impaired compression equipment received during theyear and $1.1 million gain on sale of 18 units, or 7,200 horsepower, offset by $1.3 million of losses incurred in the disposalof various unit and non-unit assets. Impairment of compression equipment. A majority of the $27.3 million impairment charge during the year endedDecember 31, 2015 resulted from our evaluation of the future deployment of our current idle fleet under the current marketconditions. As a result of our evaluation during the second quarter of 2015, we determined to retire and either sell or re-utilize the key components of 166 compressor units, or approximately 58,000 horsepower, that had been previously used toprovide compression services in our business. Goodwill impairment. During the fourth quarter of 2015, we recorded a $172.2 million impairment of goodwill dueprimarily to the decline in our unit price, the sustained decline in global commodity prices, expected reduction in the capitalbudgets of certain of our customers and the impact these factors have on our expected future cash flows. There was noimpairment of goodwill for the year ended December 31, 2014. Interest expense, net. The $5.1 million increase in interest expense, net was primarily attributable to the impact of anapproximately $224.6 million increase in average outstanding borrowings under our revolving credit facility, in whichaverage borrowings were $723.3 million for the year ended December 31, 2015 compared to $498.7 million for the yearended December 31, 2014. Our revolving credit facility had an interest rate of 2.26% and 2.16% at December 31, 2015 and2014, respectively, and an average interest rate of 2.24% and 2.22% during December 31, 2015 and 2014, respectively. Income tax expense. This line item represents the Revised Texas Franchise Tax (“Texas Margin Tax”). The increase inincome tax expense for the year ended December 31, 2015 compared to December 31, 2014 was primarily associated with theestablishment of a deferred tax liability reflecting the book/tax basis difference in our property and equipment. 50 Table of ContentsYear ended December 31, 2014 compared to the year ended December 31, 2013 The following table summarizes our results of operations for the periods presented (dollars in thousands): Year Ended December 31, Percent 2014 2013 Change 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 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%Loss (gain) 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 (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 productionof natural 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 “Overview.” The 33.1% increase in average revenuegenerating horsepower was primarily due to organic growth along with the full year impact of the addition of assets inconnection with the S&R Acquisition in August 2013. Average revenue per revenue generating horsepower per monthincreased by 10.0%, primarily due to higher revenue per horsepower per month from the full year impact of the addition ofsmaller horsepower compression units in connection with the S&R Acquisition and organic growth thereafter. Smallerhorsepower compression units typically generate higher revenue per horsepower per month than large horsepowercompression units. The 24.1% increase in revenue generating compression units and the 26.2% increase in revenuegenerating horsepower as of December 31, 2014 was primarily due to organic growth. Parts and service revenue. Parts and service revenue was earned primarily on freight and crane charges that are directlyreimbursable by our customers, for which we earn little to no margin, and maintenance work on units at our customers’locations that are outside the scope of our core maintenance activities, for which we earn lower margins than our contractoperations. We offered these services as a courtesy to our customers and the demand fluctuates from period to period basedon 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, partiallyoffset by 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 to51 Table of Contentscustomers. These factors were primarily attributable to the increase in our fleet size due to organic growth, along with a fullyear of operations related to assets 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 horsepowerunits placed 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 tosupport operations and sales management and (ii) the addition of certain additional executive positions. Additionally, weexpensed an additional $1.7 million of unit-based compensation expense related to the issuance of phantom units in 2014under our 2013 Long-Term Incentive Plan (the “LTIP”), along with a $0.5 million increase in professional fees. The selling,general and administrative 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 thebusiness, including growth resulting 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 aresult, recognized impairment on certain compression units and reduced the book value of each such unit to its estimated fairvalue. The fair value of each such unit was estimated based on an analysis of the expected net sale proceeds compared toother recently sold compression units in our fleet, other units recently offered for sale by third parties, and the estimatedcomponent value 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 the yearended December 31, 2014 compared to $370.8 million for the year ended December 31, 2013. Our revolving credit facilityhad 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 Margin Tax. We incurred $102,738 and $279,972 in TexasMargin Tax for the years ended December 31, 2014 and 2013, respectively. 52 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 make other capital expenditures, service our debt, fund working capital, and pay distributions. Ourprincipal sources of liquidity include cash generated by operating activities, borrowings under our revolving credit facilityand issuances of debt and equity securities, including under the DRIP. We believe cash generated by operating activities and, where necessary, borrowings under our revolving credit facilitywill be sufficient to service our debt, fund working capital, fund our estimated 2016 expansion capital expenditures and fundour maintenance capital expenditures. Because we distribute all of our available cash, which excludes prudent operatingreserves, we expect to fund any future expansion capital expenditures or acquisitions primarily with capital from externalfinancing sources, such as borrowings under our revolving credit facility and issuances of debt and equity securities,including under the DRIP. We are not aware of any regulatory changes or environmental liabilities that we currently expect to have a materialimpact on our 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, 2015, 2014 and 2013 (inthousands): Year Ended December 31, 2015 2014 2013Net cash provided by operating activities $117,401 $101,891 $68,190Net cash used in investing activities (278,158) (380,523) (153,946)Net cash provided by financing activities 160,758 278,631 85,756 Net cash provided by operating activities. The $15.5 million increase in net cash provided by operating activities fromthe year ended December 31, 2014 to the year ended December 31, 2015 relates primarily to a $41.5 million increase ingross operating margin, offset by a $9.4 million increase in inventory purchases, a $6.0 million increase in payroll andbenefits payments, a $4.6 million increase in cash interest paid, $3.9 million increase in property tax payments, and a $1.4million increase in selling, general and administrative expenses, excluding unit-based compensation expense. Net cash provided by operating activities increased for the year ended December 31, 2014 from the year endedDecember 31, 2013. The increase relates primarily to higher gross operating margin offset by higher selling, general andadministrative expenses. Net cash used in investing activities. For the year ended December 31, 2015, net cash used in investing activitiesrelated primarily to purchases of new compression units and related equipment in response to increased demand for ourservices and maintenance capital expenditures made to maintain or replace existing assets and operating capacity, partiallyoffset by $1.7 million of proceeds from the sale of equipment during 2015 and $1.2 million of proceeds from insurancerecoveries on previously impaired compression units during 2015. For the year ended December 31, 2014, net cash used in investing activities related primarily to the purchase of newcompression units and related equipment in response to increased demand and maintenance capital expenditures made tomaintain or replace existing assets and operating capacity, partially offset by $1.4 million of proceeds from the sale ofequipment during 2014. For the year ended December 31, 2013, net cash used in investing activities related primarily to the purchase of newcompression units and maintenance capital expenditures made to maintain or replace existing assets and operating53 Table of Contentscapacity, partially offset by $2.2 million of proceeds from the sale of equipment during 2013 and cash received as part of apurchase price adjustment related to the S&R Acquisition of $3.4 million during 2013. Net cash provided by financing activities. During 2015, we borrowed $134.3 million, on a net basis, primarily tosupport our purchases of new compression units and related equipment, as described above. During September 2015, wecompleted a public equity offering and utilized net proceeds of $75.1 million to reduce indebtedness outstanding under ourrevolving credit facility. Additionally, in January 2015, we paid various loan fees and incurred costs of $3.4 million relatedto an amendment to our revolving credit facility. During 2015, we made cash distributions to our unitholders of $45.1million. For the year ended December 31, 2014, we borrowed $173.9 million, on a net basis, primarily to support our purchases ofnew compression units and related equipment, as described above. During May 2014, we completed an equity offering andutilized the net proceeds of $138.0 million to reduce indebtedness outstanding under our revolving credit facility.Additionally during 2014, we also made distributions to our unitholders of $32.3 million. For the year ended December 31, 2013, we borrowed $81.3 million, on a net basis, primarily to support our purchases ofnew compression units and related equipment. We utilized $180.6 million in proceeds from our initial public offering toreduce indebtedness outstanding under our revolving credit facility. During 2013, we also made distributions to ourunitholders of $14.7 million. Equity Offerings On September 15, 2015, the Partnership closed a public offering of 4,000,000 common units at a price to the public of$19.33 per common unit. The Partnership used the net proceeds of $74.4 million (net of underwriting discounts andcommission and offering expenses) to reduce the indebtedness outstanding under our revolving credit facility. On May 21, 2015, we issued 34,921 common units in a private placement to Argonaut for $0.7 million in a transactionthat was exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). Weused the proceeds from the private placement for general partnership purposes. In May 2014, the Partnership closed a public offering of 5,600,000 common units at a price to the public of $25.59 percommon unit. The Partnership used the net proceeds of $138.0 million (net of underwriting discounts and commission andoffering expenses) to reduce the indebtedness outstanding under our revolving credit facility. In connection with thisoffering, certain selling unitholders, including USA Compression Holdings and Argonaut, sold a combined total of1,990,000 common units. We did not receive any proceeds from the common units sold by such selling unitholders. Capital Expenditures The compression business is capital intensive, requiring significant investment to maintain, expand and upgradeexisting operations. Our capital requirements have consisted primarily of, and we anticipate that our capital requirements willcontinue to consist primarily of, the following: ·maintenance capital expenditures, which are capital expenditures made to maintain the operating capacity of ourassets and extend their useful lives, to replace partially or fully depreciated assets, or other capital expenditures thatare incurred in maintaining our existing business and related operating income; and ·expansion capital expenditures, which are capital expenditures made to expand the operating capacity or operatingincome capacity of assets, including by acquisition of compression units or through modification of existingcompression units to increase their capacity, or to replace certain partially or fully depreciated assets that were notcurrently generating operating income. We classify capital expenditures as maintenance or expansion on an individual asset basis. Over the long term, weexpect that our maintenance capital expenditure requirements will continue to increase as the overall size and age of our54 Table of Contentsfleet increases. Our aggregate maintenance capital expenditures for the years ended December 31, 2015 and 2014 were $16.1million and $15.8 million, respectively. We currently plan to spend approximately $15 million in maintenance capitalexpenditures during 2016. Given the recent downturn in the energy industry described above under the heading “—General Trends and Outlook,”we anticipate that we will significantly reduce our 2016 expansion capital expenditures in comparison to our 2014 and 2015capital expenditures. Without giving effect to any equipment we may acquire pursuant to any future acquisitions, wecurrently have budgeted between $40 million and $50 million in expansion capital expenditures during 2016. Ourexpansion capital expenditures for the years ended December 31, 2015 and 2014 were $268.9 million and $372.1 million,respectively. Revolving Credit Facility As of December 31, 2015, we were in compliance with all of our covenants under our revolving credit facility. As ofDecember 31, 2015, we had outstanding borrowings under our revolving credit facility of $729.2 million, $370.8 million ofborrowing base availability and, subject to compliance with the applicable financial covenants, available borrowingcapacity of $101.0 million. The borrowing base consists of eligible accounts receivable, inventory and compression units.Financial covenants permit a maximum leverage ratio of 5.50 to 1.0 through the end of the fiscal quarter ending June 30,2016 and 5.00 to 1.0 thereafter. As of February 9, 2016, we had outstanding borrowings of $740.2 million. We expect toremain in compliance with our covenants throughout 2016. If our current cash flow projections prove to be inaccurate, weexpect to be able to remain in compliance with such financial covenants by one or more of the following actions: issueequity in conjunction with the acquisition of another business; issue equity in a public or private offering; request amodification of our covenants from our bank group; reduce distributions from our current distribution rate or request anequity infusion pursuant to the terms of our revolving credit facility. For a detailed description of our revolving credit facility including the covenants and restrictions contained therein,please refer to Note 8 to our consolidated financial statements. Distribution Reinvestment Plan During the year ended December 31, 2015, distributions of $56.9 million were reinvested under the DRIP resulting in theissuance of 3.1 million common units. Such distributions are treated as non-cash transactions in the accompanyingConsolidated Statements of Cash Flows included under Part IV, Item 15 of this report. For a more detailed description of the DRIP, please refer to Note 9 to our consolidated financial statements. 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 ofup to $150 million (the “COP”). We did not issue any common units or receive any proceeds under the COP in the yearended December 31, 2015. 55 Table of ContentsTotal Contractual Cash Obligations The following table summarizes our total contractual cash obligations as of December 31, 2015: 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) $729,187 $— $— $729,187 $— Interest on long-term debt obligations (2) 66,191 16,480 32,960 16,751 — Equipment/capital purchases (3) 20,802 20,802 — — — Operating lease obligations (4) 5,320 1,645 2,620 1,055 — Total contractual cash obligations $821,500 $38,927 $35,580 $746,993 $ — (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 31,2015 of 2.26%. (3)Represents commitments for new compression units that are being fabricated, and is a component of our overallprojected expansion capital expenditures during 2016 of $40 million to $50 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 We have no off-balance sheet financing activities. Please refer to Note 14 of our consolidated financial statementsincluded in this report for a description of our commitments and contingencies. 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 the financial statementsand the reported amounts of revenue and expenses during the periods presented. We base our estimates on historicalexperience, available information and various other assumptions we believe to be reasonable under the circumstances. On anongoing basis, we evaluate our estimates; however, actual results may differ from these estimates under different assumptionsor conditions. The accounting policies that we believe require management’s most difficult, subjective or complexjudgments and are the most critical to its reporting of results of operations and financial position are as follows: Revenue Recognition We recognize revenue using the following criteria: (i) persuasive evidence of an arrangement, (ii) delivery has occurredor services have been rendered, (iii) the customer’s price is fixed or determinable and (iv) collectability is reasonably assured. Revenue from compression services is recognized as earned under our fixed-fee contracts. Compression servicesgenerally are billed monthly in advance of the service period, except for certain customers which are billed at the beginningof the service month. Revenues are recognized as deferred revenue on the balance sheet until earned. 56 Table of ContentsBusiness Combinations and Goodwill Goodwill acquired in connection with business combinations represents the excess of consideration over the fair valueof net 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 evaluate goodwill for impairment annually on October 1 of the fiscal year and whenever events or changes indicatethat it is more likely than not that the fair value of our single business reporting unit could be less than its carrying value(including goodwill). The timing of the annual test may result in charges to our statement of operations in our fourth fiscalquarter that could not have been reasonably foreseen in prior periods. We estimate the fair value of our reporting unit based on a number of factors, including the potential value we wouldreceive if we sold the reporting unit, enterprise value, discount rates and projected cash flows. Estimating projected cashflows requires us to make certain assumptions as it relates to future operating performance. When considering operatingperformance, various factors are considered such as current and changing economic conditions and the commodity priceenvironment, among others. Due to the imprecise nature of these projections and assumptions, actual results can and oftendo, differ from our estimates. If the growth assumptions embodied in the current year impairment testing prove inaccurate, wecould incur an impairment charge in the future. On October 1, 2015, we performed our annual goodwill impairment test. We updated our impairment test as of December31, 2015 as certain potential impairment indicators were identified during the fourth quarter, specifically (1) the decline inthe market price of the Partnership’s common units, (2) the sustained decline in global commodity prices, and (3) the declinein performance of the Alerian MLP Index, which indicated the reporting unit had a fair value that was less than its carryingvalue as of December 31, 2015. As described in Note 2, “Summary of Significant Accounting Policies – Goodwill,” weprepared a quantitative assessment as of December 31, 2015 which indicated that the calculated fair value was less than thecarrying value. We subsequently performed “Step 2” impairment test for our reporting unit which requires us to treat thebusiness as if it had been acquired in a business combination as of December 31, 2015 and assign the fair value of thereporting unit to all of its assets and liabilities. The carrying value of the goodwill is compared to the new implied fair valueof goodwill and an impairment is recognized for any amount the carrying value exceeds the implied fair value. Based on thatstep two impairment test, we recognized a non-cash impairment charge of $172.2 million. We had approximately $35.9 ofgoodwill remaining on the balance sheet as of December 31, 2015. 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. We continue to monitor the remaining$35.9 million of goodwill and if the estimated fair value of our reporting unit declines due to any of these or other factors, wemay be required to record future goodwill impairment charges. Long-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 assetmay not be recoverable. For long-lived assets to be held and used, we base our evaluation on impairment indicators such asthe nature 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 are57 Table of Contentspresent or other factors exist that indicate the carrying amount of the asset may not be recoverable, we determine whether animpairment has occurred through the use of an undiscounted cash flows analysis. If an impairment has occurred, we recognizea loss for the difference between the carrying amount and the estimated fair value of the asset. The fair value of the asset ismeasured using quoted market prices or, in the absence of quoted market prices, is based on an estimate of discounted cashflows, the expected net sale proceeds compared to other similarly configured fleet units we recently sold, a review of otherunits recently offered for sale by third parties, or the estimated component value of similar equipment we plan to continue touse. We recorded $27.3 million, $2.3 million and $0.2 million in impairment of compression equipment for the years endedDecember 31, 2015, 2014 and 2013, respectively. 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 recordan impairment 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. Thedetermination of the allowance for doubtful accounts requires us to make estimates and judgments regarding our customers’ability to pay amounts due. On an ongoing basis, we conduct an evaluation of the financial strength of our customers basedon payment history, the overall business climate in which our customers operate and specific identification of customer baddebt and make adjustments to the allowance as necessary. The allowance for doubtful accounts was $2.1 million, $0.4million and $0.2 million as of December 31, 2015, 2014 and 2013, respectively. 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 forcomplying with new or revised accounting standards is irrevocable. For more discussion on specific recent accounting pronouncements affecting us, please see Note 13 to our consolidatedfinancial statements. 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,natural gas and crude oil. Lower natural gas prices or crude oil prices over the long term could result in a decline in theproduction of natural gas or crude oil, which could result in reduced demand for our compression services. Please readPart I, Item 1A (“Risk Factors—Risks Related to Our Business”). We do not intend to hedge our indirect exposure tofluctuating commodity prices. A 1% decrease in average revenue generating horsepower of our active fleet during the yearended December 31, 2015 would have resulted in a decrease of approximately $2.7 million and $1.9 million in our revenueand gross operating margin, respectively. Gross operating margin is a non-GAAP financial measure. For a reconciliation ofgross operating margin to net income (loss), its most directly comparable financial measure, calculated and presented inaccordance with GAAP, please read Part II, Item 6 (“—Non-GAAP Financial58 Table of ContentsMeasures”). Please also read Part I, Item 1A (“Risk Factors—Risks Related to Our Business—A long-term reduction in thedemand for, or production of, natural gas or crude oil in the locations where we operate could adversely affect the demand forour services or the prices we charge for our services, which could result in a decrease in our revenues and cash available fordistribution to unitholders”). Interest Rate Risk We are exposed to market risk due to variable interest rates under our financing arrangements. As of December 31, 2015 we had approximately $729.2 million of variable-rate outstanding indebtedness at a weighted-average interest rate of 2.26%. A 1% increase in the effective interest rate on our variable-rate outstanding debt as ofDecember 31, 2015 would result in an annual increase in our interest expense of approximately $7.3 million. For further information regarding our exposure to interest rate fluctuations on our debt obligations, see Note 8 to ourconsolidated financial statements. Although we do not currently hedge our variable rate debt, we may, in the future, hedgeall or a portion of such 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, the effectiveness of the designand operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the ExchangeAct) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to providereasonable assurance that the information required to be disclosed by us in reports that we file or submit under the ExchangeAct is accumulated and communicated to our management, including our principal executive officer and principal financialofficer, as appropriate to allow timely decisions regarding required disclosures, and is recorded, processed, summarized andreported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principalexecutive officer and principal financial officer have concluded that our disclosure controls and procedures were effective asof December 31, 2015 at the reasonable assurance level. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting forus. Our internal control system was designed to provide reasonable assurance regarding the preparation and fair presentationof our published financial statements. There are inherent limitations to the effectiveness of any control system, however well designed, including thepossibility of human error and the possible circumvention or overriding of controls. Further, the design of a control59 Table of Contentssystem must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to theircosts. Management must make judgments with respect to the relative cost and expected benefits of any specific controlmeasure. The design of a control system also is based in part upon assumptions and judgments made by management aboutthe likelihood of future events, and there can be no assurance that a control will be effective under all potential futureconditions. As a result, even an effective system of internal control over financial reporting can provide no more thanreasonable assurance with respect to the fair presentation of financial statements and the processes under which they wereprepared. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. 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 believesthat, as of December 31, 2015, our internal control over financial reporting was effective. This report does not include anattestation report of the company’s registered public accounting firm due to a transition period established by rules of theSEC for emerging 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.60 Table of Contents PART 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 notelected by our unitholders and is not subject to re-election on a regular basis in the future. Our general partner has a board ofdirectors that 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 theboard of 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.Chandler and Forrest E. Wylie are independent directors under the standards established by the NYSE and the Exchange Act.The board of directors of our general partner considered all relevant facts and circumstances and applied the independentguidelines of the NYSE and the Exchange Act in determining that none of these directors has any material relationship withus, our management, 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 ofone of our customers. For the year ended December 31, 2015, subsidiaries of this customer made compression servicepayments to us of approximately $8.8 million. The board of directors of our general partner made a determination that therelationship with this customer 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 committeeindependence. The audit committee assists the board of directors of our general partner in its oversight of the integrity of ourfinancial statements and our compliance with legal and regulatory requirements and corporate policies and controls. Theaudit committee 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 usacompression.com. We also will provide a copy of the charter of the audit committee to anyof 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”). The61 Table of Contentscompensation committee consists of Robert F. End, William H. Shea, Jr. and Olivia C. Wassenaar. The compensationcommittee establishes and reviews general policies related to our compensation and benefits. The compensation committeehas the responsibility to determine and make recommendations to the board of directors of our general partner with respectto, the compensation and benefits of the board of directors and executive officers of our general partner. A copy of the charterof the compensation committee is available under the Investor Relations tab on our website at usacompression.com. We alsowill provide a copy of the charter of the compensation committee to any of our unitholders without charge upon writtenrequest 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 certainother requirements. Any matters approved by the conflicts committee in good faith will be conclusively deemed to be fairand reasonable to us, approved by all of our partners and not a breach by our general partner of any duties it may owe us orour unitholders. 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 withcopies of all Section 16(a) forms they filed with the SEC. To our knowledge, based solely on a review of the copies of suchreports furnished to us, we believe that all reporting obligations of the officers and directors of our general partner and greaterthan 10 percent unitholders under Section 16(a) were satisfied during the year ended December 31, 2015. 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 BusinessConduct and Ethics (the “Code”) that applies to our general partner and its subsidiaries and affiliates, including us, and to allof its and their directors, employees and officers, including its principal executive officer, principal financial officer andprincipal accounting officer. Copies of the Corporate Governance Guidelines and the Code are available under the InvestorRelations tab on our website at usacompression.com. We also will provide copies of the Corporate Governance Guidelinesand the Code 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.62 Table of Contents Directors and Executive Officers The following table shows information as of February 9, 2016 regarding the current directors and executive officers ofUSA Compression GP, LLC. Name Age Position with USA Compression GP, LLCEric D. Long 57 President and Chief Executive Officer and DirectorMatthew C. Liuzzi 41 Vice President, Chief Financial Officer and TreasurerJ. Gregory Holloway 58 Vice President, General Counsel and SecretaryDavid A. Smith 53 Vice President and President, Northeast RegionWilliam G. Manias 53 Vice President and Chief Operating OfficerJohn D. Chandler 46 DirectorJim H. Derryberry 71 DirectorRobert F. End 60 DirectorWilliam H. Shea, Jr. 61 DirectorAndrew W. Ward 49 DirectorOlivia C. Wassenaar 36 DirectorForrest E. Wylie 52 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 directorof USA 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 ofdirectors of the Wiser Oil Company, an NYSE listed company from May 2001 until it was sold to Forest Oil Corporation inMay 2004. Mr. Long received his bachelor’s degree, with honors, in Petroleum Engineering from Texas A&M University. Heis a registered 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.From September 2005 through June 2011, Mr. Holloway was a partner at Thompson & Knight LLP in its Austin office. Hisareas of practice at the firm included corporate, securities and merger and acquisition law. Mr. Holloway received his B.A.from Rice University and his J.D., with honors, from the University of Texas School of Law. 63 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 inthat capacity from 1996 to 1998. Mr. Smith received an associates degree in Automotive and Diesel Technology fromRosedale Technical 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 withEnterprise Product Partners L.P. Prior to GulfTerra Energy Partners, L.P., Mr. Manias held several executive managementpositions with El Paso Corporation. Prior to El Paso, he worked as an energy investment banker for J.P. Morgan SecuritiesInc. and its predecessor companies from May 1992 to August 2001. Mr. Manias earned a B.S.E. in civil engineering fromPrinceton University in 1984, a M.S. in petroleum engineering from Louisiana State University in 1986 and an M.B.A. fromRice University 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 Midstream GP, LLC since October 2014. From 2009 toMarch 2014, Mr. Chandler served as Senior Vice President and Chief Financial Officer of Magellan GP, LLC, the generalpartner of Magellan Midstream Partners, LP. From 2003 until 2009, he served in the same capacities for the general partner ofMagellan Midstream Holdings, L.P. From 1999 to 2002, Mr. Chandler was Director of Financial Planning and Analysis andDirector of Strategic Development for a subsidiary of The Williams Companies, Inc. From 1992 to 1999, Mr. Chandler heldvarious accounting and finance positions with MAPCO Inc. Mr. Chandler received his B.S. and B.A. in accounting andfinance from the 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. Derryberry was in the Goldman Sachs Global Energy and Power Group where he was responsible for mergers andacquisitions, capital markets financing and the management of relationships with major energy companies. He has alsoserved as an advisor to the Russian government for energy privatization. Mr. Derryberry has served as a member of the Boardof Overseers for the Hoover Institution at Stanford University and is a member of the Engineering Advisory Board at theUniversity of Texas at Austin. He received his B.S. and M.S. degrees in engineering from the University of Texas at Austinand earned an M.B.A. from Stanford University. Mr. Derryberry brings significant knowledge and expertise to the board of directors of our general partner from hisservice on other boards and his years of experience in our industry including his useful insight into investments and64 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 joinedin 2004. Previously, Mr. End was a founding Partner and Director of Stonington Partners Inc., a private equity firmestablished in 1994. Prior to leaving Merrill Lynch in 1994, Mr. End was a Managing Director of Merrill Lynch CapitalPartners, Merrill Lynch’s private equity group. Mr. End joined Merrill Lynch in 1986 and worked in the Investment BankingDivision before joining the private equity group in 1989. Mr. End received his A.B. from Dartmouth College and his M.B.A.from the Tuck School 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 andbusiness development and proven leadership skills as Managing Director of MLGPE. As a result of this experience andresulting skills set, 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 servedin such role since May 2014. Previously, Mr. Shea served as the President and Chief Operating Officer of Buckeye GP LLCand its predecessor entities (“Buckeye”), from July 1998 to September 2000, as President and Chief Executive Officer ofBuckeye from September 2000 to July 2007, and Chairman from May 2004 to July 2007. From August 2006 to July 2007,Mr. Shea served as Chairman of MainLine Management LLC, the general partner of Buckeye GP Holdings, L.P., and asPresident and Chief Executive Officer of MainLine Management LLC from May 2004 to July 2007. Mr. Shea served as adirector of Penn Virginia Corp. from July 2007 to March 2010, and as President and Chief Executive Officer of the generalpartner of Penn Virginia GP Holdings, L.P. from March 2010 to October 2013 and as Chief Executive Officer of the generalpartner of PVR Partners, L.P. (“PVR”), from March 2010 to October 2013. Mr. Shea has also served as a director of KayneAnderson Energy Total Return Fund, Inc., and Kayne Anderson MLP Investment Company since March 2008 and Niska GasStorage Partners LLC since May 2010. Mr. Shea has an agreement with Riverstone, pursuant to which he has agreed to serveon the boards of certain Riverstone portfolio companies. Mr. Shea received his B.A. from Boston College and his M.B.A.from the University of Virginia. 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. from 2008 to 2013 and of the general partner of PVR Partners, L.P.from 2012 to 2014. Mr. Ward has served on the board of directors of Niska Gas Storage Partners LLC since May 2006 as wellas various private companies sponsored by Riverstone. Mr. Ward received his A.B. from Dartmouth College and received hisM.B.A. from the UCLA Anderson School of Management. 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, PVR Partners, L.P. and Niska Gas Storage Partners LLC has given him both an understanding of65 Table of Contentsthe midstream sector of the energy business and of the unique issues related to operating publicly traded limited partnerships. Olivia 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 from May 2010 to February 2014 and as a Managing Director since February 2014. In this capacity, she invests inand 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 Northern Blizzard Resources Inc. since June 2011 and on theboard of directors of Niska Gas Storage Partners LLC as well as various private portfolio companies sponsored by Riverstone.Ms. Wassenaar received her A.B., magna cum laude, from Harvard College and earned an M.B.A. from the Wharton School ofthe University of Pennsylvania. Ms. Wassenaar’s experience in evaluating financial and strategic options and the operations of companies in ourindustry and 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. 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 ofa “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 with66 Table of Contentscompensation that is significantly performance based. For the year ended December 31, 2015, our named executive officers(“NEOs”) were: ·Eric D. Long, President and Chief Executive Officer; ·William G. Manias, Vice President and Chief Operating Officer; and ·Matthew C. Liuzzi, Vice President, Chief Financial Officer and Treasurer. Summary Compensation Table The following table sets forth certain information with respect to the compensation paid to our NEOs for the years endedDecember 31, 2014 and 2015. All Other Unit Awards Compensation Name and Principal Position Year Salary ($) Bonus ($) (1) ($) (2) ($) Total ($)Eric D. Long 2015 588,962 885,000 1,500,000 279,917(3) 3,253,879President and Chief Executive Officer 2014 488,462 650,500 1,000,000 270,562 2,409,524William G. Manias (4) 2015 399,596 450,000 725,000 95,866(5) 1,670,462Vice President and Chief Operating Officer Matthew C. Liuzzi (6) 2015 312,247 325,500 586,500 85,351(7) 1,309,598Vice President, Chief Financial Officer andTreasurer (1)Represents the awards earned under annual cash incentive bonus program for the years ended December 31, 2014 and2015, as applicable. For a discussion of the determination of the 2015 bonus amounts, see “—Annual PerformanceBased Compensation for 2015” below. (2)On February 19, 2015, each of our NEOs received an award of phantom units under our LTIP. Each phantom unit is theeconomic equivalent of one common unit. The phantom unit values reflect the grant date fair value of the awardscalculated in accordance with FASB ASC Topic 718. For a detailed discussion of the assumptions utilized in coming tothese values, please see Note 10 to our consolidated financial statements. (3)Includes $229,816 of distribution equivalent rights, $18,000 of automobile allowance, $10,449 of club membershipdues, $7,950 of employer contributions under the 401(k) plan, $3,302 of parking, $8,400 of personal administrativeassistant support 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)Mr. Manias was not a NEO for the 2014 fiscal year, therefore we have not reported his compensation for the 2014 fiscalyear. (5)Includes $86,398 of distribution equivalent rights, $7,373 of employer contributions under the 401(k) plan and $2,095of parking. (6)Mr. Liuzzi was not an NEO for the 2014 fiscal year, therefore we have not reported his compensation for the 2014 fiscalyear. (7)Includes $75,350 of distribution equivalent rights and $7,950 of employer contributions under the 401(k) plan and$2,051 of parking. 67 Table of ContentsNarrative 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 incentive 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 2015 and 2016 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 compensationcommittee. No formulaic base salary increases are provided to the NEOs. For 2015 and 2016, in connection with determiningbase salaries for each of our NEOs, the board of directors of our general partner, compensation committee and chief executiveofficer worked with a compensation consultant to determine comparable salaries for our peer group, which we identifiedbased on a review 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 and 2016, the board of directors of our generalpartner determined that base salary should be set at approximately the 50 percentile of the peer group. The 2015 andcurrent 2016 base salaries for our NEOs, including for our Chief Executive Officer, are set forth in the following table: 2015 Base Salary Current 2016Base SalaryName and Principal Position ($) ($)Eric D. Long President and Chief Executive Officer 590,000 607,700William G. Manias, Vice President and Chief Operating Officer 400,000 412,000Matthew C. Liuzzi, Vice President, Chief Financial Officer and Treasurer 310,000 365,000 68 th Table of ContentsAnnual Incentive Compensation For 2015 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 Planunder the supervision of the full board of directors of our general partner, and has the discretion to amend, modify orterminate the Cash Plan at any time upon approval by the board of directors of our general partner. Although the Cash Planuses both company and individual performance goals to determine bonus amounts, the Cash Plan is ultimately adiscretionary annual bonus plan and awards are therefore reported in the “Bonus” column within the SummaryCompensation Table above. 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, 2015, the Target Bonus for each NEO was$590,000 for Mr. Long, $300,000 for Mr. Manias and $217,000 for Mr. Liuzzi. The Target Bonus is generally subject to thesatisfaction of both a partnership performance goal and an individual performance goal. For the year ended December 31,2015 fifty percent (50%) of the Target Bonus is subject to our achievement of our budgeted distributable cash flow level(“DCF”) for the year, as determined by our board of directors of our general partner. Payouts with respect to the portion of thebonus subject to DCF (the “DCF Bonus”) generally do not occur unless we have satisfied the threshold set for DCF. For2015, the board of directors of our general partner set the budget for DCF at $105 million. The threshold, target andmaximum requirements for the DCF target for the year ended December 31, 2015, as well as the portion of the DCF Bonusthat could become payable if performance was satisfied for the year, are set forth below: DCF as a Percentage of Percentage of DCF Levels of Budgeted DCF Bonus that would DCF Bonus for 2015 be Paid Threshold 80% 50% Target 100% 100% Maximum 110% 200% If DCF performance falls in between threshold and target, or between target and maximum, the amounts payable areadjusted ratably using straight line interpolation. If DCF is satisfied above maximum levels, the potential payment of theDCF Bonus is capped at the maximum level of 200%. For the year ended December 31, 2015, the remaining fifty percent (50%) of the Target Bonus is subject to individualobjectives specific to each eligible individual’s role at USAC Management (the “Individual Bonus”). The individualobjectives are agreed upon in advance between the NEO and his immediate supervisor (or, with respect to the chief executiveofficer, between the board of directors of our general partner and the chief executive officer) and such objectives address thekey priorities for that NEO’s position. They may include key operating objectives as well as personal developmentcriteria. The Individual Bonus is subject to a maximum payout of 100% of the targeted Individual Bonus amount, althoughthe board of directors of our general partner has discretion to pay out smaller amounts ranging from 0% to 100%, at their solediscretion, after analyzing the individual’s personal performance for the year. In connection with the Individual Bonus forthe year ended December 31, 2015, each of the NEOs met with their immediate supervisor (or, with respect to the chiefexecutive officer, the board of directors of our general partner) to set individual objectives that reflected the responsibilitiesand priorities of their position. For the year ended December 31, 2015, in the aggregate, the maximum amount payable with respect to a Target Bonusunder the Plan is 150%, as the DCF Bonus is capped at 200% of target and the Individual Bonus is capped at 100% oftarget. Target Bonuses, if any, are paid within one week following delivery by our independent auditor of the audit of ourfinancial statements for the year in which the Target Bonus relates, but in no case later than March 15 of the year followingthe year in which the Target Bonus relates. For the year ended December 31, 2015, DCF exceeded the target threshold inexcess of 10%, which resulted in the DCF portion of the Cash Plan (comprising one-half of the overall69 Table of ContentsBonus) being paid to each NEO at the maximum rate of 200% for such portion of the Bonus. With respect to the IndividualBonus portion of the overall Bonus, each NEO was determined by his immediate supervisor (which in the case of the chiefexecutive officer is the board of directors of our general partner) to have satisfied his individual objectives and therefore wasentitled to receive 100% of the Individual Bonus. The awards made pursuant to the Cash Plan with respect to the 2015 yearwere: Eric D. Long $885,000 William G. Manias $450,000 Matthew C. Liuzzi $325,500 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 2015, as well as in 2014, 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, 2014 and 2015, our board of directors of our general partner granted phantom unitawards to certain key employees, including our NEOs. Each of these phantom unit awards vest in three equal annualinstallments, with the first installment vesting on the first anniversary of the date of grant. In the event of cessation of anemployee’s service for any reason, all phantom units that have not vested prior to or in connection with such cessation ofservice shall automatically be forfeited. Each phantom unit granted to an employee, including the NEOs, is granted intandem with a corresponding distribution equivalent right, which is paid quarterly on the distribution date from the grantdate until the earlier of the vesting or the forfeiture of the related phantom units. Each distribution equivalent right entitlesthe participant to receive payments in the amount equal to any distribution made by us following the grant date in respect ofthe grant date in respect of the common unit underlying the phantom unit to which such distribution equivalent right relates. Prior to the Holdings Acquisition, Mr. Long 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, Mr.Long re-invested a substantial portion of the cash proceeds received in respect of his prior equity interests in certain classesof capital or profit interest units in USA Compression Holdings. Mr. Manias and Mr. Liuzzi joined us after the HoldingsAcquisition. Mr. Long was also granted Class B Units of USA Compression Holdings at the time of the Holdings Acquisition. Mr.Manias and Mr. Liuzzi were granted Class B Units of USA Compression Holdings at the time of their employment.70 Table of ContentsThe grants the NEOs received had time-based vesting requirements (which, for Mr. Long, were satisfied in full as ofDecember 31, 2013) and are designed not only to compensate but also to motivate and retain the recipients by providing anopportunity for equity ownership by our NEOs. The grants to our NEOs also provide our NEOs with meaningful incentives toincrease unitholder value over time. The Class B Units are profits interests that allow our NEOs to participate in the increasein value of USA Compression Holdings over and above an 8% annual and cumulative preferred return hurdle. Available cashwill be distributed to the USA Compression Holdings members at such times as determined by its board of managers, atwhich time the holders of Class B Units could receive distributions if the cash distributed reaches the required distributionhurdles. Distributions to the Class B Unit holders could also occur in connection with a sale or liquidation event of USACompression Holdings. To date, our NEOs have not received distributions with respect to these awards. Outstanding Equity Awards as of December 31, 2015 The following table provides information regarding the Class B Units in USA Compression Holdings held by the NEOsas of December 31, 2015. None of our NEOs held any option awards that were outstanding as of December 31, 2014 and2015. Also reflected within the table are the outstanding phantom units that were granted to our NEOs from the LTIP duringthe years ended December 31, 2013, 2014 and 2015, 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) (#) ($) (7)Eric D. Long 462,500 2013 Grant — 20,408(4)234,4882014 Grant 25,262(5)290,2602015 Grant 75,528(6)867,817William G. Manias 64,453 60,547 2013 Grant — 4,691(4)53,9002014 Grant 5,263(5)60,4722015 Grant 36,505(6)419,442Matthew C. Liuzzi 35,156 27,344 2013 Grant — 3,456(4)39,7092014 Grant 7,142(5)82,0622015 Grant 29,531(6)339,311(1)Represents the number of Class B Units in USA Compression Holdings that became vested but had not been settled as ofDecember 31, 2015. 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 50% of the then-unvested portion of Class B Units vested at the timeof 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.Manias’ awards are scheduled to vest pro rata each month through July 15, 2017. The remainder of Mr. Liuzzi’s awardsare scheduled to vest pro rata each month through April 17, 2017. (3)As described under the heading “—Discretionary Long-Term Equity Incentive Awards,” the Class B Units are intendedto allow recipients to receive a percentage of profits generated by USA Compression Holdings over and above certainreturn hurdles. The Class B Units had no recognizable value as of December 31, 2015 and the holders of the Class BUnits had not received any distributions with respect to those awards during the 2015 year. 71 Table of Contents(4)Represents the number of phantom units issued on March 11, 2013, April 17, 2013 and October 28, 2013 to Mr. Long,Mr. Manias and Mr. Liuzzi, respectively, pursuant to the LTIP that have not vested as of December 31, 2015. Eachphantom unit is the economic equivalent of one common unit. The phantom units are scheduled to vest in three equalannual installments on the anniversary of the date of grant. In the event of cessation of the NEO’s service for any reason,all phantom units that have not vested prior to or in connection with such cessation of service shall automatically beforfeited. (5)Represents the number of phantom units issued on February 20, 2014 pursuant to the LTIP that had not vested as ofDecember 31, 2015. Each phantom unit is the economic equivalent of one common unit. The phantom units arescheduled to vest in three equal annual installments on each subsequent February 15. The first installment vested onFebruary 15, 2015. In the event of cessation of the NEO’s service for any reason, all phantom units that have not vestedprior to or in connection with such cessation of service shall automatically be forfeited. (6)Represents the number of phantom units issued on February 19, 2015 pursuant to the LTIP that had not vested as ofDecember 31, 2015. Each phantom unit is the economic equivalent of one common unit. The phantom units arescheduled to vest in three equal annual installments on each subsequent February 15 with the first installment vestingon February 15, 2016. In the event of cessation of the NEO’s service for any reason, all phantom units that have notvested prior to or in connection with such cessation of service shall automatically be forfeited. (7)Market value is calculated using the value of $11.49, which was the closing price of our common units on December 31,2015. Severance and Change in Control Arrangements Our NEOs are entitled to severance payments and benefits upon certain terminations of employment and, in certaincases, 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, pursuantto which 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 thetermination of employment), subject to acceleration upon the NEO’s death during the Severance Period, and (ii) continuedcoverage for twenty-four (24) months (or, with respect to Mr. Long, thirty (30) months) under our group medical plan inwhich the executive and any of his dependents were participating immediately prior to his termination. Continued coverageunder our group medical plan is subsidized for the first twelve (12) months following termination, after which time continuedcoverage shall be provided at the NEO’s sole expense (except with respect to Mr. Long, who is entitled to reimbursement byus to the extent the cost of such coverage exceeds $1,200 per month) for the remainder of the applicable period.Additionally, upon a termination of an NEO’s employment by us for72 thth Table of Contentsconvenience, by the NEO for good reason, or due to the NEO’s death or disability, the NEO is entitled to receive (i) anamount 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 forany reason, including a failure to renew the employment agreement at the end of an initial term or any renewal term, otherthan a termination for “cause.” “Cause” is defined in the NEOs’ employment agreements to mean (i) any material breach ofthe employment agreement or the Holdings Operating Agreement, by the executive, (ii) the executive’s breach of anyapplicable duties of loyalty to us or any of our affiliates, gross negligence or misconduct, or a significant act or acts ofpersonal dishonesty or deceit, taken by the executive, in the performance of the duties and services required of the executivethat has a material adverse effect on us or any of our affiliates, (iii) conviction or indictment of the executive of, or a plea ofnolo contendere by the executive to, a felony, (iv) the executive’s willful and continued failure or refusal to performsubstantially the executive’s material obligations pursuant to the employment agreement or the Holdings OperatingAgreement or follow any lawful and reasonable directive from the board of managers of USA Compression Holdings(regarding Mr. Long) or the board of directors of our general partner (regarding Mr. Manias and Mr. Liuzzi) or, as applicable,the chief executive officer, other than as a result of the executive’s incapacity, or (v) a pattern of illegal conduct by theexecutive that is materially 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 thana reduction that is generally applicable to all similarly situated employees, or (v) the relocation of the geographic location ofthe executive’s current principal place of employment by more than fifty miles from the location of the executive’s principalplace of employment. With respect to Mr. Long’s employment agreement, “good reason” also means the failure to appointand 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. 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. Oneexception to this practice is with respect to our CEO, who would receive immediate vesting of any outstanding phantomunits upon the change in control event. In addition, a portion (subject to the discretion of the compensation committee) ofeach LTIP award granted to our NEOs during the year ending December 31, 2016 will immediately vest immediately prior tothe change in control event. Director Compensation For the year ended December 31, 2015, Mr. Long, our only NEO who also served as a director, did not receive additionalcompensation for his service as a director. Mr. Long’s compensation as an executive is reflected in the SummaryCompensation Table above. Only the independent members of the board of directors of our general partner receivecompensation for their service as directors. 73 Table of ContentsThe following table shows the total compensation earned by each independent director during 2015. Fees Earned or All Other Paid in Cash Unit Awards Compensation TotalName ($) ($) (1) ($) (2) ($)John D. Chandler 116,000 75,000 1,737 192,737Robert F. End 128,000 75,000 6,948 209,948Forrest E. Wylie 99,000(3)75,000 6,948 180,948 (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 10 to our consolidated financialstatements. As of December 31, 2015, the independent members of the board of directors of our general partner held thefollowing number of outstanding equity awards under the LTIP: Mr. Chandler, 3,932 phantom units; Mr. End, 3,932phantom units; and Mr. Wylie, 7,865 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 will vest in full on February 15,2016. 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 theboard of 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 the2015 phantom unit grants was a one year vesting period). DERs will be paid either on a current or deferred basis, ineach case as will be determined at the time of grant of the awards; the 2015 phantom unit awards provided fordeferred DERs. 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 9, 2016 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; and74 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. All of our outstanding subordinated units will convert to common units on a one-for-one basis on February 16, 2016upon the payment of our quarterly distribution on February 12, 2016. Percentage of Percentage ofPercentage ofCommon and CommonCommonSubordinatedSubordinatedSubordinated UnitsUnitsUnitsUnitsUnits BeneficiallyBeneficiallyBeneficiallyBeneficiallyBeneficially Name of Beneficial OwnerOwnedOwnedOwnedOwnedOwned USA Compression Holdings (1) 7,267,511 18.8% 14,048,588 100% 40.5%Argonaut (2) 7,715,948 20.0% — —14.7%Oppenheimer Funds, Inc. (3) 3,513,104 9.1% — —6.7%Eric D. Long (4) 167,970*— —*William G. Manias (5) 40,140*— —*Matthew C. Liuzzi (6) 25,165*— —*John D. Chandler (7) 7,651 *— —*Jim H. Derryberry — —— ——William H. Shea, Jr. — —— ——Robert F. End (8) 20,554*— —*Andrew W. Ward — —— ——Olivia C. Wassenaar — —— ——Forrest E. Wylie (9) 23,414*— —*All directors and executive officersas a group (12 persons) (10)341,0470.9%— —**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/CIV USACP 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 97.6% of the limited liability company interests of USACompression Holdings and is entitled to elect a majority of the members of the board of managers of USA CompressionHoldings. R/C Holdings is an investment partnership affiliated with Riverstone/Carlyle Global Energy and Power FundIV, L.P. (“R/C IV”). Management and control of R/C Holdings is vested in its general partner, which is in turn managedand controlled by its general partner, R/C Energy GP IV, LLC. R/C Energy GP IV, LLC is managed by an eight personmanagement committee that includes Andrew W. Ward. The principal business address of R/C Energy GP IV, LLC is 712Fifth Avenue, 51st Floor, New York, New York 10019. 75 Table of ContentsMr. 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, each disclaims beneficial ownership of the unitsowned by USA Compression Holdings. (2)Argonaut has sole voting and dispositive power of 7,715,948 common units. The principal business address ofArgonaut 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, 3,513,104 common units, including 3,429,769 common units held by Oppenheimer SteelPath MLPIncome Fund, based on Amendment No. 5 to Schedule 13G filed on February 5, 2016 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 61,462 common units held directly by Mr. Long, 6,665 common units held by Aladdin Partners, L.P., a limitedpartnership affiliated with Mr. Long, 39,720 common units held by certain trusts of which Mr. Long is the trustee, 1,908common units held by Mr. Long’s spouse and 58,215 common units that Mr. Long has the right to acquire within 60days upon the vesting and/or settlement of his phantom units, subject to compensation committee discretion. Mr. Longdisclaims any beneficial ownership of the units held by Mr. Long’s spouse, except to the extent of his pecuniary interesttherein. (5)Includes 14,801 common units that Mr. Manias has the right to acquire within 60 days upon the vesting and/orsettlement of his phantom units , subject to compensation committee discretion. (6)Includes 13,415 common units that Mr. Liuzzi has the right to acquire within 60 days upon the vesting and/orsettlement of his phantom units, subject to compensation committee discretion. (7)Includes 3,932 common units that Mr. Chandler has the right to acquire within 60 days upon the vesting and/orsettlement of his phantom units. (8)Includes 3,932 common units that Mr. End has the right to acquire within 60 days upon the vesting and/or settlement ofhis phantom units. (9)Includes 7,865 common units that Mr. Wylie has the right to acquire within 60 days upon the vesting and/or settlementof his phantom units. (10)Includes 131,743 common units that certain of our directors and executive officers have the right to receive within 60days upon the vesting and/or settlement of phantom units held by such directors and executive officers. 76 Table of ContentsSecurities Authorized for Issuance Under Equity Compensation Plans In connection with the consummation of our initial public offering on January 18, 2013, the board of directors of ourgeneral partner adopted the LTIP. The following table provides certain information with respect to this plan as ofDecember 31, 2015: 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 securityholders — N/A —Equity compensation plans not approved by securityholders 457,081 N/A 771,532 For more information about our LTIP, please see Note 10 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 initial public offering, we and other parties have entered into the followingagreements. These agreements were not the result of arm’s length negotiations, and they, or any of the transactions that theyprovide for, may not be effected on terms as favorable to the parties to these agreements as could have been obtained fromunaffiliated 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 allocable expenses it incursin its performance under the services agreement. These expenses include, among other things, salary, bonus, cash incentivecompensation and other amounts paid to persons who perform services for us or on our behalf and other expenses allocatedby USAC Management to us. USAC Management has substantial discretion to determine in good faith which expenses toincur 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 upour or our general partner’s business; (d) a final judgment, order or decree that materially and adversely affects the ability ofus or our general partner to perform under the services agreement is obtained or entered against us or our general partner, andsuch judgment, 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. 77 Table of ContentsProcedures 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 authorizedcommittee will 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) the terms available to unrelated third parties entering into similar transactions; (iv) the impact of the transaction on adirector’s independence (in the event the related person is a director, an immediate family member of a director or an entity inwhich a director 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 conductand ethics. The code of business conduct and ethics described above was adopted in connection with the closing of our initialpublic offering, and as a result the transaction described above was not reviewed under such policy. The transactiondescribed above was not approved by an independent committee of our board of directors of our general partner and theterms were determined by negotiation among the parties. Conflicts 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.78 Table of Contents 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 accountingfirm, KPMG LLP during the years ended December 31, 2015 and 2014: Year Ended December31, 2015 2014 (in millions)Audit Fees (1) $0.6 $0.5Audit-Related Fees — —Tax Fees — —All Other Fees — —Total $0.6 $0.5 (1)Expenditures classified as “Audit Fees” above were billed to USA Compression Partners, LP and include the audits ofour annual financial statements, work related to the registration statements, reviews of our quarterly financial statements,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.79 Table of Contents PART IV ITEM 15.Exhibits and Financial Statement Schedules (a)Documents filed as a part of this report. 1.Financial Statements. See “Index to Consolidated Financial Statements” set forth on Page F-1. 2.Financial Statement Schedule All other schedules have been omitted because they are not required under the relevant instructions. 3.Exhibits The following documents are filed as exhibits to this report: ExhibitNumber Description3.1 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 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, assyndication agent (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form8-K (File No. 001-35779) filed on December 17, 2013) 10.2 Letter Agreement by and among USA Compression Partners, LLC, USAC Leasing, LLC,USA Compression Partners, LP, USAC Leasing 2, LLC, USAC OpCo 2, LLC, the Lenders party theretoand JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders, dated as of June30, 2014 (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K(File No. 001-35779) filed on July 3, 2014) 10.3 Second Amendment to the Fifth Amended and Restated Credit Agreement, dated as of January 6, 2015,by and 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 partythereto and JPMorgan Chase Bank, N.A., as agent and LC issuer (incorporated by reference to Exhibit10.1 to the Partnership’s Current Report on Form 8-K (File No. 001-35779) filed on January 9, 2015) 10.4† 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) 10.5† 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) 80 Table of Contents10.6† 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) 10.7*† Employment Agreement, dated July 15, 2013, between USA Compression Management Services,LLC and William G. Manias 10.8 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) 10.9† 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) 10.10† 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) 10.11† 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) 10.12† 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) 10.13*† USA Compression Partners, LP 2013 Long-Term Incentive Plan—Form of Employee Phantom UnitAgreement (with updated performance metrics) 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 toSection 906 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.81 Table of Contents#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).82 Table of ContentsSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. USA COMPRESSION PARTNERS, LP By:USA Compression GP, LLC, its General Partner By:/s/ Eric D. Long Eric D. Long President and Chief Executive Officer (Principal Executive Officer) Date:February 11, 2016 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 11, 2016. 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 83 Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2Consolidated Balance Sheets as of December 31, 2015 and 2014 F-3Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013 F-4Consolidated Statements of Changes in Partners’ Capital for the years ended December 31, 2015, 2014 and 2013 F-5Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 F-6Notes to Consolidated Financial Statements F-7Supplemental Selected Quarterly Financial Data S-1 F-1 Table of Contents Report 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, 2015 and 2014, 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, 2015. 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 thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audits provide 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, 2015 and 2014, and the results of theiroperations and their cash flows for each of the years in the three‑year period ended December 31, 2015, in conformity withU.S. generally accepted accounting principles. /s/ KPMG LLP Dallas, TexasFebruary 11, 2016 F-2 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Balance SheetsDecember 31, 2015 and 2014(in thousands, except for unit amounts) 2015 2014 Assets Current assets: Cash and cash equivalents $7 $6 Accounts receivable, net: Trade, net 28,465 25,159 Other 3,023 2,926 Inventory, net 18,872 8,923 Prepaid expenses 2,600 1,020 Total current assets 52,967 38,034 Property and equipment, net 1,318,043 1,162,637 Installment receivable 17,275 20,241 Identifiable intangible assets, net 78,773 82,357 Goodwill 35,866 208,055 Other assets 6,847 5,158 Total assets $1,509,771 $1,516,482 Liabilities and Partners’ Capital Current liabilities: Accounts payable $23,840 $44,535 Accrued liabilities 20,582 21,708 Deferred revenue 17,000 15,855 Total current liabilities 61,422 82,098 Long-term debt 729,187 594,864 Other liabilities 874 — Partners’ capital: Limited partner interest: Common units, 38,556,245 and 31,307,116 units issued and outstanding, respectively 557,583 600,401 Subordinated units, 14,048,588 units issued and outstanding each period 150,787 225,221 General partner interest 9,918 13,898 Total partners’ capital 718,288 839,520 Total liabilities and partners’ capital $1,509,771 $1,516,482 See accompanying notes to consolidated financial statements. F-3 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Statements of OperationsYears ended December 31, 2015, 2014 and 2013(in thousands, except per unit amounts) 2015 2014 2013 Revenues: Contract operations $263,816 $217,361 $150,360 Parts and service 6,729 4,148 2,558 Total revenues 270,545 221,509 152,918 Costs and expenses: Cost of operations, exclusive of depreciation and amortization 81,539 74,035 48,097 Selling, general and administrative 40,950 38,718 27,587 Depreciation and amortization 85,238 71,156 52,917 Loss (gain) on sale of assets (1,040) (2,233) 284 Impairment of compression equipment (Note 4) 27,274 2,266 203 Impairment of goodwill 172,189 — — Total costs and expenses 406,150 183,942 129,088 Operating income (loss) (135,605) 37,567 23,830 Other income (expense): Interest expense, net (17,605) (12,529) (12,488) Other 22 11 9 Total other expense (17,583) (12,518) (12,479) Net income (loss) before income tax expense (153,188) 25,049 11,351 Income tax expense (Note 7) 1,085 103 280 Net income (loss) $(154,273) $24,946 $11,071 Less: Earnings allocated to general partner prior to initial public offering on January 18,2013 $ — $ — $5 Earnings available for limited partners prior to initial public offering on January 18,2013 $ — $ — $530 Net income (loss) subsequent to initial public offering on January 18, 2013 $(154,273) $24,946 $10,536 Net income (loss) subsequent to initial public offering allocated to: General partner’s interest in net income (loss) $(1,477) $760 $211 Limited partners’ interest in net income (loss): Common units $(107,513) $16,811 $5,805 Subordinated units $(45,283) $7,375 $4,520 Weighted average common units outstanding: Basic 34,109,547 28,087,498 18,043,075 Diluted 34,109,547 28,146,446 18,086,745 Weighted average subordinated units outstanding: Basic and diluted 14,048,588 14,048,588 14,048,588 Net income (loss) per common unit: Basic $(3.15) $0.60 $0.32 Diluted $(3.15) $0.60 $0.32 Net income (loss) per subordinated unit: Basic and diluted $(3.22) $0.52 $0.32 Distributions declared per limited partner unit in respective periods $2.09 $2.01 $1.73 See accompanying notes to consolidated financial statements. F-4 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Statements of Changes in Partners’ CapitalYears ended December 31, 2015, 2014 and 2013(in thousands) Partners’ Capital Total General Limited Common Units Subordinated Units General Partner Units Partners’ Partners Partners Units Amount Units Amount Amount Capital 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 Distributions and DERs — — — (22,872) — (17,533) (819) (41,224) Issuance of common units — — 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 Distributions and DERs — — — (53,854) — (27,746) (1,729) (83,329) Issuance of common units — — 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 Vesting of phantom units — — 101 1,844 — — — 1,844 Distributions and DERs — — — (69,480) (29,151) (2,503) (101,134) Issuance of common units — — 7,148 132,006 — — — 132,006 Unit-based compensation — — — 325 — — — 325 Net loss — — — (107,513) — (45,283) (1,477) (154,273) Partners’ capital, December 31, 2015 $ — $ — 38,556 $557,583 14,049 $150,787 $9,918 $718,288 See accompanying notes to consolidated financial statements. F-5 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIES Consolidated Statements of Cash FlowsYears ended December 31, 2015, 2014 and 2013(in thousands) 2015 2014 2013 Cash flow from operating activities: Net income (loss) $(154,273) $24,946 $11,071 Adjustments to reconcile net income (loss) to net cash provided by operatingactivities: Depreciation and amortization 85,238 71,156 52,917 Amortization of debt issue costs 1,702 1,224 2,192 Unit-based compensation expense 3,863 3,034 1,343 Net loss (gain) on sale of assets (1,040) (2,233) 284 Impairment of compression equipment 27,274 2,266 203 Impairment of goodwill 172,189 — — Changes in assets and liabilities: Accounts receivable (439) (2,659) (11,674) Inventory (14,340) (4,942) (5,725) Prepaids (1,580) 1,380 (600) Other noncurrent assets (3) (39) 3,824 Accounts payable (3,310) (1,431) 8,132 Accrued liabilities and deferred revenue 2,120 9,189 6,223 Net cash provided by operating activities 117,401 101,891 68,190 Cash flow from investing activities: Capital expenditures (281,050) (381,943) (159,547) Proceeds from sale of property and equipment 1,735 1,420 2,227 Acquisitions, net of cash — — 3,374 Proceeds from insurance recovery 1,157 — — Net cash used in investing activities (278,158) (380,523) (153,946) Cash flows from financing activities: Proceeds from long-term debt 480,004 538,644 243,501 Payments on long-term debt (345,681) (364,714) (324,834) Net proceeds from issuance of common units 75,111 138,047 180,555 Cash paid for taxes related to net settlement of unit-based awards (210) (334) — Cash Distributions (45,078) (32,345) (14,669) General partner contribution — 294 4,251 Financing costs (3,388) (961) (3,048) Net cash provided by financing activities 160,758 278,631 85,756 Increase (decrease) in cash and cash equivalents 1 (1) — Cash and cash equivalents, beginning of year 6 7 7 Cash and cash equivalents, end of year $7 $6 $7 Supplemental cash flow information: Cash paid for interest $17,110 $12,622 $10,603 Cash paid for income taxes $282 $115 $196 Supplemental non-cash transactions: Non-cash distributions to certain limited partners (DRIP) $56,895 $51,707 $26,286 Change in capital expenditures included in accounts payable and accruedliabilities $(19,256) $16,515 $15,846 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-6 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (1) The Partnership, Nature of Business, and Recent Transactions USA Compression Partners, LP, 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 causedthe Partnership 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 Partnershipto the 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 as well as certain compression assets acquiredafter the acquisition. Each of Leasing Subsidiary and LeaseCo 2 leases its compressor fleet to Operating Subsidiary andOpCo 2, respectively, for use in providing compression services to customers. The Partnership is a guarantor to OperatingSubsidiary’s revolving credit facility and each of Leasing Subsidiary, OpCo2 and LeaseCo2 are co-borrowers on therevolving credit facility (see Note 8). The accompanying consolidated financial statements include the accounts of thePartnership, the Operating Subsidiary, the Leasing Subsidiary, OpCo 2 and LeaseCo 2, and all intercompany balances andtransactions have been eliminated in consolidation. The Operating Subsidiary, the Leasing Subsidiary, OpCo 2 and LeaseCo2, are collectively referred to herein, as the “Operating Subsidiaries.” The Partnership, through the Operating Subsidiaries, provides compression services under term contracts with customersin the natural gas and crude oil industry, using natural gas compression packages that it designs, engineers, owns, operatesand 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 $2.1 million and $0.4 million as of December 31, 2015 and 2014, respectively, is the Partnership’s best estimateof the amount of probable credit losses in the Partnership’s existing accounts receivable. Bad debt expense for the year endedDecember 31, 2015 was $1.8 million. The determination of the allowance for doubtful accounts requires us to makeestimates and judgments regarding our customers’ ability to pay amounts due. The Partnership determines the allowancebased upon historical write-off experience, specific customer circumstances and the overall business climate in which ourcustomers operate. The Partnership does not have any off-balance-sheet credit exposure related to its customers.F-7 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (c)Inventories Inventory consists of serialized and non-serialized parts used primarily in the repair of compression units. Serializedparts inventories are valued at the lower of cost or market value using the specific identification method, while non-serializedparts inventory is valued using the weighted average cost method. Purchases of these assets are considered operatingactivities in the consolidated statement of cash flows. Significant components of inventories as of December 31, 2015 and 2014 are as follows (in thousands): 2015 2014Serialized parts $18,361 $9,286Non-serialized parts 825 —Total Inventory, gross 19,186 9,286Less: obsolete and slow moving reserve (314) (363)Total Inventory, net $18,872 $8,923 (d)Property and Equipment Property and equipment are carried at cost. Overhauls and major improvements that increase the value or extend the lifeof compression equipment are capitalized and depreciated over 3 to 5 years. Ordinary maintenance and repairs are charged tocost of operations, exclusive of depreciation and amortization. Depreciation is calculated using the straight-line method overthe 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, 2015, 2014 and 2013 was $81.7 million, $67.6 million and$49.7 million, respectively. (e)Impairments of Long-Lived Assets Long-lived assets with recorded values that are not expected to be recovered through future cash flows are written-downto estimated fair value. An asset shall be tested for impairment when events or circumstances indicate that its carrying valuemay not be recoverable or will no longer be utilized in the operating fleet. The carrying value of a long-lived asset is notrecoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition ofthe asset. If the carrying value exceeds the sum of the undiscounted cash flows associated with the operating fleet, animpairment loss equal to the amount of the carrying value exceeding the fair value of the asset is recognized. The fair valueof the asset is measured using quoted market prices or, in the absence of quoted market prices, is based on an estimate ofdiscounted cash flows, the expected net sale proceeds compared to the other similarly configured fleet units the Partnershiprecently sold or a review of other units recently offered for sale by third parties, or the estimated component value of theequipment the Partnership plans to use. Refer to Note 4 for more detailed information about impairment charges during the years ended December 31, 2015 and2014. (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 thecustomer.F-8 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (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 totheir respective 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. Refer to Note 7 for more detailed information about the Revised Texas Franchise Tax for the years ended December 31,2015, 2014 and 2013. (h)Fair Value Measurements Accounting standards on fair value measurements establish a framework for measuring fair value and stipulatedisclosures about fair value measurements. The standards apply to recurring and nonrecurring financial and non-financialassets and liabilities that require or permit fair value measurements. Among the required disclosures is the fair value hierarchyof inputs the Partnership uses to value an asset or a liability. The three levels of the fair value hierarchy are described asfollows: 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 those other than quoted prices included within Level 1 that are observable for the asset or liability,either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. As of December 31, 2015 and 2014, 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 a liability, and such liability is re-measured on a quarterly basis. The liability is based onthe publicly quoted price of the Partnership’s common units, which is considered a Level 1 input. Refer to Note 10 for moredetailed information about unit-based compensation for the years ended December 31, 2015, 2014 and 2013. As part of the impairment analysis of goodwill, the fair value of the Partnership’s goodwill was re-measured using Level3 inputs. Refer to the Goodwill section of Note 2 below for more detailed information about the valuation as of December31, 2015 and 2014. (i)Pass Through Taxes Sales taxes incurred on behalf of, and passed through to, customers are accounted for on a net basis. F-9 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (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, 2015, identifiable intangible assets consisted of the following (in thousands): Customer Relationships Trade Names Non-compete Total 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 Gross Balance at December 31, 2014 78,700 15,600 900 95,200 Additions — — — — Accumulated amortization (12,782) (3,120) (525) (16,427) Net Balance at December 31, 2015 $65,918 $12,480 $375 $78,773 Identifiable intangible assets are amortized using the straight-line method over their estimated useful lives, which is theperiod over which the assets are expected to contribute directly or indirectly to the Partnership’s future cash flows. Theestimated useful lives range from 4 to 30 years. Amortization expense for the years ended December 31, 2015, 2014 and 2013was $3.6 million, $3.6 million and $3.2 million, respectively. The expected amortization of the identifiable intangible assetsfor each of the five succeeding years is as follows (in thousands): Year ending December 31, Total 2016 $3,584 2017 3,509 2018 3,359 2019 3,359 2020 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 the years ended December 31, 2015, 2014 or 2013. (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 ofOctober 1, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not berecovered. As of October 1, 2015, 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, 2015, 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 2015,specifically (1) the decline in the market price of the Partnership’s common units, (2) the sustained decline in globalcommodity prices, and (3) the decline in performance of the Alerian MLP Index, the Partnership prepared a quantitativeassessment as of December 31, 2015. This assessment indicated that the calculatedF-10 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 fair value was less than the carrying value. As such, the Partnership prepared a Step 2 impairment test which measures theamount of the impairment loss and involves a hypothetical allocation of the estimated fair value of the reporting unit amongall assets and liabilities of the reporting unit. The carrying value of goodwill exceeded the implied value of goodwill and animpairment charge was recorded for $172.2 million. The fair value of our single reporting unit was calculated using theDiscounted Cash Flow Method, an income approach. This method utilizes Level 3 inputs from the fair value hierarchy. Theimpairment of goodwill is primarily the result of the sustained decline in the market price of the Partnership’s commonunits. The continued decline in commodity prices has adversely impacted many of the Partnership’s customers and resultedin a significant decline in their future capital expansion plans. This has in turn reduced the Partnership’s expected futurecapital expansion plans and in turn, the Partnership’s estimated future cash flows. The Partnership had approximately $35.9 million of goodwill remaining on the balance sheet as of December 31, 2015. No impairment of goodwill was recorded in the years ended December 31, 2014 and 2013. (m)Capitalized Interest For each of the years ended December 31, 2015 and 2014, the Partnership capitalized $0.3 million of interest expensein accordance with Accounting Standards Codification (“ASC”) Topic 835-20 for interest costs incurred during the periodrelated to upfront payments required in acquiring certain compression units. The Partnership capitalized no interest duringthe year ended December 31, 2013. (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 wasconsummated pursuant to the contribution agreement with S&R and Argonaut Private Equity L.L.C. (“Argonaut”). The S&RAcquisition had an effective date (from a standpoint of settling working capital) of June 30, 2013. The consolidated financialstatements reflect the operating results of the S&R Acquisition for the period subsequent to the August 30, 2013 acquisition.At the time of the closing of the acquisition, the common units issued in the S&R Acquisition were not registered pursuant tothe Securities Act of 1933, as amended (the “Securities Act”), or any applicable state securities laws, and, at the time ofissuance, were restricted securities under the federal securities laws. The resale of the common units issued in the S&RAcquisition 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 purchase price adjustment due toworking capital changes from the effective date to the closing date. F-11 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 The transaction was accounted for in accordance with ASC Topic 805, Business Combinations. The purchase priceallocation 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”).The acquisition was recorded at fair value, which was determined using the cost and market approaches for the fixed assets,the multi-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. This goodwill was included as a component of the goodwill impairment, as describedin Note 2. The intangible asset customer relationships will be amortized over a life of 20 years and 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 onJanuary 1, 2013. The financial information was derived from the Partnership’s audited historical consolidated financialstatements for the year ended December 31, 2013 and S&R’s unaudited interim financial statements from January 1, 2013through 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, realized revenue mayhave been different and costs of operation of the compression assets may have been different. This pro forma financialinformation is provided for illustrative purposes only and may not provide an indication of results in theF-12 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 future. The following table presents a summary of pro forma financial information (in thousands, except for unit amounts): Year Ended December31, 2013 (unaudited) Total revenues $176,254 Net income 15,919 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 for the year endedDecember 31, 2013. Incremental operating costs related to the S&R Acquisition were $12.2 million for the yearended December 31, 2013. (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 yearended December 30, 2013. (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 for the year ended December 31, 2013.F-13 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (4) Property and Equipment Property and equipment consisted of the following at December 31 (in thousands): 2015 2014 Compression equipment $1,520,835 $1,311,943 Furniture and fixtures 669 619 Automobiles and vehicles 19,284 17,303 Computer equipment 21,457 11,913 Leasehold improvements 1,197 858 Total Property and equipment, gross 1,563,442 1,342,636 Less: accumulated depreciation and amortization (245,399) (179,999) Total Property and equipment, net $1,318,043 $1,162,637 As of December 31, 2015 and 2014, there was $13.1 million and $32.4 million, respectively, of property and equipmentpurchases in accounts payable and accrued liabilities. For the year ended December 31, 2015, non-cash transfers of inventory to and from property and equipment totaled $4.0million. These transfers have been treated as non-cash inventory activities in the Consolidated Statements of Cash Flows. During the year ended December 31, 2015, insurance recoveries of $1.2 million were received on previously impairedcompression equipment and are reported within the Loss (gain) on sale of assets line in the Consolidated Statements ofOperations. During the year ended December 31, 2015, the Partnership evaluated the future deployment of its idle fleet under currentmarket conditions and determined to retire and either sell or re-utilize the key components of 166 compressor units, orapproximately 58,000 horsepower, that were previously used to provide services in the Partnership’s business. Thiscompression equipment was written down to its respective estimated salvage value, measured using quoted market prices, orthe estimated component value of the equipment the Partnership plans to use. The Partnership recorded $27.3 million, $2.3million and $0.2 million in impairment of compression equipment for the years ended December 31, 2015, 2014 and 2013,respectively. (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 valueat the end of the lease term. The Capital Lease Transaction was accounted for as a sales type lease and, as of December 31, 2015 and 2014, resulted ina current installment receivable of $3.0 million and $2.8 million, respectively, included in other accounts receivable and along-term installment receivable of $17.3 million and $20.2 million, respectively. Additionally, the Partnership recorded a$2.6 million gain on sale of assets related to the Capital Lease Transaction for the year ended December 31, 2014. For the year ended December 31, 2015, non-cash transfers from long-term installment receivable to current installmentreceivable totaled $3.0 million. These transfers have been treated as non-cash accounts receivable activities in theConsolidated Statements of Cash Flows. F-14 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (6) Accrued Liabilities Other current liabilities included accrued payroll and benefits and accrued property taxes. The Partnership recognized$7.1 million and $5.5 million of accrued payroll and benefits as of December 31, 2015 and 2014, respectively. ThePartnership recognized $4.1 million and $4.8 million of accrued property taxes as of December 31, 2015 and 2014,respectively. (7) Income Tax Expense The Partnership is subject to the Revised Texas Franchise Tax (“Texas Margin Tax”). The Partnership does not dobusiness in any other state where a similar tax is applied. The Texas Margin Tax became effective for tax reports originally due on or after January 1, 2008. This margin taxrequires certain forms of legal entities, including limited partnerships, to pay a tax of 1.0% (or 0.75% for 2015 and forward)on its “margin,” as defined in the law, based on annual results. The margin tax base to which the tax rate is applied is theleast of (1) 70% of total revenues for federal income tax purposes, (2) total revenue less cost of goods sold or (3) total revenueless compensation for federal income tax purposes. For the years ended December 31, 2015, 2014 and 2013, the Partnershiprecorded expense related to the Texas margin tax of $1.1 million, $0.1 million and $0.3 million, respectively. Components of income tax expense are as follows (in thousands): 2015 2014 2013 Current tax expense: State income tax $211 $103 $280Total current tax expense 211 103 280 Deferred tax expense: State income tax $874 $ — $ —Total deferred tax expense 874 — — Total income tax expense $1,085 $103 $280 Deferred income tax balances are the direct effect of temporary differences between the financial statement carryingamounts and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the taxes are actuallypaid or recovered. The tax effects of temporary differences that give rise to deferred tax liabilities are as follows (inthousands): 2015 2014 Deferred tax liabilities Property and equipment $874 $ —Total deferred tax liabilities 874 —Net deferred tax liabilities $874 $ — The Financial Accounting Standards Board’s (“FASB”) ASC Topic 740-10 (“ASC 740-10”) provides guidance onmeasurement and recognition in accounting for income tax uncertainties and provides related guidance on derecognition,classification, disclosure, interest, and penalties. As of December 31, 2015, the Partnership had no material unrecognized taxbenefits (as defined in ASC 740-10). The Partnership does not expect to incur interest charges or penalties related to its taxpositions, but if such charges or penalties are incurred, the Partnership’s policy is to account for interest charges as Interestexpense, net and penalties as Income tax expense in the Consolidated Statements of Operations. F-15 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (8) Long-Term Debt The long-term debt of the Partnership consisted of the following as of December 31 (in thousands): 2015 2014 Revolving Credit Facility $729,187 $594,864 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 (subjectto availability under the Partnership’s borrowing base and a further potential increase of $100 million) and reduced theapplicable margin for BBA London Interbank Offering Rate (“LIBOR”) loans to a range of 150 to 225 basis points aboveLIBOR, depending on the Partnership’s leverage ratio. The Partnership’s revolving credit facility is secured by a first prioritylien against its assets. 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 therevolving credit 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 therevolving credit facility was extended to January 6, 2020. In addition, this Second Amendment provided additionalflexibility under the financial 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 ofat least $20 million. In addition, the revolving credit facility contains various covenants that may limit, among other things,the Partnership’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. F-16 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 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; and ·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 withcertain future acquisitions for the six consecutive month period following the period in which any such acquisitionoccurs. If a default exists under the revolving credit facility, the lenders will be able to accelerate the maturity on the amountthen outstanding 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 $3.4million, $0.2 million, and $3.0 million in 2015, 2014 and 2013, respectively, which were capitalized to loan costs and willbe amortized through January 2020. The Partnership wrote off $0.3 million in 2013 related to certain third parties that exitedthe credit facility. As of December 31, 2015 and 2014, the Partnership was in compliance with all of its covenants under the revolvingcredit facility. As of December 31, 2015, the Partnership had outstanding borrowings under its revolving credit facility of $729.2million, $370.8 million of borrowing base availability and, subject to compliance with the applicable financial covenants,available borrowing capacity of $101.0 million. The borrowing base consists of eligible accounts receivable, inventory andcompression units. The largest component, representing 91% and 94% of the borrowing base as of December 31, 2015 and2014, respectively, was eligible compression units. Eligible compression units consist of compressor packages that areleased, rented or under service contracts to customers and carried in the financial statements as fixed assets. The Partnership’sinterest rate in effect for all borrowings under its revolving credit facility as of December 31, 2015 and 2014 was 2.26% and2.16%, respectively, with an average interest rate of 2.24%, 2.22%, and 2.43% during 2015, 2014 and 2013, respectively.There were no letters of credit issued as of December 31, 2015 and 2014. 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 isreduced below $20 million. As the remittances do not automatically reduce the debt outstanding absent the occurrence of adefault or a reduction in excess availability below $20 million, the debt has been classified as long-term as ofDecember 31, 2015 and 2014. Maturities of long-term debt (in thousands): Year ending December 31, 2016 — 2017 — 2018 — 2019 — 2020 729,187 Total Debt $729,187 F-17 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 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 will be subjectto release, 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 the indenture governing such debt andany debt securities issued under such indenture, except a discharge or release by or as a result of payment under suchguarantees. Capitalized terms used but not defined in this paragraph are defined in the Form of Indenture filed as exhibit 4.1to such registration statement. (9) Partner’s Capital As of February 9, 2016, USA Compression Holdings held 7,267,511 common units and 14,048,588 subordinated unitsand controlled the General Partner which held an approximate 1.46% general partner interest (the “General Partner’sInterest”) and the incentive distribution rights (“IDRs”). See the Consolidated Statement of Changes in Partners’ Capital. Subordinated Units All of the subordinated units are held by USA Compression Holdings. The Partnership’s limited partnership agreement(the “Partnership Agreement”) provides that, during the subordination period, the common units have the right to receivedistributions of Available Cash from Operating Surplus (each as defined in the Partnership Agreement) each quarter in anamount equal to $0.425 per common unit (the “Minimum Quarterly Distribution”), plus any arrearages in the payment of theMinimum Quarterly Distribution from Operating Surplus on the common units from prior quarters, before any distributions ofAvailable Cash from Operating 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 receive anydistributions from Operating Surplus until the common units have received the Minimum Quarterly Distribution plus anyarrearages from prior quarters. The practical effect of the subordinated units is to increase the likelihood that during thesubordination period there will be Available Cash from Operating Surplus to be distributed on the common units. Thesubordination period will end on the first business day after the Partnership has earned and paid at least (i) $1.70 (theMinimum Quarterly Distribution on an annualized basis) on each outstanding unit and the corresponding distribution on theGeneral Partner’s Interest, for each of three consecutive, non-overlapping four-quarter periods ending on or afterDecember 31, 2015 or (ii) $2.55 (150.0% of the annualized Minimum Quarterly Distribution) on each outstanding unit andthe corresponding distributions on the General Partner’s Interest and the related distribution on the incentive distributionrights for the four-quarter period immediately preceding that date. When the subordination period ends, all subordinatedunits will convert into common units on a one-for-one basis, and all common units thereafter will no longer be entitled toarrearages. All of our outstanding subordinated units will convert to common units on a one-for-one basis on February 16,2016 upon the Partnership’s payment of its quarterly distribution on February 12, 2016. Incentive Distribution Rights The General Partner holds all of the IDRs. The following table illustrates the percentage allocations of Available Cashfrom Operating 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 Partnerand the unitholders in any Available Cash from Operating Surplus the Partnership distributes up to and including thecorresponding amount in the column “Total Quarterly Distribution per Unit.” The percentage interests shown for thePartnership’s unitholders and the General Partner for the minimum quarterly distribution are also applicable to quarterlydistribution amounts that are less than the minimum quarterly distribution. The percentage interests set forth below for theGeneral Partner include its General Partner’s Interest, and assume the General PartnerF-18 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 has contributed any additional capital necessary to maintain its General Partner’s Interest, the General Partner has nottransferred the IDRs and there are no arrearages on common units. Marginal Percentage Interest in Total Quarterly Distributions Distributions per Unit Unitholders General Partner Minimum QuarterlyDistribution $0.425 98.54% 1.46%First Target Distribution up to $0.4888 98.54% 1.46%Second Target Distribution above $0.4888 up to$0.5313 85.54% 14.46%Third Target Distribution above $0.5313 up to$0.6375 75.54% 24.46%Thereafter above $0.6375 50.54% 49.46% Cash Distributions The Partnership has declared quarterly distributions per unit to limited partner unitholders of record, including holdersof common, subordinated and phantom units and distributions paid to the General Partner, including the General Partner’sInterest and IDRs, as follows (dollars in millions, except distribution per unit): Distribution per Amount Paid to Amount Paid to Amount Paid to Amount Paid to Limited Partner Common Subordinated General Phantom Total Payment Date Unit Unitholders Unitholder Partner Unitholders Distribution May 15, 2013 $0.348(1) $5.2 $4.9 $0.2 $— $10.3 August 14, 2013 0.440 6.7 6.2 0.3 — 13.2 November 14, 2013 0.460 10.6 6.5 0.3 — 17.4 February 14, 2014 0.480 11.3 6.7 0.4 — 18.4 May 15, 2014 0.490 11.8 6.9 0.4 0.2 19.3 August 14, 2014 0.500 15.1 7.0 0.5 0.2 22.8 November 14, 2014 0.505 15.5 7.1 0.5 0.2 23.3 February 13, 2015 0.510 16.0 7.2 0.5 0.1 23.8 May 15, 2015 0.515 16.6 7.2 0.6 0.2 24.6 August 14, 2015 0.525 17.2 7.4 0.7 0.2 25.5 November 13, 2015 0.525 19.7 7.4 0.7 0.2 28.0 (1)Prorated to reflect 72 days of quarterly cash distribution rate of $0.435 per unit. Announced Quarterly Distribution On January 21, 2016, the Partnership announced a cash distribution of $0.525 per unit on its common and subordinatedunits. The distribution will be paid on February 12, 2016 to unitholders of record as of the close of business on February 2,2016. USA Compression Holdings, the owner of approximately 41% of the Partnership’s outstanding limited partner interestshas elected to reinvest all of this distribution with respect to its units pursuant to the Partnership’s distribution reinvestmentplan (the “DRIP”). Dividend Reinvestment Program For the years ended December 31, 2015, 2014 and 2013, distributions of $56.9 million, $51.7 million and $26.3 million,respectively, were reinvested under the DRIP resulting in the issuance of 3.1 million, 2.1 million and 1.1 million commonunits, respectively. Such distributions are treated as non-cash transactions in the accompanying Consolidated Statements ofCash Flows. Equity Offerings F-19 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 On September 15, 2015, the Partnership closed a public offering of 4,000,000 common units at a price to the public of$19.33 per common unit. The Partnership used the net proceeds of $74.4 million (net of underwriting discounts andcommission and offering expenses) to reduce the indebtedness outstanding under its revolving credit facility. On May 21, 2015, the Partnership issued 34,921 common units in a private placement to Argonaut for $0.7 million in atransaction that was exempt from registration under Section 4(a)(2) of the Securities Act. The Partnership used the proceedsfrom the private placement for general partnership purposes. There were no other unregistered sales of securities during theyears ended December 31, 2015 or 2014. On May 19, 2014, the Partnership closed a public offering of 6,600,000 common units, of which 5,600,000 commonunits were 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 per common unit. USACompression Holdings and Argonaut granted the underwriters an option to purchase up to an additional 990,000 commonunits to cover over-allotments, which was exercised by the underwriters in full and closed on May 27, 2014. The Partnershipused the net proceeds of $138.0 million (net of underwriting discounts and commissions and offering expenses) to reduce theindebtedness outstanding under the revolving credit facility. 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. Earnings Per Common and Subordinated Unit The computations of earnings per common unit and subordinated unit are based on the weighted average number ofcommon units and subordinated units, respectively, outstanding during the applicable period. The subordinated units andthe General Partner’s Interest (including its IDRs) meet the definition of participating securities as defined by the FASB’sASC Topic 260 Earnings Per Share; therefore, the Partnership is required to use the two-class method in the computation ofearnings per unit. Basic earnings per common and subordinated unit are determined by dividing net income (loss) allocatedto the common and subordinated units, respectively, after deducting the amount allocated to the General Partner (includingdistributions to the General Partner on the General Partner Interest and its IDRs), by the weighted average number ofoutstanding common and subordinated units, respectively, during the period. Net income (loss) is allocated to the commonunits, subordinated units and the General Partner Interest (including its IDRs) based on their respective shares of thedistributed and undistributed earnings for the period. To the extent cash distributions exceed net income (loss) for the period,the excess 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 areliability classified and as such are not considered to be participating securities, but are included in the calculation of dilutedearnings per unit. For the year ended December 31, 2015, approximately 121,000 incremental phantom units were excludedfrom the calculation of diluted units because the impact was anti-dilutive. (10) 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 interestawards which have a service condition. F-20 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 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 B unitawards, in excess of USA Compression Holdings’ Class A unitholder’s capital contributions and an 8% return on each ClassA unitholder’s capital account, compounded annually, (both of which are due upon a monetization event) to the extent ofvested 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 therate of 1/48 per month) subject to certain continued employment. The units have no expiry date provided the employeeremains employed 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, 2012 570,313 617,187 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 $— Issuance of profit interest units $— — — Vesting 42,968 (42,968) Forfeitures (125,000) — Balance of awards as of December 31, 2015 1,037,109 87,891 Expense recorded in 2015 $— Fair value of the Class B units is based on enterprise value calculated by a predetermined formula. As of December 31,2015 and 2014, there was no unit-based compensation expense or liability recorded related to these Class B units. The Partnership’s initial public offering constituted a qualified public offering for purposes of certain vesting provisionsof the employee holder’s Class B Units, which resulted in 50% of certain employee’s unvested Class B Units vesting. Anyremaining unvested Class B Units generally (i) vest 25% percent on the first anniversary date of the grant date and (ii) withrespect to the remaining Class B Units, will vest monthly for the next three years (at the rate of 1/48 per month) subject to theemployee’s continued employment on each applicable vesting date. If any employee holder’s employment is terminated bythe General Partner without cause or the employee resigns for good reason, the remaining unvested Class B Units will vest infull. As used in the Holdings Operating Agreement, “good reason” and “cause” have the meanings set forth in eachemployee’s employment agreement. Long-Term Incentive Plan In connection with the Partnership’s initial public offering, the board of directors of the General Partner (the “Board”)adopted the LTIP for employees, consultants and directors of the General Partner and any of its affiliates who performservices for the Partnership. The LTIP consists of unit options, unit appreciation rights, restricted units, phantom units, DERs,unit awards, profits interest units and other unit-based awards. The LTIP initially limits the number ofF-21 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 common units that may be delivered pursuant to awards under the plan to 1,410,000 common units. Awards that are forfeited,cancelled, paid or otherwise terminate or expire without the actual delivery of units will be available for delivery pursuant toother awards. The LTIP is administered by the Board or a committee thereof. In February 2014, the Board approved a modification to all of the phantom unit awards that were granted to employeespursuant to the LTIP during the 2013 fiscal year. The modification provided all employees with phantom unit awards grantedduring 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 awardis vested 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’sfair value that has been earned through service to date. The total incremental compensation cost recorded in February 2014as a result of the modification was $1.2 million. During the years ended December 31, 2015 and 2014, an aggregate of 320,636 and 187,856, respectively, phantom units(including the corresponding DERs) were granted under the LTIP to the General Partner’s executive officers and employeesand independent directors. The phantom units granted in 2015 and 2014 provide the employees with an option of settling aportion of their award in cash and a portion in units. The phantom units (including the corresponding DERs) awarded aresubject to restrictions on transferability, customary forfeiture provisions and time vesting provisions generally in which, foremployees, one-third of each award vests on the first, second, and third anniversaries of the date of grant. The phantom unitswill generally vest in full in the event of a change in control and a termination of employment. Grants of phantom units tothe independent directors of the General Partner generally vest in full on the one year anniversary of the grant date. Awardrecipients do not have all the rights of a unitholder in the partnership with respect to the phantom units until the units havevested. Phantom units granted to employees during the years ended December 31, 2015 and 2014 are accounted for as aliability and are re-measured at the end of each reporting period using the market price of the common units. As of December31, 2015 and 2014, the total unit-based compensation liability was $2.0 million and $1.3 million, respectively. Phantomunits granted to independent directors do not have the cash settlement option and as such are subject to equitytreatment. During the requisite service period, compensation cost is recognized using the proportionate amount of theaward’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 in selling, general and administrative expense. During the years endedDecember 31, 2015, 2014 and 2013, the Partnership recognized $3.9 million, $3.0 million and $1.3 million, respectively, ofcompensation expense associated with these awards, net of expense related to forfeited units. During the years endedDecember 31, 2015 and 2014, amounts paid by the Partnership for income tax withholdings related to the vesting of awardsunder the LTIP were $0.2 million in each year and the value of phantom units that vested and were redeemed by thePartnership for cash was immaterial and $0.1 million, respectively. During the year ended December 31, 2013, no employeeawards under the LTIP plan vested. The total fair value and intrinsic value of the phantom units vested under the LTIP was$2.2 million, $2.4 million, and $0.1 million during the years ended December 31, 2015, 2014 and 2013, respectively. F-22 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 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 Granted 320,636 19.04 Vested 111,991 22.96 Forfeited 20,666 21.77 Phantom units outstanding at December 31, 2015 457,081 $22.10 (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 $3.6 million as ofDecember 31, 2015. The Partnership expects to recognize the unrecognized compensation cost for these awards on aweighted-average basis over a period of 1.7 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 phantom 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,which is paid quarterly on the distribution date from the grant date until the earlier of the settlement or the forfeiture of therelated phantom units. (11) 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 $18,000 in 2015. The plan provides fordiscretionary matching contributions by the Partnership on an annual basis. Aggregate matching contributions made by thePartnership were $0.8 million, $0.7 million and $0.6 million for the years ended December 31, 2015, 2014 and 2013,respectively. (12) Transactions with Related Parties William Shea, Jr., who has served as a director of the General Partner since June 2011, served as Chief Executive Officerof the general partner of a customer from March 2010 to March 2014. For the years ended December 31, 2014 and 2013,subsidiaries of this customer made compression service payments to us of approximately $0.6 million and $3.0 million,respectively. John Chandler, who has served as a director of the General Partner since October 2013, has served as a director of acustomer since October 2014. During the year ended December 31, 2015 and the period of Mr. Chandler’s appointment forthe year ended December 31, 2014, the Partnership recognized approximately $8.8 million and $1.7 million, F-23 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 respectively, in revenue on compression services and $1.3 million and $0.1 million, respectively, in accounts receivable fromthis customer on the Consolidated Balance Sheets as of December 31, 2015 and 2014. (13) Recent Accounting Pronouncements In April 2015, the FASB issued an Accounting Standards Update (“ASU”) that clarified when fees paid in a cloudcomputing arrangement pertain to the acquisition of a software license and/or services. When a cloud computingarrangement includes a license of software, the fee attributable to the software license portion of the arrangement will becapitalized when the criteria for capitalization of internal-use software are met. When a cloud computing arrangement doesnot include a license of software, the arrangement will be treated as a service contract and the cost will be expensed as theservices are received. This ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2015.Early adoption is permitted and entities may elect to adopt this ASU either prospectively, for all arrangements entered into ormaterially modified after the effective date, or retrospectively. The Partnership concluded this ASU will not have a materialimpact on its consolidated financial statements. In July 2015, the FASB agreed to defer by one year the mandatory effective date of its revenue recognition standard toannual and interim periods in fiscal years beginning after December 15, 2017, but will also provide entities the option toadopt it as of the original effective date. The option to use either a retrospective or cumulative-effect transition method willnot change. The Partnership is currently evaluating the impact, if any, of this ASU on its consolidated financial statements. Also in July 2015, the FASB issued an ASU that changes the measurement principle for inventory from the lower of costor market to the lower of cost and net realizable value. This ASU requires prospective adoption for inventory measurementsfor annual and interim periods in fiscal years beginning after December 15, 2016. Early adoption is permitted. ThePartnership is currently evaluating the impact, if any, of this ASU on its consolidated financial statements. (14) Commitments and Contingencies (a)Operating Leases Rent expense for office space, warehouse facilities and certain corporate equipment for the years ended December 31,2015, 2014 and 2013 was $2.9 million, $2.3 million and $1.6 million, respectively. Commitments for future minimum leasepayments for non-cancelable leases are as follows (in thousands): 2016 $1,645 2017 1,460 2018 1,160 2019 1,028 2020 27 Thereafter — Total $5,320 (b)Major Customers The Partnership did not have revenue from any single customer greater than 10% of total revenue for the year endedDecember 31, 2015. The Partnership had revenue from one customer representing 11.6% and 14.3% of total revenue for theyears ended December 31, 2014 and 2013, respectively. No other customer represented greater than 10% of revenue for theyears ended December 31, 2014 and 2013. F-24 Table of ContentsUSA COMPRESSION PARTNERS, LP AND SUBSIDIARIESNotes to Consolidated Financial StatementsDecember 31, 2015, 2014 and 2013 (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, 2015 were $20.8 million, all of which areexpected to be settled within the next twelve months. (15) Subsequent Events Phantom Units On February 9, 2016, an aggregate of 36,361 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, 2017. F-25 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, September30, December 31, 2015 2015 2015 2015 Revenue $65,000 $66,390 $70,540 $68,615 Gross profit (1) 45,789 47,311 48,621 47,285 Net income (loss) 11,456 (15,904) 9,805 (159,630) Income (loss) per common unit - basic and diluted $0.24 $(0.34) $0.21 $(3.02) Income per subordinated unit - basic and diluted 0.24 (0.35) 0.16 (3.03) March 31, June 30, September30, December 31, 2014 2014 2014 2014 Revenue $50,202 $53,266 $57,045 $60,995 Gross profit 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 (1)Gross profit is defined as revenue less cost of operations, exclusive of depreciation and amortization expense. S-1 Exhibit 10.13USA COMPRESSION PARTNERS, LP2013 LONG-TERM INCENTIVE PLANFORM OFEMPLOYEE PHANTOM UNIT AGREEMENTPursuant to this Phantom Unit Agreement, dated as of Grant Date identified in the Grant Noticebelow (this “Agreement”), USA Compression GP, LLC (the “Company”), as the general partner ofUSA Compression Partners, LP (the “Partnership”), hereby grants to _______ (the “Participant”)the following award of Phantom Units (“Phantom Units”), pursuant and subject to the terms andconditions of this Agreement and the USA Compression Partners, LP 2013 Long-Term Incentive Plan(the “Plan”), the terms and conditions of which are hereby incorporated into this Agreement byreference. Each Phantom Unit shall constitute a Phantom Unit under the terms of the Plan and ishereby granted in tandem with a corresponding distribution equivalent right (“DER”), as furtherdetailed in Section 3 below. Except as otherwise expressly provided herein, all capitalized terms usedin this Agreement, but not defined, shall have the meanings provided in the Plan. GRANT NOTICESubject to the terms and conditions of this Agreement, the principal features of this Award areas follows:Number of Phantom Units: _____ Phantom Units, comprised of _____ Standard Units and_____ Performance Units (each as defined below). The number of Performance Units set forth in thisparagraph shall be referred to herein as the “Target Number.”Grant Date: _____, 20__Vesting of Phantom Units: (a)All Phantom Units granted hereunder other than Performance Units (“Standard Units”)shall vest in three essentially equal annual installments, with the first installment (____Standard Units) vesting on ______, 20__ and the other two installments (____ StandardUnits for 20__ and ____ Standard Units for 20__) vesting on the next two succeedinganniversaries thereof (with the second of such two succeeding anniversaries being termedthe “Final Scheduled Vesting Date”), subject in each case to the Participant continuing inService through the applicable vesting date; provided that the Standard Units shall besubject to accelerated vesting in certain circumstances as set forth in Section 4(b) below.(b)All remaining Phantom Units (the “Performance Units”) shall vest, subject to (d) below,on the earlier to occur of (i) immediately prior to a Change in Control or (ii) the FinalScheduled Vesting Date. (c)If vesting under (b) occurs as a result of a Change in Control, the Target Number of thePerformance Units shall vest (subject, however, to the Committee’s discretion to vest agreater portion (up to ___% of the Target Number) of Performance Units based on factors at the time of such event (such as, without limitation, time left until the FinalScheduled Vesting Date, the Partnership’s performance relative to similarly situatedcompanies in the Partnership’s industry, etc.)), and any potential remaining PerformanceUnits (i.e., those above the Target Number that were not vested in the Committee’sdiscretion) shall be forfeited.(d)If vesting under (b) occurs as a result of the occurrence of the Final Scheduled VestingDate, the Performance Units shall (subject to the Committee’s discretion to vest a greaterportion (up to ____% of the Target Number) or lesser portion of Performance Units basedon other relevant factors (such as, without limitation, the Partnership’s performance relativeto similarly situated companies in the Partnership’s industry)) vest from ___%-____% of theTarget Number, based on _______, with the number of Performance Units vesting to bedetermined in accordance with the provisions of Appendix A hereto.(e)The number of Performance Units deemed granted hereunder (for all purposes other thanDERs) shall be up to _____ the number of Performance Units as the Target Number.Forfeiture of Phantom Units: Subject to (b) above and Section 4(b) below, in the event of acessation (not including any approved leave of absence) of the Participant’s Service for any reason, allPhantom Units that have not vested prior to or in connection with such cessation of Service shallthereupon automatically be forfeited by the Participant without further action and without payment ofconsideration therefor.Payment of Phantom Units: Vested Phantom Units shall be paid to the Participant as set forthin Section 5 below.DERs: Each Phantom Unit granted under this Agreement shall be issued in tandem with acorresponding DER, which shall entitle the Participant to receive payments in an amount equal to thePartnership distributions in accordance with Section 3 below. For purposes of clarity, DERs that aregranted with respect to Performance Units will be granted based upon the Target Number ofPerformance Units (with no adjustment upwards or downwards at vesting). TERMS AND CONDITIONS OF PHANTOM UNITS1. Grant. The Company hereby grants to the Participant, as of the Grant Date, an award ofPhantom Units in the amount set forth in the Grant Notice above, subject to all of the terms andconditions contained in this Agreement and the Plan.2. Phantom Units. Subject to Section 4 below and (c) above (regarding Performance Units),each Phantom Unit that vests shall represent the right to receive payment, in accordance with Section 5below, in the form of one (1) Unit. Unless and until a Phantom Unit vests, the Participant will have noright to payment in respect of such Phantom Unit. Prior to actual payment in respect of any vestedPhantom Unit, such Phantom Unit will represent an unsecured obligation of the Partnership, payable(if at all) only from the general assets of the Partnership. 3. Grant of Tandem DER. Each Phantom Unit granted hereunder is hereby granted in tandemwith a corresponding DER, which shall remain outstanding from the Grant Date until the earlier of the payment or forfeiture of the related Phantom Unit. Each DER shall entitle theParticipant to receive payments, subject to and in accordance with this Agreement, in an amount equalto any distributions made by the Partnership following the Grant Date and while the DER isoutstanding in respect of the Unit underlying the Phantom Unit to which such DER relates. TheCompany shall make each such payment to the Participant in cash as soon as reasonably practicable,but not later than forty-five days after each such distribution is paid by the Partnership.4. Vesting and Forfeiture.(a) Vesting. Subject to Section 4(b) or 4(c) below, the Phantom Units shall vest in suchamounts and at such times as are set forth in the Grant Notice above.(b) Accelerated Vesting. Subject to Section 4(c) below, if a Change in Control occursafter the Grant Date and following such occurrence, the Participant incurs a termination of Service dueto the Participant’s termination by the Company or one of its Affiliates without Cause or theParticipant’s resignation for Good Reason, then 100% of the then-unvested Standard Units shall vest infull as of immediately prior to such termination. Accelerated vesting of Performance Units is coveredunder (c) of the Grant Notice above. For purposes of this Agreement, the following definitions shallapply:(i) “Cause” shall have the meaning set forth in a written employment orother similar agreement between the Participant on one hand and the Partnership, the Companyor any of their Affiliates on the other hand. In the event the Participant is not a party to a writtenagreement containing a definition of “Cause” or similar term, “Cause” (solely for purposes ofthis Agreement and not for the purpose of establishing any standard of termination foremployment) shall mean a finding by the Committee, before or after the Participant’stermination of Service, of: any material failure by the Participant to perform the Participant’sduties and responsibilities as an Employee; any significant act of fraud, embezzlement, theft ormisappropriation by the Participant relating to the Company, the Partnership or any of theirAffiliates that is demonstrably and significantly injurious to the Partnership or any of itsAffiliates; the Participant’s conviction of a felony or a crime involving moral turpitude; anygross negligence or intentional misconduct on the part of the Participant in the conduct of theParticipant’s duties and responsibilities with the Company, the Partnership or any of theirAffiliates that is demonstrably and significantly injurious to the Partnership or any of itsAffiliates; or any material breach by the Participant of any agreement between the Company,the Partnership or any of their Affiliates, on the one hand, and the Participant on the other;provided, that with respect to items (i), (iv) and (v), the Participant shall have not been able toremedy such deficiencies within 15 days of receiving written notice thereof from the Company(as long as any such types of deficiencies have not previously been noticed in writing toParticipant in the immediately preceding six months). The findings and decision of theCommittee with respect to such matter, including those regarding the acts of the Participant andthe impact thereof, will be final for all purposes.Accelerated vesting for the President and Chief Executive Officer will occur immediately prior to a Change inControl, with or without any such termination. 11. (ii) “Good Reason” shall have the meaning set forth in a writtenemployment or other similar agreement between the Participant on one hand and thePartnership, the Company or any of their Affiliates on the other hand, provided that in no eventshall any event or occurrence constitute Good Reason for purposes of this Agreement unlesssuch event or occurrence constitutes a “material negative change” (within the meaning ofTreasury Regulation 1.409A-1(n)(2)) to the Participant in his or her service relationship withthe Company, the Partnership and its Affiliates. In the event the Participant is not a party to awritten agreement containing a definition of “Good Reason” or similar term, “Good Reason”(solely for purposes of this Agreement and not for the purpose of establishing any standard oftermination for employment) shall mean the occurrence of one or more of the following actionswithout the Participant’s consent: a material reduction in the duties and responsibilities held bythe Participant, except in connection with a termination of the Participant’s Service for Cause; a material reduction in the Participant’s base salary, other than a reduction that is generallyapplicable to all similarly situated employees of the Company; or a material change (i.e., morethan 50 miles) in the geographic location at which the Participant must perform services for theCompany, the Partnership or its Affiliates; provided, however, that no termination of Service bythe Participant shall constitute a termination for Good Reason unless the Participant has firstprovided the Company, the Partnership or its applicable Affiliate with written noticespecifically identifying the acts or omissions constituting the grounds for Good Reason withinthirty (30) days after the Participant has or should reasonably be expected to have hadknowledge of the occurrence thereof, the Company, the Partnership or its Affiliate, asapplicable, has not cured such acts or omissions within thirty (30) days of its actual receipt ofsuch notice, and the effective date of the Participant’s termination for Good Reason occurs nolater than ninety (90) days after the initial existence of the facts or circumstances constitutingGood Reason.(a) Forfeiture. Notwithstanding the foregoing, in the event of a cessation (not includingany approved leave of absence) of the Participant’s Service for any reason, all Phantom Units that havenot vested prior to or in connection with such cessation of Service shall thereupon automatically beforfeited by the Participant without further action and without payment of consideration therefor. Noportion of the Phantom Units which has not become vested at the date of the Participant’s cessation(not including any approved leave of absence) of Service shall thereafter become vested.(b) Payment. Vested Phantom Units shall be subject to the payment provisions set forthin Section 5 below.5. Payment of Phantom Units and DERs.(a) Phantom Units. Unpaid, vested Phantom Units shall be paid to the Participant in theform of Units in a lump sum as soon as reasonably practical, but not later than forty-five (45) days,following the date on which such Phantom Units vest. Payments of any Phantom Units that vest inaccordance herewith shall be made to the Participant (or in the event of the Participant’s death, to theParticipant’s estate) in whole Units in accordance with this Section 5. In lieu of the foregoing, theCommittee may elect in its discretion to pay the Phantom Units in cash equal to the Fair Market Value of the Units that would otherwise be distributed as of thedate of vesting.(b) DERs. DERs shall be paid to the Participant as provided above in Section 3.(c) Potential Delay. Notwithstanding anything to the contrary in this Agreement, noamounts payable under this Agreement shall be paid to the Participant prior to the expiration of the six(6)-month period following his “separation from service” (within the meaning of Treasury RegulationSection 1.409A-1(h)) (a “Separation from Service”) to the extent that the Company determines thatpaying such amounts prior to the expiration of such six (6)-month period would result in a prohibiteddistribution under Section 409A(a)(2)(B)(i) of the Code. If the payment of any such amounts isdelayed as a result of the previous sentence, then on the first business day following the end of theapplicable six (6)-month period (or such earlier date upon which such amounts can be paid underSection 409A of the Code without resulting in a prohibited distribution, including as a result of theParticipant’s death), such amounts shall be paid to the Participant.6. Tax Withholding. The Company and/or its Affiliates shall have the authority and the right todeduct or withhold, or to require the Participant to remit to the Company and/or its Affiliates, anamount sufficient to satisfy all applicable federal, state and local taxes (including the Participant’semployment tax obligations) required by law to be withheld with respect to any taxable event arising inconnection with the Phantom Units and the DERs. In satisfaction of the foregoing requirement theCompany and/or its Affiliates shall withhold, solely at the election of the Participant, Units otherwiseissuable in respect of such Phantom Units having a Fair Market Value equal to the sums required to bewithheld, cash, or a combination of cash and Units otherwise issuable in respect of such PhantomUnits. In the event that Units that would otherwise be issued in payment of the Phantom Units are usedto satisfy all or part of such withholding obligations, the number of Units which shall be so withheldshall be limited to the number of Units which have a Fair Market Value (which, in the case of a broker-assisted transaction (if a broker assisted transaction is permitted by the Participant), shall be determinedby the Committee, consistent with applicable provisions of the Code) on the date of withholding equalto the aggregate amount of such liabilities based on the minimum statutory withholding rates forfederal, state, local and foreign income tax and payroll tax purposes that are applicable to suchsupplemental taxable income, less any cash withheld.7. Rights as Unit Holder. Neither the Participant nor any person claiming under or through theParticipant shall have any of the rights or privileges of a holder of Units in respect of any Units thatmay become deliverable hereunder unless and until certificates representing such Units shall have beenissued or recorded in book entry form on the records of the Partnership or its transfer agents orregistrars, and delivered in certificate or book entry form to the Participant or any person claimingunder or through the Participant.8. Non-Transferability. Except as set forth in the next sentence, neither the Phantom Units norany right of the Participant under the Phantom Units may be assigned, alienated, pledged, attached,sold or otherwise transferred or encumbered by the Participant (or any permitted transferee) other thanby will or the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void andunenforceable against the Company, the Partnership and any of their Affiliates. Notwithstanding theforegoing, the Phantom Units or any right of the Participant under the Phantom Units may betransferred by a Participant without consideration to any “family member” of the Participant, as definedin the instructions to use of the Form S-8 Registration Statement under the Securities Act, as applicable,or any other transferee specifically approved by the Committee after taking into account any state,federal, local or foreign tax and securities laws applicable to transferable Awards; and vested Unitsmay be transferred to the extent permitted by the Partnership Agreement and not otherwise prohibitedby this Agreement or any other agreement restricting the transfer of such Units.9. Distribution of Units. Unless otherwise determined by the Committee or required by anyapplicable law, rule or regulation, neither the Company nor the Partnership shall deliver to theParticipant certificates evidencing Units issued pursuant to this Agreement and instead such Units shallbe recorded in the books of the Partnership (or, as applicable, its transfer agent or equity planadministrator). All certificates for Units issued pursuant to this Agreement and all Units issued pursuantto book entry procedures hereunder shall be subject to such stop transfer orders and other restrictions asthe Company may deem advisable under the Plan or the rules, regulations, and other requirements ofthe Securities Exchange Commission, any stock exchange upon which such Units are then listed, andany applicable federal or state laws, and the Company may cause a legend or legends to be inscribedon any such certificates or book entry to make appropriate reference to such restrictions. In addition tothe terms and conditions provided herein, the Company may require that the Participant make suchcovenants, agreements, and representations as the Company, in its sole discretion, deems advisable inorder to comply with any such laws, regulations, or requirements. No fractional Units shall be issued ordelivered pursuant to the Phantom Units and the Committee shall determine the amount of cash, othersecurities, or other property that shall be paid or transferred in lieu of fractional Units.10. Partnership Agreement. Units issued upon payment of the Phantom Units shall be subjectto the terms of the Plan and the Partnership Agreement. Upon the issuance of Units to the Participant,the Participant shall, automatically and without further action on his or her part, be admitted to thePartnership as a Limited Partner (as defined in the Partnership Agreement) with respect to the Units,and become bound, and be deemed to have agreed to be bound, by the terms of the PartnershipAgreement.11. No Effect on Service. Nothing in this Agreement or in the Plan shall be construed as givingthe Participant the right to be retained in the employ or service of the Company or any Affiliate thereofor establish standards regarding the termination from employment of the Participant. Furthermore, theCompany and its Affiliates may at any time dismiss the Participant from employment or consulting freefrom any liability or any claim under the Plan or this Agreement, unless otherwise expressly providedin the Plan, this Agreement or any other written agreement between the Participant and the Companyor an Affiliate thereof.12. Non-Solicitation of Customers and Employees.(a) During the period beginning on the Grant Date and for a period of 12 monthsfollowing the termination of the Participant’s Service (the “Restricted Period”) for any reason, the Participant agrees to not, directly or indirectly, recruit or otherwise solicit or induce anyemployee, customer, subscriber or supplier of the Company to terminate its employment orarrangement with the Company, to engage in business with the Participant (or any future employer,affiliate or service recipient of the Participant) or to otherwise change its relationship with theCompany, the Partnership or any of their Affiliates. Further, during the Restricted Period, theParticipant agrees not to, directly or indirectly, hire or attempt to hire, or assist another person, firm,corporation, partnership or business in hiring or attempting to hire any employee (or former employeefor six months after termination of employment) of the Company.(b) It is recognized and acknowledged by the Participant that a breach of the covenantscontained in this Section 12 will cause irreparable damage to the Company, the Partnership and theirAffiliates and their goodwill, the exact amount of which will be difficult or impossible to ascertain, andthat the remedies at law for any such breach will be inadequate. Accordingly, the Participant agreesthat in the event of a breach of any of the covenants contained in this Section 12, in addition to anyother remedy which may be available at law or in equity, the Company, the Partnership and theirAffiliates will be entitled to specific performance and injunctive relief without having to provedamages. In the event any term of this Section 12 shall be determined by any court of competentjurisdiction to be unenforceable by reason of its extending for too great a period of time or over toogreat a geographical area or by reason of its being too extensive in any other respect, it will beinterpreted to extend only over the maximum period of time for which it may be enforceable, over themaximum geographical area as to which it may be enforceable, or to the maximum extent in all otherrespects as to which it may be enforceable, all as determined by such court in such action.13. Non-Disparagement. The Participant agrees to refrain from making any oral or writtenstatements to a third party about the Company, the Partnership, or any of their Affiliates that areslanderous, libelous or defamatory with the effect of damaging the business or reputation of theCompany, the Partnership, or any of their Affiliates. If the Participant violates the terms of thisSection 13, the violation shall be deemed an Act of Misconduct under the Plan and the Phantom Units,DERs, and Units issuable hereunder, whether vested or unvested and whether or not previously issued,shall be subject to the clawback described in Section 8(o) of the Plan only to the extent that theviolation resulted in actual demonstrable harm to the Company, the Partnership, or any of theirAffiliates.14. Severability. If any provision of this Agreement is or becomes or is deemed to be invalid,illegal, or unenforceable in any jurisdiction, such provision shall be construed or deemed amended toconform to the applicable law or, if it cannot be construed or deemed amended without, in thedetermination of the Committee, materially altering the intent of this Agreement, such provision shallbe stricken as to such jurisdiction, and the remainder of this Agreement shall remain in full force andeffect.15. Tax Consultation. None of the Board, the Committee, the Company or the Partnership hasmade any warranty or representation to Participant with respect to the income tax consequences of theissuance of the Phantom Units, the DERs, the Units or the transactions contemplated by thisAgreement, and the Participant represents that he or she is in no manner relying on such entities or theirrepresentatives for tax advice or an assessment of such tax consequences. The Participant understandsthat the Participant may suffer adverse tax consequences in connection with the Phantom Units and DERs granted pursuant to this Agreement.The Participant represents that the Participant has consulted with any tax consultants that the Participantdeems advisable in connection with the Phantom Units and DERs.16. Amendments, Suspension and Termination. Solely to the extent permitted by the Plan, thisAgreement may be wholly or partially amended or otherwise modified, suspended or terminated at anytime or from time to time by the Board or the Committee. Except as provided in the precedingsentence, this Agreement cannot be modified, altered or amended, except by an agreement, in writing,signed by both the Partnership and the Participant.17. Lock-Up Agreement. The Participant shall agree, if so requested of all executivemanagement personnel by the Company or the Partnership and any underwriter in connection with anypublic offering of securities of the Partnership or any Affiliate thereof, not to directly or indirectly offer,sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,grant any option, right or warrant for the sale of or otherwise dispose of or transfer any Units held byhim or her for such period, not to exceed one hundred eighty (180) days following the effective date ofthe relevant registration statement filed under the Securities Act in connection with such publicoffering, as such underwriter shall specify reasonably and in good faith. The Company or thePartnership may impose stop-transfer instructions with respect to securities subject to the foregoingrestrictions until the end of such 180-day period. Notwithstanding the foregoing, the 180-day periodmay be extended for up to such number of additional days as is deemed necessary by such underwriteror the Company or Partnership to continue coverage by research analysts in accordance with FINRARule 2711 or any successor rule.18. Conformity to Securities Laws. The Participant acknowledges that the Plan and thisAgreement are intended to conform to the extent necessary with all provisions of the Securities Act andthe Exchange Act, any and all regulations and rules promulgated by the Securities and ExchangeCommission thereunder, and all applicable state securities laws and regulations. Notwithstandinganything herein to the contrary, the Plan shall be administered, and the Phantom Units and DERs aregranted, only in such a manner as to conform to such laws, rules and regulations. To the extentpermitted by applicable law, the Plan and this Agreement shall be deemed amended to the extentnecessary to conform to such laws, rules and regulations.19. Code Section 409A. None of the Phantom Units, the DERs or any amounts paid pursuantto this Agreement are intended to constitute or provide for a deferral of compensation that is subject toSection 409A of the Code. Nevertheless, to the extent that the Committee determines that the PhantomUnits or DERs may not be exempt from (or compliant with) Section 409A of the Code, the Committeemay (but shall not be required to) amend this Agreement in a manner intended to comply with therequirements of Section 409A of the Code or an exemption therefrom (including amendments withretroactive effect), or take any other actions as it deems necessary or appropriate to exempt thePhantom Units or DERs from Section 409A of the Code and/or preserve the intended tax treatment ofthe benefits provided with respect to the Phantom Units or DERs, or comply with the requirements ofSection 409A of the Code. To the extent applicable, this Agreement shall be interpreted in accordancewith the provisions of Section 409A of the Code. Notwithstanding anything in this Agreement to thecontrary, to the extent that any payment or benefit hereunder constitutes non-exempt “nonqualifieddeferred compensation” for purposes of Section 409A of the Code, and such payment or benefit wouldotherwise be payable or distributable hereunder by reason of the Participant’s cessation of Service, allreferences to the Participant’s cessation of Service shall be construed to mean a Separation fromService, and the Participant shall not be considered to have a cessation of Service unless such cessationconstitutes a Separation from Service with respect to the Participant.20. Adjustments; Clawback. The Participant acknowledges that the Phantom Units are subjectto modification and forfeiture in certain events as provided in this Agreement and Section 7 of the Plan.The Participant further acknowledges that the Phantom Units, DERs and Units issuable hereunder,whether vested or unvested and whether or not previously issued, are subject to clawback as providedin Section 8(o) of the Plan.21. Successors and Assigns. This Agreement shall inure to the benefit of the successors andassigns of the Company and the Partnership. Subject to the restrictions on transfer contained herein,this Agreement shall be binding upon the Participant and his or her heirs, executors, administrators,successors and assigns.22. Governing Law. The validity, construction, and effect of this Agreement and any rules andregulations relating to this Agreement shall be determined in accordance with the laws of the State ofDelaware without regard to its conflicts of laws principles.23. Headings. Headings are given to the sections and subsections of this Agreement solely as aconvenience to facilitate reference. Such headings shall not be deemed in any way material or relevantto the construction or interpretation of this Agreement or any provision hereof.24. Forfeiture. The Award granted under this Agreement shall automatically be deemedforfeited by the Participant on ______, 20__ unless prior to such date the Participant shallhave executed and delivered to the Partnership this Agreement and an NDA and Assignment in favorof the Partnership (except that (ii) is not required for Participants who already have entered into awritten employment agreement with the Partnership, one of its subsidiaries or USA CompressionManagement Services, LLC or a Nondisclosure and Assignment of Inventions Agreement in formsatisfactory to the Partnership (a “Form NDA and Assignment”)).[Signature page follows] The Participant’s signature below indicates the Participant’s agreement with and understandingthat this award is subject to all of the terms and conditions contained in the Plan and in this Agreement,and that, in the event that there are any inconsistencies between the terms of the Plan and the terms ofthis Agreement, the terms of this Agreement shall control. The Participant further acknowledges thatthe Participant has read and understands the Plan and this Agreement, which contains the specific termsand conditions of this grant of Phantom Units. The Participant hereby agrees to accept as binding,conclusive and final all decisions or interpretations of the Committee upon any questions arising underthe Plan or this Agreement.USA Compression Partners, LPa Delaware limited partnership By:USA Compression GP, LLCIts:General Partner By:_______________________________________________Name: Eric D. LongTitle: President and CEO “PARTICIPANT” [ ] Appendix A Exhibit 10.7EMPLOYMENT AGREEMENTThis Employment Agreement (“Agreement”) is made and entered into as of July 15, 2013 (the“Effective Date”) by and between USA Compression Management Services, LLC, a Delaware limitedliability company (hereafter the “Company”), and William G. Manias (“Employee”).WHEREAS, Employee and the Company desire to enter into this Agreement as set forthherein.NOW, THEREFORE, in consideration of the foregoing and the mutual covenants containedherein, Employee and the Company, intending to be legally bound, do hereby agree as follows:1. Employment. During the Employment Period (as defined in Section 4 below), the Companyshall employ Employee, and Employee shall serve, as Vice President and Chief Operating Officer ofthe Company.2. Duties and Responsibilities of Employee.(a)During the Employment Period, Employee shall: (i) devote all of Employee’sbusiness time and attention to the business of the Company and its Affiliates (asdefined below) (collectively, the “Company Group”, which term shall include,for the avoidance of doubt, any subsidiaries or other entities that becomeAffiliates of the Company from and after the date hereof), as applicable, (ii) willact in the best interests of the Company Group and (iii) will perform with duecare Employee’s duties and responsibilities. Employee’s duties will includethose normally incidental to the position of Chief Operating Officer, as well aswhatever additional duties may be assigned to Employee by the Chief ExecutiveOfficer or the board of directors of USA Compression GP, LLC (the “Board”),which duties may include, without limitation, providing services to members ofthe Company Group in addition to the Company. Employee agrees to cooperatefully with the Board and not to engage in any activity that interferes with theperformance of Employee’s duties hereunder. During the Employment Period,Employee will not hold any type of outside employment, engage in any type ofconsulting or otherwise render services to or for any other person or businessconcern without the advance written consent of the Board; provided, that theforegoing shall not preclude Employee from managing private investments,participating in industry and/or trade groups, engaging in volunteer civic,charitable or religious activities, serving on boards of directors of charitablenot‑for‑profit entities or, with the consent of the Board, which consent is not tobe unreasonably withheld, serving on the board of directors of other entities, ineach case as long as such activities, individually or in the1 aggregate, do not materially interfere or conflict with Employee’sresponsibilities to the Company.(b)Employee represents and covenants that Employee is not the subject of or aparty to any employment agreement, non‑competition covenant, nondisclosureagreement, or any other agreement, covenant, understanding, or restriction thatwould prohibit Employee from executing this Agreement or the Amended andRestated Limited Liability Company Agreement of USA CompressionHoldings, LLC, dated as of December 23, 2010 (as amended, the “OperatingAgreement”) and fully performing Employee’s duties and responsibilitieshereunder or thereunder, or would in any manner, directly or indirectly, limit oraffect the duties and responsibilities that may now or in the future be assigned toEmployee hereunder.(c)Employee acknowledges and agrees that Employee owes the Company Group aduty of loyalty as a fiduciary of the Company Group, and that the obligationsdescribed in this Agreement are in addition to, and not in lieu of, the obligationsEmployee owes the Company Group under the common law.3. Compensation.(a)During the Employment Period, the Company shall pay to Employee anannualized base salary of $275,000 (the “Base Salary”) in consideration forEmployee’s services under this Agreement, payable on a bi‑weekly basis, inconformity with the Company’s customer payroll practices for similarly situatedemployees. The Board will annually review the Base Salary, which may beincreased but not decreased during the Employment Period based onEmployee’s performance and market conditions.(b)During the Employment Period, Employee shall be entitled to participate in thebonus programs established for employees of the Company, as may be amendedfrom time to time. The performance targets that must be achieved in order to beeligible for certain bonus levels shall be established by the Board each yearwithin 90 days following the start of the applicable fiscal year, in its solediscretion, and communicated to Employee. If the Board determines thatEmployee meets the performance targets established for a particular fiscal year,then his bonus for that year (the “Annual Bonus”) will be in an amount up to$137,500 (the “Target Annual Bonus”), in accordance with the terms of thebonus program in effect for the applicable year, which amount shall be proratedfor less than a full year of service for the fiscal year ending December 31,2013. In addition, in the event Employee outperforms and exceeds theperformance targets established for a particular fiscal year, Employee mayreceive an additional outperformance bonus for the applicable year, in anamount determined in the sole discretion of the Board (an “Outperformance2 Bonus”). The Annual Bonus and any Outperformance Bonus shall bepaid no later than March 15 of the year following the year in which theAnnual Bonus or Outperformance Bonus is earned, andshall not be payable unless Employee remains employed by theCompany on the date that such bonus is paid, except in the case of atermination of Employee due to the death or Disability of Employee, bythe Company for convenience, or a resignation by Employee for GoodReason, in which case Employee will be entitled to (i) the entire amountof any earned Annual Bonus for the year preceding the year in whichEmployee dies, becomes Disabled, is terminated by the Company forconvenience or resigns for Good Reason and (ii) a pro rata portion(based on the number of days employed during the year) of any earnedAnnual Bonus for the year in which Employee dies, becomes Disabled,is terminated by the Company for convenience or resigns for GoodReason in each case in the year following the year to which theapplicable bonus relates.4. Term of Employment. The initial term of this Agreement shall be for the period beginningon the Effective Date and ending on the second anniversary of the Effective Date (the “Initial Term”). On the second anniversary of the Effective Date and on each subsequentanniversary thereafter, this Agreement shall automatically renew and extend for a period of12 months (each such 12‑month period being a “Renewal Term”) unless written notice of non‑renewalis delivered from either party to the other not less than 90 days prior to the expiration of thethen‑existing Initial Term or Renewal Term. Notwithstanding any other provision of this Agreement,Employee’s employment pursuant to this Agreement may be terminated at any time in accordance withSection 6. The period from the Effective Date through the expiration of this Agreement or, ifsooner, the termination of Employee’s employment pursuant to this Agreement, regardless of the timeor 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 entitledto the following benefits during the Employment Period:(a)Reimbursement of Business Expenses. Subject to Section 24 hereof (regardingsection 409A compliance), the Company agrees to reimburse Employee forEmployee’s reasonable business‑related expenses incurred in the performance ofEmployee’s duties under this Agreement; provided, that Employee timelysubmits all documentation for such reimbursement, as required by Companypolicy in effect from time‑to‑time. Employee is not permitted to receive apayment in lieu of reimbursement under this Section 5(a).(b)Benefits. During the Employment Period, Employee and where applicableEmployee’s spouse and dependents shall be eligible to participate in thesame benefit plans or fringe benefit policies, other than 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 lessfavorable than the terms of benefits generally available to3 the employees of the Company (based on seniority and salary level),subject to applicable eligibility requirements and the terms andconditions of all plans and policies.(c)Paid Time Off. During the Employment Period, Employee shall accrue paidtime off (“Paid Time Off”) at a rate of 20 days per calendar year during theEmployment Period; provided, however, that Employee shall cease accruingPaid Time Off once Employee has accrued 20 unused days’ worth of Paid TimeOff, and such accrual will begin again only after Employee has used accruedPaid Time Off such that Employee’s accrued entitlement to Paid Time Off isonce again less than 20 days. Employee shall take Paid Time Off inaccordance with all Company policies and with due regard for the needs of theCompany Group.6. Termination of Employment.(a)Company’s Right to Terminate Employee’s Employment for Cause. TheCompany shall have the right to terminate Employee’s employment hereunder atany time for “Cause.” For purposes of this Agreement, “Cause” shall mean:(i)any material breach of this Agreement or theOperating Agreement by Employee, including,without limitation, the material breach of anyrepresentation, warranty or covenant made underthis Agreement or the Operating Agreement byEmployee;(ii)Employee’s breachof any applicable duties of loyalty to the Companyor any of its Affiliates, gross negligence or materialmisconduct, or a significant act or acts of personaldishonesty or deceit, taken by Employee, in theperformance of duties and servicesrequired of Employee that is demonstrably andsignificantly injurious to the Company or any of itsAffiliates;(iii)conviction of Employee of a felony or crimeinvolving moral turpitude;(iv)Employee’s willful and continued failure or refusal toperform substantially Employee’s material obligationspursuant to this Agreement or the Operating Agreement orfollow any lawful andreasonable directive from the Chief Executive Officer or theBoard, other than as a result of Employee’s incapacity; or(v)a violation of a federal, state or local law orregulation applicable to the business of theCompany that is demonstrably and significantlyinjurious to the Company.4 Prior to Employee’s termination for Cause, the Company must givewritten notice to Employee describing the act or omission of Employeegiving rise to the determination of Cause and, in respect ofcircumstances capable of cure, such circumstances must remain uncuredfor 15 days following receipt by Employee of such written notice,provided, that Employee shall not be entitled to cure any such acts oromissions if Employee has previously cured any acts or omissions in theimmediately preceding six months.(b)Company’s Right to Terminate for Convenience. The Company shall have theright to terminate Employee’s employment for convenience at any time and forany 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 thisAgreement, the Company’s failure to renew the Agreement at the end of InitialTerm or a Renewal Term shall be deemed a termination of Employee’semployment for convenience.(c)Employee’s Right to Terminate for Good Reason. Employee shall have theright to terminate Employee’s employment with the Company at anytime for “Good Reason.” For purposes of this Agreement, “Good Reason”shall mean:(i)a material breach by the Company of any of itscovenants or obligations under this Agreement, theOperating Agreement or any other materialagreement with Employee;(ii)any material reduction in Employee’s Base Salary,other than a reduction that is generally applicable toall similarly situated employees of the Company;(iii)a material reduction by the Company in Employee’s duties,authority, responsibilities, job title or reporting relationshipsas in effect immediately prior to such reduction, or theassignment to Employee of such reduced duties, authority,responsibilities, job title or reporting relationships;(iv)a material reduction of the facilities and perquisitesavailable to Employee immediately prior to suchreduction, other than a reduction that is generallyapplicable to all similarly situated employees of theCompany; or(v)the relocation of the geographic location ofEmployee’s principal placeof employment by more than 50 miles from 5 the location of Employee’s principal place ofemployment as of the Effective Date.Notwithstanding the foregoing provisions of this Section 6(c) or anyother provision of this Agreement to the contrary, any assertion ofEmployee of a termination for Good Reason shall not be effective unlessall of the following conditions are satisfied: (A) the condition giving riseto Employee’s termination of employment musthave arisen without Employee’s written consent; (B) Employee mustprovide written notice to the Board of such condition within 30 days ofthe initial existence of the condition; (C) the condition specified in suchnotice must remain uncorrected for 30 days after receipt of such noticeby the Board; and (D) the date of Employee’s termination ofemployment must occur within the 90‑day period after the initialexistence of the condition specified in such notice, in which case, ifGood Reason is found to exist and Employee otherwise complies withSection 6(g), Employee will be entitled to receive the severance benefitsprovided in Section 6(g).(d)Death or Disability. Upon the death or Disability (as defined below) ofEmployee, Employee’s employment with Company shall terminate and theCompany shall have no further obligation to Employee, or Employee’ssuccessor(s) in interest; provided, that the Company shall pay to Employee orthe estate of Employee the amounts set forth in Section 6(h), plus any AnnualBonus or Outperformance Bonus provided for in Section 3(b). Forpurposes of this Agreement, “Disability” shall mean that Employee is unable toperform the essential functions of Employee’s position, with reasonableaccommodation, due to an illness or physical or mental impairment or otherincapacity which continues for a period in excess of 20 consecutive weeks. Thedetermination of Disability will bemade by a physician selected by Employee and acceptable to the Company orits insurers, with such agreement to the acceptability not to be unreasonablywithheld.(e)Employee’s Right to Terminate for Convenience. Employee shall have the rightto terminate Employee’s employment with the Company for convenience at anytime and for any reason, or no reason at all, upon 30 days’ advance writtennotice to the Company.(f)Termination upon Non‑Renewal of the Agreement. Except as otherwisemutually agreed between the Company and Employee, if the Company orEmployee provides the other party with a written notice of non‑renewal ofthis Agreement in accordance with Section 4, Employee’s employment withCompany shall automatically terminate upon the expiration of the then-applicable Initial Term or Renewal Term, as applicable.6 (g)Effect of Termination for Convenience or Good Reason Resignation. If Employee incurs a Separation from Service (asdefined below) due to Employee’s employment terminating pursuant to Sections 6(b) or 6(c) (regarding termination forconvenience and resignation for Good Reason) above and Employee: (x) executes within 45 days following the date ofEmployee’s Separation 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 his Separation fromService substantially in the form of release contained atExhibit A (the “Release”); and (y) abides by Employee’s continuing obligations hereunder, including, without limitation,the provisions of Sections 8 and 9 hereof (regarding confidentiality and non‑competition),then Employee shall be entitled to the following, in addition to the amounts described in Section 6(h), and any AnnualBonus or Outperformance Bonus provided for in Section 3(b):(i)Severance Pay. The Company shall make severancepayments to Employee in an aggregate amount equal to onetimes Employee’s Base Salary as in effect as of the date ofEmployee’s termination of employment (or Base Salary forany preceding year in the Employment Period, if greater)(the “Severance Payment”). If payable, the SeverancePayment will be made, as applicable, in equal semi‑monthlyinstallments over the one‑year period following the date ofEmployee’s Separation from Service (the“Severance Period’), in accordance with theCompany’s regular payroll practices, provided, that anysuch installment payments thatwould otherwise be paid prior to the Company’s first regularpayroll date that occurs on or after the 60 day following thedate of Employee’s Separation from Service (the “First PayDate”) shall be paid on the First Pay Date. Notwithstandingthe foregoing, in the event of Employee’s death during theSeverance Period, all remaining Severance Payments duehim shall be paid in a lump sum within 30 days ofEmployee’s death. Likewise, notwithstanding the otherprovisions of this Section 6(g)(i), in the event of a termination for convenience bythe Company or termination by Employee for Good Reasonwithin two years following the occurrence of a “change incontrol event” within the meaning of Treasury RegulationSection 1.409A‑3(i)(5), the Severance Payment shall bepaid in a lump sum on the Company’s first regular payrolldate that occurs on or after 30 days of the date ofEmployee’s Separation from Service.(ii)Continued Health Insurance Benefits. For a period of24 months following Employee’s Separation from Service7 th (which period of 24 months shall include and runconcurrently with any so‑called COBRA continuationperiodapplicable to Employee and/or his eligible dependents underSection 4980B of the Code, and may be subjectto Employee and/or his eligible dependents electing such continuation coverage), provided, however, that(A) during the first 12 months of such coverage, theCompany shall continue to provide health insurancebenefits to Employee and any eligible dependents at theCompany’s expense (other than Employee’s monthlycost‑sharing contribution under the Company’s group healthplan, as in effect on the date of Employee’s Separation fromService), and (B) during the remaining 12 months of suchcoverage, the Company shall continue to provide healthinsurance benefits to Employee and any eligible dependentsat Employee’s expense. Notwithstanding the previoussentence, if the Company determines in its sole discretionthat it cannot provide the foregoing benefit withoutpotentially violating applicable law (including, withoutlimitation, Section 2716 of the Public Health Service Actand anyapplicable non‑discrimination requirement thereunder orotherwise), the Company shall in lieu thereof provide toEmployee a taxable monthly payment in an amount equal tothe monthly COBRA premium that Employee would berequired to pay to continue his and his covered dependents’group health coverage in effect on the Date of Terminationfor the 12 month period following the date of Employee’sSeparation from Service (which amount shall be based onthe premium for the first month of COBRA coverage), lessthe amount of Employee’s monthly cost‑sharingcontribution under the Company’s group health plan, as ineffect on the date of Employee’s Separation from Service atemployee rates in effect thereunder as of the Separationfrom Service.(h)Effect of Termination. Subject to Section 24 hereof (regarding section 409Acompliance), upon the termination of Employee’s employment for any reason,all earned, unpaid Base Salary and all accrued, unused Paid Time Off shall bepaid to Employee within 30 days of the date of Employee’s terminationof employment, or earlier if required by law. With the exception of anypayments to which Employee may be entitled pursuant toSection 5(a) (regarding business expenses) and Section 6(g) (regardingseverance benefits), the Company shall have no further obligation under thisAgreement to make any payments to Employee.8 7. Conflicts of Interest. Employee agrees that Employee shall promptly disclose to the Boardany conflict of interest involving Employee upon Employee becoming aware of such conflict.8. Confidentiality. Employee acknowledges and agrees that, in the course of Employee’semployment with the Company and the performance of Employee’s duties on behalf of the CompanyGroup hereunder, Employee will be provided with, and have access to, valuable ConfidentialInformation (as defined below) of the Company Group and exchange for other valuable considerationprovided hereunder, Employee agrees to comply with this Section 8 and Section 9.(a)Employee covenants and agrees, both during the term of the EmploymentPeriod and thereafter that, except as expressly permitted by this Agreement or bydirective of the Board, Employee shall not disclose any Confidential Informationto any person or entity and shall not use any Confidential, Information exceptfor the benefit of the Company Group. Employee shall take all reasonableprecautions to protect the physicalsecurity of all documents and other material containing Confidential Information(regardless of the medium on which the Confidential Information is stored). This covenant shall apply to all Confidential Information, whether now knownor later to become known to Employee during the Employment Period.(b)Notwithstanding Section 5(a), Employee may make the following disclosuresand uses of Confidential Information:(i)disclosures to other employees ofthe Company Group in connection with the faithful performance of duties for the CompanyGroup;(ii)disclosures to customers and suppliers when, in thereasonable and good faith belief of Employee, suchdisclosure is in connection withEmployee’s performance of services under thisAgreement and is in the best interests of theCompany Group;(iii)disclosures and uses that are approved by theBoard;(iv)disclosures to a person or entity that has beenretained by the Company Group to provideservices to the Company Group, and has agreed inwriting to abide by the terms of a confidentialityagreement;(v)disclosures for the purpose of complying with anyapplicable laws or regulatory requirements;(vi)disclosures to Employee’s legal, tax or financialadvisors for the purpose of assisting such advisors in providing 9 advice to Employee, provided, however, that suchadvisors agree to maintain the confidentiality of suchdisclosures; or(vii)disclosures that Employee is legally compelled to make bydeposition, interrogatory, request for documents,subpoena, civil investigative demand, order of a court ofcompetent jurisdiction, or similar process, or otherwise bylaw; provided, however, that, prior to any suchdisclosure, Employee shall, to the extent legallypermissible:(A)provide the Board with prompt notice ofsuch requirements so that the Board mayseek a protective order or other appropriateremedy or waive compliance with the termsof this Section;(B)consult with the Board on the advisability oftaking steps to resist or narrow suchdisclosure; and(C)cooperate with the Board (at the Company’s cost andexpense) in any attempt the Board may make toobtain a protective order or other appropriate remedyor assurance that confidential treatment will beafforded the Confidential Information; and in theevent such protective order or other remedy is notobtained, Employee agrees (y) to furnish only thatportion of the Confidential Information that is legallyrequired to be furnished, as advised by counsel toEmployee, and (z) to exercise (at the Company’sreasonable cost and expense) all reasonable efforts toobtain assurance that confidential treatment will beaccorded such Confidential Information.(c)Upon the expiration of the Employment Period and at any other time uponrequest of the Company, Employee shall surrender and deliver to the Companyall documents (including, without limitation, electronically stored information)and other material of any nature containing or pertaining to all ConfidentialInformation in Employee’s possession and shall not retain any such document orother material. Within 10 days of any such request, Employee shall certify tothe Company in writing that all such materials have been returned to theCompany.(d)All non‑public information, designs, ideas, concepts, improvements, productdevelopments, discoveries and inventions, whether patentable or not, that areconceived, made, developed or acquired by Employee, individually or inconjunction with others, during the Employment Period(whether during business hours or otherwise and whether on the10 Company’s premises or otherwise) that relate to the Company Group’sbusinesses or properties, products or services (including, withoutlimitation, all such information relating to corporate opportunities,business plans, strategies for developing business and market share,research, financial and sales data, pricing terms, evaluations, opinions,interpretations, acquisition prospects, the identity of customers or theirrequirements, the identity of key contacts within customers’organizations or within the organization of acquisition prospects, ormarketing and merchandising techniques, prospective names and marks)is defined as “Confidential Information.” 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, models and all other writings or materials of anytype including or embodying any of such information, ideas, concepts,improvements, discoveries, inventions and other similar forms ofexpression are and shall be the sole and exclusive property of theCompany Group and be subject to the same restrictions on disclosureapplicable to all Confidential Information pursuant to this Agreement.9. Non‑Competition.(a)The Company shall provide Employee access to the Confidential Informationfor use only during the Employment Period, and Employee acknowledges andagrees that the Company Group will be entrusting Employee, inEmployee’s unique and special capacity, with developing the goodwill of theCompany Group, and in consideration thereof and in consideration of the accessto Confidential Information, has voluntarily agreed to the covenants set forth inthis Section. Employee further agrees and acknowledges that the limitations andrestrictions set forth herein, including, but not limited to, geographical andtemporal restrictions on certain competitive activities, are reasonable and notoppressive and are material and substantial parts of this Agreement intended andnecessary to prevent unfair competition and to protect the Company Group’sConfidential Information and substantial and legitimate business interests andgoodwill.(b)During the Employment Period and for a period of two years (the“Restricted Period”) following the termination of the Employment Periodfor any reason, Employee shall not, for whatever reason and with or withoutcause, either individually or in partnership or jointly or inconjunction with any other Person or Persons as principal, agent, employee,shareholder (other than holding equity interests listed on a United States stockexchange or automated quotation system that do not exceed 5% of theoutstanding shares so listed), owner, investor, partner or in any other mannerwhatsoever, directly or indirectly, engage in or compete with the Businessanywhere in the world.11 (c)During the Restricted Period, Employee shall not (i) knowingly induce orattempt to induce any other Person known to Employee to be a customer of theCompany or its affiliates (each, a “Customer”) to cease doing any business withthe Company or its affiliates anywhere in the world or (ii) solicit businessinvolving the Business from, or provide services related to the Business to, anyCustomer.(d)During the Restricted Period, Employee shall not solicit the employment of anyindividual who is an employee of the Company or its affiliates, except thatEmployee shall not be precluded from soliciting the employment of, or hiring,any such individual (i) whose employment with the Company or one of itsaffiliates has been terminated before entering intoemployment discussions with such Seller, (ii) who initiates discussions withEmployee regarding employment opportunities with Employee or (iii) respondsto a general advertisement or other similarly broad form of solicitation foremployees.(e)For purposes of this Section 9, the following terms shall have the followingmeanings:(i)“Business” shall mean the business of providingnatural gas compression services through thedeployment and maintenance of on‑site compressorpackages and any other line of business in whichthe Company Group is engaged at the time oftermination or has taken substantial steps to enterduring the Employment Period and is activelypursuing at the time of termination.(ii)“Person” means any individual, corporation,partnership, limited liability company, association,trust, incorporated organization,other entity or group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, asamended).(f)Because of the difficulty of measuring economic losses to the Company Groupas a result of a breach of the foregoing covenants, and because ofthe immediate and irreparable damage that could be caused to the CompanyGroup for which it would have no other adequate remedy, Employee agrees thatthe foregoing covenant may be enforced by the Company, in the event of breachby Employee, by injunctions and restraining orders and that such enforcementshall not be the Company’s exclusive remedy for a breach but instead shall be inaddition to all other rights and remedies available to the Company.(g)The covenants in this Section 9 are severable and separate, and theunenforceability of any specific covenant shall not affect the provisions of anyother covenant. Moreover, in the event any arbitrator or court of12 competent jurisdiction shall determine that the scope, time or territorial .restrictions set forth are unreasonable, then it is the intention of theparties that such restrictions be enforced to the fullest extent which thepanel or court deems reasonable, and this Agreement shall thereby bereformed.(h)All of the covenants in this Section 9 shall be construed as an agreementindependent of any other provision in this Agreement; and the existence of anyclaim or cause of action of Employee against the Company, whether predicatedon this Agreement or otherwise, shall not constitute a defense to the enforcementby the Company of such covenants.10. Ownership of Intellectual Property. Employee agrees that the Company shall own, andEmployee agrees to assign and does hereby assign, all right, title and interest (including, but notlimited, to patent rights, copyrights, trade secret rights, mask work rights, trademark rights, and all otherintellectual and industrial property rights of any sort throughout the world) relating to any and allinventions (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 inpart, by Employee during the Employment Period which either (a) relate, at the time of conception,reduction to practice, creation, derivation or development, to the Company Group’s businesses oractual or anticipated research or development, or (b) were developed on any amount of the Company’stime or with the use of any of the Company Group’s equipment, supplies,facilities or trade secret information (all of the foregoing collectively referred to herein as “CompanyIntellectual Property”); and Employee will promptly disclose all Company Intellectual Property to theCompany. All of Employee’s works of authorship and associated copyrights created during theEmployment Period and in the scope of Employee’s employment shall be deemed to be “works madefor 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 theCompany, at the Company’s expense, in obtaining and enforcing its rights throughout the world in theCompany Intellectual Property. Such acts may include, but are not limited to, execution of documentsand assistance or cooperation (a) in the filing, prosecution, registration, and memorialization ofassignment of any applicable patents, copyrights, mask work, or other applications, (b) in theenforcement of any applicable patents, copyrights, mask work, moral rights, trade secrets, or otherproprietary rights, and (c) in other legal proceedings related to the Company Intellectual Property.11. Arbitration.(a)Subject to Section 11(b), any dispute, controversy or claim between Employeeand the Company arising out of or relating to this Agreement or Employee’semployment with the Company will be finally settled by arbitration in Austin,Texas before, and in accordance with the rules for the resolution of employmentdisputes then in effect of, the American Arbitration Association (“AAA”). Thearbitration award shall be final and binding on both parties.13 (b)Any arbitration conducted under this Section 11 shall be heard by a singlearbitrator (the “Arbitrator”) selected in accordance with the then applicable rulesof the AAA. The Arbitrator shall expeditiously (and, if possible, within 90 daysafter the selection of the Arbitrator) hear and decide all matters concerning thedispute. Except as expressly provided to the contrary in this Agreement, theArbitrator shall have the power to (i) gather such materials, information,testimony and evidence as he or she deems relevant to the dispute before himor her (and each party will provide such materials, information, testimony andevidence requested by the Arbitrator, except to the extent any information sorequested is subject to an attorney‑client or other privilege and, if the informationso requested is proprietary or subject to a third party confidentiality restriction,the arbitrator shall enter an order providing that such material will be subject to aconfidentiality agreement), and (ii) grant injunctive relief and enforce specificperformance. The decision of the Arbitrator shall be rendered in writing, befinal, non‑appealable and binding upon the disputing parties and the partiesagree that judgment upon the award may be entered by any court of competentjurisdiction; provided, that the parties agree that the Arbitrator and any courtenforcing the award of the Arbitrator shall not have the right or authority toaward punitive or exemplary damages to any disputing party.(c)Each side shall share equally the cost of the arbitration and bear its owncosts and attorneys’ fees incurred in connection with any arbitration, unless the Arbitrator determines that compelling reasons exist forallocating all or a portion of such costs and fees to the other side.(d)Notwithstanding Section 11(a), an application for emergency or temporaryinjunctive relief by either party shall not be subject to arbitration under thisSection; provided, however, that the remainder of any such dispute (beyond theapplication for emergency or temporary injunctive relief) shall be subject toarbitration under this Section.(e)By entering into this Agreement and entering into the arbitration provisions ofthis Section 11, THE PARTIES EXPRESSLYACKNOWLEDGE AND AGREE THAT THEY ARE KNOWINGLY,VOLUNTARILY AND INTENTIONALLY WAIVING THEIR RIGHTSTO A JURY TRIAL.(f)Nothing in this Section 11 shall prohibit a party to this Agreement from(i) instituting litigation to enforce any arbitration award, or (ii) joining anotherparty to this Agreement in a litigation initiated by a person or entity which is nota party to this Agreement.12. Defense of Claims. Employee agrees that, during the Employment Period and thereafter,upon request from the Company, Employee will reasonably cooperate with the Company Group in thedefense of any claims or actions that may be made by or against the14 Company Group that relate to Employee’s actual or prior areas ofresponsibility, except if Employee’s reasonable interests are adverse tothe Company or its Affiliate(s), as applicable, in such claim oraction. The Company agrees to pay or reimburse Employee for all ofEmployee’s reasonable travel and other direct expenses incurred, or tobe reasonably incurred, to comply with Employee’s obligations underthis Section, provided, Employee provides reasonable documentation ofsame and obtains the Company’s prior approval for incurring suchexpenses. After the expiration of one year following the date ofEmployee’s Separation from Service, the Company will compensateEmployee for the time Employee spends on reasonable cooperation andassistance at the Company’s request at a rate per hour calculated, bydividing his annualized Base Salary at the end of the EmploymentPeriod by 2,080.13. Withholdings; Deductions. The Company may withhold and deduct from any paymentsmade or to be made pursuant to this Agreement (a) all federal, state, local and other taxes or otheramounts as may be required pursuant to any law or governmental regulation or ruling and (b) anydeductions consented to in writing by Employee.14. Title and Headings; Construction. Titles and headings to Sections hereof are for thepurpose of reference only and shall in no way limit, define or otherwise affect the provisions hereof. Any and all Exhibits or Attachments referred to in this Agreement are, by such reference, incorporatedherein 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 not toany particular provision hereof.15. Applicable Law; Submission to Jurisdiction. This Agreement shall in all respects beconstrued according to the laws of the State of Texas. With respect to any claim or dispute related toor arising under this Agreement, the parties hereby consent to the arbitration provisions of Section 11above and recognize and agree that should any resort to a court be necessary and permitted under thisAgreement, then they consent to the exclusive jurisdiction, forum and venue of the state and federalcourts located in Austin, Texas.16. Entire Agreement and Amendment. This Agreement,-including the OperatingAgreement, the terms of which are incorporated herein by reference, contains the entire agreement ofthe parties with respect to the matters covered herein; moreover, this Agreement supersedes all priorand contemporaneous agreements and understandings, oral or written, between the parties heretoconcerning the subject matter hereof; provided, however, that, notwithstanding anything to thecontrary in the Operating Agreement, the definitions of “Cause” and “Good Reason” in thisAgreement shall apply in lieu of those same defined terms in the Operating Agreement when and to theextent those defined terms are applicable to Employee under the Operating Agreement. ThisAgreement may be amended only by a written instrument executed by both parties hereto.17. Waiver of Breach. Any waiver of this Agreement must be executed by the party to bebound by such waiver. No waiver by either party hereto of a breach of any provision of thisAgreement by the other party, or of compliance with any condition or provision of this Agreement tobe performed by such other party, will operate or be construed as a waiver of any subsequent breachby such other party or any similar or dissimilar provision or condition at the same or any subsequenttime. The failure of either party hereto to take any action by reason of15 any breach will not deprive such party of the right to take action at any time while such breachcontinues.18. Assignment. This Agreement is personal to Employee, and neither this Agreement norany rights or obligations hereunder shall be assignable or otherwise transferred by Employee. TheCompany may assign this Agreement to any member of the Company Group and to any successor(whether by merger, purchase or otherwise) to all or substantially all of the equity, assets or businessesof the Company, if such successor expressly agrees to assume the obligations of the Companyhereunder.19. Affiliates. For purposes of this Agreement, the term “Affiliates” means any person orentity Controlling, Controlled by or Under Common Control with such person or entity, but withrespect to the Company, specifically does not mean Riverstone, the entities Controlling it, and itsinvestment funds, partners of its investment funds, and its portfolio companies other than the Companyand its subsidiaries. The term “Control,” including the correlative terms “Controlling,” “Controlledby,” and “Under Common Control with” means possession, directly or indirectly, of the power todirect or cause the direction of management or policies (whether through ownership of securities or anyCompany or other ownership interest, by contract or otherwise) of a person or entity. For thepurposes of the preceding sentence, Control shall be deemed to exist when a person or entitypossesses, directly or indirectly, through one or more intermediaries (a) in the case of a corporationmore than 50% of the outstanding voting securities thereof; (b) in the case of a limited liabilitycompany, partnership or joint venture, the right to more than 50% of the distributions therefrom(including liquidating distributions); or (c) in the case of any other person or entity, more than 50% ofthe economic or beneficial interest therein.20. Notices. Notices provided for in this Agreement shall be in writing and shall bedeemed to have been duly received (a) when delivered in person or sent by facsimiletransmission, (b) on the first business day after such notice is sent by air express overnightcourier service, or (c) on the third business day following deposit in the United States mail,registered or certified mail, return receipt requested, postage prepaid and addressed, to the followingaddress, as applicable:If to the Company, addressed to: USA Compression Management Services, LLC100 Congress Avenue, Suite 1550Austin, TX 78701Attn: J. Gregory HollowayFacsimile: (512) 473‑2616 16 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: Vinson & Elkins1001 Fannin StreetSuite 2500Houston, Texas 77002-6760Attn: E. Ramey LayneFacsimile: (713) 751‑5396 If to Employee, addressed to: William G. ManiasFacsimile: (___) ___‑____ 21. Counterparts. This Agreement may be executed in any number of counterparts, includingby electronic mail or facsimile, each of which when so executed and delivered shall be an original, butall such counterparts shall together constitute one and the same instrument. Each counterpart mayconsist of a copy hereof containing multiple signature pages, each signed by one party, but togethersigned by both parties hereto.22. Deemed Resignations. Unless otherwise agreed to in writing by the Companyand Employee prior to the termination of Employee’s employment, any termination of Employee’semployment shall constitute: (a) an automatic resignation of Employee as an officer of the Companyand each member of the Company Group, as applicable, and (b) an automatic resignation of Employeefrom the Board (if applicable), from the board of directors or managers of any member of the CompanyGroup (if applicable) and from the board of directors or managers or any similar governing body ofany corporation, limited liability entity or other entity in which the Company or any Affiliate holds anequity interest and with respect to which board or similar governing body Employee serves as theCompany’s or such Affiliate’s designee or other representative (if applicable).23. Key Person Insurance. At any time during the Employment Period, the Company shallhave the right to insure the life of Employee for the Company’s sole benefit. The Company shall havethe right to determine the amount of insurance and the type of policy. Employee shall cooperate withthe Company in obtaining such insurance by submitting to physical examinations, by supplying allinformation reasonably required by any insurance carrierand by executing all necessary documents reasonably required by any insurance carrier.17 st Employee shall incur no financial obligation by executing any required document, and shallhave no interest in any such policy.24. Compliance with Section 409A.(a)The severance pay and benefits provided under this Agreement are intended tobe exempt from or comply with Section 409A of the Internal Revenue Code(the “Code”), and any ambiguous provision shall be construed in a mannerconsistent with such intent. For purposes of this Agreement, a “Separationfrom Service” shall mean Employee’s “separation from service” as such term isdefined in Treasury RegulationSection 1.409A‑1(h) or any successor regulation. Each separateseverance payment and each severance installment payment shall be treated as aseparate payment under this Agreement for all purposes. To the extent thatEmployee is a “specified employee” within the meaning of Section 1.409A‑l(i)(l) of the Department of Treasury Regulations, any amounts that wouldotherwise be payable by reason of such separation from service and are nototherwise exempt from the provisions of Section 409A of the Code will delayedfor a period of six months from the date of such Separation from Service, inwhich case the payments that would otherwise have been paid during such sixmonth period shall be paid in a lump sum on the first day of the seventh monthafter the date of the Separation from Service and the remainder of suchpayments, if any, will be made pursuant to their terms.(b)Notwithstanding anything to the contrary in this Agreement, in‑kind benefitsand reimbursements provided under this Agreement during any calendar yearshall not affect in‑kind benefits or reimbursements to be provided in any othercalendar year, other than an arrangement providing for the reimbursement ofmedical expenses referred to in Section 105(b) of the Code, and are notsubject to liquidation or exchange for another benefit. Notwithstandinganything to the contrary in this Agreement, reimbursement requests must betimely submitted by Employee and, if timely submitted, reimbursementpayments shall be promptly made to Employee following such submission, butin no event later than December 31of the calendar year following the calendaryear in which the expense was incurred. In no event shall Employee be entitledto any reimbursement payments after December 31 of the calendar yearfollowing the calendar year in which the expense was incurred. This paragraphshall only apply to in‑kind benefits and reimbursements that would result intaxable compensation income to Employee.(c)If any amount payable hereunder would be subject to additional taxes andinterest under Section 409A of the Code because the timing of such payment isnot delayed as provided in Section 409A(a)(2)(B) of the Code, then the paymentof such amount shall be delayed and paid, without interest, in a lump sum on theearliest of: (i) Employee’s death, (ii) the18 st st date that is six months after the date of Employee’s Separation fromService with the Company (or if such payment date does not fall on abusiness day of Company, the next following business day of theCompany), or (iii) such earlier date upon which such payment can bepaid under Section 409A of the Code without being subject to suchadditional taxes and interest.[Signature Page Follows] 19 IN WITNESS WHEREOF, Employee and the Company each have caused this Agreement tobe executed in its name and on its behalf, as of the Effective Date.EMPLOYEE: /s/ William G. ManiasWilliam G. Manias COMPANY: USA COMPRESSION MANAGEMENTSERVICES, LLC By:/s/Joseph C. Tusa, Jr.Joseph C. Tusa, Jr.President Signature Page toEmployment Agreement EXHIBIT AFORM OF RELEASE AGREEMENTThis Release Agreement (this “Agreement”) constitutes the release referred to in that certainEmployment Agreement (the “Employment Agreement”) dated as of July __, 2013 byand among William G. Manias (“Employee”) and USA Compression Management Services, LLC (the“Company”).(a) For good and valuable consideration, including the Company’s provision of aseverance payment to Employee in accordance with Section 6(f) of the EmploymentAgreement, Employee hereby releases, discharges and forever acquits each member of theCompany Group and their respective Affiliates (each as defined in the EmploymentAgreement, provided, however, that for purposes of this Agreement, “Affiliates” shallexpressly include Riverstone, the entities Controlling it, and its investment funds, partners of itsinvestment funds, and its and their portfolio companies other than the Company) andsubsidiaries and the past, present and future stockholders, members, partners, directors,managers, employees, agents, attorneys, heirs, representatives, successors and assigns of theforegoing, 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 anykind related to Employee’s employment withany Company Party, the termination of such employment, and any other acts or omissionsrelated to any matter on or prior to the date of the execution of this Agreement including,without limitation, any alleged violation through the date of this Agreement of: (i) the AgeDiscrimination in Employment Act of 1967, as amended; (ii) Title VII of the Civil Rights Actof 1964, as amended; (iii) the Civil Rights Act of 1991; (iv) Section 1981 through 1988 ofTitle 42 of the United States Code, as amended; (v) Employee Retirement Income Security Actof 1974, as amended; (vi) the Immigration Reform Control Act, as amended; (vii) theAmericans 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) the Family andMedical Leave Act of 1993; (xi) any state anti‑discrimination law; (xii) any state wage and hourlaw; (xiii) any other local, state or federal law, regulation or ordinance; (xiv) any public policy,contract, tort, or common law claim; (xv) any allegation for costs, fees, or other expensesincluding attorneys’ fees incurred in these matters; (xvi) any and all rights, benefits or claimsEmployee may have under any employment contract, incentive compensation plan or stockoption 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 otherequity compensation agreement between Employee and the Company and (xvii) any claim forcompensation or benefits of any kind not expressly set forth in the Employment Agreementor any such stock option or other equity compensation agreement (collectively, the “ReleasedClaims”). In no event shall the Released Claims include (i) any claim which arises after thedate of this Agreement, (ii) any claim to vested benefits under an employee benefit plan,(iii) any claims for contractual payments under the Employment Agreement,or (iv) any claims under the Operating Agreement of the Company. This Agreement is notintended to indicate that any such claims exist orExhibit A‑1 that, if they do exist, they are meritorious. Rather, Employee is simply agreeing that, in exchange forthe consideration recited in the first sentence of this paragraph, any and all potential claims of thisnature that Employee may have against the Company Parties, regardless of whether they actually exist,are expressly settled, compromised and waived. By signing this Agreement, Employee is bound by it. Anyone who succeeds to Employee’s rights and responsibilities, such as heirs or the executorof Employee’s estate, is also bound by this Agreement. This release also applies to any claims broughtby any person or agency or class action under which Employee may have a right or benefit. Notwithstanding the release of liability contained herein, nothing in this Agreement prevents Employeefrom filing any non‑legally waivable claim (including a challenge to the validity of this Agreement)with the Equal Employment Opportunity Commission (“EEOC”) or comparable state or local agencyor participating in any investigation or proceeding conducted by the .EEOC or comparable state orlocal agency; however, Employee understands and agrees that Employee is waiving any and all rightsto recover any monetary or personal relief or recovery as a result of such EEOC or comparable state orlocal agency proceeding or subsequent legal actions. THIS RELEASE INCLUDES MATTERSATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS ORSIMPLE) 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 CompanyParties in any court relating to any of the Released Claims. Employee represents that Employeehas not brought or joined any lawsuit or filed any charge or claim against any of the CompanyParties in any court or before any government agency and has made no assignment of anyrights Employee has asserted or may have against any of the Company Parties to any person orentity, 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 [21] [45] days to consider thisAgreement before the execution and deliveryhereof to the Company. [Add if 45 days applies: , and he acknowledges that attached to thisAgreement are (A) a list of the positions andages of those employees selected for termination(or participation in the exit incentive or otheremployment termination program); (B) a list ofthe ages of those employees not selected fortermination (or participation in such program);and (C) information about the unit affected bythe employment termination program of whichhis termination was a part, including anyeligibility factors for such program and any timelimits applicable to such program];Exhibit A‑2 (iii)He has been and hereby is advised in writing thathe may, at his option, discuss this Agreement withan attorney of his choice and that he has hadadequate opportunity to do so;(iv)He fully understands the final and binding effect ofthis Agreement; the only promises made to him tosign this Agreement are those stated in theEmployment Agreement and herein; and he issigning this Agreement voluntarily and of his ownfree will, and that he understands and agrees toeach of the terms of this Agreement; and(v)With the exception of any sums that he may beowed pursuant to Section 6(f) of the EmploymentAgreement, he has been paid all wages and othercompensation to which he is entitled under theAgreement and received all leaves (paid andunpaid) to which he was entitled during theEmployment Period (as defined in the EmploymentAgreement).Notwithstanding the initial effectiveness of this Agreement, Employee may revoke the delivery(and therefore the effectiveness) of this Agreement within the seven‑day period beginning on the dateEmployee delivers this Agreement to the Company (such seven day period being referenced to hereinas the “Release Revocation Period”). To be effective, such revocation must be in writing signed byEmployee and must be delivered to [name, address] before 11:59 p.m., Austin, Texas time, on the lastday of the Release Revocation Period. If an effective revocation is delivered in the foregoing mannerand timeframe, this Agreement shall be of no force or effect and shall be null and void ab initio. Noconsideration shall be paid if this Agreement is revoked by Employee in the foregoing manner.Executed on this _____ day of _________________________, 201__.William G. Manias Exhibit A‑3 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 11, 2016, with respect tothe consolidated balance sheets of USA Compression Partners, LP as of December 31, 2015 and 2014, 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, 2015, which report appears in the December 31, 2015 annual report on Form 10-K of USACompression Partners, LP. /s/ KPMG LLP Dallas, TexasFebruary 11, 2016 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,not misleading 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 generallyaccepted accounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by 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 11, 2016 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,not misleading 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 generallyaccepted accounting principles; c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by 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 11, 2016 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, 2015 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 11, 2016 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging,or otherwise adopting the signature that appears in typed form within the electronic version of this written statement requiredby Section 906, has been provided to the Partnership and will be retained by the Partnership and furnished to the Securitiesand Exchange 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, 2015 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 11, 2016 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging,or otherwise adopting the signature that appears in typed form within the electronic version of this written statement requiredby Section 906, has been provided to the Partnership and will be retained by the Partnership and furnished to the Securitiesand Exchange Commission or its staff upon request.

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