CSI pressco LP(CCLP) - 2022 Q3 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements This section presents unaudited consolidated financial statements, including operations, balance sheets, cash flows, and detailed accounting notes Consolidated Statements of Operations This section details the company's revenues, costs, and net loss for the three and nine months ended September 30, 2022 and 2021 Revenue and Net Loss (Three Months Ended September 30, in Thousands) | Metric | 2022 (Thousands) | 2021 (Thousands) | Change (YoY) | | :--------------- | :--------------- | :--------------- | :----------- | | Total Revenues | $94,895 | $77,684 | +22.2% | | Net Loss | $(4,451) | $(10,492) | -57.6% | | Net Loss per Unit| $(0.03) | $(0.22) | -86.4% | Revenue and Net Loss (Nine Months Ended September 30, in Thousands) | Metric | 2022 (Thousands) | 2021 (Thousands) | Change (YoY) | | :--------------- | :--------------- | :--------------- | :----------- | | Total Revenues | $259,429 | $223,981 | +15.8% | | Net Loss | $(17,849) | $(33,005) | -45.9% | | Net Loss per Unit| $(0.13) | $(0.68) | -80.9% | Consolidated Statements of Comprehensive Income (Loss) This section presents net loss and other comprehensive income (loss) components, primarily foreign currency adjustments Comprehensive Loss (Three Months Ended September 30, in Thousands) | Metric | 2022 (Thousands) | 2021 (Thousands) | Change (YoY) | | :----------------- | :--------------- | :--------------- | :----------- | | Net Loss | $(4,451) | $(10,492) | -57.6% | | Foreign Currency Adj.| $(228) | $(152) | +50.0% | | Comprehensive Loss | $(4,679) | $(10,644) | -56.0% | Comprehensive Loss (Nine Months Ended September 30, in Thousands) | Metric | 2022 (Thousands) | 2021 (Thousands) | Change (YoY) | | :----------------- | :--------------- | :--------------- | :----------- | | Net Loss | $(17,849) | $(33,005) | -45.9% | | Foreign Currency Adj.| $(313) | $(14) | +2135.7% | | Comprehensive Loss | $(18,162) | $(33,019) | -45.0% | Consolidated Balance Sheets This section presents the company's assets, liabilities, and partners' capital as of September 30, 2022, and December 31, 2021 Key Balance Sheet Items (in Thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | Change | | :------------------------- | :----------- | :----------- | :----------- | | Cash and cash equivalents | $15,665 | $6,598 | +137.4% | | Total current assets | $128,531 | $100,779 | +27.5% | | Net property, plant, and equipment | $550,850 | $570,462 | -3.4% | | Total assets | $730,334 | $722,361 | +1.1% | | Total current liabilities | $98,025 | $71,295 | +37.5% | | Long-term debt, net | $623,916 | $631,141 | -1.1% | | Total liabilities | $750,644 | $721,202 | +4.1% | | Total partners' capital | $(20,310) | $1,159 | -1852.5% | Consolidated Statements of Partners' Capital This section outlines changes in partners' capital, including net loss, distributions, and equity compensation, for the nine months ended September 30, 2022 Changes in Partners' Capital (Nine Months Ended September 30, 2022, in Thousands) | Item | General Partner Amount | Common Unitholders Amount | Accumulated Other Comprehensive Income (Loss) | Total Partners' Capital | | :--------------------------------- | :--------------------- | :------------------------ | :-------------------------------------------- | :---------------------- | | Balance at December 31, 2021 | $(1,486) | $17,049 | $(14,404) | $1,159 | | Net loss | $(84) | $(17,765) | — | $(17,849) | | Distributions ($0.01 per unit) | $(21) | $(4,228) | — | $(4,249) | | Equity compensation, net | — | $942 | — | $942 | | Translation adjustment, net of taxes | — | — | $(313) | $(313) | | Balance at September 30, 2022 | $(1,591) | $(4,002) | $(14,717) | $(20,310) | Consolidated Statements of Cash Flows This section summarizes cash flows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 Cash Flow Summary (Nine Months Ended September 30, in Thousands) | Activity | 2022 | 2021 | Change (YoY) | | :------------------- | :---------- | :---------- | :----------- | | Operating activities | $43,964 | $31,476 | +39.7% | | Investing activities | $(35,177) | $(15,398) | +128.4% | | Financing activities | $288 | $(8,999) | +103.2% | | Net increase in cash | $9,067 | $7,081 | +28.0% | Key Operating Cash Flow Reconciliations (Nine Months Ended September 30, in Thousands) | Item | 2022 | 2021 | | :---------------------------- | :------ | :------ | | Net loss | $(17,849)| $(33,005)| | Depreciation and amortization | $58,572 | $58,662 | | Changes in Accounts receivable| $(8,943)| $(5,288)| | Changes in Inventories | $(16,707)| $(5,754)| | Changes in Accounts payable and accrued expenses | $20,813 | $15,851 | Key Investing Cash Flow Items (Nine Months Ended September 30, in Thousands) | Item | 2022 | 2021 | | :--------------------------------------- | :---------- | :---------- | | Purchases of property, plant, and equipment, net | $(39,561) | $(17,721) | | Proceeds from sale of property, plant, and equipment | $4,384 | $846 | Notes to Consolidated Financial Statements This section provides detailed explanations of accounting policies, significant transactions, and financial instrument details NOTE 1 — ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES CSI Compressco LP provides natural gas compression and treating services, with financial statements retrospectively reflecting the Spartan Acquisition - CSI Compressco LP provides natural gas compression and treating services, sells used compressor packages, and offers aftermarket services and parts[29] - The new unit sales business was fully exited in Q4 2020 and is reflected as discontinued operations for all periods presented[29][66] - The acquisition of Spartan Treating on November 10, 2021, was accounted for as a common control transaction, with retrospective application from January 29, 2021[32][74] - No significant changes in accounting policies or their application during the three and nine months ended September 30, 2022[36] - ASU 2016-13 (Credit Losses) is effective for the company in Q1 2023, and the potential effects are still being assessed[65] NOTE 2 — DISCONTINUED OPERATIONS The new unit sales business is presented as discontinued operations, reporting net income for current periods due to non-utilization of warranty reserves - The new unit sales business was fully exited in October 2020, and its operations are reflected as discontinued for all periods[66] Financial Impact (Three Months Ended September 30, in Thousands) | Metric | 2022 | 2021 | | :-------------------------------------- | :--- | :--- | | Total pretax income (loss) from discontinued operations | $81 | $(270)| | Total income (loss) from discontinued operations | $81 | $(270)| Financial Impact (Nine Months Ended September 30, in Thousands) | Metric | 2022 | 2021 | | :-------------------------------------- | :--- | :--- | | Total pretax income (loss) from discontinued operations | $173 | $(623)| | Total income (loss) from discontinued operations | $173 | $(623)| - As of September 30, 2022, there were no current assets or liabilities associated with discontinued operations, compared to $262 thousand in accrued liabilities at December 31, 2021[69] NOTE 3 — REVENUE FROM CONTRACTS WITH CUSTOMERS Remaining performance obligations total $89.2 million, with total revenues increasing significantly due to growth in contract and aftermarket services Remaining Performance Obligations (in Thousands) | Year | Amount | | :--------- | :------- | | 2022 | $43,036 | | 2023 | $31,483 | | 2024 | $10,589 | | 2025 | $2,423 | | Thereafter | $1,679 | | Total | $89,210| Disaggregated Revenue by Geography (Three Months Ended September 30, in Thousands) | Revenue Type | 2022 | 2021 | Change (YoY) | | :------------------- | :---------- | :---------- | :----------- | | Contract services | $67,492 | $59,413 | +13.6% | | Aftermarket services | $23,192 | $13,991 | +65.8% | | Equipment rentals | $3,869 | $3,326 | +16.3% | | Equipment sales | $342 | $954 | -64.2% | | Total Revenue | $94,895 | $77,684 | +22.2% | Disaggregated Revenue by Geography (Nine Months Ended September 30, in Thousands) | Revenue Type | 2022 | 2021 | Change (YoY) | | :------------------- | :---------- | :---------- | :----------- | | Contract services | $194,647 | $174,044 | +11.8% | | Aftermarket services | $52,273 | $39,943 | +30.9% | | Equipment rentals | $10,987 | $8,430 | +30.3% | | Equipment sales | $1,522 | $1,564 | -2.7% | | Total Revenue | $259,429| $223,981| +15.8% | NOTE 4 — COMMON CONTROL ACQUISITION CSI Compressco acquired Spartan Treating for 48.4 million common units, treated as a common control transaction with retrospective application - Spartan Treating was acquired on November 10, 2021, for 48.4 million common units[74][77] - The acquisition was accounted for as a common control transaction, with retrospective application from January 29, 2021[74][77] Net Assets Acquired (November 10, 2021, in Thousands) | Item | Amount | | :------------------------- | :------- | | Total assets | $67,794 | | Total liabilities | $40,426 | | Net assets | $27,368| - A $37.9 million difference between consideration and net assets acquired was recognized as a deemed distribution[77] Pro-forma Financial Information (Nine Months Ended September 30, 2021, in Thousands) | Metric | CSI Compressco LP | Spartan Treating | Total | | :----------------------------------- | :---------------- | :--------------- | :-------- | | Revenue | $206,762 | $17,219 | $223,981 | | Income (loss) from continuing operations | $(40,289) | $7,907 | $(32,382) | | Net income (loss) | $(40,912) | $7,907 | $(33,005) | NOTE 5 — INVENTORIES Total inventories were $43.6 million as of September 30, 2022, primarily comprising compressor package spare parts and supplies Inventory Components (in Thousands) | Component | Sep 30, 2022 | Dec 31, 2021 | | :----------------- | :----------- | :----------- | | Parts and supplies | $40,751 | $30,424 | | Work in progress | $2,847 | $2,847 | | Total inventories| $43,598 | $33,271 | NOTE 6 — LEASES The company acts as a lessor for operating leases, with equipment rental revenue increasing and future minimum lease revenue projected Operating Lease Revenue (Equipment Rentals, in Thousands) | Period | 2022 | 2021 | Change (YoY) | | :------------------------------------ | :---------- | :---------- | :----------- | | Three Months Ended September 30 | $3,869 | $3,326 | +16.3% | | Nine Months Ended September 30 | $10,987 | $8,430 | +30.3% | Future Minimum Lease Revenue (Undiscounted, in Thousands) | Year | Amount | | :--------- | :------- | | 2022 | $3,946 | | 2023 | $6,674 | | 2024 | $1,744 | | 2025 | $1,599 | | 2026 | $1,576 | | Thereafter | $3,421 | NOTE 7 — LONG-TERM DEBT AND OTHER BORROWINGS Total long-term debt decreased slightly to $623.9 million, with Credit Agreement and Spartan Credit Agreement availability and extended maturity Long-Term Debt (in Thousands) | Debt Type | Scheduled Maturity | Sep 30, 2022 | Dec 31, 2021 | | :--------------------------------- | :----------------- | :----------- | :----------- | | Credit Agreement | June 29, 2025 | $— | $330 | | Spartan Credit Agreement | January 29, 2024 | $51,751 | $58,045 | | 7.50% First Lien Notes | April 1, 2025 | $399,752 | $399,767 | | 10.00%/10.75% Second Lien Notes | April 1, 2026 | $172,413 | $172,999 | | Total long-term debt | | $623,916 | $631,141 | - Credit Agreement availability as of September 30, 2022: $22.6 million[94] - Spartan Credit Agreement availability as of September 30, 2022: $13.0 million On October 19, 2022, its maturity date was extended from January 29, 2024, to October 17, 2025[96][97][123] - As of September 30, 2022, $7.2 million of the Second Lien Notes principal amount outstanding included PIK notes[101] - During 2022, the company entered into Master Equipment Finance Agreements totaling $14.3 million to finance certain compression equipment[102][103][198] NOTE 8 — RELATED PARTY TRANSACTIONS Spartan acquired the general partner and IDRs from TETRA, contributed Spartan Treating, and holds 45.5% ownership, receiving $1.9 million in distributions - Spartan acquired the general partner, IDRs, and 10.95 million common units from TETRA on January 29, 2021[104] - Spartan contributed Spartan Treating to the Partnership in November 2021, in exchange for 48.4 million common units, and the general partner's IDRs were canceled[106] - As of September 30, 2022, Spartan's ownership interest was approximately 45.5%[107] - Spartan received $1.9 million in distributions during the nine months ended September 30, 2022[107] - In January 2021, the Partnership purchased a TETRA-owned entity administering payroll in Mexico for approximately $0.4 million[110] NOTE 9 — FAIR VALUE MEASUREMENTS The company uses fair value measurements for foreign currency derivatives and nonrecurring items, with fixed-rate long-term debt fair value lower than carrying value - Foreign currency forward derivative contracts are measured at Level 2 fair value[114][115] Derivative Gains/Losses (in Thousands) | Period | 2022 (Net Gains/Losses) | 2021 (Net Gains/Losses) | | :------------------------------------ | :---------------------- | :---------------------- | | Three Months Ended September 30 | $0.04 | $(0.04) | | Nine Months Ended September 30 | $1.5 | $0.1 | Fair Value of Debt (in Thousands) | Debt Type | Sep 30, 2022 Carrying Value | Sep 30, 2022 Fair Value | Dec 31, 2021 Carrying Value | Dec 31, 2021 Fair Value | | :--------------------------------- | :-------------------------- | :---------------------- | :-------------------------- | :---------------------- | | 7.50% First Lien Notes | $400,000 | $357,000 | $400,000 | $405,000 | | 10.00%/10.75% Second Lien Notes | $172,717 | $149,400 | $172,717 | $168,399 | | Total | $572,717 | $506,400 | $572,717 | $573,399 | NOTE 10 — INCOME TAXES As a partnership, the company is generally not subject to U.S. federal income tax but incurs state, local, and foreign taxes through taxable subsidiaries - Generally not subject to U.S. federal income tax at the entity level, but incurs state, local, and foreign income taxes through taxable subsidiaries[119][168] Effective Tax Rate (Nine Months Ended September 30) | Period | Effective Tax Rate | | :----- | :----------------- | | 2022 | -16.1% | | 2021 | -13.0% | - Effective tax rates primarily attributable to foreign and Texas gross margin taxes, combined with losses generated in entities for which no related tax benefit has been recorded[120][169] NOTE 11 — COMMITMENTS AND CONTINGENCIES The company is involved in routine litigation, but management does not expect a material adverse effect on its financial condition or results of operations - Involved in litigation relating to claims arising out of operations in the normal course of business[121][203] - Management does not consider it reasonably possible that a loss in excess of accrued amounts would have a material adverse effect on financial condition, results of operations, or cash flows[121][203] NOTE 12 — SUBSEQUENT EVENTS The Spartan Credit Agreement's maturity date was extended to October 17, 2025, and a cash distribution of $0.01 per common unit was declared - On October 19, 2022, the maturity date of the Spartan Credit Agreement was extended to October 17, 2025[122][123] - On October 21, 2022, a cash distribution of $0.01 per outstanding common unit was declared for the quarter ended September 30, 2022, payable on November 14, 2022[124][125] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, liquidity, and capital resources, analyzing results and cash flows Business Overview CSI Compressco LP provides natural gas compression and treating services, driven by crude oil and natural gas production, with increased demand and utilization in 2022 - CSI Compressco LP provides natural gas compression and treating services, with a fleet of approximately 4,800 compressor packages and a treating fleet[128] - Demand for services is directly driven by crude oil and associated natural gas production, and natural gas transmission[129] - Increased demand and pricing power in 2022 due to strong commodity prices and economic recovery, leading to an 85.1% compression fleet utilization as of September 30, 2022 (up from 78.9% in 2021)[130] - Challenges include inflationary pressures, supply chain issues, increased costs, and competition for field employees[130] - Strategic focus on proactive capital allocation, liquidity management, expense monitoring, and potential sale of non-core assets (low-horsepower compression fleet)[131] Three months ended September 30, 2022 compared to three months ended September 30, 2021 This section compares the company's consolidated financial results, including revenues, costs, and net loss, for the three months ended September 30, 2022 and 2021 Consolidated Results (Three Months Ended September 30, in Thousands) | Metric | 2022 | 2021 | Change (YoY) | | :--------------------------------------- | :---------- | :---------- | :----------- | | Total revenues | $94,895 | $77,684 | +22.2% | | Total cost of revenues | $53,478 | $44,310 | +20.7% | | Loss from continuing operations | $(4,532) | $(10,222) | -55.7% | | Net loss | $(4,451) | $(10,492) | -57.6% | Revenue Changes by Segment (Three Months Ended September 30, in Thousands) | Revenue Type | 2022 | 2021 | Change (YoY) | | :------------------- | :---------- | :---------- | :----------- | | Contract services | $67,492 | $59,413 | +13.6% | | Aftermarket services | $23,192 | $13,991 | +65.8% | | Equipment rentals | $3,869 | $3,326 | +16.3% | | Equipment sales | $342 | $954 | -64.2% | Cost of Revenues Changes (Three Months Ended September 30, in Thousands) | Cost Type | 2022 | 2021 | Change (YoY) | | :------------------------- | :---------- | :---------- | :----------- | | Cost of contract services | $34,793 | $30,628 | +13.6% | | Cost of aftermarket services | $18,056 | $11,898 | +51.8% | | Cost of equipment rentals | $563 | $292 | +92.8% | | Cost of equipment sales | $66 | $1,492 | -95.6% | - Interest expense, net, decreased by $1.02 million (-7.5%) due to the redemption of 7.25% Senior Notes in Q4 2021[135][144] - Other (income) expense, net, shifted from $0.6 million income in 2021 to $1.7 million expense in 2022, driven by higher foreign currency losses, hedge losses, and increased losses on asset disposal[135][145] - Income (Loss) from discontinued operations, net of tax, shifted from a $0.3 million loss in 2021 to a $0.1 million gain in 2022 due to non-utilization of warranty reserves[135][152] Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 This section compares the company's consolidated financial results, including revenues, costs, and net loss, for the nine months ended September 30, 2022 and 2021 Consolidated Results (Nine Months Ended September 30, in Thousands) | Metric | 2022 | 2021 | Change (YoY) | | :--------------------------------------- | :---------- | :---------- | :----------- | | Total revenues | $259,429 | $223,981 | +15.8% | | Total cost of revenues | $143,682 | $122,468 | +17.3% | | Loss from continuing operations | $(18,022) | $(32,382) | -44.3% | | Net loss | $(17,849) | $(33,005) | -45.9% | Revenue Changes by Segment (Nine Months Ended September 30, in Thousands) | Revenue Type | 2022 | 2021 | Change (YoY) | | :------------------- | :---------- | :---------- | :----------- | | Contract services | $194,647 | $174,044 | +11.8% | | Aftermarket services | $52,273 | $39,943 | +30.9% | | Equipment rentals | $10,987 | $8,430 | +30.3% | | Equipment sales | $1,522 | $1,564 | -2.7% | Cost of Revenues Changes (Nine Months Ended September 30, in Thousands) | Cost Type | 2022 | 2021 | Change (YoY) | | :------------------------- | :---------- | :---------- | :----------- | | Cost of contract services | $99,418 | $86,312 | +15.2% | | Cost of aftermarket services | $42,051 | $33,664 | +24.9% | | Cost of equipment rentals | $1,530 | $654 | +133.9% | | Cost of equipment sales | $683 | $1,838 | -62.8% | - Cost of contract services as a percentage of contract services revenues increased from 49.6% in 2021 to 51.1% in 2022, primarily due to inflationary pressures on parts, field labor, and fluids costs[160] - Selling, general, and administrative expenses increased due to higher salaries, consulting services, non-recurring transaction costs, severance accruals, and new ERP-related fees[165] - Interest expense, net, decreased by $3.4 million (-8.4%) due to the redemption of 7.25% Senior Notes in Q4 2021[165] - Other (income) expense, net, shifted from $0.5 million income in 2021 to $2.5 million expense in 2022, primarily due to higher foreign currency losses from Mexico and Argentina operations[167] - Income (Loss) from discontinued operations, net of tax, shifted from a $0.6 million loss in 2021 to a $0.2 million gain in 2022 due to non-utilization of warranty reserves[170] How We Evaluate Our Operations The company evaluates operations by tracking operating expenses, using Adjusted EBITDA to assess cash generation, and monitoring horsepower utilization rates - The company tracks operating expenses (field labor, repair/maintenance, fluids costs) monthly/quarterly/yearly against budget to identify cost trends[171] - Adjusted EBITDA, a non-GAAP measure, is used to assess cash generation, financial performance, and debt servicing ability[173][177] Adjusted EBITDA (in Thousands) | Period | 2022 | 2021 | Change (YoY) | | :------------------------------------ | :---------- | :---------- | :----------- | | Three Months Ended September 30 | $29,782 | $25,704 | +15.9% | | Nine Months Ended September 30 | $83,092 | $75,455 | +10.1% | - Horsepower utilization rate measures horsepower in service divided by total fleet horsepower, used for future equipment needs and marketing effectiveness[178][179] Horsepower Utilization (September 30) | Horsepower Category | 2022 | 2021 | Change (YoY) | | :------------------------ | :------ | :------ | :----------- | | Low-horsepower (0-100) | 58.1% | 56.0% | +2.1 pp | | Medium-horsepower (101-1,000)| 83.5% | 78.3% | +5.2 pp | | High-horsepower (1,001+) | 91.8% | 84.6% | +7.2 pp | | Total utilization rate| 85.1% | 78.9% | +6.2 pp | - Operating horsepower increased by approximately 93,800 horsepower due to redeployment of idle units and new high-horsepower compressors[181] Liquidity and Capital Resources The company's cash requirements include distributions, debt service, and capital expenditures, funded by existing cash, operations, asset sales, and borrowings - Primary cash requirements are for distributions, working capital, debt service, operating expenses, and capital expenditures[183] - Sources of funds include existing cash balances, cash generated from operations, asset sales, and long-term and short-term borrowings[183] - Capital expenditures for 2022 are expected to range from $55.0 million to $65.0 million[185] Capital Expenditure Breakdown (2022 Estimates, in Millions) | Category | Amount Range | | :--------------------------- | :----------- | | Maintenance capital | $18.0 - $22.0| | Expansion (large horsepower, electric compressors) | $29.0 - $33.0| | Technology (software, systems)| $8.0 - $10.0 | - The company aims to balance growth investment with asset maintenance and enhance liquidity through strategic operating and financial measures[184] - A cash distribution of $0.01 per common unit was declared for Q3 2022, payable November 14, 2022[187] Cash Flows This section details cash flows from operating, investing, and financing activities, highlighting increases in operating cash and capital expenditures Cash Flow Summary (Nine Months Ended September 30, in Thousands) | Activity | 2022 | 2021 | Change (YoY) | | :------------------- | :---------- | :---------- | :----------- | | Operating activities | $43,964 | $31,476 | +39.7% | | Investing activities | $(35,177) | $(15,398) | +128.4% | | Financing activities | $288 | $(8,999) | +103.2% | - Net cash provided by operating activities increased by $12.5 million, primarily from revenues exceeding cash expenses[189][176] - Capital expenditures during the nine months ended September 30, 2022, increased by $21.8 million, driven by growth capital investments[191] - Distributions of $4.2 million were made to common unitholders and the general partner[193] - The Credit Agreement had $22.6 million available as of September 30, 2022[195] - The Spartan Credit Agreement had $13.0 million available as of September 30, 2022, and its maturity was extended to October 17, 2025[196] - New Master Finance Agreements totaling $14.3 million were entered into to finance compression equipment[198] Off Balance Sheet Arrangements As of September 30, 2022, the company had no off-balance sheet arrangements materially affecting its financial condition or results of operations - As of September 30, 2022, the company had no off-balance sheet arrangements that would materially affect its financial condition or results of operations[200] Critical Accounting Policies and Estimates No material changes or developments occurred in the company's critical accounting policies and estimates since the 2021 Annual Report - There have been no material changes or developments in the evaluation of the accounting estimates and underlying assumptions or methodologies pertaining to the company's Critical Accounting Policies and Estimates disclosed in its 2021 Annual Report[201] Commitments and Contingencies The company is involved in routine litigation, but management does not expect a material adverse effect on its financial condition or results of operations - The company is involved in litigation relating to claims arising out of its operations in the normal course of business[203] - Management does not consider it reasonably possible that a loss resulting from such lawsuits or proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on the company's financial condition, results of operations, or cash flows[203] Cautionary Statement for Purposes of Forward-Looking Statements This report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations - This Quarterly Report contains forward-looking statements identifiable by specific terminology such as 'anticipates,' 'expects,' 'plans,' etc[205] - Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical experience and present expectations, as described in this report and the 2021 Annual Report[206] - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[206] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section states that it is 'Not Applicable,' indicating no material quantitative or qualitative disclosures about market risk are being provided - The company states that this item is 'Not Applicable' for this report[208] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2022, with a new ERP system deployment not anticipated to have an adverse effect - Disclosure controls and procedures were effective as of September 30, 2022[210] - A new Enterprise Resource Planning (ERP) system was deployed during the nine months ended September 30, 2022, leading to updates in internal controls over financial reporting, but no adverse effect is anticipated[210] - No other changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[211] PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company is involved in routine litigation, but management does not anticipate any material adverse effect on its financial condition or results of operations - The company is involved in litigation relating to claims arising out of its operations in the normal course of business[213] - Management does not consider it reasonably possible that a loss resulting from such lawsuits or proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on the company's financial condition, results of operations, or cash flows[213] Item 1A. Risk Factors There have been no material changes to the company's risk factors as disclosed in its 2021 Annual Report - There have been no material changes in the information pertaining to the company's Risk Factors as disclosed in its 2021 Annual Report[214] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or purchases of equity securities by the issuer during the three months ended September 30, 2022 - No unregistered sales of equity securities or purchases of equity securities by the issuer or affiliated purchasers occurred during the three months ended September 30, 2022[217][218][220] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported[221] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures - No mine safety disclosures were reported[223] Item 5. Other Information The company reported no other information - No other information was reported[225] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including certifications, XBRL taxonomy documents, and a loan agreement amendment - The exhibit list includes certifications (31.1, 31.2, 32.1, 32.2), XBRL taxonomy documents (101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE), and an amendment to the Loan, Security and Guaranty Agreement (10.1)[227] - Exhibit 10.1 is the Second Amendment to Loan, Security and Guaranty Agreement, dated October 19, 2022, by and among Spartan Energy Services LLC, Treating Holdco LLC, and Bank of America, N.A[227] SIGNATURES The report is signed by the Chief Executive Officer, Principal Financial Officer, and Principal Accounting Officer of CSI Compressco GP LLC on November 3, 2022 SIGNATURES The report is signed by the Chief Executive Officer, Principal Financial Officer, and Principal Accounting Officer of CSI Compressco GP LLC on November 3, 2022 - The report is signed by John E. Jackson (Chief Executive Officer), Jonathan W. Byers (Principal Financial Officer), and Riplee L. Parkening (Controller, Principal Accounting Officer) of CSI Compressco GP LLC[230][233] - The signing date for the report is November 3, 2022[230][233]