Delaware | 22-3935108 | |
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) |
16666 Northchase Drive | ||
Houston, Texas | 77060 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
Page | |
June 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 159 | $ | 472 | |||
Accounts receivable, trade, net of allowance of $1,448 and $2,463, respectively | 75,326 | 85,183 | |||||
Due from affiliates, net | 4,479 | — | |||||
Total current assets | 79,964 | 85,655 | |||||
Property, plant and equipment | 2,629,571 | 2,661,996 | |||||
Accumulated depreciation | (862,467 | ) | (846,213 | ) | |||
Property, plant and equipment, net | 1,767,104 | 1,815,783 | |||||
Intangible and other assets, net | 88,968 | 93,215 | |||||
Total assets | $ | 1,936,036 | $ | 1,994,653 | |||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||
Current liabilities: | |||||||
Accrued liabilities | $ | 6,091 | $ | 6,696 | |||
Accrued interest | 12,235 | 12,443 | |||||
Due to affiliates, net | — | 5,980 | |||||
Current portion of interest rate swaps | 5,397 | 4,608 | |||||
Total current liabilities | 23,723 | 29,727 | |||||
Long-term debt | 1,410,042 | 1,410,382 | |||||
Deferred income taxes | 1,394 | 1,054 | |||||
Other long-term liabilities | 11,140 | 5,494 | |||||
Total liabilities | 1,446,299 | 1,446,657 | |||||
Commitments and contingencies (Note 13) | |||||||
Partners’ capital: | |||||||
Common units, 60,122,062 and 59,796,514 units issued, respectively | 493,061 | 538,197 | |||||
General partner units, 2% interest with 1,214,767 and 1,209,562 equivalent units issued and outstanding, respectively | 11,434 | 17,151 | |||||
Accumulated other comprehensive loss | (12,875 | ) | (5,558 | ) | |||
Treasury units, 86,244 and 74,888 common units, respectively | (1,883 | ) | (1,794 | ) | |||
Total partners’ capital | 489,737 | 547,996 | |||||
Total liabilities and partners’ capital | $ | 1,936,036 | $ | 1,994,653 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | $ | 140,052 | $ | 167,801 | $ | 291,476 | $ | 332,096 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales (excluding depreciation and amortization expense) — affiliates | 49,310 | 65,942 | 107,170 | 131,110 | |||||||||||
Depreciation and amortization | 38,627 | 39,487 | 77,864 | 75,592 | |||||||||||
Long-lived asset impairment | 8,283 | 1,826 | 14,598 | 5,310 | |||||||||||
Restructuring charges | 1,208 | — | 5,347 | — | |||||||||||
Selling, general and administrative — affiliates | 19,741 | 20,721 | 43,420 | 41,890 | |||||||||||
Interest expense | 19,313 | 19,082 | 38,055 | 36,914 | |||||||||||
Other (income) loss, net | 72 | (1,512 | ) | 910 | (1,703 | ) | |||||||||
Total costs and expenses | 136,554 | 145,546 | 287,364 | 289,113 | |||||||||||
Income before income taxes | 3,498 | 22,255 | 4,112 | 42,983 | |||||||||||
Provision for (benefit from) income taxes | 187 | (72 | ) | 281 | 571 | ||||||||||
Net income | $ | 3,311 | $ | 22,327 | $ | 3,831 | $ | 42,412 | |||||||
General partner interest in net income | $ | 66 | $ | 4,814 | $ | 76 | $ | 9,023 | |||||||
Common units interest in net income | $ | 3,245 | $ | 17,513 | $ | 3,755 | $ | 33,389 | |||||||
Weighted average common units outstanding used in income per common unit: | |||||||||||||||
Basic | 59,837 | 58,987 | 59,788 | 57,342 | |||||||||||
Diluted | 59,837 | 58,987 | 59,788 | 57,342 | |||||||||||
Income per common unit: | |||||||||||||||
Basic | $ | 0.05 | $ | 0.30 | $ | 0.06 | $ | 0.58 | |||||||
Diluted | $ | 0.05 | $ | 0.30 | $ | 0.06 | $ | 0.58 | |||||||
Distributions declared and paid per limited partner unit in respective periods | $ | 0.2850 | $ | 0.5625 | $ | 0.8575 | $ | 1.1200 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 3,311 | $ | 22,327 | $ | 3,831 | $ | 42,412 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Interest rate swap gain (loss), net of reclassifications to earnings | (2,421 | ) | 1,363 | (7,317 | ) | (4,191 | ) | ||||||||
Amortization of terminated interest rate swaps | — | 783 | — | 1,609 | |||||||||||
Total other comprehensive income (loss) | (2,421 | ) | 2,146 | (7,317 | ) | (2,582 | ) | ||||||||
Comprehensive income (loss) | $ | 890 | $ | 24,473 | $ | (3,486 | ) | $ | 39,830 |
Accumulated | ||||||||||||||||||||||||||||
Partners’ Capital | Other | |||||||||||||||||||||||||||
Common Units | General Partner Units | Treasury Units | Comprehensive | |||||||||||||||||||||||||
$ | Units | $ | Units | $ | Units | Loss | Total | |||||||||||||||||||||
Balance, January 1, 2015 | $ | 668,714 | 55,724,022 | $ | 19,542 | 1,129,221 | $ | (1,477 | ) | (61,665 | ) | $ | (3,438 | ) | $ | 683,341 | ||||||||||||
Issuance of common units for vesting of phantom units | 52,224 | — | ||||||||||||||||||||||||||
Treasury units purchased | (274 | ) | (11,009 | ) | (274 | ) | ||||||||||||||||||||||
Acquisition of a portion of Archrock's contract operations business | 107,710 | 3,963,138 | 2,198 | 80,341 | 109,908 | |||||||||||||||||||||||
Net proceeds from issuance of common units | 1,268 | 49,774 | 1,268 | |||||||||||||||||||||||||
Distribution of capital, net | (649 | ) | (373 | ) | (1,022 | ) | ||||||||||||||||||||||
Excess of purchase price of equipment over Archrock’s cost of equipment | (8,324 | ) | (457 | ) | (8,781 | ) | ||||||||||||||||||||||
Cash distributions | (62,464 | ) | (8,762 | ) | (71,226 | ) | ||||||||||||||||||||||
Unit-based compensation expense | 839 | 839 | ||||||||||||||||||||||||||
Comprehensive income (loss) | 33,389 | 9,023 | (2,582 | ) | 39,830 | |||||||||||||||||||||||
Balance, June 30, 2015 | $ | 740,483 | 59,789,158 | $ | 21,171 | 1,209,562 | $ | (1,751 | ) | (72,674 | ) | $ | (6,020 | ) | $ | 753,883 | ||||||||||||
Balance, January 1, 2016 | $ | 538,197 | 59,796,514 | $ | 17,151 | 1,209,562 | $ | (1,794 | ) | (74,888 | ) | $ | (5,558 | ) | $ | 547,996 | ||||||||||||
Issuance of common units for vesting of phantom units | 68,548 | — | ||||||||||||||||||||||||||
Treasury units purchased | (89 | ) | (11,356 | ) | (89 | ) | ||||||||||||||||||||||
March 2016 Acquisition | 1,799 | 257,000 | 37 | 5,205 | 1,836 | |||||||||||||||||||||||
Contribution (distribution) of capital, net | 232 | (39 | ) | 193 | ||||||||||||||||||||||||
Cash distributions | (51,402 | ) | (5,791 | ) | (57,193 | ) | ||||||||||||||||||||||
Unit-based compensation expense | 480 | 480 | ||||||||||||||||||||||||||
Comprehensive income (loss) | 3,755 | 76 | (7,317 | ) | (3,486 | ) | ||||||||||||||||||||||
Balance, June 30, 2016 | $ | 493,061 | 60,122,062 | $ | 11,434 | 1,214,767 | $ | (1,883 | ) | (86,244 | ) | $ | (12,875 | ) | $ | 489,737 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 3,831 | $ | 42,412 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | 77,864 | 75,592 | |||||
Long-lived asset impairment | 14,598 | 5,310 | |||||
Amortization of deferred financing costs | 1,838 | 1,952 | |||||
Amortization of debt discount | 613 | 576 | |||||
Amortization of terminated interest rate swaps | — | 1,609 | |||||
Interest rate swaps | 649 | (7 | ) | ||||
Unit-based compensation expense | 480 | 839 | |||||
Provision for doubtful accounts | 1,572 | 469 | |||||
(Gain) loss on sale of property, plant and equipment | 156 | (2,062 | ) | ||||
Loss on non-cash consideration in March 2016 Acquisition | 635 | — | |||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable, trade | 8,285 | (8,670 | ) | ||||
Other assets and liabilities | (1,633 | ) | 2,075 | ||||
Net cash provided by operating activities | 108,888 | 120,095 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (33,319 | ) | (138,918 | ) | |||
Payment for March 2016 Acquisition | (13,779 | ) | — | ||||
Proceeds from sale of property, plant and equipment | 10,900 | 11,148 | |||||
Increase in amounts due from affiliates, net | (4,479 | ) | (511 | ) | |||
Net cash used in investing activities | (40,677 | ) | (128,281 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from borrowings of long-term debt | 126,000 | 247,000 | |||||
Repayments of long-term debt | (128,000 | ) | (165,500 | ) | |||
Distributions to unitholders | (57,193 | ) | (71,226 | ) | |||
Net proceeds from issuance of common units | — | 1,268 | |||||
Net proceeds from sale of general partner units | 37 | — | |||||
Payments for debt issuance costs | (1,709 | ) | (1,311 | ) | |||
Payments for settlement of interest rate swaps that include financing elements | (1,590 | ) | (1,877 | ) | |||
Purchases of treasury units | (89 | ) | (274 | ) | |||
Decrease in amounts due to affiliates, net | (5,980 | ) | — | ||||
Net cash provided by (used in) financing activities | (68,524 | ) | 8,080 | ||||
Net decrease in cash and cash equivalents | (313 | ) | (106 | ) | |||
Cash and cash equivalents at beginning of period | 472 | 295 | |||||
Cash and cash equivalents at end of period | $ | 159 | $ | 189 | |||
Supplemental disclosure of non-cash transactions: | |||||||
Non-cash capital contribution from limited and general partner | $ | 984 | $ | 6,328 | |||
Contract operations equipment acquired/exchanged, net | $ | (791 | ) | $ | 101,503 | ||
Common units issued in March 2016 Acquisition | $ | 1,799 | $ | — | |||
Non-cash consideration in March 2016 Acquisition | $ | 3,165 | $ | — | |||
Intangible assets allocated in April 2015 Contract Operations Acquisition | $ | — | $ | 1,055 | |||
Non-cash capital contribution due to the April 2015 Contract Operations Acquisition | $ | — | $ | 7,608 | |||
Common units issued in April 2015 Contract Operations Acquisition | $ | — | $ | 100,267 | |||
General partner units issued in April 2015 Contract Operations Acquisition | $ | — | $ | 2,033 |
June 30, 2016 | December 31, 2015 | ||||||||||||||
Carrying Amount (1) | Fair Value | Carrying Amount (1) | Fair Value | ||||||||||||
Fixed rate debt | $ | 682,019 | $ | 626,000 | $ | 680,484 | $ | 524,000 | |||||||
Floating rate debt | 728,023 | 729,000 | 729,898 | 731,000 | |||||||||||
Total debt | $ | 1,410,042 | $ | 1,355,000 | $ | 1,410,382 | $ | 1,255,000 |
(1) | Carrying values are shown net of unamortized debt discounts and unamortized deferred financing costs. See Note 5(“Long-Term Debt”) for further details. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 3,311 | $ | 22,327 | $ | 3,831 | $ | 42,412 | |||||||
Less: General partner incentive distribution rights | — | (4,460 | ) | — | (8,347 | ) | |||||||||
Less: General partner 2% ownership interest | (66 | ) | (354 | ) | (76 | ) | (676 | ) | |||||||
Common units interest in net income | 3,245 | 17,513 | 3,755 | 33,389 | |||||||||||
Less: Net income attributable to participating securities | (57 | ) | (48 | ) | (113 | ) | (96 | ) | |||||||
Net income used in basic and diluted income per common unit | $ | 3,188 | $ | 17,465 | $ | 3,642 | $ | 33,293 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Weighted average common units outstanding including participating securities | 60,036 | 59,072 | 59,931 | 57,414 | |||||||
Less: Weighted average participating securities outstanding | (199 | ) | (85 | ) | (143 | ) | (72 | ) | |||
Weighted average common units outstanding — used in basic income per common unit | 59,837 | 58,987 | 59,788 | 57,342 | |||||||
Net dilutive potential common units issuable: | |||||||||||
Phantom units | — | — | — | — | |||||||
Weighted average common units and dilutive potential common units — used in diluted income per common unit | 59,837 | 58,987 | 59,788 | 57,342 |
Fair Value | |||
Property, plant and equipment | $ | 14,929 | |
Intangible assets | 3,839 | ||
Purchase price | $ | 18,768 |
Amount (in thousands) | Average Useful Life | ||||
Customer related | $ | 3,839 | 2.3 years |
• | our acquisition in April 2015 of certain contract operations customer service agreements, compression equipment and identifiable intangible assets from Archrock; and |
• | our issuance of approximately 4.0 million common units to Archrock and approximately 80,000 general partner units to our general partner. |
Three months ended June 30, 2015 | Six months ended June 30, 2015 | ||||||
Revenue | $ | 169,113 | $ | 341,175 | |||
Net income | $ | 22,488 | $ | 43,004 | |||
Basic income per common unit | $ | 0.30 | $ | 0.56 | |||
Diluted income per common unit | $ | 0.30 | $ | 0.56 |
• | certain agreements not to compete between Archrock and its affiliates, on the one hand, and us and our affiliates, on the other hand; |
• | Archrock’s obligation to provide all operational staff, corporate staff and support services reasonably necessary to operate our business and our obligation to reimburse Archrock for such services; |
• | the terms under which we, Archrock, and our respective affiliates may transfer, exchange or lease compression equipment among one another; |
• | Archrock’s grant to us of a license to use certain intellectual property, including our logo; and |
• | Archrock’s and our obligations to indemnify each other for certain liabilities. |
June 30, 2016 | December 31, 2015 | ||||||
Revolving credit facility due May 2018 | $ | 578,500 | $ | 580,500 | |||
Term loan facility due May 2018 | 150,000 | 150,000 | |||||
Less: Deferred financing costs, net of amortization | (477 | ) | (602 | ) | |||
149,523 | 149,398 | ||||||
6% senior notes due April 2021 | 350,000 | 350,000 | |||||
Less: Debt discount, net of amortization | (3,543 | ) | (3,862 | ) | |||
Less: Deferred financing costs, net of amortization | (4,882 | ) | (5,396 | ) | |||
341,575 | 340,742 | ||||||
6% senior notes due October 2022 | 350,000 | 350,000 | |||||
Less: Debt discount, net of amortization | (4,379 | ) | (4,673 | ) | |||
Less: Deferred financing costs, net of amortization | (5,177 | ) | (5,585 | ) | |||
340,444 | 339,742 | ||||||
Long-term debt | $ | 1,410,042 | $ | 1,410,382 |
• | first, 98% to all common unitholders, pro rata, and 2% to our general partner, until each unit has received a distribution of $0.4025; |
• | second, 85% to all common unitholders, pro rata, and 15% to our general partner, until each unit has received a distribution of $0.4375; |
• | third, 75% to all common unitholders, pro rata, and 25% to our general partner, until each unit has received a total of $0.5250; and |
• | thereafter, 50% to all common unitholders, pro rata, and 50% to our general partner. |
Period Covering | Payment Date | Distribution per Limited Partner Unit | Total Distribution (1) | |||||||
1/1/2015 — 3/31/2015 | May 15, 2015 | $ | 0.5625 | $ | 35.9 | million | ||||
4/1/2015 — 6/30/2015 | August 14, 2015 | 0.5675 | 39.1 | million | ||||||
7/1/2015 — 9/30/2015 | November 13, 2015 | 0.5725 | 39.7 | million | ||||||
10/1/2015 — 12/31/2015 | February 12, 2016 | 0.5725 | 39.7 | million | ||||||
1/1/2016 — 3/31/2016 | May 13, 2016 | 0.2850 | 17.5 | million |
Phantom Units (in thousands) | Weighted Average Grant Date Fair Value per Unit | |||||
Phantom units outstanding, January 1, 2016 | 77 | $ | 27.01 | |||
Granted | 190 | 7.84 | ||||
Vested | (68 | ) | 18.59 | |||
Phantom units outstanding, June 30, 2016 | 199 | 11.58 |
Expiration Date | Notional Value (in millions) | |||
May 2018 | $ | 300 | ||
May 2019 | 100 | |||
May 2020 | 100 | |||
$ | 500 |
Fair Value Asset (Liability) | ||||||||
Balance Sheet Location | June 30, 2016 | December 31, 2015 | ||||||
Derivatives designated as hedging instruments: | ||||||||
Interest rate swaps | Intangible and other assets, net | $ | — | $ | 45 | |||
Interest rate swaps | Current portion of interest rate swaps | (5,397 | ) | (4,608 | ) | |||
Interest rate swaps | Other long-term liabilities | (7,005 | ) | (1,421 | ) | |||
Total derivatives | $ | (12,402 | ) | $ | (5,984 | ) |
Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives | Location of Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) | Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) | |||||||
Derivatives designated as cash flow hedges: | |||||||||
Interest rate swaps | |||||||||
Three months ended June 30, 2016 | $ | (3,518 | ) | Interest expense | $ | (1,096 | ) | ||
Three months ended June 30, 2015 | 255 | Interest expense | (1,891 | ) | |||||
Six months ended June 30, 2016 | (9,450 | ) | Interest expense | (2,133 | ) | ||||
Six months ended June 30, 2015 | (5,998 | ) | Interest expense | (3,416 | ) |
• | Level 1 — Quoted unadjusted prices for identical instruments in active markets to which we have access at the date of measurement. |
• | Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or prices vary substantially over time or among brokered market makers. |
• | Level 3 — Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect our own assumptions regarding how market participants would price the asset or liability based on the best available information. |
June 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Interest rate swaps asset | $ | — | $ | — | $ | — | $ | — | $ | 45 | $ | — | |||||||||||
Interest rate swaps liability | — | (12,402 | ) | — | — | (6,029 | ) | — |
June 30, 2016 | December 31, 2015 | ||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Impaired long-lived assets | $ | — | $ | — | $ | 813 | $ | — | $ | — | $ | 2,789 |
• | conditions in the oil and natural gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained low price of oil or natural gas; |
• | our reduced profit margins or the loss of market share resulting from competition or the introduction of competing technologies by other companies; |
• | our dependence on Archrock to provide personnel and services, including its ability to hire, train and retain key employees and to cost effectively perform the services necessary to conduct our business; |
• | changes in economic or political conditions, including terrorism and legislative changes; |
• | the inherent risks associated with our operations, such as equipment defects, impairments, malfunctions and natural disasters; |
• | loss of our status as a partnership for United States of America (“U.S.”) federal income tax purposes; |
• | the risk that counterparties will not perform their obligations under our financial instruments; |
• | the financial condition of our customers; |
• | our ability to implement certain business and financial objectives, such as: |
• | growing our asset base and asset utilization; |
• | winning profitable new business; |
• | integrating acquired businesses; |
• | generating sufficient cash; |
• | accessing the capital markets at an acceptable cost; and |
• | purchasing additional contract operations contracts and equipment from Archrock; |
• | liability related to the provision of our services; |
• | changes in governmental safety, health, environmental or other regulations, which could require us to make significant expenditures; and |
• | our level of indebtedness and ability to fund our business. |
• | certain agreements not to compete between Archrock and its affiliates, on the one hand, and us and our affiliates, on the other hand; |
• | Archrock’s obligation to provide all operational staff, corporate staff and support services reasonably necessary to operate our business and our obligation to reimburse Archrock for such services; |
• | the terms under which we, Archrock, and our respective affiliates may transfer, exchange or lease compression equipment among one another; |
• | Archrock’s grant to us of a license to use certain intellectual property, including our logo; and |
• | Archrock’s and our obligations to indemnify each other for certain liabilities. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Total Available Horsepower (at period end)(1)(2) | 3,315 | 3,352 | 3,315 | 3,352 | |||||||
Total Operating Horsepower (at period end)(1)(3) | 2,778 | 3,130 | 2,778 | 3,130 | |||||||
Average Operating Horsepower | 2,815 | 3,128 | 2,888 | 3,081 | |||||||
Horsepower Utilization: | |||||||||||
Spot (at period end) | 84 | % | 93 | % | 84 | % | 93 | % | |||
Average | 85 | % | 94 | % | 87 | % | 95 | % |
(1) | Includes compressor units comprising approximately 600 and 1,000 horsepower leased from Archrock as of June 30, 2016 and 2015, respectively. Excludes compressor units comprising approximately 4,000 horsepower leased to Archrock as of June 30, 2016 (see Note 4 (“Related Party Transactions”) to our Financial Statements). |
(2) | Available horsepower is defined as idle and operating horsepower. New units completed by a third party manufacturer that have been delivered to us are included in the fleet. |
(3) | Operating horsepower is defined as horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 3,311 | $ | 22,327 | $ | 3,831 | $ | 42,412 | |||||||
Depreciation and amortization | 38,627 | 39,487 | 77,864 | 75,592 | |||||||||||
Long-lived asset impairment | 8,283 | 1,826 | 14,598 | 5,310 | |||||||||||
Restructuring charges | 1,208 | — | 5,347 | — | |||||||||||
Selling, general and administrative — affiliates | 19,741 | 20,721 | 43,420 | 41,890 | |||||||||||
Interest expense | 19,313 | 19,082 | 38,055 | 36,914 | |||||||||||
Other (income) loss, net | 72 | (1,512 | ) | 910 | (1,703 | ) | |||||||||
Provision for (benefit from) income taxes | 187 | (72 | ) | 281 | 571 | ||||||||||
Gross margin | $ | 90,742 | $ | 101,859 | $ | 184,306 | $ | 200,986 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 3,311 | $ | 22,327 | $ | 3,831 | $ | 42,412 | |||||||
Depreciation and amortization | 38,627 | 39,487 | 77,864 | 75,592 | |||||||||||
Long-lived asset impairment | 8,283 | 1,826 | 14,598 | 5,310 | |||||||||||
Restructuring charges | 1,208 | — | 5,347 | — | |||||||||||
Non-cash selling, general and administrative — affiliates | 281 | 247 | 480 | 839 | |||||||||||
Interest expense | 19,313 | 19,082 | 38,055 | 36,914 | |||||||||||
Expensed acquisition costs | — | 302 | 172 | 302 | |||||||||||
Less: (Gain) loss on sale of property, plant and equipment | 103 | (1,782 | ) | 156 | (2,062 | ) | |||||||||
Less: Loss on non-cash consideration in March 2016 Acquisition | — | — | 635 | — | |||||||||||
Less: Cash interest expense | (18,527 | ) | (17,893 | ) | (36,545 | ) | (34,661 | ) | |||||||
Less: Maintenance capital expenditures | (5,878 | ) | (15,294 | ) | (13,925 | ) | (25,373 | ) | |||||||
Distributable cash flow | $ | 46,721 | $ | 48,302 | $ | 90,668 | $ | 99,273 | |||||||
Distributions declared to all unitholders for the period, including incentive distribution rights | $ | 17,513 | $ | 39,084 | $ | 35,026 | $ | 74,987 | |||||||
Distributable cash flow coverage(1) | 2.67 | x | 1.24 | x | 2.59 | x | 1.32 | x |
(1) | Defined as distributable cash flow for the period divided by distributions declared to all unitholders for the period, including incentive distribution rights. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net cash provided by operating activities | $ | 42,885 | $ | 42,027 | $ | 108,888 | $ | 120,095 | |||||||
Provision for doubtful accounts | (547 | ) | (79 | ) | (1,572 | ) | (469 | ) | |||||||
Restructuring charges | 1,208 | — | 5,347 | — | |||||||||||
Expensed acquisition costs | — | 302 | 172 | 302 | |||||||||||
Payments for settlement of interest rate swaps that include financing elements | (778 | ) | (935 | ) | (1,590 | ) | (1,877 | ) | |||||||
Maintenance capital expenditures | (5,878 | ) | (15,294 | ) | (13,925 | ) | (25,373 | ) | |||||||
Changes in assets and liabilities | 9,831 | 22,281 | (6,652 | ) | 6,595 | ||||||||||
Distributable cash flow | $ | 46,721 | $ | 48,302 | $ | 90,668 | $ | 99,273 |
Three Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 140,052 | $ | 167,801 | |||
Gross margin(1) | 90,742 | 101,859 | |||||
Gross margin percentage(2) | 65 | % | 61 | % | |||
Expenses: | |||||||
Depreciation and amortization | $ | 38,627 | $ | 39,487 | |||
Long-lived asset impairment | 8,283 | 1,826 | |||||
Restructuring charges | 1,208 | — | |||||
Selling, general and administrative — affiliates | 19,741 | 20,721 | |||||
Interest expense | 19,313 | 19,082 | |||||
Other (income) loss, net | 72 | (1,512 | ) | ||||
Provision for (benefit from) income taxes | 187 | (72 | ) | ||||
Net income | $ | 3,311 | $ | 22,327 |
(1) | Defined as revenue less cost of sales, excluding depreciation and amortization expense. For a reconciliation of gross margin to net income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “— Non-GAAP Financial Measures.” |
(2) | Defined as gross margin divided by revenue. |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 291,476 | $ | 332,096 | |||
Gross margin(1) | 184,306 | 200,986 | |||||
Gross margin percentage(2) | 63 | % | 61 | % | |||
Expenses: | |||||||
Depreciation and amortization | $ | 77,864 | $ | 75,592 | |||
Long-lived asset impairment | 14,598 | 5,310 | |||||
Restructuring charges | 5,347 | — | |||||
Selling, general and administrative — affiliates | 43,420 | 41,890 | |||||
Interest expense | 38,055 | 36,914 | |||||
Other (income) expense, net | 910 | (1,703 | ) | ||||
Provision for income taxes | 281 | 571 | |||||
Net income | $ | 3,831 | $ | 42,412 |
(1) | Defined as revenue less cost of sales, excluding depreciation and amortization expense. For a reconciliation of gross margin to net income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “— Non-GAAP Financial Measures.” |
(2) | Defined as gross margin divided by revenue. |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 108,888 | $ | 120,095 | |||
Investing activities | (40,677 | ) | (128,281 | ) | |||
Financing activities | (68,524 | ) | 8,080 | ||||
Net change in cash and cash equivalents | $ | (313 | ) | $ | (106 | ) |
June 30, 2016 | December 31, 2015 | ||||||
Cash and cash equivalents | $ | 159 | $ | 472 | |||
Working capital | 56,241 | 55,928 |
• | growth capital expenditures, which are made to expand or to replace partially or fully depreciated assets or to expand the operating capacity or revenue generating capabilities of existing or new assets, whether through construction, acquisition or modification; and |
• | maintenance capital expenditures, which are made to maintain the existing operating capacity of our assets and related cash flows further extending the useful lives of the assets. |
Exhibit No. | Description | |
2.1 | Contribution, Conveyance and Assumption Agreement, dated April 17, 2015, by and among Exterran Holdings, Inc., Exterran Energy Solutions, L.P., EES Leasing LLC, EXH GP LP LLC, Exterran GP LLC, EXH MLP LP LLC, Exterran General Partner, L.P., EXLP Operating LLC, EXLP Leasing LLC and Exterran Partners, L.P., incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on April 20, 2015 | |
3.1 | Certificate of Limited Partnership of Universal Compression Partners, L.P. (now Archrock Partners, L.P), incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 filed on June 27, 2006 | |
3.2 | Certificate of Amendment to Certificate of Limited Partnership of Universal Compression Partners, L.P. (now Archrock Partners, L.P.), dated as of August 20, 2007, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 24, 2007 | |
3.3 | Certificate of Amendment of Certificate of Limited Partnership of Exterran Partners, L.P. (now Archrock Partners, L.P.), incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015 | |
3.4 | Composite Certificate of Limited Partnership of Archrock Partners, L.P., incorporated by reference to Exhibit 3.4 to the Registrant’s Annual Report on Form 10-K filed on February 29, 2016 | |
3.5 | First Amended and Restated Agreement of Limited Partnership of Archrock Partners, L.P., as amended, incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 | |
3.6 | Certificate of Limited Partnership of UCO General Partner, LP (now Archrock General Partner, L.P.), incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1 filed on June 27, 2006 | |
3.7 | Amended and Restated Limited Partnership Agreement of UCO General Partner, LP (now Archrock General Partner, L.P.), incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on October 26, 2006 | |
3.8 | Certificate of Formation of UCO GP, LLC (now Archrock GP, LLC), incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form S-1 filed June 27, 2006 | |
3.9 | Amended and Restated Limited Liability Company Agreement of UCO GP, LLC (now Archrock GP, LLC), incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed on October 26, 2006 | |
4.1 | Indenture, dated as of March 27, 2013, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Bank, National Association, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 28, 2013 | |
4.2 | Registration Rights Agreement, dated as of March 27, 2013, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Securities, LLC, as representative of the Initial Purchasers, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on March 28, 2013 | |
4.3 | Indenture, dated as of April 7, 2014, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Bank, National Association, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on April 11, 2014 | |
4.4 | Registration Rights Agreement, dated as of April 7, 2014, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Securities, LLC, as representative of the Initial Purchasers, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on April 7, 2014 | |
10.1 | Fifth Amendment to Amended and Restated Senior Secured Credit Agreement and First Amendment to Amended and Restated Collateral Agreement, dated May 2, 2016, among Archrock Partners Operating LLC, as Borrower, Archrock Partners, L.P., as Guarantor, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 6, 2016 | |
10.2* | Second Amendment to Amended and Restated Collateral Agreement, dated June 17, 2016, among Archrock Partners Operating LLC, as Borrower, Archrock Partners, L.P., the other grantors party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent | |
31.1 * | Certification of the Principal Executive Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 | |
31.2 * | Certification of the Principal Financial Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 | |
32.1 ** | Certification of the Chief Executive Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 ** | Certification of the Chief Financial Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.1 * | Interactive data files pursuant to Rule 405 of Regulation S-T |
* | Filed herewith. |
** | Furnished, not filed. |
Date: August 4, 2016 | ARCHROCK PARTNERS, L.P. | |
By: | ARCHROCK GENERAL PARTNER, L.P. | |
its General Partner | ||
By: | ARCHROCK GP LLC | |
its General Partner | ||
By: | /s/ DAVID S. MILLER | |
David S. Miller | ||
Senior Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
By: | /s/ DONNA A. HENDERSON | |
Donna A. Henderson | ||
Vice President and Chief Accounting Officer | ||
(Principal Accounting Officer) |
Exhibit No. | Description | |
2.1 | Contribution, Conveyance and Assumption Agreement, dated April 17, 2015, by and among Exterran Holdings, Inc., Exterran Energy Solutions, L.P., EES Leasing LLC, EXH GP LP LLC, Exterran GP LLC, EXH MLP LP LLC, Exterran General Partner, L.P., EXLP Operating LLC, EXLP Leasing LLC and Exterran Partners, L.P., incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on April 20, 2015 | |
3.1 | Certificate of Limited Partnership of Universal Compression Partners, L.P. (now Archrock Partners, L.P), incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 filed on June 27, 2006 | |
3.2 | Certificate of Amendment to Certificate of Limited Partnership of Universal Compression Partners, L.P. (now Archrock Partners, L.P.), dated as of August 20, 2007, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 24, 2007 | |
3.3 | Certificate of Amendment of Certificate of Limited Partnership of Exterran Partners, L.P. (now Archrock Partners, L.P.), incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015 | |
3.4 | Composite Certificate of Limited Partnership of Archrock Partners, L.P., incorporated by reference to Exhibit 3.4 to the Registrant’s Annual Report on Form 10-K filed on February 29, 2016 | |
3.5 | First Amended and Restated Agreement of Limited Partnership of Archrock Partners, L.P., as amended, incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 | |
3.6 | Certificate of Limited Partnership of UCO General Partner, LP (now Archrock General Partner, L.P.), incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1 filed on June 27, 2006 | |
3.7 | Amended and Restated Limited Partnership Agreement of UCO General Partner, LP (now Archrock General Partner, L.P.), incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on October 26, 2006 | |
3.8 | Certificate of Formation of UCO GP, LLC (now Archrock GP, LLC), incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form S-1 filed June 27, 2006 | |
3.9 | Amended and Restated Limited Liability Company Agreement of UCO GP, LLC (now Archrock GP, LLC), incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed on October 26, 2006 | |
4.1 | Indenture, dated as of March 27, 2013, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Bank, National Association, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 28, 2013 | |
4.2 | Registration Rights Agreement, dated as of March 27, 2013, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Securities, LLC, as representative of the Initial Purchasers, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on March 28, 2013 | |
4.3 | Indenture, dated as of April 7, 2014, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Bank, National Association, incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on April 11, 2014 | |
4.4 | Registration Rights Agreement, dated as of April 7, 2014, by and among Exterran Partners, L.P., EXLP Finance Corp., the Guarantors named therein and Wells Fargo Securities, LLC, as representative of the Initial Purchasers, incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on April 7, 2014 | |
10.1 | Fifth Amendment to Amended and Restated Senior Secured Credit Agreement and First Amendment to Amended and Restated Collateral Agreement, dated May 2, 2016, among Archrock Partners Operating LLC, as Borrower, Archrock Partners, L.P., as Guarantor, Wells Fargo Bank, National Association, as Administrative Agent, and the other lenders party thereto, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 6, 2016 | |
10.2* | Second Amendment to Amended and Restated Collateral Agreement, dated June 17, 2016, among Archrock Partners Operating LLC, as Borrower, Archrock Partners, L.P., the other grantors party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as Administrative Agent | |
31.1 * | Certification of the Principal Executive Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 | |
31.2 * | Certification of the Principal Financial Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 | |
32.1 ** | Certification of the Chief Executive Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 ** | Certification of the Chief Financial Officer of Archrock GP LLC (as general partner of the general partner of Archrock Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.1 * | Interactive data files pursuant to Rule 405 of Regulation S-T |
* | Filed herewith. |
** | Furnished, not filed. |
Title: | Senior Vice President and Chief Financial Officer |
By: | ARCHROCK GENERAL PARTNER, L.P., its general partner |
By: | ARCHROCK GP LLC, its general partner |
Title: | Senior Vice President and Chief Financial Officer |
Title: | Senior Vice President and Chief Financial Officer |
Title: | Senior Vice President and Chief Financial Officer |
/s/ D. BRADLEY CHILDERS | ||
Name: | D. Bradley Childers | |
Title: | Chief Executive Officer, Archrock GP LLC | |
(Principal Executive Officer) | ||
As General Partner of Archrock General Partner, L.P. | ||
As General Partner of Archrock Partners, L.P. |
/s/ DAVID S. MILLER | ||
Name: | David S. Miller | |
Title: | Chief Financial Officer, Archrock GP LLC | |
(Principal Financial Officer) | ||
As General Partner of Archrock General Partner, L.P. | ||
As General Partner of Archrock Partners, L.P. |
/s/ D. BRADLEY CHILDERS | ||
Name: | D. Bradley Childers | |
Title: | Chief Executive Officer, Archrock GP LLC | |
As General Partner of Archrock General Partner, L.P. | ||
As General Partner of Archrock Partners, L.P. |
/s/ DAVID S. MILLER | ||
Name: | David S. Miller | |
Title: | Chief Financial Officer, Archrock GP LLC | |
As General Partner of Archrock General Partner, L.P. | ||
As General Partner of Archrock Partners, L.P. |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 28, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | ARCHROCK PARTNERS, L.P. | |
Entity Central Index Key | 0001367064 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 60,035,818 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, trade, allowance (in dollars) | $ 1,448 | $ 2,463 |
Common units, units issued | 60,122,062 | 59,796,514 |
General partner units, interest (as a percent) | 2.00% | 2.00% |
General partner units, equivalent units issued | 1,214,767 | 1,209,562 |
General partner units, equivalent units outstanding | 1,214,767 | 1,209,562 |
Treasury units, common units | 86,244 | 74,888 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,311 | $ 22,327 | $ 3,831 | $ 42,412 |
Other comprehensive income (loss): | ||||
Interest rate swap gain (loss), net of reclassifications to earnings | (2,421) | 1,363 | (7,317) | (4,191) |
Amortization of terminated interest rate swaps | 0 | 783 | 0 | 1,609 |
Total other comprehensive income (loss) | (2,421) | 2,146 | (7,317) | (2,582) |
Comprehensive income (loss) | $ 890 | $ 24,473 | $ (3,486) | $ 39,830 |
Organization and Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements of Archrock Partners, L.P. (“we,” “our,” “us,” or the “Partnership”) included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP are not required in these interim financial statements and have been condensed or omitted. Management believes that the information furnished includes all adjustments, consisting only of normal recurring adjustments, that are necessary to present fairly our consolidated financial position, results of operations and cash flows for the periods indicated. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements presented in our Annual Report on Form 10-K for the year ended December 31, 2015, which contains a more comprehensive summary of our accounting policies. The interim results reported herein are not necessarily indicative of results for a full year. Organization Archrock General Partner, L.P. is our general partner and an indirect wholly-owned subsidiary of Archrock, Inc. (individually, and together with its wholly-owned subsidiaries, “Archrock”). As Archrock General Partner, L.P. is a limited partnership, its general partner, Archrock GP LLC, conducts our business and operations, and the board of directors and officers of Archrock GP LLC, which we refer to herein as our board of directors and our officers, make decisions on our behalf. On November 3, 2015, Exterran Holdings, Inc. completed the spin-off (the “Spin-off”) of its international contract operations, international aftermarket services and global fabrication businesses into a standalone public company operating as Exterran Corporation (“Exterran”). To effect the Spin-off, Exterran Holdings, Inc. distributed, on a pro rata basis, all of the shares of Exterran common stock to the stockholders of Exterran Holdings, Inc. as of October 27, 2015. Upon the completion of the Spin-off, Exterran Holdings, Inc. was renamed “Archrock, Inc.” and, on November 4, 2015, the ticker symbol for Archrock’s common stock on the New York Stock Exchange was changed to “AROC.” Archrock continues to hold interests in us, which include the sole general partner interest and certain limited partner interests, as well as all of the incentive distribution rights. Effective on November 3, 2015, we were renamed “Archrock Partners, L.P.” and, on November 4, 2015, the ticker symbol for our common units on the Nasdaq Global Select Market was changed to “APLP.” Comprehensive Income (Loss) Components of comprehensive income (loss) are net income (loss) and all changes in equity during a period except those resulting from transactions with our limited partners or general partner. Our accumulated other comprehensive income (loss) consists only of derivative financial instruments. Changes in accumulated other comprehensive income (loss) represent changes in the fair value of derivative financial instruments that are designated as cash flow hedges to the extent the hedge is effective and amortization of terminated interest rate swaps. See Note 8 (“Accounting for Derivatives”) for additional disclosures related to comprehensive income (loss). Financial Instruments Our financial instruments consist of cash, trade receivables, interest rate swaps and debt. At June 30, 2016 and December 31, 2015, the estimated fair values of these financial instruments approximated their carrying amounts as reflected in our condensed consolidated balance sheets. The fair value of our fixed rate debt was estimated based on quoted market yields in inactive markets, which are Level 2 inputs. The fair value of our floating rate debt was estimated using a discounted cash flow analysis based on interest rates offered on loans with similar terms to borrowers of similar credit quality, which are Level 3 inputs. See Note 9 (“Fair Value Measurements”) for additional information regarding the fair value hierarchy. The following table summarizes the carrying amount and fair value of our debt as of June 30, 2016 and December 31, 2015 (in thousands):
GAAP requires that all derivative instruments (including certain derivative instruments embedded in other contracts) be recognized in the balance sheet at fair value and that changes in such fair values be recognized in income (loss) unless specific hedging criteria are met. Changes in the values of derivatives that meet these hedging criteria will ultimately offset related income effects of the hedged item pending recognition in income. Goodwill Beginning in late 2014 and extending throughout 2015, the energy markets experienced a significant reduction in oil and natural gas prices which has had a significant impact on the financial performance and operating results of many oil and natural gas companies. Such declines accelerated in the fourth quarter of 2015, resulting in higher borrowing costs for companies and a substantial reduction in forecasted capital spending across the energy industry leading to lower projected growth rates over the short-term. Such declines impacted our future cash flow forecasts, our market capitalization, and the market capitalization of peer companies. We identified these conditions as a triggering event, which required us to perform a two-step goodwill impairment test as of December 31, 2015. Accordingly, we recorded a preliminary full impairment of our goodwill in the fourth quarter of 2015 of $127.8 million. During the first quarter of 2016, we finalized the impairment analysis which did not result in an adjustment to the preliminary impairment booked in the fourth quarter of 2015. Income Per Common Unit Income per common unit is computed using the two-class method. Under the two-class method, basic income per common unit is determined by dividing net income allocated to the common units after deducting the amounts allocated to our general partner (including distributions to our general partner on its incentive distribution rights) and participating securities, by the weighted average number of outstanding common units (also referred to as limited partner units) during the period. Participating securities include unvested phantom units with nonforfeitable tandem distribution equivalent rights to receive cash distributions in the quarter in which distributions are paid on common units. During periods of net loss, no effect is given to participating securities because they do not have a contractual obligation to participate in our losses. When computing income per common unit in periods when distributions are greater than income, the amount of the actual incentive distribution rights, if any, is deducted from net income and allocated to our general partner for the corresponding period. The remaining amount of net income, after deducting distributions to participating securities, is allocated between the general partner and common units based on how our partnership agreement allocates net losses. When computing income per common unit in periods when income is greater than distributions, income is allocated to the general partner, participating securities and common units based on how our partnership agreement would allocate income if the full amount of income for the period had been distributed. This allocation of net income does not impact our total net income, consolidated results of operations or total cash distributions (including actual incentive distribution rights); however, it may result in our general partner being allocated additional incentive distributions for purposes of our income per unit calculation, which could reduce net income per common unit. However, as required by our partnership agreement, we determine cash distributions based on available cash and determine the actual incentive distributions allocable to our general partner based on actual distributions. The following table reconciles net income used in the calculation of basic and diluted income per common unit (in thousands):
The following table shows the potential common units that were included in computing diluted income per common unit (in thousands):
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Recent Accounting Developments |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Developments | 2. Recent Accounting Developments Accounting Standards Updates Not Yet Implemented In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09 (“Update 2016-09”) that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either debt or equity liabilities, and classification on the statement of cash flows. For public entities, Update 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of Update 2016-09 on our consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“Update 2016-02”) that establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Under the new guidance, lessor accounting is largely unchanged. Update 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of Update 2016-02 on our consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“Update 2014-09”) that outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance, including industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Update 2014-09 also requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Update 2014-09 will be effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted for reporting periods beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach. In March 2016, the FASB issued Accounting Standards Update No. 2016-08 (“Update 2016-08”), which clarifies the guidance in Update 2014-09 by providing guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer. In April 2016, the FASB issued Accounting Standards Update 2016-10 (“Update 2016-10”), clarifying the implementation guidance on identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Also in April 2016, the FASB issued Accounting Standards Update No. 2016-11 (“Update 2016-11”), rescinding certain paragraphs pertaining to accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. In May 2016, the FASB issued Accounting Standards Update No. 2016-12 (“Update 2016-12”), clarifying implementation guidance on a few narrow areas and adds some practical expedients to the guidance. Each of these subsequent updates has the same effective date as Update 2014-09. We are currently evaluating the potential impact of Update 2014-09, Update 2016-08, Update 2016-10, Update 2016-11 and Update 2016-12 on our consolidated financial statements. |
Business Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions | 3. Business Acquisitions March 2016 Acquisition On March 1, 2016, we completed an acquisition of contract operations customer service agreements with four customers and a fleet of 19 compressor units used to provide compression services under those agreements comprising approximately 23,000 horsepower. The $18.8 million purchase price was funded with $13.8 million in borrowings under our revolving credit facility, a non-cash exchange of 24 compressor units for $3.2 million, and the issuance of 257,000 common units for $1.8 million. In connection with this acquisition, we issued and sold 5,205 general partner units to our general partner so it could maintain its approximate 2% general partner interest in us. This acquisition is referred to as the “March 2016 Acquisition.” During the six months ended June 30, 2016, we incurred transaction costs of approximately $0.2 million related to the March 2016 Acquisition, which is reflected in other (income) expense, net, in our condensed consolidated statement of operations. We accounted for the March 2016 Acquisition using the acquisition method, which requires, among other things, assets acquired to be recorded at their fair value on the acquisition date. The following table summarizes the purchase price allocation based on estimated fair values of the acquired assets as of the acquisition date (in thousands):
Property, Plant and Equipment and Intangible Assets Acquired Property, plant and equipment is comprised of compressor units that will be depreciated on a straight-line basis over an estimated average remaining useful life of 15 years. The amount of finite life intangible assets, and their associated average useful lives, was determined based on the period which the assets are expected to contribute directly or indirectly to our future cash flows, and consisted of the following:
The results of operations attributable to the assets acquired in the March 2016 Acquisition have been included in our condensed consolidated financial statements since the date of acquisition. Pro forma financial information is not presented for the March 2016 Acquisition as it is immaterial to our reported results. April 2015 Contract Operations Acquisition On April 17, 2015, we acquired from Archrock contract operations customer service agreements with 60 customers and a fleet of 238 compressor units used to provide compression services under those agreements, comprising approximately 148,000 horsepower, or 3% (by then available horsepower) of the combined contract operations business of Archrock and us. The acquired assets also included 179 compressor units, comprising approximately 66,000 horsepower, previously leased from Archrock to us. At the acquisition date, the acquired fleet assets had a net book value of $108.8 million, net of accumulated depreciation of $59.9 million. Total consideration for the transaction was approximately $102.3 million, excluding transaction costs. In connection with this acquisition, we issued approximately 4.0 million common units to Archrock and approximately 80,000 general partner units to our general partner. Based on the terms of the contribution, conveyance and assumption agreement, the common units and general partner units, including incentive distribution rights, we issued for this acquisition were not entitled to receive a cash distribution relating to the quarter ended March 31, 2015. This acquisition is referred to as the “April 2015 Contract Operations Acquisition.” In connection with this acquisition, we were allocated $1.1 million finite life intangible assets associated with customer relationships of Archrock’s contract operations segment. The amounts allocated were based on the ratio of fair value of the net assets transferred to us to the total fair value of Archrock’s contract operations segment. These intangible assets are being amortized through 2024, based on the present value of income expected to be realized from these intangible assets. Because Archrock and we are considered entities under common control, GAAP requires that we record the assets acquired and liabilities assumed from Archrock in connection with the April 2015 Contract Operations Acquisition using Archrock’s historical cost basis in the assets and liabilities. The difference between the historical cost basis of the assets acquired and liabilities assumed and the purchase price is treated as either a capital contribution or distribution. As a result, we recorded a capital contribution of $7.6 million for the April 2015 Contract Operations Acquisition during the six months ended June 30, 2015. An acquisition of a business from an entity under common control is generally accounted for under GAAP by the acquirer with retroactive application as if the acquisition date was the beginning of the earliest period included in the financial statements. Retroactive effect to the April 2015 Contract Operations Acquisition was impracticable because such retroactive application would have required significant assumptions in a prior period that cannot be substantiated. Accordingly, our financial statements include the assets acquired, liabilities assumed, revenue and direct operating expenses associated with the acquisition beginning on the date of such acquisition. However, the preparation of pro forma financial information allows for certain assumptions that do not meet the standards of financial statements prepared in accordance with GAAP. Pro Forma Financial Information Pro forma financial information for the six months ended June 30, 2015 has been included to give effect to the additional assets acquired in the April 2015 Contract Operations Acquisition. The April 2015 Contract Operations Acquisition is presented in the pro forma financial information as though this transaction occurred as of January 1, 2015. The pro forma financial information reflects the following transactions related to the April 2015 Contract Operations Acquisition:
The pro forma financial information below is presented for informational purposes only and is not necessarily indicative of our results of operations that would have occurred had the transaction been consummated at the beginning of the period presented, nor is it necessarily indicative of future results. The pro forma financial information below was derived by adjusting our historical financial statements. The following table shows pro forma financial information for the three and six months ended June 30, 2015 (in thousands, except per unit amounts):
Pro forma net income per common unit is determined by dividing the pro forma net income that would have been allocated to our common unitholders by the weighted average number of common units outstanding after the completion of the transactions included in the pro forma financial information. Pursuant to our partnership agreement, to the extent that the quarterly distributions exceed certain targets, our general partner is entitled to receive certain incentive distributions that will result in more net income proportionately being allocated to our general partner than to our common unitholders. The pro forma net income per limited partner unit calculations reflect the incentive distributions made to our general partner and a reduction of net income allocable to our limited partners of $0.3 million for the six months ended June 30, 2015, which reflects the amount of additional incentive distributions that would have occurred if the pro forma limited partner units had been outstanding as of January 1, 2015. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||
Related Party Transactions | 4. Related Party Transactions We are a party to an omnibus agreement with Archrock, our general partner and others (as amended and/or restated, the “Omnibus Agreement”), which includes, among other things:
The Omnibus Agreement will terminate upon a change of control of Archrock GP LLC, our general partner or us, and certain provisions of the Omnibus Agreement will terminate upon a change of control of Archrock. Purchase of New Compression Equipment from Archrock In connection with the Spin-off, Archrock contributed its fabrication business to Exterran and we entered into a separate supply agreement with Exterran under which we are obligated to purchase our requirements of newly-fabricated compression equipment from Exterran and its affiliates, subject to certain exceptions. For the six months ended June 30, 2016, we purchased $16.8 million of newly-manufactured compression equipment from Exterran. Prior to the November 2015 amendment and restatement of our Omnibus Agreement, in connection with the Spin-off, we were able to purchase newly-fabricated compression equipment from Archrock or its affiliates at Archrock’s cost to fabricate such equipment plus a fixed margin. During the six months ended June 30, 2015, we purchased $109.7 million of newly-fabricated compression equipment from Archrock. Transactions between us and Archrock and its affiliates are transactions between entities under common control. Under GAAP, transfers of assets and liabilities between entities under common control are to be initially recorded on the books of the receiving entity at the carrying value of the transferor. Any difference between consideration given and the carrying value of the assets or liabilities is treated as a capital distribution or contribution. As a result, the newly-fabricated compression equipment purchased during the six months ended June 30, 2015 was recorded in our condensed consolidated balance sheets as property, plant and equipment of $100.9 million, which represents the carrying value of Archrock’s affiliates that sold it to us, and as a distribution of equity of $8.8 million, which represents the fixed margin we paid above the carrying value in accordance with the Omnibus Agreement. During the six months ended June 30, 2016 and 2015, Archrock contributed to us $1.0 million and $6.0 million, respectively, primarily related to the completion of overhauls on compression equipment that was exchanged with us or contributed to us and where overhauls were in progress on the date of exchange or contribution. Transfer, Exchange or Lease of Compression Equipment with Archrock If Archrock determines in good faith that we or Archrock’s contract operations services business need to transfer, exchange or lease compression equipment between Archrock and us, the Omnibus Agreement permits such equipment to be transferred, exchanged or leased if it will not cause us to breach any existing contracts, suffer a loss of revenue under an existing compression services contract or incur any unreimbursed costs. In consideration for such transfer, exchange or lease of compression equipment, the transferee will either (1) transfer to the transferor compression equipment equal in value to the appraised value of the compression equipment transferred to it, (2) agree to lease such compression equipment from the transferor or (3) pay the transferor an amount in cash equal to the appraised value of the compression equipment transferred to it. During the six months ended June 30, 2016, pursuant to the terms of the Omnibus Agreement, we transferred ownership of 202 compressor units, totaling approximately 102,800 horsepower with a net book value of approximately $45.8 million, to Archrock. In exchange, Archrock transferred ownership of 171 compressor units, totaling approximately 74,300 horsepower with a net book value of approximately $45.0 million, to us. During the six months ended June 30, 2015, pursuant to the terms of the Omnibus Agreement, we transferred ownership of 243 compressor units, totaling approximately 80,100 horsepower with a net book value of approximately $38.6 million, to Archrock. In exchange, Archrock transferred ownership of 191 compressor units, totaling approximately 69,800 horsepower with a net book value of approximately $31.6 million, to us. During the six months ended June 30, 2016 and 2015, we recorded capital distributions of approximately $0.8 million and $7.0 million, respectively, related to the differences in net book value on the exchanged compression equipment. No customer contracts were included in the transfers. Under the terms of the Omnibus Agreement, such transfers must be of equal appraised value, as defined in the Omnibus Agreement, with any difference being settled in cash. At June 30, 2016, we had equipment on lease to Archrock with an aggregate cost and accumulated depreciation of $0.3 million and $0.1 million, respectively. At December 31, 2015, we had equipment on lease to Archrock with an aggregate cost and accumulated depreciation of $10.1 million and $3.3 million, respectively. During each of the six month periods ended June 30, 2016 and 2015, we had revenue of $0.1 million from Archrock related to the lease of our compression equipment. During the six months ended June 30, 2016 and 2015, we had cost of sales of $0.1 million and $1.5 million, respectively, with Archrock related to the lease of Archrock’s compression equipment. Reimbursement of Operating and SG&A Expense Archrock provides all operational staff, corporate staff and support services reasonably necessary to run our business. These services may include, without limitation, operations, marketing, maintenance and repair, periodic overhauls of compression equipment, inventory management, legal, accounting, treasury, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, credit, payroll, internal audit, taxes, facilities management, investor relations, enterprise resource planning system, training, executive, sales, business development and engineering. Archrock charges us for costs that are directly attributable to us. Costs that are indirectly attributable to us and Archrock’s other operations are allocated among Archrock’s other operations and us. The allocation methodologies vary based on the nature of the charge and have historically included, among other things, revenue, headcount and horsepower. We believe that the allocation methodologies used to allocate indirect costs to us are reasonable. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | 5. Long-Term Debt Long-term debt consisted of the following (in thousands):
Revolving Credit Facility and Term Loan Facility In February 2015, we amended our senior secured credit agreement (the “Credit Agreement”), which among other things, increased the borrowing capacity under the revolving credit facility by $250.0 million to $900.0 million. In May 2016, we further amended our Credit Agreement to, among other things, decrease the borrowing capacity under the revolving credit facility by $75.0 million to $825.0 million. Prior to this amendment, we were able to increase the aggregate commitments under the Credit Agreement by up to an additional $50 million subject to certain conditions, including the approval of the lenders. As a result of this amendment and subject to certain conditions, including the approval of the lenders, we are able to increase the aggregate commitments under the Credit Agreement by up to an additional $125 million. During the six months ended June 30, 2016 and 2015, we incurred transaction costs of $1.7 million and $1.3 million, respectively, related to these amendments of our Credit Agreement. These costs were recorded in intangible and other assets, net, and are being amortized to interest expense over the term of the facility. The Credit Agreement, which matures in May 2018, also includes a $150.0 million term loan facility. As of June 30, 2016, we had undrawn and available capacity of $246.5 million under our revolving credit facility. 6% Senior Notes Due April 2021 and 6% Senior Notes Due October 2022 In March 2013, we issued $350.0 million aggregate principal amount of 6% senior notes due April 2021 (the “2013 Notes”). In April 2014, we issued $350.0 million aggregate principal amount of 6% senior notes due October 2022 (the “2014 Notes”).The 2013 Notes and the 2014 Notes are guaranteed on a senior unsecured basis by all of our existing subsidiaries (other than Archrock Partners Finance Corp., which is a co-issuer of the 2013 Notes and the 2014 Notes) and certain of our future subsidiaries. The 2013 Notes and the 2014 Notes and the guarantees, respectively, are our and the guarantors’ general unsecured senior obligations, rank equally in right of payment with all of our and the guarantors’ other senior obligations, and are effectively subordinated to all of our and the guarantors’ existing and future secured debt to the extent of the value of the collateral securing such indebtedness. In addition, the 2013 Notes and the 2014 Notes and guarantees are effectively subordinated to all existing and future indebtedness and other liabilities of any future non-guarantor subsidiaries. All of our subsidiaries are 100% owned, directly or indirectly, by us and guarantees by our subsidiaries are full and unconditional (subject to customary release provisions which are discussed in our Annual Report on Form 10-K for the year ended December 31, 2015) and constitute joint and several obligations. We have no assets or operations independent of our subsidiaries, and there are no significant restrictions upon our subsidiaries’ ability to distribute funds to us. Archrock Partners Finance Corp. has no operations and does not have revenue other than as may be incidental as co-issuer of the 2013 Notes and the 2014 Notes. Because we have no independent operations, the guarantees are full and unconditional (subject to customary release provisions) and constitute joint and several obligations of our subsidiaries other than Archrock Partners Finance Corp., and as a result we have not included consolidated financial information of our subsidiaries. |
Cash Distributions |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Distributions | 6. Cash Distributions We make distributions of available cash (as defined in our partnership agreement) from operating surplus in the following manner:
The following table summarizes our distributions per unit for 2015 and 2016:
(1) Includes distributions to our general partner on its incentive distribution rights. On July 27, 2016, our board of directors approved a cash distribution of $0.2850 per limited partner unit, or approximately $17.5 million. The distribution covers the period from April 1, 2016 through June 30, 2016. The record date for this distribution is August 9, 2016 and payment is expected to occur on August 15, 2016. |
Unit-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Unit-Based Compensation | 7. Unit-Based Compensation Long-Term Incentive Plan Our board of directors adopted the Archrock Partners, L.P. Long-Term Incentive Plan (the “Plan”) in October 2006 for the benefit of the employees, directors and consultants of us, Archrock and our respective affiliates. A maximum of 1,035,378 common units are available for the issuance of common unit options, restricted units, unit awards and phantom units under the Plan. The Plan is administered by the compensation committee of our board of directors (the “Plan Administrator”). Phantom units are notional units that entitle the grantee to receive common units upon the vesting of such phantom units or, at the discretion of the Plan Administrator, cash equal to the fair market value of the underlying common units. Phantom units granted under the Plan may include nonforfeitable tandem distribution equivalent rights to receive cash distributions on unvested phantom units in the quarter in which distributions are paid on common units. Phantom units generally vest one-third per year on each of the first three anniversaries of the grant date. Phantom Units The following table presents phantom unit activity during the six months ended June 30, 2016:
As of June 30, 2016, we expect $2.3 million of unrecognized compensation cost related to unvested phantom units to be recognized over the weighted-average period of 2.5 years. |
Accounting for Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Derivatives | 8. Accounting for Derivatives We are exposed to market risks associated with changes in interest rates. We use derivative financial instruments to minimize the risks and/or costs associated with financial activities by managing our exposure to interest rate fluctuations on a portion of our debt obligations. We do not use derivative financial instruments for trading or other speculative purposes. Interest Rate Risk At June 30, 2016, we were a party to the following interest rate swaps, which were entered into to offset changes in expected cash flows due to fluctuations in the associated variable interest rates:
As of June 30, 2016, the weighted average effective fixed interest rate on our interest rate swaps was 1.6%. We have designated these interest rate swaps as cash flow hedging instruments so that any change in their fair values is recognized as a component of comprehensive income (loss) and is included in accumulated other comprehensive income (loss) to the extent the hedge is effective. As the swap terms substantially coincide with the hedged item and are expected to offset changes in expected cash flows due to fluctuations in the variable rate, we currently do not expect a significant amount of ineffectiveness on these hedges. We perform quarterly calculations to determine whether the swap agreements are still effective and to calculate any ineffectiveness. We recorded an immaterial amount of interest income during the six months ended June 30, 2016 as compared to $0.4 million of interest income during the six months ended June 30, 2015 due to ineffectiveness related to interest rate swaps. We estimate that $4.8 million of deferred losses attributable to interest rate swaps and included in our accumulated other comprehensive income (loss) at June 30, 2016, will be reclassified into earnings as interest expense at then-current values during the next twelve months as the underlying hedged transactions occur. Cash flows from derivatives designated as hedges are classified in our condensed consolidated statements of cash flows under the same category as the cash flows from the underlying assets, liabilities or anticipated transactions, unless the derivative contract contains a significant financing element; in this case, the cash settlements for these derivatives are classified as cash flows from financing activities in our condensed consolidated statements of cash flows. The following tables present the effect of derivative instruments on our consolidated financial position and results of operations (in thousands):
The counterparties to our derivative agreements are major international financial institutions. We monitor the credit quality of these financial institutions and do not expect non-performance by any counterparty, although such non-performance could have a material adverse effect on us. We have no specific collateral posted for our derivative instruments. The counterparties to our interest rate swaps are also lenders under our senior secured credit facility and, in that capacity, share proportionally in the collateral pledged under the related facility. |
Fair Value Measurements |
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Fair Value Measurements | 9. Fair Value Measurements The accounting standard for fair value measurements and disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories:
The following table presents our assets and liabilities measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, with pricing levels as of the date of valuation (in thousands):
Our interest rate swaps are recorded at fair value utilizing a combination of the market approach and income approach to estimate fair value based on forward LIBOR curves. The following table presents our assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2016 and December 31, 2015, with pricing levels as of the date of valuation (in thousands):
Our estimate of the impaired long-lived assets’ fair value was primarily based on either the expected net sale proceeds compared to other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use. We discounted the expected proceeds, net of selling and other carrying costs, using a weighted average disposal period of four years. |
Long-Lived Asset Impairment |
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Jun. 30, 2016 | |
Asset Impairment Charges [Abstract] | |
Long-Lived Asset Impairment | 10. Long-Lived Asset Impairment We review long-lived assets, including property, plant and equipment and identifiable intangibles that are being amortized, for impairment whenever events or changes in circumstances, including the removal of compressor units from our active fleet, indicate that the carrying amount of an asset may not be recoverable. During the three and six months ended June 30, 2016, we reviewed the future deployment of our idle compression assets for units that were not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. Based on this review, we determined that approximately 100 and 160 idle compressor units totaling approximately 31,000 and 53,000 horsepower would be retired from the active fleet during the three and six months ended June 30, 2016, respectively. The retirement of these units from the active fleet triggered a review of these assets for impairment. As a result, we recorded a $7.7 million and a $14.0 million asset impairment to reduce the book value of each unit to its estimated fair value during the three and six months ended June 30, 2016, respectively. The fair value of each unit was estimated based on either the expected net sale proceeds compared to other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use. In connection with our fleet review during the three and six months ended June 30, 2016, we evaluated for impairment idle units that had been culled from our fleet in prior years and were available for sale. Based upon that review, we reduced the expected proceeds from disposition for certain of the remaining units. This resulted in an additional impairment of $0.6 million during the three and six months ended June 30, 2016 to reduce the book value of each unit to its estimated fair value. During the three and six months ended June 30, 2015, we reviewed the future deployment of our idle compression assets for units that were not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. Based on this review, we determined that approximately 20 and 50 idle compressor units totaling approximately 6,000 and 17,000 horsepower would be retired from the active fleet during the three and six months ended June 30, 2015, respectively. The retirement of these units from the active fleet triggered a review of these assets for impairment. As a result, we recorded a $1.4 million and a $4.9 million asset impairment to reduce the book value of each unit to its estimated fair value during the three and six months ended June 30, 2015, respectively. The fair value of each unit was estimated based on either the expected net sale proceeds compared to other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use. In connection with our fleet review during the three and six months ended June 30, 2015, we evaluated for impairment idle units that had been culled from our fleet in prior years and were available for sale. Based upon that review, we reduced the expected proceeds from disposition for certain of the remaining units. This resulted in an additional impairment of $0.4 million during the three and six months ended June 30, 2015 to reduce the book value of each unit to its estimated fair value. |
Restructuring Charges |
6 Months Ended |
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Jun. 30, 2016 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | 11. Restructuring Charges In the first quarter of 2016, Archrock determined to undertake a cost reduction program to reduce its on-going operating expenses, including workforce reductions and closure of certain make ready shops. These actions were the result of Archrock’s review of its business and efforts to efficiently manage cost and maintain its business in line with current and expected activity levels and anticipated make ready demand in the U.S. market. During the three and six months ended June 30, 2016, we incurred $1.2 million and $5.3 million, respectively, of restructuring charges comprised of an allocation of expenses related to severance benefits and consulting fees associated with this cost reduction plan from Archrock to us pursuant to the terms of the Omnibus Agreement based on horsepower. These charges are reflected as restructuring charges in our condensed consolidated statements of operations. |
Unit Transactions |
6 Months Ended |
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Jun. 30, 2016 | |
Partners' Capital [Abstract] | |
Unit Transactions | 12. Unit Transactions On March 1, 2016, the Partnership completed the March 2016 Acquisition. A portion of the $18.8 million purchase price was funded through the issuance of 257,000 common units for $1.8 million. In connection with this acquisition, we issued and sold 5,205 general partner units to our general partner so it could maintain its approximate 2% general partner interest in us. In May 2015, we entered into an At-The-Market Equity Offering Sales Agreement (the “ATM Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC. During the three months ended June 30, 2015, we sold 49,774 common units for net proceeds of $1.3 million pursuant to the ATM Agreement. We did not make any sales under the ATM Agreement during the three months ended June 30, 2016 and the ATM Agreement expired pursuant to its terms on June 21, 2016. In April 2015, we completed the April 2015 Contract Operations Acquisition from Archrock. In connection with this acquisition, we issued approximately 4.0 million common units to Archrock and approximately 80,000 general partner units to our general partner. As of June 30, 2016, Archrock owned 23,582,056 common units and 1,214,767 general partner units, collectively representing approximately 40% interest in us. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. Commitments and Contingencies In 2011, the Texas Legislature enacted changes related to the appraisal of natural gas compressors for ad valorem tax purposes by expanding the definitions of “Heavy Equipment Dealer” and “Heavy Equipment” effective from the beginning of 2012 (the “Heavy Equipment Statutes”). Under the revised statutes, we believe we are a Heavy Equipment Dealer, that our natural gas compressors are Heavy Equipment and that we, therefore, are required to file our ad valorem tax renditions under this new methodology. We further believe that, under the Heavy Equipment Statutes, our natural gas compressors are taxable in the counties where we maintain a business location and keep natural gas compressors instead of where the compressors may be located on January 1 of a tax year. A large number of appraisal review boards denied our position, and we filed petitions for review in the appropriate district courts. As of June 30, 2016, three of these cases have been decided. In each case, the district court held that the revised Heavy Equipment Statutes apply to natural gas compressors. However, in each case, the district court further held that the revised Heavy Equipment Statutes are unconstitutional as applied to natural gas compressors, and that the natural gas compressors of our wholly owned subsidiary Archrock Partners Leasing LLC, formerly known as EXLP Leasing LLC (“EXLP Leasing”), and Archrock’s subsidiary Archrock Services Leasing LLC, formerly known as EES Leasing LLC (“EES Leasing”), are taxable in the counties where they were located on January 1 of the tax year at issue, which is favorable to the county appraisal districts. We appealed all three of these decisions. On August 25, 2015, the Fourteenth Court of Appeals in Houston, Texas issued a ruling stating that EXLP Leasing’s and EES Leasing’s natural gas compressors are taxable in the counties where they were located on January 1 of the tax year at issue, and it remanded the case to the district court for further evidence on the issue of whether the Heavy Equipment Statutes are constitutional as applied to EXLP Leasing’s and EES Leasing’s compressors. On November 24, 2015, we filed a petition asking the Texas Supreme Court to review this decision. On March 21, 2016, the Galveston Central Appraisal District filed a response to our petition for review, and we filed a reply on April 26, 2016. On September 23, 2015, the Eighth Court of Appeals in El Paso, Texas decided the other two appellate cases in our favor by affirming the district court’s ruling that the Heavy Equipment Statutes apply to natural gas compressors, and overturning the district court’s ruling that the Heavy Equipment Statutes are unconstitutional as applied to natural gas compressors. The Eighth Court of Appeals also ruled, however, that EXLP Leasing’s and EES Leasing’s natural gas compressors are taxable in the counties where they were located on January 1 of the tax year at issue. The Ward County Appraisal District and Loving County Appraisal District each filed (on January 27, 2016 and February 10, 2016, respectively) a petition asking the Texas Supreme Court to review its respective Eighth Court of Appeals decision. On March 11, 2016, we filed responses to the appraisal districts’ petitions and cross-petitions for review in each case asking the Texas Supreme Court to review the Eighth Court of Appeals’ determination that natural gas compressors are taxable in the counties where they were located on January 1 of the tax year at issue. The Ward County Appraisal District filed its response to our cross-petition on June 6, 2016, and we filed a reply on June 21, 2016. The Loving County Appraisal District filed its response to our cross-petition on May 27, 2016, and we filed a reply on June 10, 2016. In EES Leasing LLC and EXLP Leasing LLC v. Harris County Appraisal District, the parties filed motions for summary judgment, which are currently pending before the district court. In EES Leasing LLC v. Irion County Appraisal District, the court denied both parties’ respective motions for summary judgment concerning taxes assessed by Irion County for the 2012 tax year, and consolidated the case with EES Leasing’s 2013 tax year case, which also included EXLP Leasing as a party. On August 27, 2015, the Irion County district court abated the consolidated case, EES Leasing LLC and EXLP Leasing LLC v. Irion County Appraisal District, until the final resolution of the appellate cases considering the constitutionality of the Heavy Equipment Statutes, or further order of the court. As a result of the new methodology, our ad valorem tax expense (which is reflected in our condensed consolidated statements of operations as a component of cost of sales (excluding depreciation and amortization expense)) includes a benefit of $7.2 million during the six months ended June 30, 2016. Since the change in methodology became effective in 2012, we have recorded an aggregate benefit of $42.4 million as of June 30, 2016, of which approximately $10.4 million has been agreed to by a number of appraisal review boards and county appraisal districts and $32.0 million has been disputed and is currently in litigation. Recognizing the similarity of the issues and that these cases will ultimately be resolved by the Texas appellate courts, we have reached, or intend to reach, agreements with as many of the appraisal districts as possible to stay or abate any appeals that are pending in district court. If our appeals are ultimately unsuccessful, we would be required to pay ad valorem taxes up to the aggregate benefit we have recorded, and the additional ad valorem tax payments may also be subject to substantial penalties and interest. In addition, while we do not expect the ultimate determination of the issue of where the natural gas compressors are taxable under the Heavy Equipment Statutes would have an impact on the amount of taxes due, we could be subject to substantial penalties if we are unsuccessful on this issue. Also, if we are unsuccessful in our litigation with the appraisal districts, or if legislation is enacted in Texas that repeals or alters the Heavy Equipment Statutes such that in the future we do not qualify as a Heavy Equipment Dealer or our compressors do not qualify as Heavy Equipment, then we would likely be required to pay these ad valorem taxes under the old methodology going forward, which would increase our quarterly cost of sales expense up to approximately the amount of our then most recent quarterly benefit recorded. If this litigation is resolved against us in whole or in part, or if in the future we do not qualify as a Heavy Equipment Dealer or our compressors do not qualify as Heavy Equipment because of new or revised Texas statutes, we will incur additional taxes and could be subject to substantial penalties and interest, which would impact our future results of operations and cash flows, including our cash available for distribution. In the ordinary course of business, we are also involved in various other pending or threatened legal actions. While management is unable to predict the ultimate outcome of these actions, it believes that any ultimate liability arising from any of these other actions will not have a material adverse effect on our consolidated financial position, results of operations or cash flows, including our ability to make cash distributions to our unitholders. However, because of the inherent uncertainty of litigation and arbitration proceedings, we cannot provide assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material adverse effect on our consolidated financial position, results of operations or cash flows, including our ability to make cash distributions to our unitholders. We are subject to a number of state and local taxes that are not income-based. As many of these taxes are subject to audit by the taxing authorities, it is possible that an audit could result in additional taxes due. We accrue for such additional taxes when we determine that it is probable that we have incurred a liability and we can reasonably estimate the amount of the liability. As of June 30, 2016 and December 31, 2015, we had accrued $1.3 million and $1.1 million, respectively, for the outcomes of non-income based tax audits. We do not expect that the ultimate resolutions of these audits will result in a material variance from the amounts accrued. We do not accrue for unasserted claims for tax audits unless we believe the assertion of a claim is probable, it is probable that it will be determined that the claim is owed and we can reasonably estimate the claim or range of the claim. We also believe the likelihood is remote that the impact of potential unasserted claims from non-income based tax audits could be material to our consolidated financial position, but it is possible that the resolution of future audits could be material to our results of operations or cash flows for the period in which the resolution occurs. |
Organization and Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Components of comprehensive income (loss) are net income (loss) and all changes in equity during a period except those resulting from transactions with our limited partners or general partner. Our accumulated other comprehensive income (loss) consists only of derivative financial instruments. Changes in accumulated other comprehensive income (loss) represent changes in the fair value of derivative financial instruments that are designated as cash flow hedges to the extent the hedge is effective and amortization of terminated interest rate swaps. See Note 8 (“Accounting for Derivatives”) for additional disclosures related to comprehensive income (loss). |
Financial Instruments | Financial Instruments Our financial instruments consist of cash, trade receivables, interest rate swaps and debt. At June 30, 2016 and December 31, 2015, the estimated fair values of these financial instruments approximated their carrying amounts as reflected in our condensed consolidated balance sheets. The fair value of our fixed rate debt was estimated based on quoted market yields in inactive markets, which are Level 2 inputs. The fair value of our floating rate debt was estimated using a discounted cash flow analysis based on interest rates offered on loans with similar terms to borrowers of similar credit quality, which are Level 3 inputs. See Note 9 (“Fair Value Measurements”) for additional information regarding the fair value hierarchy. |
Income (Loss) Per Common Unit | Income Per Common Unit Income per common unit is computed using the two-class method. Under the two-class method, basic income per common unit is determined by dividing net income allocated to the common units after deducting the amounts allocated to our general partner (including distributions to our general partner on its incentive distribution rights) and participating securities, by the weighted average number of outstanding common units (also referred to as limited partner units) during the period. Participating securities include unvested phantom units with nonforfeitable tandem distribution equivalent rights to receive cash distributions in the quarter in which distributions are paid on common units. During periods of net loss, no effect is given to participating securities because they do not have a contractual obligation to participate in our losses. When computing income per common unit in periods when distributions are greater than income, the amount of the actual incentive distribution rights, if any, is deducted from net income and allocated to our general partner for the corresponding period. The remaining amount of net income, after deducting distributions to participating securities, is allocated between the general partner and common units based on how our partnership agreement allocates net losses. When computing income per common unit in periods when income is greater than distributions, income is allocated to the general partner, participating securities and common units based on how our partnership agreement would allocate income if the full amount of income for the period had been distributed. This allocation of net income does not impact our total net income, consolidated results of operations or total cash distributions (including actual incentive distribution rights); however, it may result in our general partner being allocated additional incentive distributions for purposes of our income per unit calculation, which could reduce net income per common unit. However, as required by our partnership agreement, we determine cash distributions based on available cash and determine the actual incentive distributions allocable to our general partner based on actual distributions. |
Accounting Standards Updates Not Yet Implemented | Accounting Standards Updates Not Yet Implemented In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-09 (“Update 2016-09”) that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either debt or equity liabilities, and classification on the statement of cash flows. For public entities, Update 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of Update 2016-09 on our consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“Update 2016-02”) that establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Under the new guidance, lessor accounting is largely unchanged. Update 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the impact of Update 2016-02 on our consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (“Update 2014-09”) that outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance, including industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Update 2014-09 also requires disclosures enabling users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Update 2014-09 will be effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted for reporting periods beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach. In March 2016, the FASB issued Accounting Standards Update No. 2016-08 (“Update 2016-08”), which clarifies the guidance in Update 2014-09 by providing guidance on recording revenue on a gross basis versus a net basis based on the determination of whether an entity is a principal or an agent when another party is involved in providing goods or services to a customer. In April 2016, the FASB issued Accounting Standards Update 2016-10 (“Update 2016-10”), clarifying the implementation guidance on identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Also in April 2016, the FASB issued Accounting Standards Update No. 2016-11 (“Update 2016-11”), rescinding certain paragraphs pertaining to accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. In May 2016, the FASB issued Accounting Standards Update No. 2016-12 (“Update 2016-12”), clarifying implementation guidance on a few narrow areas and adds some practical expedients to the guidance. Each of these subsequent updates has the same effective date as Update 2014-09. We are currently evaluating the potential impact of Update 2014-09, Update 2016-08, Update 2016-10, Update 2016-11 and Update 2016-12 on our consolidated financial statements. |
Organization and Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the carrying amount and fair value of debt | The following table summarizes the carrying amount and fair value of our debt as of June 30, 2016 and December 31, 2015 (in thousands):
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Schedule of reconciliation of net income used in calculation of basic and diluted earnings per common unit | The following table reconciles net income used in the calculation of basic and diluted income per common unit (in thousands):
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Schedule of potential common units included in computing diluted earnings per common unit | The following table shows the potential common units that were included in computing diluted income per common unit (in thousands):
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Business Acquisitions (Tables) |
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Schedule of pro forma financial information | The following table shows pro forma financial information for the three and six months ended June 30, 2015 (in thousands, except per unit amounts):
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Summary of purchase price allocation based on estimated fair values of acquired assets and liabilities as of the acquisition date | The following table summarizes the purchase price allocation based on estimated fair values of the acquired assets as of the acquisition date (in thousands):
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Schedule of amounts of finite-lived intangible assets, and their associated average useful lives | The amount of finite life intangible assets, and their associated average useful lives, was determined based on the period which the assets are expected to contribute directly or indirectly to our future cash flows, and consisted of the following:
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt consisted of the following (in thousands):
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Cash Distributions (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of distributions per unit | The following table summarizes our distributions per unit for 2015 and 2016:
(1) Includes distributions to our general partner on its incentive distribution right |
Unit-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of phantom unit activity | The following table presents phantom unit activity during the six months ended June 30, 2016:
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Accounting for Derivatives (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | At June 30, 2016, we were a party to the following interest rate swaps, which were entered into to offset changes in expected cash flows due to fluctuations in the associated variable interest rates:
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Effect of derivative instruments on consolidated financial position | The following tables present the effect of derivative instruments on our consolidated financial position and results of operations (in thousands):
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Effect of derivative instruments on results of operations |
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis with pricing levels as of the date of valuation | The following table presents our assets and liabilities measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015, with pricing levels as of the date of valuation (in thousands):
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Schedule of assets and liabilities measured at fair value on a nonrecurring basis with pricing levels as of the date of valuation | The following table presents our assets and liabilities measured at fair value on a nonrecurring basis as of June 30, 2016 and December 31, 2015, with pricing levels as of the date of valuation (in thousands):
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Organization and Summary of Significant Accounting Policies - Financial Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
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Carrying Amount | ||
Financial Instruments | ||
Total debt | $ 1,410,042 | $ 1,410,382 |
Carrying Amount | Fixed rate debt | ||
Financial Instruments | ||
Total debt | 682,019 | 680,484 |
Carrying Amount | Floating rate debt | ||
Financial Instruments | ||
Total debt | 728,023 | 729,898 |
Fair Value | ||
Financial Instruments | ||
Total debt | 1,355,000 | 1,255,000 |
Fair Value | Fixed rate debt | ||
Financial Instruments | ||
Total debt | 626,000 | 524,000 |
Fair Value | Floating rate debt | ||
Financial Instruments | ||
Total debt | $ 729,000 | $ 731,000 |
Organization and Summary of Significant Accounting Policies - Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Goodwill, Impaired | |
Goodwill, impairment loss | $ 127.8 |
Business Acquisitions - Net Assets Acquired (Details) - March 2016 Acquisition $ in Thousands |
Mar. 01, 2016
USD ($)
|
---|---|
Net Assets Acquired | |
Property, plant and equipment | $ 14,929 |
Intangible assets | 3,839 |
Purchase price | $ 18,768 |
Business Acquisitions - Finite Lived Assets Acquired (Details) - March 2016 Acquisition - Customer related $ in Thousands |
Mar. 01, 2016
USD ($)
|
---|---|
Business Acquisitions | |
Total acquired identifiable intangible assets | $ 3,839 |
Weighted average useful life | 2 years 3 months 18 days |
Business Acquisitions - Pro Forma Financial Information (Narratives) (Details) - USD ($) $ in Millions |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 17, 2015 |
Apr. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Business Acquisitions | ||||
Additional pro forma reduction of net income allocable to the entity's limited partners | $ 0.3 | |||
Partners' Capital Common Units | ||||
Business Acquisitions | ||||
Units issued in connection with acquisition (in units) | 257,000 | 3,963,138 | ||
Partners' Capital General Partner Units | ||||
Business Acquisitions | ||||
Units issued in connection with acquisition (in units) | 5,205 | 80,341 | ||
April 2015 Contract Operations Acquisition | Partners' Capital Common Units | ||||
Business Acquisitions | ||||
Units issued in connection with acquisition (in units) | 4,000,000 | 4,000,000 | ||
April 2015 Contract Operations Acquisition | Partners' Capital General Partner Units | ||||
Business Acquisitions | ||||
Units issued in connection with acquisition (in units) | 80,000 | 80,000 |
Business Acquisitions - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2015 |
Jun. 30, 2015 |
|
Pro forma financial information | ||
Revenue | $ 169,113 | $ 341,175 |
Net income | $ 22,488 | $ 43,004 |
Basic income per common unit (in dollars per unit) | $ 0.30 | $ 0.56 |
Diluted income per common unit (in dollars per unit) | $ 0.30 | $ 0.56 |
Long-Term Debt - Revolving Credit Facility and Term Loan (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
May 02, 2016 |
Feb. 28, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revolving credit facility and term loan facility | ||||
Long-Term Debt | ||||
Transaction costs | $ 1,700,000 | $ 1,300,000 | ||
Revolving credit facility due May 2018 | ||||
Long-Term Debt | ||||
Increase (decrease) in borrowing capacity | $ (75,000,000) | $ 250,000,000 | ||
Maximum borrowing capacity | 825,000,000.0 | $ 900,000,000.0 | ||
Line of credit remaining potential increase to borrowing capacity | 50,000,000 | |||
Aggregate maximum increase to credit facility | $ 125,000,000 | |||
Undrawn capacity under revolving credit facility | 246,500,000 | |||
Line of credit facility current available borrowing capacity | 246,500,000 | |||
Term loan facility due May 2018 | ||||
Long-Term Debt | ||||
Maximum borrowing capacity | $ 150,000,000.0 |
Long-Term Debt Long-Term Debt - Senior Notes (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
Apr. 30, 2014 |
Mar. 31, 2013 |
---|---|---|---|---|
Long-Term Debt | ||||
Ownership percentage (as a percent) | 100.00% | |||
Amount of independent assets or operations | $ 0 | |||
6% senior notes due April 2021 | ||||
Long-Term Debt | ||||
Principal amount of senior debt | $ 350,000,000 | |||
Interest rate (as a percent) | 6.00% | 6.00% | 6.00% | |
6% senior notes due October 2022 | ||||
Long-Term Debt | ||||
Principal amount of senior debt | $ 350,000,000 | |||
Interest rate (as a percent) | 6.00% | 6.00% | 6.00% |
Cash Distributions Cash Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
May 13, 2016 |
Feb. 12, 2016 |
Nov. 13, 2015 |
Aug. 14, 2015 |
May 15, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Summary of distributions per unit | |||||||||
Distribution per limited partner unit (in dollars per unit) | $ 0.2850 | $ 0.5725 | $ 0.5725 | $ 0.5675 | $ 0.5625 | $ 0.285 | $ 0.5625 | $ 0.8575 | $ 1.12 |
Total Distribution | $ 17,500 | $ 39,700 | $ 39,700 | $ 39,100 | $ 35,900 | $ 57,193 | $ 71,226 |
Unit-Based Compensation - Long-term Incentive Plan (Details) |
Jun. 30, 2016
shares
|
---|---|
Long-Term Incentive Plan | |
Unit-Based Compensation | |
Maximum number of shares available under the Plan | 1,035,378 |
Accounting for Derivatives - Interest Rate Risk (Details) - Derivatives designated as hedging instruments - Interest rate swaps $ in Millions |
Jun. 30, 2016
USD ($)
|
---|---|
Accounting for Derivatives | |
Notional amount of interest rate swaps | $ 500 |
Derivative expiring in 2018 | |
Accounting for Derivatives | |
Notional amount of interest rate swaps | 300 |
Derivative expiring in 2019 | |
Accounting for Derivatives | |
Notional amount of interest rate swaps | 100 |
Derivative expiring in 2020 | |
Accounting for Derivatives | |
Notional amount of interest rate swaps | $ 100 |
Accounting for Derivatives - Interest Rate Risk (Narratives) (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2015 |
Jun. 30, 2016 |
|
Accounting for Derivatives | ||
Interest income recorded due to ineffectiveness related to interest rate swaps | $ 0.4 | |
Deferred losses to be reclassified during next 12 months | $ 4.8 | |
Interest rate swaps | Derivatives designated as hedging instruments | ||
Accounting for Derivatives | ||
Weighted average effective fixed interest rate on interest rate swaps (as a percent) | 1.60% |
Accounting for Derivatives - Effect on Derivative Instruments on the Balance Sheet (Details) - Derivatives designated as hedging instruments - Interest rate swaps - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounting for Derivatives | ||
Total derivatives, Fair value | $ (12,402) | $ (5,984) |
Intangible and other assets, net | ||
Accounting for Derivatives | ||
Derivatives asset , fair value | 0 | 45 |
Current portion of interest rate swaps | ||
Accounting for Derivatives | ||
Derivatives liability, fair value | (5,397) | (4,608) |
Other long-term liabilities | ||
Accounting for Derivatives | ||
Derivatives liability, fair value | $ (7,005) | $ (1,421) |
Accounting for Derivatives - Effect on Derivative Instruments on the Income Statement (Details) - Derivatives designated as cash flow hedges - Interest rate swaps - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Effect of derivative instruments on results of operations | ||||
Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives | $ (3,518) | $ 255 | $ (9,450) | $ (5,998) |
Interest expense | ||||
Effect of derivative instruments on results of operations | ||||
Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) | $ (1,096) | $ (1,891) | $ (2,133) | $ (3,416) |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Recurring basis | Level 1 | ||
Fair value measurements | ||
Interest rate swaps asset | $ 0 | $ 0 |
Interest rate swaps liability | 0 | 0 |
Recurring basis | Level 2 | ||
Fair value measurements | ||
Interest rate swaps asset | 0 | 45 |
Interest rate swaps liability | (12,402) | (6,029) |
Recurring basis | Level 3 | ||
Fair value measurements | ||
Interest rate swaps asset | 0 | 0 |
Interest rate swaps liability | 0 | 0 |
Nonrecurring basis | Level 1 | ||
Fair value measurements | ||
Impaired long-lived assets | 0 | 0 |
Nonrecurring basis | Level 2 | ||
Fair value measurements | ||
Impaired long-lived assets | 0 | 0 |
Nonrecurring basis | Level 3 | ||
Fair value measurements | ||
Impaired long-lived assets | $ 813 | $ 2,789 |
Fair Value Measurements (Narratives) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Impaired long-lived assets | |
Fair value measurements | |
Weighted average disposal period used in estimation of the fair value of the impaired long-lived assets | 4 years |
Long-Lived Asset Impairment (Details) hp in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016
USD ($)
compressor_unit
hp
|
Jun. 30, 2015
USD ($)
compressor_unit
hp
|
Jun. 30, 2016
USD ($)
compressor_unit
hp
|
Jun. 30, 2015
USD ($)
compressor_unit
hp
|
|
Long-lived asset impairment | ||||
Long-lived asset impairment | $ 8,283 | $ 1,826 | $ 14,598 | $ 5,310 |
Held for sale | ||||
Long-lived asset impairment | ||||
Long-lived asset impairment | $ 600 | $ 400 | $ 600 | $ 400 |
Idle compressor units | ||||
Long-lived asset impairment | ||||
Number of long-lived assets to be retired | compressor_unit | 100 | 20 | 160 | 50 |
Horsepower of long-lived assets to be retired | hp | 31 | 6 | 53 | 17 |
Long-lived asset impairment | $ 7,700 | $ 1,400 | $ 14,000 | $ 4,900 |
Restructuring Charges (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Restructuring and Related Activities [Abstract] | ||||
Restructuring charges | $ 1,208 | $ 0 | $ 5,347 | $ 0 |
Commitments and Contingencies (Details) $ in Millions |
6 Months Ended | 54 Months Ended | ||
---|---|---|---|---|
Sep. 23, 2015
case
|
Jun. 30, 2016
USD ($)
case
|
Jun. 30, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Number of heavy equipment statutes cases tried and completed in Texas state district court | case | 3 | |||
Number of heavy equipment statutes cases appealed | case | 3 | |||
Number of heavy equipment statutes appellate cases with favorable ruling | case | 2 | |||
Ad valorem tax benefit | $ 7.2 | $ 42.4 | ||
Ad valorem tax benefit agreed to by a number of appraisal review boards and county appraisal districts | 10.4 | 10.4 | ||
Ad valorem tax benefit in litigation | 32.0 | 32.0 | ||
Accrued liability for the outcomes of non-income based tax audits | $ 1.3 | $ 1.3 | $ 1.1 |
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