Delaware | 22-3935108 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer x | Smaller reporting company o |
Emerging growth company o | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Page | |
2018 Form 10-K | Archrock Partners, L.P.’s Annual Report on Form 10-K for the year ended December 31, 2018 |
2027 Notes | $500.0 million of 6.875% senior notes due April 2027, issued in March 2019 |
6% Notes | $350.0 million of 6% senior notes due April 2021 and $350 million of 6% senior notes due October 2022, collectively |
Amendment No. 1 | Amendment No. 1 to Credit Agreement dated February 23, 2018, which amended that certain Credit Agreement, dated as of March 30, 2017, which governs the Credit Facility |
Archrock | Prior to the Merger: Archrock, Inc., individually and together with its wholly-owned subsidiaries Subsequent to the Merger: Archrock, Inc., individually and together with its wholly-owned subsidiaries, excluding the Partnership |
ASC 842 Leases | Accounting Standards Codification Topic 842 Leases as promulgated by Accounting Standards Update No. 2016-02 Leases (Topic 842) and further updated by Accounting Standards Updates No. 2018-11 Leases (Topic 842): Targeted Improvements and 2019-01 Leases (Topic 842) — Codification Improvements |
ASU 2016-13 | Accounting Standards Update No. 2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
ASU 2017-12 | Accounting Standards Update No. 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities |
ASU 2018-13 | Accounting Standards Update No. 2018-13 Fair Value Measurement (Topic 820) — Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement |
Credit Facility | $1.25 billion asset-based revolving credit facility due March 2022, as amended by Amendment No. 1 |
EBITDA | Earnings before interest, taxes, depreciation and amortization |
Exchange Act | Securities Exchange Act of 1934, as amended |
FASB | Financial Accounting Standards Board |
Financial Statements | Condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q |
GAAP | U.S. generally accepted accounting principles |
General Partner | Archrock General Partner, L.P., the Partnership’s general partner, and an indirect, wholly-owned subsidiary of Archrock |
Merger | Transaction in which Archrock acquired all of the Partnership’s outstanding common units not already owned by Archrock pursuant to the Agreement and Plan of Merger, dated as of January 1, 2018, among Archrock and the Partnership, which was amended by Amendment No. 1 to Agreement and Plan of Merger on January 11, 2018, and which was completed and effective on April 26, 2018 |
Omnibus Agreement | Partnership’s Fifth Amended and Restated Omnibus Agreement with certain Archrock entities, dated as of April 26, 2018, which governs various services and transactions that may occur between the Partnership and Archrock |
Partnership, we, our, us | Archrock Partners, L.P., together with its subsidiaries |
Revenue Recognition Update | Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606) and additional related standards updates |
Revolving Loan Agreement | Agreement dated April 26, 2018 among the Partnership and Archrock under which the Partnership may make loans to Archrock |
ROU | Right-of-use, as related to the new lease model under ASC 842 Leases |
SEC | U.S. Securities and Exchange Commission |
Securities Act | Securities Act of 1933, as amended |
SG&A | Selling, general and administrative |
U.S. | United States of America |
• | the risk that cost savings, tax benefits and any other synergies from the Merger may not be fully realized or may take longer to realize than expected; |
• | conditions in the oil and natural gas industry, including the level of production of, demand for or 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; |
• | 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: |
– | winning profitable new business; |
– | growing our asset base and enhancing asset utilization; |
– | integrating acquired businesses; |
– | generating sufficient cash; and |
– | accessing the capital markets at an acceptable cost; |
• | liability related to the use 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. |
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | $ | $ | |||||
Accounts receivable, trade, net of allowance of $965 and $1,253, respectively | |||||||
Tax refund receivable | |||||||
Derivative asset | |||||||
Other current assets | |||||||
Total current assets | |||||||
Property, plant and equipment | |||||||
Accumulated depreciation | ( | ) | ( | ) | |||
Property, plant and equipment, net | |||||||
Intangible assets, net | |||||||
Contract costs, net | |||||||
Loan receivable due from Archrock | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND PARTNERS’ CAPITAL | |||||||
Current liabilities: | |||||||
Accounts payable, trade | $ | $ | |||||
Accrued liabilities | |||||||
Deferred revenue | |||||||
Accrued interest | |||||||
Due to Archrock, net | |||||||
Total current liabilities | |||||||
Long-term debt | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Commitments and contingencies (Note 11) | |||||||
Partners’ capital: | |||||||
Common units: 70,231,036 issued and outstanding | |||||||
General partner units: 1,422,458 issued and outstanding | |||||||
Accumulated other comprehensive income | |||||||
Total partners’ capital | |||||||
Total liabilities and partners’ capital | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenue | $ | $ | |||||
Cost of sales (excluding depreciation and amortization) | |||||||
Selling, general and administrative | |||||||
Depreciation and amortization | |||||||
Long-lived asset impairment | |||||||
Interest expense, net | |||||||
Merger-related costs | |||||||
Other (income) loss, net | ( | ) | |||||
Income before income taxes | |||||||
Provision for income taxes | |||||||
Net income | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net income | $ | $ | |||||
Other comprehensive income (loss): | |||||||
Interest rate swap gain (loss), net of reclassifications to earnings | ( | ) | |||||
Amortization of terminated interest rate swaps | |||||||
Total other comprehensive income (loss) | ( | ) | |||||
Comprehensive income | $ | $ |
Partners’ Capital | Treasury Units | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||
Common Units | General Partner Units | |||||||||||||||||||||||||||
Amount | Units | Amount | Units | Amount | Units | Total | ||||||||||||||||||||||
Balance at January 1, 2018 | $ | $ | $ | ( | ) | ( | ) | $ | $ | |||||||||||||||||||
Issuance of common units for vesting of phantom units | — | |||||||||||||||||||||||||||
Treasury units purchased | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Issuance of general partner units | ||||||||||||||||||||||||||||
Contribution of capital, net | ||||||||||||||||||||||||||||
Cash distributions ($0.285 per common unit) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Unit-based compensation expense | ||||||||||||||||||||||||||||
Impact of adoption of Revenue Recognition Update | ||||||||||||||||||||||||||||
Impact of adoption of ASU 2017-12 | ||||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||
Interest rate swap gain, net of reclassifications to earnings | ||||||||||||||||||||||||||||
Amortization of terminated interest rate swaps | ||||||||||||||||||||||||||||
Balance at March 31, 2018 | $ | $ | $ | ( | ) | ( | ) | $ | $ | |||||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Distribution of capital, net | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Contribution of capital - excess of fair market value of equipment sold to Archrock over equipment purchased from Archrock | ||||||||||||||||||||||||||||
Cash distributions ($0.240 per common unit) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Cash contributions from Archrock | ||||||||||||||||||||||||||||
Comprehensive income (loss) | ||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||
Interest rate swap loss, net of reclassifications to earnings | ( | ) | ( | ) | ||||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Long-lived asset impairment | |||||||
Amortization of deferred financing costs | |||||||
Amortization of debt discount | |||||||
Amortization of terminated interest rate swaps | |||||||
Interest rate swaps | ( | ) | |||||
Unit-based compensation expense | |||||||
Provision for (benefit from) doubtful accounts | ( | ) | |||||
(Gain) loss on sale of property, plant and equipment | ( | ) | |||||
Deferred income tax provision | |||||||
Amortization of contract costs | |||||||
Deferred revenue recognized in earnings | ( | ) | ( | ) | |||
Changes in assets and liabilities: | |||||||
Accounts and other receivables | ( | ) | |||||
Contract costs | ( | ) | ( | ) | |||
Deferred revenue | |||||||
Other assets and liabilities | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Proceeds from sale of property, plant and equipment | |||||||
Proceeds from insurance | |||||||
Loans receivable from Archrock, net | ( | ) | |||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from borrowings of long-term debt | |||||||
Repayments of long-term debt | ( | ) | ( | ) | |||
Payments for debt issuance costs | ( | ) | ( | ) | |||
(Payments for) proceeds from settlement of interest rate swaps that include financing elements | ( | ) | |||||
Distributions to unitholders | ( | ) | ( | ) | |||
Contributions from Archrock | |||||||
Net proceeds from issuance of general partner units | |||||||
Purchases of treasury units | ( | ) | |||||
Decrease in amounts due to Archrock, net | ( | ) | ( | ) | |||
Net cash provided by (used in) financing activities | ( | ) | |||||
Net decrease in cash | ( | ) | ( | ) | |||
Cash at beginning of period | |||||||
Cash at end of period | $ | $ | |||||
Supplemental disclosure of non-cash transactions: | |||||||
Non-cash capital contribution, net from limited partner | $ | $ | |||||
Contract operations equipment acquired, net | ( | ) | |||||
Non-cash capital contribution from Archrock |
Three Months Ended March 31, 2019 | |||||||
Sold to Archrock | Purchased from Archrock | ||||||
Compressor units | |||||||
Horsepower | |||||||
Net book value | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||
Credit Facility | $ | $ | |||||
6.875% senior notes due April 2027 | |||||||
Less: Deferred financing costs, net of amortization | ( | ) | |||||
6% senior notes due April 2021 | |||||||
Less: Debt discount, net of amortization | ( | ) | ( | ) | |||
Less: Deferred financing costs, net of amortization | ( | ) | ( | ) | |||
6% senior notes due October 2022 | |||||||
Less: Debt discount, net of amortization | ( | ) | ( | ) | |||
Less: Deferred financing costs, net of amortization | ( | ) | ( | ) | |||
Long-term debt | $ | $ |
EBITDA to Interest Expense | 2.5 to 1.0 |
Senior Secured Debt to EBITDA | 3.5 to 1.0 |
Total Debt to EBITDA | |
Through fiscal year 2018 | 5.95 to 1.0 |
Through fiscal year 2019 | 5.75 to 1.0 |
Through second quarter of 2020 | 5.50 to 1.0 |
Thereafter (1) | 5.25 to 1.0 |
(1) |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
0 - 1,000 horsepower per unit | $ | $ | |||||
1,001 - 1,500 horsepower per unit | |||||||
Over 1,500 horsepower per unit | |||||||
Other (1) | |||||||
Total revenue (2) | $ | $ |
(1) | Primarily relates to fees associated with Partnership-owned non-compressor equipment. |
(2) |
2019 | 2020 | 2021 | 2022 | 2023 | Total | ||||||||||||||||||
Remaining performance obligations | $ | $ | $ | $ | $ | $ |
Expiration Date | Notional Value | |||
May 2019 | $ | |||
May 2020 | ||||
March 2022 | ||||
$ |
Fair Value Asset (Liability) | |||||||
March 31, 2019 | December 31, 2018 | ||||||
Derivative asset | $ | $ | |||||
Other assets | |||||||
$ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Pre-tax gain (loss) recognized in other comprehensive income (loss) | $ | ( | ) | $ | |||
Pre-tax gain (loss) reclassified from accumulated other comprehensive income into interest expense, net | ( | ) |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Total amount of interest expense, net in which the effects of cash flow hedges are recorded | $ | $ | |||||
Amount of gain (loss) reclassified from accumulated other comprehensive income into interest expense, net | ( | ) |
• | 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. |
March 31, 2019 | December 31, 2018 | ||||||
Carrying amount of fixed rate debt (1) | $ | $ | |||||
Fair value of fixed rate debt |
(1) |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Idle compressor units retired from the active fleet | |||||||
Horsepower of idle compressor units retired from the active fleet | |||||||
Impairment recorded on idle compressor units retired from the active fleet | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenue | $ | 165,719 | $ | 147,002 | |||
Cost of sales (excluding depreciation and amortization) | 67,724 | 56,302 | |||||
Selling, general and administrative | 21,107 | 19,801 | |||||
Depreciation and amortization | 35,376 | 34,326 | |||||
Long-lived asset impairment | 2,684 | 3,066 | |||||
Interest expense, net | 23,428 | 21,609 | |||||
Merger-related costs | — | 1,376 | |||||
Other (income) loss, net | 552 | (287 | ) | ||||
Provision for income taxes | 529 | 519 | |||||
Net income | $ | 14,319 | $ | 10,290 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Idle compressor units retired from the active fleet | 15 | 35 | |||||
Horsepower of idle compressor units retired from the active fleet | 13,000 | 13,000 | |||||
Impairment recorded on idle compressor units retired from the active fleet | $ | 2,684 | $ | 3,066 |
Exhibit No. | Description | |
2.1 | ||
2.2 | ||
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
3.5 | ||
3.6 | ||
3.7 | ||
3.8 | ||
3.9 | ||
3.10 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
10.1 | ||
10.2 | ||
31.1* | ||
31.2* |
32.1** | ||
32.2** | ||
101.1* | Interactive data files pursuant to Rule 405 of Regulation S-T |
* | Filed herewith. |
** | Furnished, not filed. |
ARCHROCK PARTNERS, L.P. | ||
By: | ARCHROCK GENERAL PARTNER, L.P. | |
its General Partner | ||
By: | ARCHROCK GP LLC | |
its General Partner | ||
By: | /s/ DOUGLAS S. ARON | |
Douglas S. Aron | ||
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) | ||
April 30, 2019 |
1. | I have reviewed this Quarterly Report on Form 10-Q of Archrock Partners, L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/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. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Archrock Partners, L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ DOUGLAS S. ARON | ||
Name: | Douglas S. Aron | |
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. |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. |
/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. |
1. | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. |
/s/ DOUGLAS S. ARON | ||
Name: | Douglas S. Aron | |
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 |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 29, 2019 |
|
Document and Entity Information | ||
Entity Registrant Name | Archrock Partners, L.P. | |
Entity Central Index Key | 0001367064 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 70,231,036 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, trade, allowance (in dollars) | $ 965 | $ 1,253 |
Common units, issued (in units) | 70,231,036 | 70,231,036 |
Common units, outstanding (in units) | 70,231,036 | 70,231,036 |
General partner units, issued (in units) | 1,422,458 | 1,422,458 |
General partner units, outstanding (in units) | 1,422,458 | 1,422,458 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Statement [Abstract] | ||
Revenue | $ 165,719 | $ 147,002 |
Cost of sales (excluding depreciation and amortization) | 67,724 | 56,302 |
Selling, general and administrative | 21,107 | 19,801 |
Depreciation and amortization | 35,376 | 34,326 |
Long-lived asset impairment | 2,684 | 3,066 |
Interest expense, net | 23,428 | 21,609 |
Merger-related costs | 0 | 1,376 |
Other (income) loss, net | 552 | (287) |
Income before income taxes | 14,848 | 10,809 |
Provision for income taxes | 529 | 519 |
Net income | $ 14,319 | $ 10,290 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 14,319 | $ 10,290 |
Other comprehensive income (loss): | ||
Interest rate swap gain (loss), net of reclassifications to earnings | (3,225) | 4,985 |
Amortization of terminated interest rate swaps | 0 | 166 |
Total other comprehensive income (loss) | (3,225) | 5,151 |
Comprehensive income | $ 11,094 | $ 15,441 |
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (Parentheticals) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Partners' Capital [Abstract] | ||
Distribution per common unit (in dollars per unit) | $ 0.240 | $ 0.285 |
Organization and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation We are a leading provider of natural gas compression services to customers in the oil and natural gas industry throughout the U.S. Our contract operations services primarily include designing, sourcing, owning, installing, operating, servicing, repairing and maintaining equipment to provide natural gas compression services to our customers. In April 2018, Archrock completed the acquisition of all of our outstanding common units that it did not already own and, as a result, we became its wholly-owned subsidiary. See Note 10 (“Partners’ Capital”) for further details of the Merger. The accompanying unaudited condensed consolidated financial statements included herein have been prepared in accordance with GAAP and the rules and regulations of the SEC. 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, which 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 2018 Form 10-K, 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. Certain prior year amounts have been reclassified to conform to the current year presentation. Omission of Information by Certain Wholly-Owned Subsidiaries |
Recent Accounting Developments |
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Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Developments | 2. Recent Accounting Developments Accounting Standards Updates Implemented Leases ASC 842 Leases establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet. Leases are 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. We are a party to leases in our contract operations services agreements. We adopted ASC 842 Leases on January 1, 2019, and have determined that ASC 842 Leases will not have an impact on our condensed consolidated financial statements. ASC 842 Leases provides several practical expedients, one of which is for lessors to not separate lease and nonlease components and instead account for those components as a single component if the nonlease components otherwise would be accounted for under the Revenue Recognition Update and certain conditions are met. ASC 842 Leases also provides clarification for lessors on whether ASC 842 Leases or the Revenue Recognition Update is applicable to the combined component based on determination of the predominant component. We have concluded that for our contract operations services agreements, in which we are the lessor, the services nonlease component is predominant over the compression unit lease component and therefore ongoing recognition of these agreements will continue to follow the Revenue Recognition Update guidance. Accounting Standards Updates Not Yet Implemented In August 2018, the FASB issued ASU 2018-13 which amends the required fair value measurements disclosures related to valuation techniques and inputs used, uncertainty in measurement and changes in measurements applied. These amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact of ASU 2018-13 on our consolidated financial statements and footnote disclosures. |
Related Party Transactions |
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Related Party Transactions | 3. Related Party Transactions Revolving Loan Agreement with Archrock In conjunction with the closing of the Merger, we and Archrock entered into the Revolving Loan Agreement under which we may make loans to Archrock from time to time in an aggregate amount not to exceed the Credit Facility’s outstanding balance. The Revolving Loan Agreement matures on the maturity date of our Credit Facility. Interest on amounts loaned under the Revolving Loan Agreement is payable to us on a monthly basis and is calculated as a proportion of our total interest expense on the Credit Facility. At March 31, 2019, the balance of outstanding borrowings under the Revolving Loan Agreement was $21.4 million. During the three months ended March 31, 2019, we recorded $0.2 million of interest income earned on loans to Archrock under the Revolving Loan Agreement which was included in interest expense, net in our condensed consolidated statements of operations. Common Control Transactions 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 received is treated as a capital distribution or contribution. Sales of Compression Equipment with Archrock If Archrock determines in good faith that we or Archrock’s contract operations services business needs to sell compression equipment between Archrock and us, the Omnibus Agreement permits such transactions if it will not cause us to breach any existing contracts, suffer a loss of revenue under any existing contract operations services contracts or incur any unreimbursed costs. As consideration for the sale of compression equipment, the transferee will make a distribution to or receive a contribution from the transferor in an amount equal to the net book value of the compression equipment sold. The following table summarizes compressor unit sales activity between Archrock and us (dollars in thousands):
During the three months ended March 31, 2019, we recorded a capital distribution of $2.9 million related to the difference in net book value of the compression equipment sold to and acquired from Archrock. In addition, in accordance with the Omnibus Agreement, we recorded a capital contribution of $1.8 million which represented the net excess of the fair market value of the equipment sold to Archrock over the equipment purchased from Archrock. No customer contracts were included in these sales. Transfers of Overhauls During the three months ended March 31, 2019 and 2018, Archrock contributed to us $1.0 million and $1.8 million, respectively, related to the completion of overhauls on compression equipment that was sold to us and where the overhauls were in progress on the date of the sale. 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. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | 4. Long-Term Debt Long-term debt consisted of the following (in thousands):
Credit Facility As of March 31, 2019, we had $15.2 million letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 2.7%. The weighted average annual interest rate on the outstanding balance under the Credit Facility, excluding the effect of interest rate swaps, was 5.3% and 5.4% at March 31, 2019 and December 31, 2018, respectively. We incurred $0.5 million in commitment fees on the daily unused amount of the Credit Facility during each of the three months ended March 31, 2019 and 2018. We must maintain the following consolidated financial ratios, as defined in our Credit Facility agreement:
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As a result of the ratio requirements above, $485.8 million of the $834.3 million of undrawn capacity was available for additional borrowings as of March 31, 2019. As of March 31, 2019, we were in compliance with all covenants under the Credit Facility agreement. 2027 Notes On March 21, 2019, we completed a private offering of $500.0 million aggregate principal amount of 6.875% senior notes due April 2027. We received net proceeds of $490.9 million after deducting issuance costs. The $9.1 million of issuance costs were recorded as deferred financing costs within long-term debt in our condensed consolidated balance sheets and are being amortized to interest expense in our condensed consolidated statement of operations over the term of the notes. The net proceeds were used to repay borrowings outstanding under our Credit Facility as of March 31, 2019. In April 2019, we borrowed on our Credit Facility to repay the $350.0 million of our 6% senior notes due April 2021. See Note 12 (“Subsequent Events”) for further details of the redemption. The 2027 Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the U.S. except pursuant to a registration exemption under the Securities Act and applicable state securities laws. We offered and issued the 2027 Notes only to qualified institutional buyers in accordance with Rule 144A under the Securities Act and to certain non-U.S. persons outside the U.S. in accordance with Regulation S under the Securities Act. The 2027 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Archrock and all of its existing subsidiaries, other than Archrock Partners, L.P. and APLP Finance Corp., which are co-issuers of the 2027 Notes, and certain of its future subsidiaries. The 2027 Notes and the guarantees rank equally in right of payment with all of Archrock and the guarantors’ existing and future senior indebtedness. Prior to April 1, 2022, we may redeem all or part of the 2027 Notes at a redemption price equal to 100% of the principal amount of the 2027 Notes plus a make-whole premium plus accrued and unpaid interest, if any. We may also redeem up to 35% of the aggregate principal amount of the 2027 Notes prior to April 1, 2022 with the net proceeds of one or more equity offerings at a redemption price of 106.875% of the principal amount of the 2027 Notes plus any accrued and unpaid interest as long as at least 65% of the aggregate principal amount of the 2027 Notes remains outstanding after such redemption and the redemption occurs within 180 days of the closing of such equity offering. On or after April 1, 2022, we may redeem all or part of the 2027 Notes at redemption prices equal to 105.156%, 103.438% and 101.719% for the 12-month periods beginning on April 1, 2022, 2023 and 2024, respectively, and 100.000% beginning on April 1, 2025 and at any time thereafter, plus any accrued and unpaid interest. 6% Notes |
Revenue from Contracts with Customers |
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Revenue from Contracts with Customers | 5. Revenue from Contracts with Customers Disaggregation of Revenue The following table presents our revenue from contracts with customers disaggregated by revenue source (in thousands):
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Performance Obligations As of March 31, 2019, we had $261.3 million of remaining performance obligations related to our contract operations segment. We have elected to apply the practical expedient to not consider the effects of the time value of money, as the expected time between the transfer of services and payment for such services is less than one year. The remaining performance obligations will be recognized through 2022 as follows (in thousands):
Contract Balances |
Derivatives |
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Derivatives | 6. Derivatives We are exposed to market risks associated with changes in the variable interest rate of the Partnership Credit Facility. We use derivative instruments to manage our exposure to fluctuations in this variable interest rate and thereby minimize the risks and costs associated with financial activities. We do not use derivative instruments for trading or other speculative purposes. At March 31, 2019, 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 (in millions):
The counterparties to our derivative agreements are major 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. We have designated these interest rate swaps as cash flow hedging instruments and so any change in their fair value is recognized as a component of other comprehensive income (loss) until the hedged transaction affects earnings. At that time, amounts are reclassified into earnings to interest expense, net, the same statement of operations line item to which the earnings effect of the hedged item is recorded. 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. We expect the hedging relationship to be highly 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 perform quarterly qualitative prospective and retrospective hedge effectiveness assessments unless facts and circumstances related to the hedging relationships change such that we can no longer assert qualitatively that the cash flow hedge relationships were and continue to be highly effective. During the three months ended March 31, 2019, we performed a quantitative assessment of hedge effectiveness. The results indicated the interest rate swap cash flow hedge relationship was and continues to be highly effective. We estimate that $2.4 million of the deferred gain attributable to interest rate swaps included in accumulated other comprehensive income at March 31, 2019 will be reclassified into earnings as interest income at then-current values during the next 12 months as the underlying hedged transactions occur. As of March 31, 2019, the weighted average effective fixed interest rate on our interest rate swaps was 1.8%. The following table presents the effect of our derivative instruments designated as cash flow hedging instruments on our condensed consolidated balance sheets (in thousands):
The following tables present the effect of our derivative instruments designated as cash flow hedging instruments on our condensed consolidated statements of operations (in thousands):
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Fair Value Measurements |
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Fair Value Measurements | 7. Fair Value Measurements The accounting standard for fair value measurements and disclosures establishes a fair value hierarchy that prioritizes the inputs of valuation techniques used to measure fair value into the following three categories:
Assets and Liabilities Measured at Fair Value on a Recurring Basis On a quarterly basis, our interest rate swaps are valued based on the income approach (discounted cash flow) using market observable inputs, including London Interbank Offered Rate forward curves. These fair value measurements are classified as Level 2. Our interest rate swap assets measured at fair value on a recurring basis with pricing levels as of March 31, 2019 and December 31, 2018 were $4.1 million and $7.3 million, respectively. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis During the three months ended March 31, 2019, we recorded non-recurring fair value measurements related to our idle and previously-culled compressor units. Our estimate of the compressor units’ fair value was primarily based on 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. These fair value measurements are classified as Level 3. The fair value of our impaired compressor units was $0.3 million and $1.0 million at March 31, 2019 and December 31, 2018, respectively. See Note 8 (“Long-Lived Asset Impairment”) for further details. Other Financial Instruments The carrying amounts of our cash, receivables and payables approximate fair value due to the short-term nature of those instruments. The carrying amount of borrowings outstanding under our Credit Facility approximates fair value due to its variable interest rate. The fair value of these outstanding borrowings 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. The fair value of our fixed rate debt was estimated based on quoted prices in inactive markets and is considered a Level 2 measurement. The following table summarizes the carrying amount and fair value of our fixed rate debt (in thousands):
—————— (1) Carrying amounts are shown net of unamortized debt discounts and unamortized deferred financing costs. See Note 4 (“Long-Term Debt”).
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Long-Lived Asset Impairment |
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Long-Lived Asset Impairment | 8. 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. We periodically review the future deployment of our idle compression assets for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. Based on these reviews, we determine that certain idle compressor units should be retired from the active fleet. The retirement of these units from the active fleet triggers a review of these assets for impairment and as a result of our review, we may record an asset impairment to reduce the book value of each unit to its estimated fair value. The fair value of each unit is estimated based on the expected net sale proceeds compared to other fleet units we recently sold, 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 review of our idle compression assets, we evaluate for impairment idle units that were culled from our fleet in prior years and are available for sale. Based on that review, we may reduce the expected proceeds from disposition and record additional impairment to reduce the book value of each unit to its estimated fair value. The following table presents the results of our impairment review (dollars in thousands):
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Income Taxes |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes Unrecognized Tax Benefits |
Partners' Capital |
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Mar. 31, 2019 | |
Equity [Abstract] | |
Partners' Capital | 10. Partners’ Capital Merger Transaction In April 2018, Archrock completed the acquisition of all of our outstanding common units and we became a wholly-owned subsidiary of Archrock. Additionally, all outstanding treasury units were retired and our incentive distribution rights, all of which were previously owned by Archrock prior to the Merger, were canceled and ceased to exist. As a result of the Merger, our common units are no longer publicly traded. Our 6% Notes were not impacted by the Merger. Prior to the Merger, at March 31, 2018, public unitholders held a 57% ownership interest in us and Archrock owned our remaining equity interests, including 29,064,637 common units and 1,422,458 general partner units, collectively representing a 43% interest. Cash Distributions |
Commitments and Contingencies |
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Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Insurance Matters Our business can be hazardous, involving unforeseen circumstances such as uncontrollable flows of natural gas or well fluids and fires or explosions. Archrock insures our property and operations against many, but not all, of these risks. We believe that our insurance coverage is customary for the industry and adequate for our business; however, losses and liabilities not covered by insurance would increase our costs. In addition, Archrock is substantially self-insured for worker’s compensation, employer’s liability, property, auto liability, general liability and employee group health claims in view of the relatively high per-incident deductibles it absorbs under its insurance arrangements for these risks. Losses up to the deductible amounts are estimated and accrued based upon known facts, historical trends and industry averages. Tax Matters 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 each of March 31, 2019 and December 31, 2018, we accrued $3.2 million 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 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 consolidated results of operations or cash flows. Litigation and Claims |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events |
Recent Accounting Developments Recent Accounting Developments (Policies) |
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Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Accounting Standards Updates Implemented and Accounting Standards Updates Not Yet Implemented | Accounting Standards Updates Implemented Leases ASC 842 Leases establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet. Leases are 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. We are a party to leases in our contract operations services agreements. We adopted ASC 842 Leases on January 1, 2019, and have determined that ASC 842 Leases will not have an impact on our condensed consolidated financial statements. ASC 842 Leases provides several practical expedients, one of which is for lessors to not separate lease and nonlease components and instead account for those components as a single component if the nonlease components otherwise would be accounted for under the Revenue Recognition Update and certain conditions are met. ASC 842 Leases also provides clarification for lessors on whether ASC 842 Leases or the Revenue Recognition Update is applicable to the combined component based on determination of the predominant component. We have concluded that for our contract operations services agreements, in which we are the lessor, the services nonlease component is predominant over the compression unit lease component and therefore ongoing recognition of these agreements will continue to follow the Revenue Recognition Update guidance. Accounting Standards Updates Not Yet Implemented In August 2018, the FASB issued ASU 2018-13 which amends the required fair value measurements disclosures related to valuation techniques and inputs used, uncertainty in measurement and changes in measurements applied. These amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact of ASU 2018-13 on our consolidated financial statements and footnote disclosures. |
Related Party Transactions (Tables) |
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Schedule of Related Party Transactions | The following table summarizes compressor unit sales activity between Archrock and us (dollars in thousands):
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Long-Term Debt (Tables) |
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Schedule of Long-term Debt | Long-term debt consisted of the following (in thousands):
—————— (1) Subject to a temporary increase to 5.5 to 1.0 for any quarter during which an acquisition satisfying certain thresholds is completed and for the two quarters immediately following such quarter.
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Revenue from Contracts with Customers (Tables) |
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Disaggregation of Revenue | The following table presents our revenue from contracts with customers disaggregated by revenue source (in thousands):
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(2) Includes $2.1 million and $1.1 million for the three months ended March 31, 2019 and 2018, respectively, related to billable maintenance on Partnership-owned units that was recognized at a point in time. All other revenue is recognized over time.
|
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Remaining Performance Obligation Satisfaction | As of March 31, 2019, we had $261.3 million of remaining performance obligations related to our contract operations segment. We have elected to apply the practical expedient to not consider the effects of the time value of money, as the expected time between the transfer of services and payment for such services is less than one year. The remaining performance obligations will be recognized through 2022 as follows (in thousands):
|
Derivatives (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | At March 31, 2019, 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 (in millions):
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Effect of Derivative Instruments on Consolidated Financial Position | The following table presents the effect of our derivative instruments designated as cash flow hedging instruments on our condensed consolidated balance sheets (in thousands):
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Effect of Derivative Instruments on Results of Operations | The following tables present the effect of our derivative instruments designated as cash flow hedging instruments on our condensed consolidated statements of operations (in thousands):
|
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Value and Estimated Fair Value of Debt Instruments | The following table summarizes the carrying amount and fair value of our fixed rate debt (in thousands):
—————— (1) Carrying amounts are shown net of unamortized debt discounts and unamortized deferred financing costs. See Note 4 (“Long-Term Debt”).
|
Long-Lived Asset Impairment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Impairment Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Impairment of Long-Lived Assets Held and Used by Asset | The following table presents the results of our impairment review (dollars in thousands):
|
Related Party Transactions (Narratives) (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019
USD ($)
contract
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Related party transactions | |||
Loan receivable due from Archrock | $ 21,350 | $ 20,000 | |
Distributions recorded related to differences in net book value of compressor units exchanged to our assets transferred to related party | 2,867 | $ 0 | |
Non-cash capital contribution from Archrock | 1,840 | 0 | |
Affiliated Entity | Archrock | |||
Related party transactions | |||
Loan receivable due from Archrock | 21,400 | ||
Interest income from notes receivable | 200 | ||
Distributions recorded related to differences in net book value of compressor units exchanged to our assets transferred to related party | 2,900 | ||
Non-cash capital contribution from Archrock | $ 1,800 | ||
Number of customer contracts included in transfers | contract | 0 | ||
Amount contributed by related party related to completion of overhauls on compression equipment | $ 1,000 | $ 1,800 |
Related Party Transactions - Transfers (Details) - Archrock - Affiliated Entity $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
compressor_unit
hp
| |
Related party transactions | |
Compressor units sold (compressor) | compressor_unit | 11 |
Compressor units purchased (compressor) | compressor_unit | 30 |
Horse power related to compressor units sold (horsepower) | hp | 8,441 |
Horse power related to compressor units purchased (horsepower) | hp | 10,089 |
Net book value of compressor units sold | $ | $ 6,993 |
Net book value of compressor units purchased | $ | $ 4,126 |
Long-Term Debt - Credit Facility (Details) - Revolving Credit Facility - Credit Facility - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Long-Term Debt | |||
Letters of credit outstanding | $ 15.2 | ||
Weighted average interest rate (percentage) | 5.30% | 5.40% | |
Commitment fees | $ 0.5 | $ 0.5 | |
Line of credit remaining borrowing capacity | 834.3 | ||
Maximum | |||
Long-Term Debt | |||
Line of credit remaining borrowing capacity | $ 485.8 | ||
Base Rate | |||
Long-Term Debt | |||
Spread on variable rate | 2.70% |
Long-Term Debt - Debt Ratios (Details) - Revolving Credit Facility |
3 Months Ended | 6 Months Ended | 12 Months Ended | 21 Months Ended | |
---|---|---|---|---|---|
Mar. 31, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Mar. 30, 2022 |
|
Line of Credit Facility | |||||
EBITDA to total interest expenses ratio | 2.5 | ||||
Senior secured debt to EBITDA ratio | 3.5 | ||||
Total debt to EBITDA ratio | 5.95 | ||||
Forecasted | |||||
Line of Credit Facility | |||||
Total debt to EBITDA ratio | 5.5 | 5.75 | 5.25 | ||
Forecasted | Conditional Event | |||||
Line of Credit Facility | |||||
Total debt to EBITDA ratio | 5.5 |
Revenue from Contracts with Customers - Disaggregate Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Disaggregation of Revenue | ||
Contract revenue | $ 165,719 | $ 147,002 |
Transferred at point in time | ||
Disaggregation of Revenue | ||
Contract revenue | 2,100 | 1,100 |
0 - 1,000 horsepower per unit | ||
Disaggregation of Revenue | ||
Contract revenue | 58,161 | 54,427 |
1,001 - 1,500 horsepower per unit | ||
Disaggregation of Revenue | ||
Contract revenue | 68,207 | 60,694 |
Over 1,500 horsepower per unit | ||
Disaggregation of Revenue | ||
Contract revenue | 39,025 | 31,435 |
Other | ||
Disaggregation of Revenue | ||
Contract revenue | $ 326 | $ 446 |
Revenue from Contracts with Customers - Contract with Client (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Disaggregation of Revenue | |||
Net receivables | $ 81,119 | $ 80,606 | |
Contract liability with customer | 9,100 | 9,700 | |
Deferred revenue recognized in earnings | 4,768 | $ 2,237 | |
Contracts with customer | |||
Disaggregation of Revenue | |||
Net receivables | $ 78,700 | $ 78,600 |
Derivatives - Interest Rate Risk (Details) - Derivatives designated as hedging instruments $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Interest rate swaps | |
Accounting for Derivatives | |
Notional amount of interest rate swaps | $ 500 |
May 2019 | |
Accounting for Derivatives | |
Notional amount of interest rate swaps | 100 |
May 2020 | |
Accounting for Derivatives | |
Notional amount of interest rate swaps | 100 |
March 2022 | |
Accounting for Derivatives | |
Notional amount of interest rate swaps | $ 300 |
Derivatives - Interest Rate Risk (Narratives) (Details) - Derivatives designated as hedging instruments - Interest rate swaps $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Accounting for Derivatives | |
Deferred gain to be reclassified during next 12 months | $ 2.4 |
Weighted average effective fixed interest rate on interest rate swaps (as a percent) | 1.80% |
Derivatives - Effect on Derivative Instruments on the Balance Sheet (Details) - Derivatives designated as hedging instruments - Interest rate swaps - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounting for Derivatives | ||
Derivative asset | $ 4,082 | $ 7,307 |
Derivative asset | ||
Accounting for Derivatives | ||
Derivative asset | 2,428 | 3,185 |
Other assets | ||
Accounting for Derivatives | ||
Derivative asset | $ 1,654 | $ 4,122 |
Derivatives - Effect on Derivative Instruments on the Income Statement (Details) - Interest rate swaps - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Effect of derivative instruments on results of operations | ||
Pre-tax gain (loss) recognized in other comprehensive income (loss) | $ (2,299) | $ 4,696 |
Interest expense, net | ||
Effect of derivative instruments on results of operations | ||
Pre-tax gain (loss) reclassified from accumulated other comprehensive income into interest expense, net | $ 926 | $ (455) |
Derivatives - Derivative Gain (Loss) Recognized in Income Statement (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Effect of derivative instruments on results of operations | ||
Interest expense, net | $ 23,428 | $ 21,609 |
Accumulated Other Comprehensive Income (Loss) | Reclassification out of Accumulated Other Comprehensive Income | ||
Effect of derivative instruments on results of operations | ||
Interest expense, net | $ (926) | $ 54 |
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Recurring basis | Level 2 | ||
Fair value measurements | ||
Interest rate swaps asset | $ 4.1 | $ 7.3 |
Fair Value Measurements (Narratives) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Nonrecurring basis | Level 3 | ||
Fair value measurements | ||
Impaired long-lived assets | $ 0.3 | $ 1.0 |
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 |
Fair Value Measurements - Fair Value of Debt (Details) - Fixed Rate Debt - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | $ 1,181,717 | $ 690,001 |
Estimate of Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt | $ 1,216,000 | $ 674,000 |
Long-Lived Asset Impairment (Details) hp in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019
USD ($)
compressor_unit
hp
|
Mar. 31, 2018
USD ($)
compressor_unit
hp
|
|
Long-lived asset impairment | ||
Impairment recorded on idle compressor units retired from the active fleet | $ 2,684 | $ 3,066 |
Idle compressor units | ||
Long-lived asset impairment | ||
Idle compressor units retired from the active fleet (compressors) | compressor_unit | 15 | 35 |
Horsepower of idle compressor units retired from the active fleet (horsepower) | hp | 13 | 13 |
Impairment recorded on idle compressor units retired from the active fleet | $ 2,684 | $ 3,066 |
Income Taxes (Narratives) (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Potential decrease in unrecognized tax benefit | $ 1.2 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Accrual for income tax liability | $ 3.2 | $ 3.2 |
Subsequent Events (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Apr. 05, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Subsequent Event | |||
Repayments of long-term debt | $ 629,000 | $ 61,136 | |
Senior Notes | |||
Subsequent Event | |||
Interest rate (as a percent) | 6.00% | ||
Senior Notes | 6% senior notes due April 2021 | |||
Subsequent Event | |||
Interest rate (as a percent) | 6.00% | ||
Subsequent Events | Senior Notes | 6% senior notes due April 2021 | |||
Subsequent Event | |||
Interest rate (as a percent) | 6.00% | ||
Redemption rate (percent) | 100.00% | ||
Repayments of long-term debt | $ 350,000 | ||
interest paid | 200 | ||
Loss on the extinguishment of debt | $ 3,700 |
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