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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-Q
 (Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____ to______
 
Commission File Number 001-35195 
CSI Compressco LP
(Exact name of registrant as specified in its charter)
Delaware
94-3450907
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
 
 
24955 Interstate 45 North
 
The Woodlands,
 
TX
77380
(Address of Principal Executive Offices)
(Zip Code)
 (281) 364-2244
(Registrant’s Telephone Number, Including Area Code)

_______________________________________________________________________
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
COMMON UNITS REPRESENTING LIMITED
PARTNERSHIP INTERESTS
CCLP
NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
 
 
Emerging growth company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No
As of August 3, 2020, there were 47,344,351 Common Units outstanding.



CSI Compressco LP
Table of Contents
 
Page
PART I—FINANCIAL INFORMATION
 
 
 
 
PART II—OTHER INFORMATION
 
CERTAIN REFERENCES IN THIS QUARTERLY REPORT
 
References in this Quarterly Report to “CSI Compressco,” “we,” “our,” “us,” “the Partnership” or like terms refer to CSI Compressco LP and its wholly owned subsidiaries. References to “CSI Compressco GP” or “our General Partner” refer to our general partner, CSI Compressco GP Inc. References to “TETRA” refer to TETRA Technologies, Inc. and TETRA’s controlled subsidiaries, other than us.



Table of Contents

PART I
FINANCIAL INFORMATION
 
Item 1. Financial Statements.
 
CSI Compressco LP
Consolidated Statements of Operations
(In Thousands, Except Unit and Per Unit Amounts)
(Unaudited)

Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Revenues:
 
 
 
 
 

 
 

Compression and related services
$
56,336

 
$
64,876

 
$
122,101

 
$
127,578

Aftermarket services
15,737

 
18,156

 
33,707

 
31,770

Equipment sales
24,340

 
52,824

 
30,884

 
79,944

Total revenues
96,413

 
135,856

 
186,692

 
239,292

Cost of revenues (excluding depreciation and amortization expense):
 
 
 
 
 

 
 
Cost of compression and related services
25,395

 
30,520

 
57,003

 
63,141

Cost of aftermarket services
13,433

 
15,418

 
29,678

 
26,678

Cost of equipment sales
24,415

 
47,412

 
31,115

 
71,631

Total cost of revenues
63,243

 
93,350

 
117,796

 
161,450

Depreciation and amortization
20,117

 
19,054

 
40,025

 
37,586

Impairments and other charges
8,977

 
2,311

 
14,348

 
2,311

Insurance recoveries
(517
)
 

 
(517
)
 

Selling, general, and administrative expense
10,172

 
10,974

 
20,428

 
21,639

Interest expense, net
13,580

 
13,045

 
26,749

 
26,344

Series A Preferred fair value adjustment (income) expense

 
166

 

 
1,470

Other (income) expense, net
4,403

 
607

 
4,843

 
226

Loss before income tax provision
(23,562
)
 
(3,651
)
 
(36,980
)
 
(11,734
)
Provision (benefit) for income taxes
1,016

 
(704
)
 
1,228

 
3,669

Net loss
$
(24,578
)
 
$
(2,947
)
 
$
(38,208
)
 
$
(15,403
)
General partner interest in net loss
$
(345
)
 
$
(42
)
 
$
(537
)
 
$
(219
)
Common units interest in net loss
$
(24,233
)
 
$
(2,905
)
 
$
(37,671
)
 
$
(15,184
)
 
 
 
 
 
 

 
 
Net loss per common unit:
 
 
 
 
 
 
 
Basic
$
(0.51
)
 
$
(0.06
)
 
$
(0.79
)
 
$
(0.32
)
Diluted
$
(0.51
)
 
$
(0.06
)
 
$
(0.79
)
 
$
(0.32
)
Weighted average common units outstanding:
 
 
 
 
 
 
 
Basic
47,333,256

 
47,040,714

 
47,254,516

 
46,936,240

Diluted
47,333,256

 
47,040,714

 
47,254,516

 
46,936,240



See Notes to Consolidated Financial Statements

1

Table of Contents

CSI Compressco LP
Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
Net loss
$
(24,578
)
 
$
(2,947
)
 
$
(38,208
)
 
$
(15,403
)
Foreign currency translation adjustment, net of tax of $0 in 2020 and 2019
177

 
128

 
(176
)
 
400

Comprehensive loss
$
(24,401
)
 
$
(2,819
)
 
$
(38,384
)
 
$
(15,003
)
 

See Notes to Consolidated Financial Statements

2

Table of Contents

CSI Compressco LP
Consolidated Balance Sheets
(In Thousands, Except Unit Amounts)
 
June 30,
2020
 
December 31,
2019
 
(Unaudited)
 
 

ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
6,757

 
$
2,370

Trade accounts receivable, net of allowances for doubtful accounts of $3,441 as of June 30, 2020 and $3,350 as of December 31, 2019
49,627

 
64,724

Inventories
40,192

 
56,037

Prepaid expenses and other current assets
6,336

 
4,162

Total current assets
102,912

 
127,293

Property, plant, and equipment:
 

 
 

Land and building
32,058

 
35,125

Compressors and equipment
992,573

 
976,469

Vehicles
8,127

 
9,205

Construction in progress
8,477

 
26,985

Total property, plant, and equipment
1,041,235

 
1,047,784

Less accumulated depreciation
(434,600
)
 
(405,417
)
Net property, plant, and equipment
606,635

 
642,367

Other assets:
 

 
 

Deferred tax asset
24

 
24

Intangible assets, net of accumulated amortization of $29,231 as of June 30, 2020 and $27,751 as of December 31, 2019
26,537

 
28,017

Operating lease right-of-use assets
29,936

 
21,006

Other assets
3,694

 
3,539

Total other assets
60,191

 
52,586

Total assets
$
769,738

 
$
822,246

LIABILITIES AND PARTNERS' CAPITAL
 

 
 
Current liabilities:
 

 
 
Accounts payable
$
25,432

 
$
47,837

Unearned income
11,164

 
9,505

Accrued liabilities and other
37,590

 
42,581

Amounts payable to affiliates
13,074

 
7,704

Total current liabilities
87,260

 
107,627

Other liabilities:
 

 
 

Long-term debt, net
637,579

 
638,238

Deferred tax liabilities
1,390

 
1,211

Long-term affiliate payable
12,019

 
12,324

Operating lease liabilities
21,140

 
13,822

Other long-term liabilities
20

 
33

Total other liabilities
672,148

 
665,628

Commitments and contingencies
 

 
 

Partners' capital:
 

 
 

General partner interest
(371
)
 
180

Common units (47,344,351 units issued and outstanding at June 30, 2020 and 47,078,529 units issued and outstanding at December 31, 2019)
25,450

 
63,384

Accumulated other comprehensive income (loss)
(14,749
)
 
(14,573
)
Total partners' capital
10,330

 
48,991

Total liabilities and partners' capital
$
769,738

 
$
822,246

 
See Notes to Consolidated Financial Statements

3

Table of Contents

CSI Compressco LP
Consolidated Statements of Partners’ Capital
(In Thousands)
(Unaudited)
 
Partners' Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Total Partners' Capital
 
 
 
 
 
 
Limited Partners
 
 
 
General
Partner
 
Common
Unitholders
 
 
 
Amount
 
Units
 
Amount
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2019
$
180

 
47,079

 
$
63,384

 
$
(14,573
)
 
$
48,991

Net Loss
(192
)
 

 
(13,438
)
 

 
$
(13,630
)
Distributions ($0.01 per unit)
(7
)
 

 
(471
)
 

 
$
(478
)
Equity compensation

 

 
229

 

 
$
229

Vesting of Phantom Units

 
213

 

 

 
$

Translation adjustment, net of taxes of $0

 

 

 
(353
)
 
$
(353
)
Balance at March 31, 2020
$
(19
)
 
47,292

 
$
49,704

 
$
(14,926
)
 
$
34,759

Net Loss
$
(345
)
 

 
$
(24,233
)
 
$

 
$
(24,578
)
Distributions ($0.01 per unit)
(7
)
 

 
(473
)
 

 
(480
)
Equity compensation

 

 
452

 

 
452

Vesting of Phantom Units

 
52

 

 

 

Translation adjustment, net of taxes of $0

 

 

 
177

 
177

Balance at June 30, 2020
$
(371
)
 
47,344

 
$
25,450

 
$
(14,749
)
 
$
10,330


 
Partners' Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Total Partners' Capital
 
 
 
 
 
 
Limited Partners
 
 
 
General
Partner
 
Common
Unitholders
 
 
 
Amount
 
Units
 
Amount
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2018
$
505

 
45,769

 
$
81,984

 
$
(15,086
)
 
$
67,403

Net loss
(177
)
 

 
(12,279
)
 
$

 
$
(12,456
)
Distributions ($0.01 per unit)
(6
)
 

 
(470
)
 

 
(476
)
Equity compensation, net

 

 
312

 

 
312

Vesting of Phantom Units

 
117

 

 

 

Conversions of Series A Preferred

 
1,113

 
3,048

 

 
3,048

Translation adjustment, net of taxes of $0

 

 

 
272

 
272

Other

 

 
(69
)
 

 
(69
)
Balance at March 31, 2019
$
322

 
46,999

 
$
72,526

 
$
(14,814
)
 
$
58,034

Net loss
(42
)
 

 
(2,905
)
 

 
(2,947
)
Distributions ($0.01 per unit)
(7
)
 

 
(469
)
 

 
(476
)
Equity compensation, net

 

 
568

 

 
568

Vesting of Phantom Units

 
66

 

 

 

Conversions of Series A Preferred

 

 

 

 

Translation adjustment, net of taxes of $0

 

 

 
128

 
128

Other

 

 
(12
)
 

 
(12
)
Balance at June 30, 2019
$
273

 
47,065

 
$
69,708

 
$
(14,686
)
 
$
55,295


See Notes to Consolidated Financial Statements

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Table of Contents

CSI Compressco LP
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
 
 
Six Months Ended
June 30,
 
2020
 
2019
Operating activities:
 

 
 

Net loss
$
(38,208
)
 
$
(15,403
)
Reconciliation of net loss to cash provided by operating activities:
 

 
 

Depreciation and amortization
40,025

 
37,586

Impairments and other charges
14,348

 
2,311

Provision for deferred income taxes
409

 
946

Insurance recoveries associated with damaged equipment
(517
)
 

Series A Preferred Unit distributions and adjustments

 
3,600

Equity compensation expense
812

 
955

Provision for doubtful accounts
593

 
272

Amortization of deferred financing costs
1,356

 
1,180

Equipment received in lieu of cash
725

 

Debt exchange expenses
4,755

 

Other non-cash charges and credits
(157
)
 
374

(Gain) loss on sale of property, plant, and equipment
(443
)
 
(262
)
Changes in operating assets and liabilities:
 

 
 
Accounts receivable
13,903

 
(5,254
)
Inventories
7,817

 
(5,378
)
Prepaid expenses and other current assets
(2,267
)
 
491

Accounts payable and accrued expenses
(24,566
)
 
19,942

Other
(405
)
 
(1,018
)
Net cash provided by operating activities
18,180

 
40,342

Investing activities:
 

 
 
Purchases of property, plant, and equipment, net
(11,249
)
 
(40,064
)
Proceeds from sale of property, plant, and equipment
3,641

 
478

Insurance recoveries associated with damaged equipment
517

 

Net cash used in investing activities
(7,091
)
 
(39,586
)
Financing activities:
 

 
 
Proceeds from long-term debt
271,831

 

Payments of long-term debt
(273,853
)
 
(67
)
Cash redemptions of Preferred Units

 
(22,452
)
Distributions
(958
)
 
(952
)
Other financing activities
(2,207
)
 

Payments to affiliate
(1,507
)
 

Advances from affiliate

 
11,142

Net cash used in financing activities
(6,694
)
 
(12,329
)
Effect of exchange rate changes on cash
(8
)
 
11

Increase (decrease) in cash and cash equivalents
4,387

 
(11,562
)
Cash and cash equivalents at beginning of period
2,370

 
15,858

Cash and cash equivalents at end of period
$
6,757

 
$
4,296

Supplemental cash flow information:
 

 
 
Interest paid
$
29,083

 
$
23,852

Income taxes paid
$
644

 
$
1,958



See Notes to Consolidated Financial Statements

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Table of Contents

CSI Compressco LP
Notes to Consolidated Financial Statements
(Unaudited)
 
NOTE 1 ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES
 
Organization

CSI Compressco LP, a Delaware limited partnership, is a provider of compression services and equipment for natural gas and oil production, gathering, artificial lift, transmission, processing, and storage. We sell standard and custom-designed, engineered compressor packages and provide aftermarket services and compressor package parts and components manufactured by third-party suppliers. We provide these compression services and equipment to a broad base of natural gas and oil exploration and production, midstream, and transmission companies operating throughout many of the onshore producing regions of the United States as well as in a number of foreign locations, including the countries of Mexico, Canada, and Argentina. We design and fabricate a majority of the compressor packages that we use to provide compression services and sell to customers. Going forward, we plan to have such compressor packages fabricated through one or more third party packagers.

Presentation
 
Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. In the opinion of our management, our unaudited consolidated financial statements as of June 30, 2020, and for the three and six month periods ended June 30, 2020 and 2019, include all normal recurring adjustments that are necessary to provide a fair statement of our results for these interim periods. Operating results for the three and six month periods ended June 30, 2020 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2020.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission ("SEC") and do not include all information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2019 and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March 16, 2020.

Segments

Our General Partner has concluded that we operate in one business segment.

Significant Accounting Policies

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K. There have been no significant changes in our accounting policies or the application thereof during the second quarter of 2020.

Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be material.

Reclassifications

Certain previously reported financial information has been reclassified to conform to the current year's presentation. The impact of such reclassifications was not significant to the prior year's overall presentation.


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Cash Equivalents

We consider all highly liquid cash investments with maturities of three months or less when purchased to be cash equivalents.

Financial Instruments

Financial instruments that subject us to concentrations of credit risk consist principally of trade accounts receivable, which are primarily due from customers of varying size engaged in oil and gas activities in the United States, Canada, Mexico, and Argentina. Our policy is to review the financial condition of potential customers before extending credit and periodically update their credit information. Payment terms are on a short-term basis. The risk of loss from the inability to collect trade receivables is heightened during prolonged periods of low oil and natural gas commodity prices.

We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. Our risk management activities include the use of foreign currency forward purchase and sale derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected international operations.

We have a $1.5 million outstanding balance under our variable rate revolving credit facility as of June 30, 2020 and face market risk exposure related to changes in applicable interest rates.

Foreign Currencies
 
Accumulated other comprehensive income (loss) is included in partners’ capital in the accompanying consolidated balance sheets and consists of the cumulative currency translation adjustments associated with our international operations. Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $(0.3) million and $1.4 million during the three and six month periods ended June 30, 2020, respectively, and $(0.04) million and $(1.0) million during the three and six month periods ended June 30, 2019, respectively.

Inventories

Inventories consist primarily of compressor package parts and supplies and work in progress and are stated at the lower of cost or net realizable value. For parts and supplies, cost is determined using the weighted average cost method. The cost of work in progress is determined using the specific identification method.

Assets Held for Sale

As of June 30, 2020, we had $2.6 million in net book value of compressor equipment classified as held for sale within net property, plant, and equipment on our consolidated balance sheets. For further details of the impairment recorded to adjust the net book value to fair value upon this classification, see Note 3 - Impairments and Other Charges below.

Impairments and Other Charges

Impairments of long-lived assets, including identified intangible assets, are determined periodically, when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgment as to the future undiscounted operating cash flows to be generated from the relevant assets throughout their remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related assets, an impairment is recognized for the excess of the carrying value over fair value. Fair value of intangible assets is generally determined using the discounted present value of future cash flows using discount rates commensurate with the risks inherent with the specific assets. Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs. See Note 3 - "Impairments and Other Charges" for additional discussion of recorded impairments.

Earnings Per Common Unit
 
Our computations of earnings per common unit are based on the weighted average number of common units outstanding during the applicable period. Basic earnings per common unit are determined by dividing net

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income (loss) allocated to the common units after deducting the amount allocated to our General Partner (including any distributions to our General Partner on its incentive distribution rights) by the weighted average number of outstanding common units during the period.
 
When computing earnings per common unit under the two class method in periods when distributions are greater than earnings, the amount of the distribution is deducted from net income (loss) and the excess of distributions over earnings is allocated between the General Partner and common units based on how our Partnership Agreement allocates net losses.
 
Diluted earnings per common unit are computed using the treasury stock method, which considers the potential future issuance of limited partner common units. Unvested phantom units are not included in basic earnings per common unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per common unit. For the three and six month periods ended June 30, 2020 and June 30, 2019, all unvested phantom units were excluded from the calculation of diluted common units because the impact was anti-dilutive. Diluted earnings per common unit are computed using the "if converted" method, whereby the amount of net income (loss) and the number of common units issuable are each adjusted as if the Preferred Units, had been converted as of the beginning of the period presented. The calculation of diluted earnings per common unit for the three and six month period ended June 30, 2019 excludes the impact of the Preferred Units, as the inclusion of the impact from the conversion of the Preferred Units into common units would have been anti-dilutive. All remaining outstanding Preferred Units were redeemed for cash on August 8, 2019.

Revenue Recognition

Performance Obligations. Revenue is recognized when performance obligations under the terms of a contract with our customer are satisfied. Revenue is generally recognized when we transfer control of our products or services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services to our customers. We receive cash equal to the invoice price for most product sales and services and payment terms typically range from 30 to 60 days from the date we invoice our customer. With the exception of the initial terms of our compression services contracts of our medium- and high-horsepower compressor packages, our customer contracts are generally for terms of one year or less. Since the period between when we deliver products or services and when the customer pays for products or services is not to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts.

Depending on the terms of the arrangement, we may also defer the recognition of revenue for a portion of the consideration received because we have to satisfy a future performance obligation. For example, consideration received from customers during the fabrication of new compressor packages is typically deferred until control of the compressor package is transferred to our customer.

For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and amortized over the estimated service period.

Compression and related services. For compression services revenues recognized over time, our customer contracts typically provide agreed upon monthly service rates and we recognize service revenue based upon the number of days that services have been performed. The majority of our compression services are provided pursuant to contract terms ranging from one month to twenty-four months. Monthly agreements are generally cancellable with 30 days written notice by the customer.

Sales taxes, value added taxes, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We recognize the cost for freight and shipping costs when control over our products (i.e. delivery) has transferred to the customer as part of cost of product sales.

Use of Estimates. Our revenues do not include material amounts of variable consideration, as our revenues typically do not require significant estimates or judgments. The transaction price on a majority of our arrangements are fixed and product returns are immaterial. Additionally, our arrangements typically do not include multiple performance obligations that require estimates of the stand-alone purchase price for each performance obligation. Revenue on certain aftermarket service arrangements that include time as a component of the transaction price is not recognized until the performance obligation is complete.


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Contract Assets and Liabilities. We consider contract assets to be trade accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain instances, particularly those requiring customer specific documentation prior to invoicing, our invoicing of the customer is delayed until certain documentation requirements are met. In those cases, we recognize a contract asset rather than a billed trade accounts receivable until we are able to invoice the customer. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.
    
We classify contract liabilities as unearned income in our consolidated balance sheets. Such unearned income typically results from advance payments received on orders for new compressor equipment prior to the time such equipment is completed and transferred to the customer in accordance with the customer contract. New equipment sales orders generally take less than twelve months to build and deliver.

Bill-and-Hold Arrangements. We design compressor packages based on our customer’s specifications. In some cases, the customer will request us to hold the equipment, upon completion of the unit, until the job site is ready to receive the equipment. When this occurs, we along with the customer sign a bill-and-hold agreement, which outlines that the customer has title to the equipment, the equipment is ready for delivery, we cannot use the equipment or direct it to another customer, and we have a present right to payment. When those criteria have been met and the agreement is executed, we recognize the revenue on the equipment because control of the equipment has passed to our customer and our performance obligations are complete. Entering into these arrangements is something we have done as a courtesy for certain customers for many years. The equipment subject to the bill-and-hold agreements have generally been invoiced and paid for through progressive billings such that at the time the bill-and-hold agreement is executed, the majority of the contractual cash obligation of the customer has been received by us.

Fair Value Measurements

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements were utilized in the determination of the carrying value of our Series A Preferred Units (a Level 3 fair value measurement). We also utilize fair value measurements on a recurring basis in the accounting for our foreign currency forward purchase and sale derivative contracts. For these fair value measurements, we utilize the quoted value (a Level 2 fair value measurement). Refer to Note 9 - "Fair Value Measurements" for further discussion.
Fair value measurements are also utilized on a nonrecurring basis, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets (a Level 3 fair value measurement) and for the impairment of long-lived assets (a Level 3 fair value measurement).

Distributions

On January 20, 2020, our General Partner declared a cash distribution attributable to the quarter ended December 31, 2019 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit on an annualized basis. This distribution was paid on February 14, 2020, to each of the holders of common units of record as of the close of business on February 1, 2020.

On April 20, 2020, our General Partner declared a cash distribution attributable to the quarter ended March 31, 2020 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit on an annualized basis. This distribution was paid on May 15, 2020, to each of the holders of common units of record as of the close of business on May 1, 2020.

New Accounting Pronouncements

Standards adopted in 2020

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for us the first quarter of fiscal 2020. The adoption of this standard did not have a material impact on our consolidated financial statements.

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Standards not yet adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairments will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. ASU 2016-13 is effective for us the first quarter of fiscal 2023. We continue to assess the potential effects of these changes to our consolidated financial statements.    
    
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for us the first quarter of fiscal 2021. We continue to assess the potential effects of these changes to our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impacts of the provisions of ASU 2020-04 on our consolidated financial statements.
NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

As of June 30, 2020, we had $50.0 million of remaining contractual performance obligations for compression services. As a practical expedient, this amount does not include revenue for compression service contracts whose original expected duration is less than twelve months and does not consider the effects of the time value of money. Expected revenue to be recognized in the future as of June 30, 2020 for completion of performance obligations of compression service contracts are as follows:
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
Total
 
(In Thousands)
Compression service contracts remaining performance obligations
$
35,385

 
$
12,735

 
$
1,807

 
$
62

 
$
46

 
$
50,035


    
Our contract asset balances included in trade accounts receivable in our consolidated balance sheets, primarily associated with customer documentation requirements prior to invoicing, were $8.2 million and $9.6 million as of June 30, 2020 and December 31, 2019, respectively.

Collections associated with progressive billings to customers for the construction of compression equipment is included in unearned income in the consolidated balance sheets. The following table reflects the changes in unearned income in our consolidated balance sheets for the periods indicated:


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Six Months Ended
June 30,
 
2020
 
2019
 
(In Thousands)
Unearned income, beginning of period
$
9,505

 
$
24,898

Additional unearned income
31,619

 
83,640

Revenue recognized
(29,960
)
 
(77,708
)
Unearned income, end of period
$
11,164

 
$
30,830



During the six months ended June 30, 2020, we recognized in equipment sales revenue $5.7 million from unearned income that was deferred as of December 31, 2019. During the six months ended June 30, 2019, we recognized in equipment sales revenue of $18.7 million from unearned income that was deferred as of December 31, 2018.

As of June 30, 2020 and June 30, 2019, contract costs were immaterial.

Disaggregated revenue from contracts with customers by geography is as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
 
(In Thousands)
Compression and related services
 
 
 
 
 
 
 
U.S.
$
49,084

 
$
55,620

 
$
106,359

 
$
109,637

International
7,252

 
9,256

 
15,742

 
17,941

 
56,336

 
64,876

 
122,101

 
127,578

Aftermarket services
 
 
 
 
 
 
 
U.S.
15,427

 
17,745

 
32,712

 
31,076

International
310

 
411

 
995

 
694

 
15,737

 
18,156

 
33,707

 
31,770

Equipment sales
 
 
 
 
 
 
 
U.S.
24,073

 
52,757

 
30,111

 
78,924

International
267

 
67

 
773

 
1,020

 
24,340

 
52,824

 
30,884

 
79,944

Total Revenue
 
 
 
 
 
 
 
U.S.
88,584

 
126,122

 
169,182

 
219,637

International
7,829

 
9,734

 
17,510

 
19,655

 
$
96,413

 
$
135,856

 
$
186,692

 
$
239,292


NOTE 3 IMPAIRMENTS AND OTHER CHARGES

Impairments of Long-Lived Assets

During the first half of 2020, the COVID-19 pandemic and decline in oil and gas prices had a significant impact on our customers and industry, resulting in a decrease in demand in certain of our service lines.

During the first quarter of 2020, we started to see our customers revise their capital budgets downwards and adjust their operations accordingly, which led to a decline in orders for new compression equipment to be fabricated and sold to third parties. We concluded that these events were indicators of impairment for all our asset groups. We performed a recoverability analysis on all our long-lived asset groups and we determined that the carrying values of our Midland manufacturing facility and related new unit sales inventory exceeded their respective fair values. Therefore, we recorded impairments of approximately $5.4 million related to these assets. Fair value was estimated based on a market approach.

During the second quarter of 2020, primarily as a result of continued negative impacts on our compression fleet associated with the COVID-19 pandemic and declines in oil and gas prices, we recorded impairments and

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other charges of approximately $9.0 million associated with non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services. Fair value used to determine impairments was estimated based on a market approach. Given the dynamic nature of the events, we are not able to reasonably estimate how long our operations will be impacted and the full impact these events will have on our operations. As a result, we could have indicators of impairment again in future periods resulting in additional asset impairments.
NOTE 4 INVENTORIES

Components of inventories as of June 30, 2020 and December 31, 2019, are as follows: 

 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
Parts and supplies
$
30,270

 
$
42,814

Work in progress
9,922

 
13,223

Total inventories
$
40,192

 
$
56,037



Inventories consist primarily of compressor package parts and supplies. Work in progress inventories consist primarily of new compressor packages located at our manufacturing facility in Midland, Texas.
NOTE 5LEASES

We have operating leases for some of our office space, warehouse space, operating locations, and machinery and equipment. Our leases have remaining lease terms ranging from 1 to 10 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. Our leases generally require us to pay all maintenance and insurance costs. During the fourth quarter of 2019, we entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commence upon the completion of the fabrication of the compressor packages. During the first quarter, we took delivery of eight compressor packages. During the second quarter, we took delivery of the remaining six compressor packages. We have no other lease agreement commitments that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In November 2019, we entered into a sale and leaseback transaction with a third-party lessor whereby we received $9.8 million of proceeds from the sale of certain of our compression equipment in service and entered into an associated lease of the same equipment having an initial lease term of seven years.

Lease costs are included in either cost of revenues or selling, general, and administrative expense depending on the use of the underlying asset. Total lease expense (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less), was $3.5 million and $6.7 million for the three and six month period ended June 30, 2020, respectively, of which, $0.6 million and $1.5 million respectively, related to short-term leases. Variable rent expense was not material.

Operating lease supplemental cash flow information:
 
Six Months Ended June 30,
 
2020
 
2019
 
(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
     Operating cash flows - operating leases
$
4,816

 
$
2,285

 
 
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
 
 
     Operating leases
$
12,471

 
$
2,663



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Supplemental balance sheet information:
 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
 
 
Operating leases:
 
 
 
     Operating right-of-use asset
$
29,936

 
$
21,006

 
 
 
 
     Accrued liabilities and other
$
8,216

 
$
6,706

     Operating lease liabilities
21,140

 
13,822

     Total operating lease liabilities
$
29,356

 
$
20,528

 
 
 
 


Additional operating lease information:
 
June 30, 2020
 
December 31, 2019
Weighted average remaining lease term:
 
 
 
     Operating leases
5.17 Years

 
4.51 Years

 
 
 
 
Weighted average discount rate:
 
 
 
     Operating leases
9.90
%
 
8.73
%


Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year, consist of the following at June 30, 2020:
 
Operating Leases
 
(In Thousands)
 
 
Remainder of 2019
$
5,192

2020
8,768

2021
6,575

2022
4,322

2023
4,250

Thereafter
8,819

Total lease payments
37,926

Less imputed interest
(8,570
)
Total lease liabilities
$
29,356



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NOTE 6 LONG-TERM DEBT AND OTHER BORROWINGS

Long-term debt consists of the following:
 
 
 
 
June 30, 2020
 
December 31, 2019
 
 
Scheduled Maturity
 
(In Thousands)
Credit Agreement (presented net of the unamortized deferred financing costs of $0.7 million as of June 30, 2020 and $0.9 million as of December 31, 2019)
 
June 2023
 
$
746

 
$
2,622

7.25% Senior Notes (presented net of the unamortized discount of $0.4 million as of June 30, 2020 and $1.7 million as of December 31, 2019 and unamortized deferred financing costs of $0.6 million as of June 30, 2020 and $2.8 million as of December 31, 2019)
 
August 2022
 
79,745

 
291,444

7.50% First Lien Notes (presented net of the unamortized deferred financing costs of $5.7 million as of June 30, 2020 and $5.8 million as of December 31, 2019, net of the unamortized discount of $0.2 million as of June 30, 2020, and net of deferred restructuring gain of $5.6 million as of June 30, 2020)
 
April 2025
 
399,613

 
344,172

10.00%/10.75% Second Lien Notes (presented net of the unamortized discount of $0.8 million as of June 30, 2020, and net of unamortized deferred financing costs of $1.3 million as of June 30, 2020, and net of deferred restructuring gain of $4 million as of June 30, 2020)
 
April 2026
 
157,475

 

 
 
 
 
637,579

 
638,238

Less current portion
 
 
 

 

Total long-term debt
 
 
 
$
637,579

 
$
638,238



There was a $1.5 million balance outstanding and $2.8 million in letters of credit issued under the Credit Agreement as of June 30, 2020. As of June 30, 2020, and subject to compliance with the covenants, borrowing base, and other provisions of the agreements that may limit borrowings under the Credit Agreement, we had availability of $12.3 million.
    
Our credit and senior note agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments. We are in compliance with all covenants of our credit and senior note agreements as of June 30, 2020.

Refer to Note 7 - "Related Party Transactions," for a discussion of our amounts payable to affiliates and long-term affiliate payable to TETRA.

Second Amendment to Credit Agreement

On June 11, 2020, CSI Compressco, LP and CSI Compressco Sub Inc (the “Borrowers”) entered into the Second Amendment to Loan and Security Agreement (the “Amendment”) amending the Loan and Security Agreement dated June 29, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) with Bank of America, N.A., in its capacity as administrative agent, issuing bank and swing line issuer (“Administrative Agent”), and the other lenders and loan parties party thereto. The Amendment provided for changes and modifications to the Credit Agreement which include, among other things, changes to certain terms of the Credit Agreement as follows: (i) resizing of the maximum credit commitment under the Credit Agreement from $50,000,000 to $35,000,000; (ii) the inclusion of a $5,000,000 reserve with respect to the Borrowing Base (as defined in the Credit Agreement) thereunder, which would result in reduced borrowing availability; (iii) the removal of the financial covenant compliance test with respect to the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement); (iv) an increase in the applicable margin related to (x) LIBOR Rate Loans (as defined in the Credit Agreement) to a range between 3.00% and 3.50% and (y) Base Rate Loans (as defined in the Credit Agreement) to a range between 2.00% and 2.50%, in each case, which shall be determined according to average daily excess availability under the Credit Agreement; and (v) an increase in the rate used to calculate the commitment fee in respect of the unutilized commitments under the Credit

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Agreement to 0.50%. In connection to this amendment, $0.2 million of financing costs were incurred, and deferred against the carrying value of the amount outstanding, if any. Additionally, $0.2 million of financing fees were charged to other (income) expense, net during the three month period ended June 30, 2020.

First Supplemental Indenture for the Old Notes

On June 11, 2020, CSI Compressco, LP and CSI Compressco Finance Inc. (the "Issuers") announced that they had accepted for exchange $215,208,000, or approximately 72.7%, of their outstanding 7.25% Senior Notes due 2022 (the "Old Notes") that were validly tendered (and not validly withdrawn) by 11:59 p.m., New York City time, on June 10, 2020, for (i) $50,000,000 of the Issuers' 7.50% Senior Secured First Lien Notes due 2025 (the "7.50% First Lien Notes") and (ii) $155,529,000 aggregate principal amount of new 10.00%/10.75% Senior Secured Second Lien Notes due 2026 (the "10.00%/10.75% Second Lien Notes" and, together with the 7.50% First Lien Notes, the "New Notes"), pursuant to its previously announced exchange offer and consent solicitation (the "Exchange Offer"), which commenced on April 17, 2020. In connection with the exchange offer, we incurred financing fees of $4.8 million which were charged to other (income) expense, net during the three month period ended June 30, 2020.

On June 12, 2020, following receipt of the requisite consents of the holders of the Old Notes, the Issuers entered into the First Supplemental Indenture (the "First Supplemental Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of August 4, 2014 (the "Unsecured Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee.

The First Supplemental Indenture eliminated substantially all of the restrictive covenants and certain of the default provisions in the Unsecured Indenture and became operative upon the consummation by the Issuers of the Exchange Offer.

On June 12, 2020, the Issuers issued $50,000,000 in aggregate principal amount of New First Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. In March 2018, the Issuers had issued $350,000,000 in aggregate principal amount of 7.50% Senior Secured Notes due 2025 (the "Existing First Lien Notes" and, together with the New First Lien Notes, the "7.50% First Lien Notes") pursuant to the First Lien Base Indenture. The New First Lien Notes were issued as "additional notes" under the First Lien Base
Indenture and will be treated as a single class with such notes but will not trade fungibly with the Existing First
Lien Notes.

Second Lien Notes Indenture

On June 12, 2020, the Issuers issued $155,529,000 in aggregate principal amount of the 10.00%/10.75% Second Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. The Issuers issued the 10.00%/10.75% Second Lien Notes pursuant to an indenture, dated June 12, 2020 (the "Second Lien Notes Indenture"),by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee (the "Second Lien Trustee"). In connection with the payment of PIK Interest (as defined below), if any, in respect of the 10.00%/10.75% Second Lien Notes, the Issuers will be entitled, without the consent of the Holders, to increase the outstanding aggregate principal amount of the 10.00%/10.75% Second Lien Notes or issue additional notes ("PIK notes") under the Second Lien Notes Indenture on the same terms and conditions as the 10.00%/10.75% Second Lien Notes offered hereby (each such increase or issuance, a "PIK Payment"). The Issuers may issue additional 10.00%/10.75% Second Lien Notes under the Second Lien Notes Indenture from time to time. Any issuance of additional 10.00%/10.75% Second Lien Notes (including PIK notes) is subject to all of the covenants in the Second Lien Notes Indenture. The 10.00%/10.75% Second Lien Notes and any additional 10.00%/10.75% Second Lien Notes subsequently issued under the indenture, will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Subject to the making of PIK Payments, the Issuers will issue 10.00%/10.75% Second Lien Notes in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000; provided that PIK Payments may result in 10.00%/10.75% Second Lien Notes being issued in denominations of $1.00 and integral multiples of $1.00. The 10.00%/10.75% Second Lien Notes will mature on April 1, 2026. Interest on the 10.00%/10.75% Second Lien Notes will be payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2020. The Issuers will make each interest payment to the holders of record on March 15 and September 15 immediately preceding each interest payment date. Interest will accrue at (1) the annual rate of 7.250% payable in cash, plus (2)

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at the election of the Issuers (made by delivering a notice to the Second Lien Trustee not less than five business days prior to the record date), the annual rate of (i) 2.750% payable in cash (together with the annual rate set forth in clause (1), the "Cash Interest Rate") or (ii) 3.500% payable by increasing the principal amount of the outstanding 10.00%/10.75% Second Lien Notes or by issuing additional PIK notes, in each case rounding up to the nearest $1.00 (such increased principal amount or additional PIK notes, the "PIK Interest"). In the absence of an interest payment election made by the Issuers as set forth above, interest on the notes will be payable as if the Issuers had elected to pay PIK Interest with respect to the portion of interest payable pursuant to clause (2) above.

The 10.00%/10.75% Second Lien Notes are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees") on a senior secured basis initially by each of the Partnership's domestic restricted subsidiaries (other than Finance Corp, certain immaterial subsidiaries and certain other excluded domestic subsidiaries, the "Guarantors") and will be secured by a second-priority security interest in substantially all of the Issuers' and the Guarantors' assets (other than certain excluded assets) (the "Collateral") as collateral security for their obligations under the 10.00%/10.75% Second Lien Notes, subject to certain permitted encumbrances and exceptions. At any time prior to April 1, 2023, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 10.00%/10.75% Second Lien Notes issued under the Second Lien Notes Indenture at a redemption price of 110.000% of the principal amount of the 10.00%/10.75% Second Lien Notes, plus accrued and unpaid interest to the redemption date, with an amount of cash equal to the net cash proceeds of certain equity offerings. On or after April 1, 2023, the Issuers may redeem all or part of the 10.00%/10.75% Second Lien Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 107.500% for the twelve month period beginning on April 1, 2023; (ii) 105.000% for the twelve-month period beginning on April 1, 2024 and (iii) 100.000% at any time thereafter, plus accrued and unpaid interest up to, but not including, the redemption date. In addition, at any time prior to April 1, 2023, the Company may redeem all or a part of the 10.00%/10.75% Second Lien Notes at a redemption price equal to 100% of the principal amount of the 10.00%/10.75% Second Lien Notes to be redeemed plus a make-whole premium, plus accrued and unpaid interest up to, but not including, the redemption date.

The Second Lien Notes Indenture contains customary covenants restricting the Partnership's ability and the ability of its restricted subsidiaries to: (i) pay distributions on, purchase or redeem its common units or purchase or redeem its subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to the Partnership. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting the Partnership, subject to the satisfaction of certain conditions, to transfer assets to certain of its unrestricted subsidiaries. Moreover, if the 10.00%/10.75% Second Lien Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the 10.00%/10.75% Second Lien Notes Indenture, many of the restrictive covenants in the Second Lien Notes Indenture will be terminated. The Second Lien Notes Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Second Lien Notes Indenture, the Second Lien Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 10.00%/10.75% Second Lien Notes may declare all of the 10.00%/10.75% Second Lien Notes to be due and payable immediately.
NOTE 7RELATED PARTY TRANSACTIONS
 
Omnibus Agreement
 
Under the terms of the Omnibus Agreement, our General Partner provides all personnel and services reasonably necessary to manage our operations and conduct our business (other than in Mexico, Canada, and Argentina), and certain of TETRA’s Latin American-based subsidiaries provide personnel and services necessary for the conduct of certain of our Latin American-based businesses. In addition, under the Omnibus Agreement, TETRA provides certain corporate and general and administrative services as requested by our General Partner, including, without limitation, legal, accounting and financial reporting, treasury, insurance administration, claims processing and risk management, health, safety and environmental, information technology, human resources, credit, payroll, internal audit, and tax services. Pursuant to the Omnibus Agreement, we reimburse our General Partner and TETRA for services they provide to us.


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TETRA and General Partner Ownership

As of June 30, 2020, TETRA's ownership interest in us was approximately 34% of the outstanding common units and an approximate 1.4% general partner interest, through which it holds incentive distribution rights.

Other Sources of Financing

In February 2019, we entered into a transaction with TETRA whereby TETRA agreed to fund the construction of and purchase from us up to $15.0 million of new compression services equipment and to subsequently lease the equipment back to us in exchange for a monthly rental fee. As of June 30, 2020, pursuant to this arrangement, $14.8 million has been funded by TETRA for the construction of new compression services equipment and all such equipment was completed and deployed under this agreement. For accounting purposes, the inclusion of an option that allows us to repurchase the equipment at a fixed price during certain periods of the agreement caused the transaction to be accounted for as a financing transaction, as opposed to a sale-leaseback, resulting in the funded amount being recorded as a financing obligation. Accordingly, the compression services equipment is included in property, plant, and equipment and the corresponding financing obligations are included in amounts payable to affiliates and long-term affiliate payable in our consolidated balance sheet. As of June 30, 2020, the financing obligation was $15.0 million. Imputed interest expense recognized for the three and six month period ended June 30, 2020 was $0.6 million and $1.2 million, respectively.
NOTE 8COMMITMENTS AND CONTINGENCIES
 
From time to time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. While the outcome of any lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on our financial condition, results of operations, or cash flows. 
NOTE 9 – FAIR VALUE MEASUREMENTS

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability.

Under U.S. GAAP, the fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability.

We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. We enter into 30-day foreign currency forward derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of June 30, 2020, we had the following foreign currency derivative contract outstanding relating to a portion of our foreign operations:

 
US Dollar Notional Amount
 
Traded Exchange Rate
 
Settlement Date

 
(In Thousands)
 

 

Forward sale Mexican peso
 
$
5,292

 
22.58
 
7/2/2020


Under a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries, we may enter into similar derivative contracts from time to time. Although contracts

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pursuant to this program will serve as economic hedges of the cash flow of our currency exchange risk exposure, they will not be formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period.

The fair values of our foreign currency derivative contracts are based on quoted market values (a Level 2 fair value measurement). The fair values of our foreign currency derivative instruments as of June 30, 2020 and December 31, 2019, are as follows:
Foreign currency derivative contracts
 
Balance Sheet
 
Fair Value at
 
Location
 
June 30, 2020
 
December 31, 2019
 
 
 
 
(In Thousands)
Forward sale contracts
 
Current assets
 
$
95

 
$

Forward sale contracts
 
Current liabilities
 

 
(53
)
Net asset (liability)
 
 
 
$
95

 
$
(53
)


None of our foreign currency derivative instruments contains credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three and six month periods ended June 30, 2020 we recognized $0.3 million and $(1.1) million, respectively, of net (gains) losses associated with our foreign currency derivatives program, and such amounts are included in other (income) expense, net, in the accompanying consolidated statement of operations. During the three and six month periods ended June 30, 2019, we recognized $0.2 million and $0.3 million, respectively, of net (gains) losses associated with our foreign currency derivative program, and such amounts are included in other (income) expense, net, in the accompanying consolidated statement of operations.

During the six months ended June 30, 2020, we recorded impairments of approximately $9.0 million, reflecting the decreased fair value for certain assets. The fair values used in these impairment calculations were estimated based on a market approach, which is based on significant unobservable inputs (Level 3) in accordance with the fair value hierarchy.    

Recurring and nonrecurring fair value measurements by valuation hierarchy as of June 30, 2020 and December 31, 2019 are as follows:
 
 
 
Fair Value Measurements Using
Description
Total as of
June 30, 2020
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
(In Thousands)
Midland manufacturing facility and related assets
$
19,646

 
$

 
$

 
$
19,646

Non-core used compressor equipment held for sale
$
2,600

 
$

 
$

 
$
2,600

Asset for foreign currency derivative contracts
$
95

 
$

 
$
95

 
$

 
$
22,341

 
 
 
 
 
 
    

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Fair Value Measurements Using
 
 
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Description
Total as of
December 31, 2019
 
 
 
 
(In Thousands)
Liability for foreign currency derivative contracts
(53
)
 

 
(53
)
 

 
$
(53
)
 
 
 
 
 
 
The fair values of cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings, and variable-rate long-term debt pursuant to our Credit Agreement approximate their carrying amounts. The fair values of our publicly traded long-term 7.25% Senior Notes at June 30, 2020 and December 31, 2019 were approximately $41.6 million and $266.0 million, respectively. Those fair values compare to aggregate principal amounts of such notes at June 30, 2020 and December 31, 2019 of $80.7 million and $295.9 million, respectively. The fair values of our long-term 7.50% Senior Secured Notes at June 30, 2020 and December 31, 2019 were approximately $336.4 million and $344.8 million, respectively. These fair values compare to an aggregate principal amount of such notes at June 30, 2020 and December 31, 2019 of $400.0 million and $350.0 million, respectively. The fair value of the CCLP 10.00%/10.75% Second Lien Notes at June 30, 2020 was approximately $96.8 million. This fair value compares to aggregate principal amount of such notes at June 30, 2020 of $155.5 million. We based the fair values of our 7.25% Senior Notes, our 7.50% Senior Secured Notes, and our 10.00%/10.75% Second Lien Notes as of June 30, 2020 on recent trades for these notes.
NOTE 10INCOME TAXES
 
As a partnership, we are generally not subject to income taxes at the entity level because our income is included in the tax returns of our partners. Our operations are treated as a partnership for federal tax purposes with each partner being separately taxed on its share of taxable income. However, a portion of our business is conducted through taxable U.S. corporate subsidiaries. Accordingly, a U.S. federal and state income tax provision has been reflected in the accompanying statements of operations. Certain of our operations are located outside of the U.S., and the Partnership, through its foreign subsidiaries, is responsible for income taxes in these countries.

Our effective tax rate for the six month period ended June 30, 2020, was negative 3.3% primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes combined with losses generated in entities for which no related tax benefit has been recorded. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.
NOTE 11SUBSEQUENT EVENTS
    
On July 2, 2020, we completed the previously announced sale of our Midland manufacturing facility for a total sale price of $17.0 million. In connection with the sale, we have entered into an agreement with the buyer that permits us to continue to operate the facility until the completion and sale of our remaining backlog, which we anticipate will be completed during the third quarter of 2020. While we will continue to operate the facility until the completion and sale of our remaining backlog, we no longer intend to fabricate new compressor packages for sales to third parties or for our own service fleet.

During the second quarter of 2020, we entered into an agreement to sell 58 low-horsepower units to one of our customers for $2.6 million. We received the proceeds prior to June 30, 2020, however, the assets were not transferred to the customer until after June 30,2020. Therefore, they are classified as held for sale at June 30, 2020 in our financial statements. In addition, in late July, we received a purchase order to sell $6.7 million of idle large horsepower compressor units to one of our significant customers. We expect this sale to be completed and proceeds received by the end of the third quarter. We have and will continue to evaluate the sale of other non-core assets, including our low-horsepower compression fleet. We can provide no assurance that we will consummate a future sale of our low-horsepower compression fleet or any other non-core asset.


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On July 20, 2020, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended June 30, 2020 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit, on an annualized basis. This distribution will be paid on August 14, 2020 to each of the holders of common units of record as of the close of business on August 1, 2020.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and accompanying notes included in this Quarterly Report. In addition, the following discussion and analysis also should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 16, 2020 ("2019 Annual Report"). This discussion includes forward-looking statements that involve certain risks and uncertainties.
Business Overview
    
We provide compression services and equipment for natural gas and oil production, gathering, artificial lift, transmission, processing, and storage. Our compression and related services business includes a fleet of more than 4,900 compressor packages providing approximately 1.2 million in aggregate horsepower, utilizing a full spectrum of low-, medium-, and high-horsepower engines. Our equipment sales business includes the design, and sale of both standard and custom-designed, engineered compressor packages. Our aftermarket business provides compressor package reconfiguration and maintenance services, as well as the sale of compressor package parts and components manufactured by third-party suppliers. Our customers operate throughout many of the onshore producing regions of the United States, as well as in a number of foreign locations, including the countries of Mexico, Canada and Argentina. We design and fabricate a majority of the compressor packages that we use to provide compression services and sell to customers. Going forward, we plan to have such compressor packages fabricated through one or more third party packagers.
    
Our operations are significantly dependent upon the demand for, and production of, oil and the associated natural gas from unconventional oil and natural gas production in the domestic and international markets in which we operate. During the second quarter of 2020, we continued to see macroeconomic uncertainty in the oil and natural gas industry and steep declines in spending by the oil and gas operators as evidenced by a 64% decline in the U.S. onshore rig count. In addition, the second quarter of 2020 was the first full quarter where we experienced the impact of the COVID-19 pandemic and mitigation efforts to minimize the spread of the virus. The unprecedented drop in U.S. onshore oil and natural gas activity led to some of our customers temporarily shutting in wells, presenting a new challenge for us. Approximately 15% of our US domestic fleet was on standby during the quarter as a result. Customers started bringing production back online late in the second quarter and we expect that activity to continue during the third quarter of 2020.

During the first half of 2020, we saw our customers revise their capital budgets substantially downward and adjust their operations accordingly which we believe will continue for an indefinite period. Given the decline in orders for new compression equipment to be fabricated and sold to third parties, in early April 2020, we announced our plan to shut down our Midland manufacturing facility. On July 2, 2020, we completed the previously announced sale of our Midland manufacturing facility for a total sale price of $17.0 million. While we will continue to operate the facility until the completion and sale of our remaining backlog, we no longer intend to fabricate new compressor packages for sales to third parties or for our service fleet.

The COVID-19 pandemic and decline in oil prices had a significant impact on our customers and industry. During the first quarter of 2020, we concluded that these events were indicators of impairment for all our asset groups. As a result, we performed a recoverability analysis on all our long-lived asset groups and we determined that the carrying values of our Midland manufacturing facility and related new unit sales inventory exceeded their respective fair values. Therefore, we recorded impairments of approximately $5.4 million during the first quarter of 2020 related to these assets. During the second quarter of 2020, primarily as a result of continued negative impacts on our compression fleet associated with the COVID-19 pandemic and declines in oil and gas prices, we recorded impairments and other charges of approximately $9.0 million associated with non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services. Given the dynamic nature of the events, we are not able to reasonably estimate how long our operations will be impacted and the full impact these events will have on our operations. As a result, we could have indicators of impairment again in future periods resulting in additional asset impairments. We have and will continue to evaluate the sale of non-core assets, including our low-horsepower compression fleet. We can provide no

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assurance that we will consummate a future sale of our low-horsepower compression fleet or any other non-core asset.

We have taken aggressive cost reduction initiatives to improve our liquidity. In addition, during the second quarter of 2020, we completed a debt exchange that resulted in a permanent reduction in outstanding long-term debt of $9.6 million and the extension of maturity dates of certain of our remaining long-term debt balances. See further discussion of these changes in the Cash Flows section below.

We plan to manage our flexible cost structure to proactively respond to changing market conditions and take actions necessary to manage through these conditions, some of which could result in impairments or restructuring charges in future periods. Temporary and permanent cost reductions we have implemented include reductions in 2020 capital expenditures, workforce reductions, salary reductions, furloughs, a reduction in the cash retainers for the directors of our general partner, the suspension of 401(k) matching contributions for our employees, targeted reduction in SG&A expenses, rationalization of our real estate facilities, including potential exit of leases and facility closures, and negotiated reductions in expenditures with many of our suppliers. Absent a meaningful recovery in oil and natural gas prices and a material improvement in demand for oil and gas, we expect our operations to continue to be negatively impacted, particularly in the onshore producing regions of the United States. We are not able to predict how long market disruptions resulting from the COVID-19 pandemic and diminished demand for oil will continue, or what impact they will ultimately have on our business. During July 2020, completions activity in the US onshore regions has improved modestly. However, the risk of additional waves of COVID-19, increases in the number of cases, and the possibility of future lockdowns makes any forecast for improvement uncertain. Despite challenging market conditions, we will continue to maintain our commitment to safety and service quality for our customers.
How We Evaluate Our Operations
 
Operating Expenses. We use operating expenses as a performance measure for our business. We track our operating expenses using month-to-month, quarter-to-quarter, year-to-date, and year-to-year comparisons and as compared to budget. This analysis is useful in identifying adverse cost trends and allows us to investigate the cause of these trends and implement remedial measures if possible. The most significant portions of our operating expenses are for our field labor, repair and maintenance of our equipment, and for the fuel and other supplies consumed while providing our services. The costs of other materials consumed while performing our services, ad valorem taxes, other labor costs, truck maintenance, rent on storage facilities, and insurance expenses comprise the significant remainder of our operating expenses. Our operating expenses generally fluctuate with our level of activity.

Our labor costs consist primarily of wages and benefits for our field and fabrication personnel, as well as expenses related to their training and safety. Additional information regarding our operating expenses for the three and six month periods ended June 30, 2020, is provided within the Results of Operations sections below.

Adjusted EBITDA. We view Adjusted EBITDA as one of our primary management tools, and we track it on a monthly basis, both in dollars and as a percentage of revenues (typically compared to the prior month, prior year period, and to budget). We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, and before certain non-cash charges, including impairments and other charges, bad debt expense attributable to bankruptcy of customer, equity compensation, non-cash costs of compressors sold, fair value adjustments of our Preferred Units that were issued in late 2016 and redeemed for cash on August 8, 2019, gain on extinguishment of debt, write-off of unamortized financing costs, and excluding Preferred Units redemption premium, severance and other non-recurring or unusual expenses or charges. Adjusted EBITDA is used as a supplemental financial measure by our management to:
assess our ability to generate available cash sufficient to make distributions to our common unitholders and general partner;
evaluate the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis;
measure operating performance and return on capital as compared to those of our competitors; and
determine our ability to incur and service debt and fund capital expenditures.


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 The following table reconciles net income (loss) to Adjusted EBITDA for the periods indicated:
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
 
(In Thousands)
Net loss
$
(24,578
)
 
$
(2,947
)
 
$
(38,208
)
 
$
(15,403
)
Provision (benefit) for income taxes
1,016

 
(704
)
 
1,228

 
3,669

Depreciation and amortization
20,117

 
19,054

 
40,025

 
37,586

Impairments and other charges
8,977

 
2,464

 
14,348

 
2,464

Interest expense, net
13,580

 
13,045

 
26,749

 
26,344

Equity compensation
488

 
590

 
812

 
955

Series A Preferred redemption premium

 
621

 

 
1,069

Series A Preferred fair value adjustments

 
166

 

 
1,470

Debt exchange expenses
4,755

 
 
 
4,755

 
 
Severance
1,084

 

 
1,356

 

Non-cash cost of compressors sold
631

 
98

 
2,440

 
1,038

Other
977

 
376

 
1,304

 
376

Adjusted EBITDA
$
27,047


$
32,763


$
54,809


$
59,568

 
The following table reconciles cash flow from operating activities to Adjusted EBITDA:
 
Six Months Ended
June 30,
 
2020
 
2019
 
(In Thousands)
Net cash provided by operating activities
$
18,180

 
$
40,342

Changes in current assets and current liabilities
5,518

 
(8,783
)
Deferred income taxes
(409
)
 
(946
)
Other non-cash charges
(2,074
)
 
(1,411
)
Interest expense, net
26,749

 
26,344

Series A Preferred accrued paid in kind distributions

 
(1,061
)
Insurance recoveries
517

 
 
Provision for income taxes
1,228

 
3,669

Severance
1,356

 

Non-cash cost of compressors sold
2,440

 
1,038

Other
1,304

 
376

Adjusted EBITDA
$
54,809

 
$
59,568


Free Cash Flow. We define Free Cash Flow as cash from operations less capital expenditures, net of sales proceeds. Management primarily uses this metric to assess our ability to retire debt, evaluate our capacity to further invest and grow, and measure our performance as compared to our peers. The following table reconciles cash provided by operations, net, to Free Cash Flow for the periods indicated:

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
 
(In Thousands)
 
(In Thousands)
Net cash provided by operating activities
$
4,823

 
$
8,710

 
$
18,180

 
$
40,342

Capital expenditures, net of sales proceeds
(1,125
)
 
(16,434
)
 
(7,608
)
 
(39,586
)
Free cash flow
$
3,698

 
$
(7,724
)
 
$
10,572

 
$
756

    

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Adjusted EBITDA and Free Cash Flow are financial measures that are not in accordance with U.S. GAAP and should not be considered an alternative to net income, operating income, cash from operating activities, or any other measure of financial performance presented in accordance with U.S. GAAP. These measures may not be comparable to similarly titled financial metrics of other entities, as other entities may not calculate Adjusted EBITDA or Free Cash Flow in the same manner as we do. Management compensates for the limitations of Adjusted EBITDA and Free Cash Flow as analytical tools by reviewing the comparable U.S. GAAP measures, understanding the differences between the measures, and incorporating this knowledge into management’s decision-making processes. Adjusted EBITDA and Free Cash Flow should not be viewed as indicative of the actual amount of cash we have available for distributions or that we plan to distribute for a given period, nor should it be equated with “available cash” as defined in our partnership agreement.

Horsepower Utilization Rate of our Compressor Packages. We measure the horsepower utilization rate of our fleet of compressor packages as the amount of horsepower of compressor packages used to provide services as of a particular date, divided by the amount of horsepower of compressor packages in our services fleet as of such date. Management primarily uses this metric to determine our future need for additional compressor packages for our service fleet and to measure marketing effectiveness.
 
The following table sets forth the total horsepower in our compression fleet, our total horsepower in service, and our horsepower utilization rate as of the dates shown.
 
June 30,
 
2020
 
2019
Horsepower
 
 
 
Total horsepower in fleet
1,178,721

 
1,155,440

Total horsepower in service
967,505

 
1,029,045

Total horsepower utilization rate
82.1
%
 
89.1
%

The following table sets forth our horsepower utilization rates by each horsepower class of our compression fleet as of the dates shown.

 
June 30,
 
2020
 
2019
Horsepower utilization rate by class
 
 
 
Low-horsepower (0-100)
63.6
%
 
73.7
%
Medium-horsepower (101-1,000)
79.4
%
 
84.4
%
High-horsepower (1,001 and over)
88.2
%
 
97.1
%

The total horsepower utilization rate and the utilization rate by each horsepower class have each decreased this quarter compared to the prior period due to significantly lower customer activity levels. While we currently believe the second quarter of 2020 will be the most severely impacted quarter for the full year, we believe our utilization rates for the third quarter will continue to be negatively impacted by the COVID-19 pandemic and related market conditions in the oil and gas industry.
Net Increases/Decreases in Compression Fleet Horsepower. We measure the net increase (or decrease) in our compression fleet horsepower during a given period by taking the difference between the aggregate horsepower of compressor packages added to the fleet during the period, less the aggregate horsepower of compressor packages removed from the fleet during the period. We measure the net increase (or decrease) in our compression fleet horsepower in service during a given period by taking the difference between the aggregate horsepower of compressor packages placed into service during the period, less the aggregate horsepower of compressor packages removed from service during the period.
New Equipment Sales Backlog. Our new equipment sales business includes the engineering, design, fabrication, assembly, project management, and sale of both standard and custom-designed compressor packages fabricated at authorized packaging facilities in Texas. Earlier this year we disclosed our plan to shut down our Midland manufacturing facility as a result of a decline in orders for new equipment from third parties. On July 2, 2020, we completed the previously announced sale of the manufacturing facility for a total sale price of $17.0 million. In connection with the sale, we entered into an agreement with the buyer that permits us to continue to

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operate the facility until the completion and sale of our remaining backlog, which we anticipate will be completed during the third quarter of 2020. New equipment sales backlog was $8.3 million as of June 30, 2020 compared to $30.3 million and $35.5 million as of March 31, 2020 and December 31, 2019, respectively. Changes in our new equipment sales backlog are a function of additional customer orders less completed orders that result in equipment sales revenues for the period. During the six months ended June 30, 2020, we received cumulative orders of $3.5 million for new equipment. All our June 30, 2020 new equipment sales backlog is expected to be recognized during the third quarter of 2020. Our new equipment sales backlog consists of firm customer orders for which a purchase or work order has been received, satisfactory credit or financing arrangements exist, and target delivery dates have been established based on customer requirements. While we will continue to operate the facility until the completion and sale of our remaining backlog, we no longer intend to fabricate new compressor packages for sales to third parties.
Critical Accounting Policies and Estimates
 
There have been no material changes or developments in the evaluation of the accounting estimates and the underlying assumptions or methodologies pertaining to our Critical Accounting Policies and Estimates disclosed in our 2019 Annual Report. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. These judgments and estimates may change as new events occur, as new information is acquired, and as changes in our operating environments are encountered. Actual results are likely to differ from our current estimates, and those differences may be material.
Results of Operations

Three months ended June 30, 2020 compared to three months ended June 30, 2019
 
Three Months Ended June 30,
 
 
 
 
 
Period-to-Period Change
 
Percentage of Total Revenues
 
Period-to-Period Change
Consolidated Results of Operations
2020
 
2019
 
2020 vs. 2019
 
2020
 
2019
 
2020 vs. 2019
 
(In Thousands)
 
 
 
 
 
 
Revenues:
 

 
 

 
 
 
 
 
 
 
 
Compression and related services
$
56,336

 
$
64,876

 
$
(8,540
)
 
58.4
 %
 
47.8
 %
 
(13.2
)%
Aftermarket services
15,737

 
18,156

 
(2,419
)
 
16.3
 %
 
13.4
 %
 
(13.3
)%
Equipment sales
24,340

 
52,824

 
(28,484
)
 
25.2
 %
 
38.9
 %
 
(53.9
)%
Total revenues
96,413

 
135,856

 
(39,443
)
 
100.0
 %
 
100.0
 %
 
(29.0
)%
Cost of revenues:
 
 
 
 
 
 
 

 
 

 
 

Cost of compression and related services
25,395

 
30,520

 
(5,125
)
 
26.3
 %
 
22.5
 %
 
(16.8
)%
Cost of aftermarket services
13,433

 
15,418

 
(1,985
)
 
13.9
 %
 
11.3
 %
 
(12.9
)%
Cost of equipment sales
24,415

 
47,412

 
(22,997
)
 
25.3
 %
 
34.9
 %
 
(48.5
)%
Total cost of revenues
63,243

 
93,350

 
(30,107
)
 
65.6
 %
 
68.7
 %
 
(32.3
)%
Depreciation and amortization
20,117

 
19,054

 
1,063

 
20.9
 %
 
14.0
 %
 
5.6
 %
Impairments and other charges
8,977

 
2,311

 
6,666

 
9.3
 %
 
1.7
 %
 
288.4
 %
Insurance recoveries
(517
)
 

 
(517
)
 
(0.5
)%
 
 %
 
100.0
 %
Selling, general, and administrative expense
10,172

 
10,974

 
(802
)
 
10.6
 %
 
8.1
 %
 
(7.3
)%
Interest expense, net
13,580

 
13,045

 
535

 
14.1
 %
 
9.6
 %
 
4.1
 %
Series A Preferred fair value adjustment (income) expense

 
166

 
(166
)
 
 %
 
0.1
 %
 
(100.0
)%
Other (income) expense, net
4,403

 
607

 
3,796

 
4.6
 %
 
0.4
 %
 
625.4
 %
Income (loss) before income taxes
(23,562
)
 
(3,651
)
 
(19,911
)
 
(24.4
)%
 
(2.7
)%
 
545.4
 %
Provision (benefit) for income taxes
1,016

 
(704
)
 
1,720

 
1.1
 %
 
(0.5
)%
 
(244.3
)%
Net income (loss)
$
(24,578
)
 
$
(2,947
)
 
$
(21,631
)
 
(25.5
)%
 
(2.2
)%
 
734.0
 %
 

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Table of Contents

Revenues
 
Compression and related services revenues decreased $8.5 million, a 13.2% decrease, in the current year quarter compared to the prior year quarter. The COVID-19 pandemic's impact on demand for oil and natural gas and the resulting decline in oil prices has led to a significant reduction in customer activity resulting in a decrease in demand for compression services. We have experienced returned compressors, compressors placed on standby rates, and have made some pricing concessions, all contributing to a decrease in revenues.

Aftermarket services revenues decreased $2.4 million during the current year quarter compared to the prior year quarter due to decreased demand for parts and services as a result of lower customer activity levels.

Equipment sales revenues decreased $28.5 million during the current year quarter compared to the prior year quarter, as we continued to close out remaining backlog and prepared to shut down our Midland manufacturing facility.

Cost of revenues
 
The cost of compression and related services revenue decreased compared to the prior year quarter consistent with decreased revenues. Cost of compression and related services as a percent of associated revenues decreased from 47.0% during the prior year quarter to 45.1% in the current year quarter due to cost-saving actions including labor efficiencies, reduced maintenance costs, and lower indirect and overhead costs.

Cost of aftermarket services decreased during the current year quarter consistent with decreased revenues.

Cost of equipment sales revenues decreased consistent with the decrease in associated revenues. Margins were lower than the prior year due to the under-absorption of fixed and indirect cost costs associated with our Midland manufacturing facility.

Depreciation and amortization
 
Depreciation and amortization expense consists primarily of the depreciation of compressor packages in our service fleet. In addition, it includes the depreciation of other operating equipment and facilities and the amortization of intangibles. Depreciation and amortization expense increased compared to the prior year quarter primarily due to increases to the high-horsepower class of our compression fleet.

Impairments and other charges

During the current quarter, we recorded impairments and other charges of $9.0 million primarily on non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services.

Selling, general, and administrative expense
 
Selling, general, and administrative expenses decreased during the current year quarter compared to the prior year quarter primarily due decreased employee expenses of $0.9 million.


Other (income) expense, net
 
Other (income) expense, net, was $4.4 million of expense, net, during the current year quarter compared to $0.6 million of expense, net, during the prior year quarter. The increase in other expense is primarily due to $4.8 million of fees associated with the unsecured debt exchange transaction offset by decreased expense of $0.6 million associated with the redemption premium incurred during the prior year quarter in connection with the redemption of Preferred Units for cash and increased foreign currency gains of $0.2 million.


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Table of Contents

Provision for income taxes
 
As a partnership, we are generally not subject to income taxes at the entity level because our income is included in the tax returns of our partners. Our operations are treated as a partnership for federal tax purposes with each partner being separately taxed on its share of taxable income. However, a portion of our business is conducted through taxable U.S. corporate subsidiaries. Accordingly, a U.S. federal and state income tax provision has been reflected in the accompanying statements of operations. Certain of our operations are located outside of the U.S. and the Partnership, through its foreign subsidiaries, is responsible for income taxes in these countries.
Results of Operations

Six months ended June 30, 2020 compared to six months ended June 30, 2019.
 
Six Months Ended June 30,
 
 
 
 
 
Period-to-Period Change
 
Percentage of Total Revenues
Period-to-Period Change
Consolidated Results of Operations
2020
 
2019
 
2020 vs. 2019
 
2020
 
2019
 
2020 vs. 2019
 
(In Thousands)
 
 
 
 
 
 
Revenues:
 
 
 
 
 

 
 
 
 
 
 
Compression and related services
$
122,101

 
$
127,578

 
$
(5,477
)
 
65.4
 %
 
53.3
 %
 
(4.3
)%
Aftermarket services
33,707

 
31,770

 
1,937

 
18.1
 %
 
13.3
 %
 
6.1
 %
Equipment sales
30,884

 
79,944

 
(49,060
)
 
16.5
 %
 
33.4
 %
 
(61.4
)%
Total revenues
186,693

 
239,292

 
(52,600
)
 
100.0
 %
 
100.0
 %
 
(22.0
)%
Cost of revenues:
 

 
 
 
 
 
 

 
 

 
 

Cost of compression and related services
57,003

 
63,141

 
(6,138
)
 
30.5
 %
 
26.4
 %
 
(9.7
)%
Cost of aftermarket services
29,678

 
26,678

 
3,000

 
15.9
 %
 
11.1
 %
 
11.2
 %
Cost of equipment sales
31,115

 
71,631

 
(40,516
)
 
16.7
 %
 
29.9
 %
 
(56.6
)%
Total cost of revenues
117,796

 
161,450

 
(43,654
)
 
63.1
 %
 
67.5
 %
 
(27.0
)%
Depreciation and amortization
40,025

 
37,586

 
2,439

 
21.4
 %
 
15.7
 %
 
6.5
 %
Impairments and other charges
14,348

 
2,311

 
12,037

 
7.7
 %
 
1.0
 %
 
520.9
 %
Insurance recoveries
(517
)
 

 
(517
)
 
(0.3
)%
 
 %
 
100.0
 %
Selling, general, and administrative expense
20,428

 
21,639

 
(1,211
)
 
10.9
 %
 
9.0
 %
 
(5.6
)%
Interest expense, net
26,749

 
26,344

 
405

 
14.3
 %
 
11.0
 %
 
1.5
 %
Series A Preferred fair value adjustment (income) expense

 
1,470

 
(1,470
)
 
 %
 
0.6
 %
 
(100.0
)%
Other (income) expense, net
4,843

 
226

 
4,617

 
2.6
 %
 
0.1
 %
 
2,042.9
 %
Loss before income taxes
(36,980
)
 
(11,734
)
 
(25,246
)
 
(19.8
)%
 
(4.9
)%
 
215.2
 %
Provision for income taxes
1,228

 
3,669

 
(2,441
)
 
0.7
 %
 
1.5
 %
 
(66.5
)%
Net loss
$
(38,208
)
 
$
(15,403
)
 
$
(22,805
)
 
(20.5
)%
 
(6.4
)%
 
148.1
 %

Revenues
 
Compression and related services revenues decreased by $5.5 million, or 4.3%, in the current year period compared to the prior year period. The COVID-19 pandemic’s impact on demand for oil and natural gas and the resulting decline in oil prices has led to a significant reduction in customer activity resulting in a decrease in demand for compression services. We have experienced returned compressors, compressors placed on standby rates, and have made some pricing concessions, all contributing to a decrease in revenues.

Aftermarket services revenues increased $1.9 million, or 6.1%, during the current year period compared to the prior year period resulting from increased customer demand for aftermarket services and parts for maintenance and overhauls of customer-owned compressor equipment during the first quarter of 2020.


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Table of Contents

Equipment sales revenues decreased $49.1 million, or 61.4%, during the current year period compared to the prior year period, primarily because of a decrease in deliveries of new compressors compared to the prior year period due to the planned shut down of the our Midland manufacturing facility.

Cost of revenues
 
Cost of compression and related services decreased compared to the prior year period consistent with decreased revenues. Cost of compression and related services as a percentage of compression and related services revenues decreased from 49.5% during the prior year period to 46.7% during the current year period due to cost-saving actions including labor efficiencies, reduced maintenance costs, and lower indirect and overhead costs.

Cost of aftermarket services increased compared to the prior year period consistent with the increased activity and lower margins during the first quarter of 2020.

Cost of equipment sales decreased in accordance with the decrease in associated revenues. Cost of equipment sales as a percentage of equipment sales revenues increased primarily due to pricing on equipment sales orders placed in 2019 and higher costs driven by the under-utilization of the manufacturing facility.

Depreciation and amortization
 
Depreciation and amortization expense consists primarily of the depreciation of compressor packages in our service fleet. In addition, it includes the depreciation of other operating equipment and facilities and the amortization of intangibles. Depreciation and amortization expense increased compared to the prior year period due to additions to the high-horsepower class of our compression fleet.

Impairments and other charges

During the six month period ended June 30, 2020, we recorded impairments and other charges of $14.3 million on our Midland manufacturing facility and related assets, non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services.

Selling, general, and administrative expense
 
Selling, general, and administrative expenses decreased during the current year period compared to the prior year period largely due to decreased employee expenses of $1.6 million and decreased other general expenses of $0.2 million. These decreases were offset by increased professional services of $0.3 million and increased bad debt expense of $0.2 million. Despite decreased expenses, as a percentage of revenues, selling, general, and administrative expense increased in the current year period compared to the prior year period due to lower revenues in the current year period.
 
Series A Preferred fair value adjustment

The Series A Preferred Units fair value adjustment was $1.5 million charged to earnings during the prior year period. All the remaining outstanding Preferred Units were redeemed for cash on August 8, 2019.
 
Other (income) expense, net
 
Other (income) expense, net, was $4.8 million of expense during the current year period, compared to $0.2 million of expense during the prior year period. The change from income to expense is primarily due to $4.8 million of fees associated with the unsecured debt exchange transaction and increased foreign currency losses of $0.9 million offset by decreased expense of $1.1 million associated with the redemption premium incurred during the prior year period in connection with the redemption of Preferred Units for cash.

Provision for income taxes
 
As a partnership, we are generally not subject to income taxes at the entity level because our income is included in the tax returns of our partners. Our operations are treated as a partnership for federal tax purposes with

27

Table of Contents

each partner being separately taxed on its share of taxable income. However, a portion of our business is conducted through taxable U.S. corporate subsidiaries. Accordingly, a U.S. federal and state income tax provision has been reflected in the accompanying statements of operations. Certain of our operations are located outside of the U.S. and the Partnership, through its foreign subsidiaries, is responsible for income taxes in these countries.

Our effective tax rate for the six month period ended June 30, 2020, was negative 3.3% primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes combined with losses generated in entities for which no related tax benefit has been recorded. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.
Liquidity and Capital Resources
 
Our primary cash requirements are for distributions, working capital requirements, debt service payments, normal operating expenses, and capital expenditures. Our potential sources of funds are our existing cash balances, cash generated from our operations, proceeds from the sale of non-core assets, and long-term and short-term borrowings, which we believe will be sufficient to meet our working capital and reduced growth capital requirements during 2020. We are monitoring the spending plans of our customers due to the macroeconomic uncertainties resulting from the recent substantial declines in prices of oil and natural gas and the ongoing COVID-19 pandemic. These uncertainties have negatively impacted our customers' demands for our products and services, which has negatively impacted our businesses. Although oil and natural gas prices have recovered in the second quarter 2020 from their lows earlier in the year, the outlook for the remainder of 2020 is uncertain. If oil and natural gas prices decrease from current levels, our businesses could be further negatively impacted. In addition, current conditions in the market for debt and equity securities in the energy sector have increased the difficulty of obtaining equity and debt financing and we expect this to continue in the near future. Despite these challenges, we remain committed to a long-term growth strategy. Our near-term focus is to maintain our compression fleet, while continuing to preserve and enhance liquidity through strategic operating and financial measures. We periodically evaluate engaging in strategic transactions and may consider divesting non-core assets where our evaluation suggests such transactions are in the best interests of our business, such as the agreement we have entered into with a third party purchaser for the sale of the Midland facility and the agreement we have entered into to sell 58 low-horsepower units to one of our customers. We are subject to business and operational risks that could materially adversely affect our cash flows and together with risks associated with current debt and equity market conditions, our ability or desire to issue such securities. Please read Part I, Item 1A "Risk Factors" included in our 2019 Annual Report.
 
Our expected capital expenditures in 2020 to range from $28.0 million to $35.0 million. These capital expenditures include approximately $20.0 million to $22.0 million of maintenance capital expenditures and approximately $5.0 million to $8.0 million of capital expenditures primarily associated with the expansion of our compression services fleet, and $3.0 million to $5.0 million of capital expenditures related to investments in technology, primarily software and systems. The foregoing estimates are based on assumptions regarding the ongoing impact of the decline of oil and gas prices and the COVID-19 pandemic.

On July 20, 2020, our General Partner declared a cash distribution attributable to the quarter ended June 30, 2020 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit on an annualized basis. This quarterly distribution will be paid on August 14, 2020 to each of the holders of common units of record as of the close of business on August 1, 2020.

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Table of Contents

Cash Flows

A summary of our sources (uses) of cash during the six months ended June 30, 2020 and 2019 is as follows:
 
Six Months Ended June 30,
 
(In Thousands)
 
2020
 
2019
Operating activities
$
18,180

 
$
40,342

Investing activities
(7,091
)
 
(39,586
)
Financing activities
(6,694
)
 
(12,329
)
Operating Activities
 
Net cash provided by operating activities decreased by $22.2 million compared to the prior year period. Our cash provided from operating activities is primarily generated from the provision of compression and related services and the sale of new compressor packages. The decrease in cash provided by operating activities was primarily due to working capital movements, particularly related to collections of accounts receivable, and timing of payments of accounts payable.

Cash provided from our foreign operations is subject to various uncertainties, including the volatility associated with interruptions caused by customer budgetary decisions, uncertainties regarding the renewal of our existing customer contracts and other changes in contract arrangements, the timing of collection of our receivables, and the repatriation of cash generated by our international operations.

Investing Activities
 
Capital expenditures during the six months ended June 30, 2020, decreased by $28.8 million compared to the same period in 2019 primarily due to the reduction in capital expenditures to grow the capacity of our compression fleet compared to the prior year. Maintenance capital expenditures increased during the six months ended June 30, 2020 compared to the prior year period. Total capital expenditures, net of disposals and proceeds, during the current year period of $11.2 million include $10.4 million of maintenance capital expenditures and are net of $2.4 million of non-cash cost of fleet compression units sold and proceeds of $3.6 million from the sale of property, plant and equipment.

The level of growth capital expenditures depends on forecasted demand for compression services. If the forecasted demand for compression services increases or decreases, the amount of planned expenditures on growth and expansion will be adjusted, subject to the availability of funds. We continue to review all capital expenditure plans carefully in an effort to conserve cash and fund our liquidity needs.

Financing Activities

Distributions
 
Beginning with the distribution to common unitholders during February 2019, we reduced our common unit distributions from $0.75 per unit per year (or $0.1875 per quarter) to $0.04 per unit per year (or $0.01 per quarter). During the six months ended June 30, 2020, we distributed $1.0 million of cash distributions to our common unitholders and General Partner.
    
Series A Convertible Preferred Units.
    
In January 2019 we began redeeming Preferred Units for cash, resulting in 2,660,569 Preferred Units being redeemed during the six months ended June 30, 2019 for $22.5 million, which includes approximately $1.1 million of redemption premium that was paid. The last redemption of the remaining Preferred Units, along with a final cash payment made in lieu of paid in kind units occurred on August 8, 2019.

     Bank Credit Facilities. On June 11, 2020, CSI Compressco, LP and CSI Compressco Sub Inc (the “Borrowers”) entered into the Second Amendment to Loan and Security Agreement (the “Amendment”) amending

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the Loan and Security Agreement dated June 29, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) with Bank of America, N.A., in its capacity as administrative agent, issuing bank and swing line issuer (“Administrative Agent”), and the other lenders and loan parties party thereto. The Credit Agreement, as amended, provided for modifications to the Credit Agreement which include, among other things: (i) reducing the maximum credit commitment from $50,000,000 to $35,000,000; (ii) the inclusion of a $5,000,000 reserve with respect to the Borrowing Base (as defined in the Credit Agreement) thereunder, which would result in reduced borrowing availability; (iii) the removal of the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) financial maintenance covenant; (iv) a 1.25% increase in the applicable margin related to (x) LIBOR Rate Loans (as defined in the Credit Agreement) and (y) Base Rate Loans (as defined in the Credit Agreement), in each case, which shall be determined according to average daily excess availability under the Credit Agreement; and (v) an 0.50% increase in the rate used to calculate the commitment fee in respect of the unutilized commitments. As of June 30, 2020, and subject to compliance with the covenants, borrowing base, and other provisions of the agreements that may limit borrowings under the Credit Agreement, we had availability of $12.3 million.
    
The Borrowers may borrow funds under the Credit Agreement to pay fees and expenses related to the Credit Agreement and for the Borrower's ongoing working capital needs and for general partnership purposes. The revolving loans under the Credit Agreement may be voluntarily prepaid, in whole or in part, without premium or penalty, subject to breakage or similar costs. The maturity date of the Credit Agreement is June 29, 2025. As of June 30, 2020, we had a $1.5 million outstanding balance and had $2.8 million in letters of credit against our Credit Agreement. As of August 3, 2020, we have $0.0 million outstanding under our Credit Agreement and $2.4 million in letters of credit, leaving availability under the CCLP Credit Agreement of $13.8 million. The amounts the Partnership may borrow under the Credit Agreement are based on the amounts of CCLP’s accounts receivables and the value of certain inventory. Decreases in the amount of CCLP’s accounts receivable and the value of its inventory would result in reduced borrowing availability under the Credit Agreement.

We may from time to time seek to retire or purchase certain amounts of our outstanding 7.25% Senior Notes and 7.50% Senior Secured Notes through cash purchases, in open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

First Supplemental Indenture for the Old Notes

On June 11, 2020, CSI Compressco, LP and CSI Compressco Finance Inc. (the "Issuers") announced that they had accepted for exchange $215,208,000 of their outstanding 7.25% Senior Notes due 2022 (the "Old Notes") that were validly tendered by 11:59 p.m., New York City time, on June 10, 2020, for (i) $50,000,000 of the Issuers' 7.50% Senior Secured First Lien Notes due 2025 (the "7.50% First Lien Notes") and (ii) $155,529,000 aggregate principal amount of new 10.00%/10.75% Senior Secured Second Lien Notes due 2026 (the "10.00%/10.75% Second Lien Notes" and, together with the 7.50% First Lien Notes, the "New Notes"), pursuant to its previously announced exchange offer and consent solicitation , which commenced on April 17, 2020. In connection with the exchange offer, we incurred financing fees of $4.8 million which were charged to other (income) expense, net during the three month period ended June 30, 2020.

On June 12, 2020, following receipt of the requisite consents of the holders of the Old Notes, the Issuers entered into the First Supplemental Indenture (the "First Supplemental Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of August 4, 2014 (the "Unsecured Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee.

The First Supplemental Indenture eliminated substantially all of the restrictive covenants and certain of the default provisions in the Unsecured Indenture and became operative upon the consummation by the Issuers of the exchange offer.

On June 12, 2020, the Issuers issued $50,000,000 in aggregate principal amount of new First Lien Notes
to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. In March 2018, the Issuers had issued $350,000,000 in aggregate principal amount of 7.50% Senior Secured Notes due 2025 (the "Existing First Lien Notes" and, together with the newly issued First Lien Notes, the "7.50% First Lien Notes") pursuant to the First Lien Base Indenture. The New First Lien Notes were issued as "additional notes" under the First Lien Base

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Indenture and will be treated as a single class with such notes but will not trade fungibly with the Existing First Lien Notes.

Second Lien Notes Indenture

On June 12, 2020, the Issuers issued $155,529,000 in aggregate principal amount of the 10.00%/10.75% Second Lien Notes to certain holders of the Old Notes pursuant to the terms of the exchange offer. The Issuers issued the 10.00%/10.75% Second Lien Notes pursuant to an indenture, dated June 12, 2020 (the "Second Lien Notes Indenture"),by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee (the "Second Lien Trustee"). In connection with the payment of PIK Interest (as defined below), if any, in respect of the 10.00%/10.75% Second Lien Notes, the Issuers will be entitled, to increase the outstanding aggregate principal amount of the 10.00%/10.75% Second Lien Notes or issue additional notes ("PIK notes") under the Second Lien Notes Indenture on the same terms and conditions as the 10.00%/10.75% Second Lien Notes offered hereby The 10.00%/10.75% Second Lien Notes and any additional 10.00%/10.75% Second Lien Notes subsequently issued under the indenture, will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The 10.00%/10.75% Second Lien Notes will mature on April 1, 2026. Interest on the 10.00%/10.75% Second Lien Notes will be payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2020. Interest will accrue at (1) the annual rate of 7.250% payable in cash, plus (2) at the election of the Issuers (made by delivering a notice to the Second Lien Trustee not less than five business days prior to the record date), the annual rate of (i) 2.750% payable in cash (together with the annual rate set forth in clause (1), the "Cash Interest Rate") or (ii) 3.500% payable by increasing the principal amount of the outstanding 10.00%/10.75% Second Lien Notes or by issuing additional PIK notes, in each case rounding up to the nearest $1.00 (such increased principal amount or additional PIK notes, the "PIK Interest").

The 10.00%/10.75% Second Lien Notes are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees") on a senior secured basis initially by each of the Partnership's domestic restricted subsidiaries (other than Finance Corp, certain immaterial subsidiaries and certain other excluded domestic subsidiaries, the "Guarantors") and will be secured by a second-priority security interest in substantially all of the Issuers' and the Guarantors' assets (other than certain excluded assets) (the "Collateral") as collateral security for their obligations under the 10.00%/10.75% Second Lien Notes, subject to certain permitted encumbrances and exceptions.
    
The Second Lien Notes Indenture contains customary covenants restricting the Partnership's ability and the ability of its restricted subsidiaries to: (i) pay distributions on, purchase or redeem its common units or purchase or redeem its subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to the Partnership. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting the Partnership, subject to the satisfaction of certain conditions, to transfer assets to certain of its unrestricted subsidiaries. The Second Lien Notes Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Second Lien Notes Indenture, the Second Lien Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 10.00%/10.75% Second Lien Notes may declare all of the 10.00%/10.75% Second Lien Notes to be due and payable immediately.

Other Financing

In February 2019, we entered into an arrangement with TETRA under which a subsidiary of TETRA entered into an agreement with one of our subsidiaries for the purchase up to $15.0 million of compression services equipment and to subsequently lease the equipment back to us in exchange for monthly rental fees. As of June 30, 2020, pursuant to this arrangement, $14.8 million has been funded by TETRA for the construction of new compressor services equipment and all compression units were completed and deployed under this agreement. There is no additional future funding expected related to this arrangement.

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Off Balance Sheet Arrangements
 
As of June 30, 2020, we had no “off balance sheet arrangements” that may have a current or future material effect on our consolidated financial condition or results of operations.
Commitments and Contingencies
 
From time to time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. While the outcome of these lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on our financial condition, results of operations, or cash flows.

Contractual Obligations

Our contractual obligations and commitments principally include obligations associated with our outstanding indebtedness and obligations under operating leases.
    
The table below summarizes our contractual cash obligations as of June 30, 2020:
 
 
Payments Due
 
 
Total
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
 
(In Thousands)
Long-term debt
 
$
637,728

 
$

 
$

 
$
80,722

 
$
1,477

 
$

 
$
555,529

Interest on debt
 
$
244,842

 
$
25,741

 
$
51,483

 
$
49,532

 
$
45,592

 
$
45,553

 
$
26,941

Operating leases
 
$
37,926

 
5,192

 
8,768

 
6,575

 
4,322

 
4,250

 
8,819

Affiliate financing obligation
 
$
12,865

 
1,508

 
3,015

 
3,015

 
3,015

 
2,312

 

Total contractual cash obligations
 
$
933,361

 
$
32,441

 
$
63,266

 
$
139,844

 
$
54,406

 
$
52,115

 
$
591,289

Cautionary Statement for Purposes of Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” and information based on our beliefs and those of our general partner. Forward-looking statements in this Quarterly Report are identifiable by the use of the following words, the negative of such words, and other similar words: “anticipates”, “assumes”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “goal”, “intends”, “may”, “might”, “plans”, “predicts”, “projects”, “schedules”, “seeks”, “should, “targets”, “will” and “would”.

Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, "Item 1A. Risk Factors" and elsewhere in this report and in our 2019 Annual Report, and those described from time to time in our future reports filed with the SEC.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not Applicable.
Item 4. Controls and Procedures.
 
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange

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Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and Principal Financial Officer of our general partner, to allow timely decisions regarding such required disclosure. In designing and evaluating such controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. It is necessary for management to use judgment in evaluating controls and procedures.
As previously disclosed in Item 4. Controls and Procedures in our Form 10-Q for the quarter ended March 31, 2020, we determined we had a material weakness in our internal control over financial reporting for the quarter ended March 31, 2020 related to the revenue recognition for certain new unit sales where revenue recognition criteria had not been met. The material weakness was determined to be the result of operating deficiencies and not the design of the controls supporting revenue recognition. In response to the material weakness, we developed and implemented a remediation plan during the second quarter of 2020 that included more supervision and review of the performance of bill-and-hold controls to ensure adequate documentation is obtained and conclusions are reached prior to recognition of these revenues. We conducted sufficient testing of the enhanced controls and determined the enhanced controls were effective and the material weakness was properly remediated as of June 30, 2020.

Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer of our general partner, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act, as of the quarter ended June 30, 2020. Based on this evaluation, the Principal Executive Officer and Principal Financial Officer of our general partner concluded that our disclosure controls and procedures were effective as of June 30, 2020, the end of the period covered by this Quarterly Report.

Except as noted above, there has been no change in the internal control over financial reporting as of June 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
 
From time to time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. While the outcome of these lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on our financial condition, results of operations, or cash flows.
Item 1A. Risk Factors.

 The statements in this section describe the known material risks to our business and should be considered carefully. We have described in the 2019 Annual Report significant risk factors and periodically update those risks for material developments. The risk factor below updates our risk factors previously discussed in our 2019 Annual Report.


The COVID-19 pandemic has had, or may in the future have, certain negative impacts on our business, and such impacts have had, or may in the future have, an adverse effect on our business, our financial condition, results of operations, or liquidity.

The COVID-19 pandemic and the resulting economic impact have had a significant negative impact on the oil and gas industry. The deterioration in demand for oil caused by the pandemic, coupled with oil oversupply, has had, and is reasonably likely to continue to have, an adverse impact on the demand for our products and services. The public health crisis caused by the COVID-19 pandemic, and the measures that have been taken or that may be taken in the future by governments, various regulatory agencies, our customers and our suppliers, have had, or may in the future have, certain negative impacts on our financial condition, results of operations, and  liquidity, including, without limitation, the following:

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Table of Contents


demand for our products and services is declining as our customers continue to revise their budgets downward and adjust their operations in response to lower oil and gas prices;
actions undertaken by national, state and local governments and health officials to contain COVID-19 or treat its effects. In response to various governmental directives, at points we have required most office-based employees, including most employees based at our headquarters in The Woodlands, Texas, to work remotely. We may experience reductions in productivity and disruptions to our business routines while work-from-home arrangements remain in place;
We could encounter logistical complications and increased costs adapting our disclosure controls and procedures and our internal control over financial reporting in a changing environment that includes work-from-home arrangements and furloughs. In the future we may encounter operational challenges or disruptions stemming from the pandemic that require us to implement new or enhanced internal controls to mitigate the risks of operating in a remote environment or increased risks of material misstatements resulting from changes to the business and other uncertainties;
restrictions on importing and exporting products;
claims from customers and suppliers that their non-performance under our contracts is permitted as a result of force majeure or other reasons;
impacts related to late customer payments and contractual defaults associated with customer and supplier bankruptcies;
a credit rating downgrade of our corporate debt and potentially higher borrowing costs in the future;
cybersecurity issues, as our network may become more vulnerable to cyberattacks due to increased remote access associated with work-from-home arrangements;
increased costs associated with possible facility closures to meet expected customer activity levels; and
we may be required to record significant impairment charges with respect to assets, whose fair values may be negatively affected by the effects of the COVID-19 pandemic on our operations. Also, we may be required to write off obsolete inventory, and such charges may be significant.

The resumption of our normal business operations after the disruptions caused by the COVID-19 pandemic may be delayed or constrained by its lingering effects on the oil and gas industry. Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a significant adverse effect on our financial condition, results of operations, or liquidity. Any of these negative impacts, alone or in combination with others, could exacerbate many of the risk factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019. The full extent to which the COVID-19 pandemic will negatively affect our financial condition, results of operations, or liquidity will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and the resulting impact on the oil and gas industry. Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic and related market conditions will persist, the full extent of the impact they will have on our financial condition, results of operations, or liquidity or the pace or extent of any subsequent recovery. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”    
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
(a)  None.
 
(b)  None.
 

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(c)  Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Period
 
Total Number
of Units Purchased
 
Average
Price
Paid per Unit
 
Total Number of Units Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased Under the Publicly Announced
Plans or Programs
April 1 – April 30, 2020
 

 
$

 
N/A
 
N/A
May 1 – May 31, 2020
 

 

 
N/A
 
N/A
June 1 – June 30, 2020
 

 

 
N/A
 
N/A
Total
 

 
 

 
N/A
 
N/A
Item 3. Defaults Upon Senior Securities.
 
None.
Item 4. Mine Safety Disclosures.
 
None.
Item 5. Other Information.
 
None.

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Table of Contents

Item 6. Exhibits.
 
Exhibits: 
4.1
4.2
4.3
4.4
10.1
10.2
31.1*
31.2*
32.1**
32.2**
101.SCH+
XBRL Taxonomy Extension Schema Document
101.CAL+
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF+
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB+
XBRL Taxonomy Extension Label Linkbase Document
101.PRE+
XBRL Taxonomy Extension Presentation Linkbase Document
104*
Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
*
Filed with this report.
**
Furnished with this report.
+
Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the three and six month periods ended June 30, 2020 and 2019; (ii) Consolidated Statements of Comprehensive Income for the three and six month periods ended June 30, 2020 and 2019; (iii) Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019; (iv) Consolidated Statement of Partners’ Capital for the six month period ended June 30, 2020; (v) Consolidated Statements of Cash Flows for the six month periods ended June 30, 2020 and 2019; and (iv) Notes to Consolidated Financial Statements for the six months ended June 30, 2020.


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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
 
CSI COMPRESSCO LP
 
 
 
By:
CSI Compressco GP Inc.,
 
 
 
its General Partner
 
 
 
 
 
Date:
August 3, 2020
By:
/s/Brady M. Murphy
 
 
 
Brady M. Murphy
 
 
 
President
 
 
 
Principal Executive Officer
 
 
 
 
Date:
August 3, 2020
By:
/s/Elijio V. Serrano
 
 
 
Elijio V. Serrano
 
 
 
Chief Financial Officer
 
 
 
Principal Financial Officer
 
 
 
 
Date:
August 3, 2020
By:
/s/Michael E. Moscoso
 
 
 
Michael E. Moscoso
 
 
 
Vice President - Finance
 
 
 
Principal Accounting Officer
 
 
 
 

37
Exhibit


Exhibit 31.1
Certification Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Exchange Act
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
 
I, Brady M. Murphy, certify that:
 
1.
I have reviewed this report on Form 10-Q for the fiscal quarter ended June 30, 2020, of CSI Compressco LP;
 
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 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 function):
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 controls over financial reporting.
  
Date:
August 3, 2020
/s/Brady Murphy
 
 
Brady M. Murphy
 
 
President of CSI Compressco GP Inc.,
 
 
General Partner of CSI Compressco LP
 
 
(Principal Executive Officer)



Exhibit


Exhibit 31.2
Certification Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Exchange Act
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
 
I, Elijio V. Serrano, certify that:
 
1.
I have reviewed this report on Form 10-Q for the fiscal quarter ended June 30, 2020, of CSI Compressco LP;
 
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 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 function):
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 controls over financial reporting.
 
Date:
August 3, 2020
/s/Elijio V. Serrano
 
 
Elijio V. Serrano
 
 
Chief Financial Officer of CSI Compressco GP Inc.,
 
 
General Partner of CSI Compressco LP
 
 
(Principal Financial Officer)



Exhibit


Exhibit 32.1
 
Certification Pursuant to
18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 
In connection with the Quarterly Report of CSI Compressco LP (the “Partnership”) on Form 10-Q for the period ending June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brady M. Murphy, President of CSI Compressco GP Inc., the General Partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
  
Dated:
August 3, 2020
/s/Brady M. Murphy
 
 
Brady M. Murphy
 
 
President of CSI Compressco GP Inc.,
 
 
General Partner of CSI Compressco LP
 
 
(Principal Executive Officer)
 
 
A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.



Exhibit


Exhibit 32.2
 
Certification Pursuant to
18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 
In connection with the Quarterly Report of CSI Compressco LP (the “Partnership”) on Form 10-Q for the period ending June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elijio V. Serrano, Chief Financial Officer of CSI Compressco GP Inc., the General Partner of the Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
  
Dated: 
August 3, 2020
/s/Elijio V. Serrano
 
 
Elijio V. Serrano
 
 
Chief Financial Officer of CSI Compressco GP Inc.,
 
 
General Partner of CSI Compressco LP
 
 
(Principal Financial Officer)
 
 
A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the Securities and Exchange Commission or its staff upon request.



v3.20.2
Document And Entity Information - shares
6 Months Ended
Jun. 30, 2020
Aug. 03, 2020
Document Information [Line Items]    
Title of 12(b) Security COMMON UNITS REPRESENTING LIMITED PARTNERSHIP INTERESTS  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 94-3450907  
Entity Address, Address Line One 24955 Interstate 45 North  
Entity Address, City or Town The Woodlands,  
Entity Address, Postal Zip Code 77380  
Entity Address, State or Province TX  
Trading Symbol CCLP  
Security Exchange Name NASDAQ  
Entity Registrant Name CSI Compressco LP  
City Area Code 281  
Local Phone Number 364-2244  
Entity Central Index Key 0001449488  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Common Stock Shares Outstanding   47,344,351
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Document Type 10-Q  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 001-35195  
Amendment Flag false  
Document Period End Date Jun. 30, 2020  
v3.20.2
Consolidated Statements of Operations - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Deferred Costs and Other Assets $ 3,694   $ 3,694  
Weighted Average Limited Partnership Units Outstanding, Diluted   47,040,714   46,936,240
Cost of Goods and Services Sold [Abstract]        
Cost of Goods and Services Sold 25,395 $ 30,520 57,003 $ 63,141
Impairment of Long-Lived Assets Held-for-use 8,977 2,311 14,348 2,311
Insurance Recoveries 517 0 517 0
Revenues:        
Compression and related services 56,336 64,876 122,101 127,578
Aftermarket services 96,413 135,856 186,692 239,292
Cost of revenues (excluding depreciation and amortization expense):        
Cost of Revenue 63,243 93,350 117,796 161,450
Depreciation and amortization 20,117 19,054 40,025 37,586
Selling, General and Administrative Expense 10,172 10,974 20,428 21,639
Interest expense, net 13,580 13,045 26,749 26,344
Liabilities, Fair Value Adjustment 0 166 0 3,600
Preferred, Fair Value Adjustment     0 (1,470)
Other expense, net 4,403 607 4,843 226
Income (loss) before income tax provision (23,562) (3,651) (36,980) (11,734)
Provision (benefit) for income taxes 1,016 (704) 1,228 3,669
Net income (loss) (24,578) (2,947) $ (38,208) (15,403)
General partner interest in net income (loss) (345) (42)   (219)
Common units interest in net income (loss) $ (24,233) $ (2,905)   $ (15,184)
Net income (loss) per common unit:        
Basic $ (0.51) $ (0.06) $ (0.79) $ (0.32)
Earnings Per Share, Diluted $ (0.51) $ (0.06) $ (0.79) $ (0.32)
Weighted average common units outstanding:        
Basic 47,333,256 47,040,714 47,254,516 46,936,240
Common Stock [Member]        
Weighted Average Limited Partnership Units Outstanding, Diluted 47,333,256   47,254,516  
Service [Member]        
Cost of Goods and Services Sold [Abstract]        
Cost of Goods and Services Sold $ 13,433 $ 15,418 $ 29,678 $ 26,678
Revenues:        
Aftermarket services 15,737 18,156 33,707 31,770
Product [Member]        
Cost of Goods and Services Sold [Abstract]        
Cost of Goods and Services Sold 24,415 47,412 31,115 71,631
Revenues:        
Aftermarket services 24,340 52,824 30,884 $ 79,944
Common Unitholders [Member]        
Cost of revenues (excluding depreciation and amortization expense):        
Net income (loss) (24,233)   (37,671)  
Common units interest in net income (loss)   (2,905)    
General Partner [Member]        
Cost of revenues (excluding depreciation and amortization expense):        
Net income (loss) $ (345)   $ (537)  
General partner interest in net income (loss)   $ (42)    
v3.20.2
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ (24,578) $ (2,947) $ (38,208) $ (15,403)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax 177 128 (176) 400
Foreign currency translation adjustment 0 0 0 0
Comprehensive income (loss) $ (24,401) $ (2,819) $ (38,384) $ (15,003)
v3.20.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 6,757 $ 2,370
Trade accounts receivable, net of allowances for doubtful accounts 49,627 64,724
Inventory, Net 40,192 56,037
Prepaid Expense and Other Assets, Current 6,336 4,162
Total current assets 102,912 127,293
Property, plant, and equipment:    
Land and building 32,058 35,125
Compressors and equipment 992,573 976,469
Vehicles 8,127 9,205
Construction in progress 8,477 26,985
Total property, plant, and equipment 1,041,235 1,047,784
Less accumulated depreciation (434,600) (405,417)
Net property, plant, and equipment 606,635 642,367
Other assets:    
Deferred tax asset 24 24
Intangible assets, net of accumulated amortization 26,537 28,017
Operating Lease, Right-of-Use Asset 29,936 21,006
Deferred Costs and Other Assets 3,694 3,539
Total other assets 60,191 52,586
Total assets 769,738 822,246
Current liabilities:    
Accounts payable 25,432 47,837
Deferred Income, Current 11,164 9,505
Accrued liabilities and other 37,590 42,581
Amounts payable to affiliates 13,074 7,704
Total current liabilities 87,260 107,627
Other liabilities:    
Long-term debt, net 637,579 638,238
Deferred tax liabilities 1,390 1,211
Due to Related Parties, Noncurrent 12,019 12,324
Operating Lease, Liability, Noncurrent 21,140 13,822
Other long-term liabilities 20 33
Total other liabilities 672,148 665,628
Partners' capital:    
General partner interest (371) 180
Common units 25,450 63,384
Accumulated other comprehensive income (loss) (14,749) (14,573)
Total partners' capital 10,330 48,991
Total liabilities and partners' capital $ 769,738 $ 822,246
v3.20.2
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Trade accounts receivable, allowances for doubtful accounts $ 3,441 $ 3,350
Patents, trademarks, and other intangible assets, accumulated amortization $ 29,231 $ 27,751
Partners' capital:    
Common units issued and outstanding 47,344,351 47,078,529
v3.20.2
Consolidated Statements of Partners' Capital - USD ($)
$ in Thousands
Total
General Partner [Member]
Common Unitholders, Units [Member]
Common Unitholders [Member]
Accumulated Other Comprehensive Income [Member]
Partners' Capital, Including Portion Attributable to Noncontrolling Interest $ 67,403 $ 505   $ 81,984 $ (15,086)
Common units issued and outstanding       45,769,000  
Partners' capital rollforward          
Net income (loss) (12,456)        
Distributions (476) (6)   $ (470)  
Equity compensation $ (312)     $ 312  
Vesting of phantom units (units)       117,000  
Conversion of Stock, Shares Converted 1,113,000        
Conversion of Stock, Amount Converted $ 3,048   $ 3,048    
Other comprehensive income (loss) 272       272
Partners' Capital, Other (69)     $ (69) 0
Net Income (Loss) Allocated to General Partners   (177)      
Net Income (Loss) Allocated to Limited Partners       (12,279)  
Net income (loss) (15,403)        
Net Income (Loss) Allocated to General Partners (219)        
Net Income (Loss) Allocated to Limited Partners (15,184)        
Partners' Capital, Including Portion Attributable to Noncontrolling Interest 58,034 322   $ 72,526 (14,814)
Common units issued and outstanding       46,999,000  
Net income (loss) (2,947)        
Distributions (476) (7)   $ (469)  
Equity compensation $ 568     $ 568  
Vesting of phantom units (units)       66,000  
Conversion of Stock, Shares Converted 0        
Conversion of Stock, Amount Converted $ 0   $ 0    
Other comprehensive income (loss) 128       128
Partners' Capital, Other (12)     $ (12) 0
Net Income (Loss) Allocated to General Partners (42) (42)      
Net Income (Loss) Allocated to Limited Partners (2,905)     (2,905)  
Partners' Capital, Including Portion Attributable to Noncontrolling Interest $ 55,295 273   $ 69,708 (14,686)
Common units issued and outstanding       47,065,000  
Common units issued and outstanding 47,078,529        
Beginning balance at Dec. 31, 2019 $ 48,991 180   $ 63,384 (14,573)
Beginning balance, units at Dec. 31, 2019     47,079,000    
Partners' capital rollforward          
Net income (loss) (13,630) (192)   (13,438) 0
Distributions (478) (7)   (471) 0
Equity compensation 229 0   229 0
Vesting of phantom units (units)     213,000    
Other comprehensive income (loss) (353) 0   0 (353)
Ending balance at Mar. 31, 2020 34,759 (19)   49,704 (14,926)
Ending balance, units at Mar. 31, 2020     47,292,000    
Beginning balance at Dec. 31, 2019 48,991 180   63,384 (14,573)
Beginning balance, units at Dec. 31, 2019     47,079,000    
Partners' capital rollforward          
Net income (loss) (38,208) (537)   (37,671)  
Ending balance at Jun. 30, 2020 10,330 (371)   25,450 (14,749)
Ending balance, units at Jun. 30, 2020     47,344,000    
Beginning balance at Mar. 31, 2020 34,759 (19)   49,704 (14,926)
Beginning balance, units at Mar. 31, 2020     47,292,000    
Partners' capital rollforward          
Net income (loss) (24,578) (345)   (24,233) 0
Distributions (480) (7)   (473) 0
Equity compensation 452 0   452 0
Vesting of phantom units (units)     52,000    
Other comprehensive income (loss) 177 0   0 177
Ending balance at Jun. 30, 2020 10,330 $ (371)   $ 25,450 $ (14,749)
Ending balance, units at Jun. 30, 2020     47,344,000    
Partners' capital rollforward          
Net Income (Loss) Allocated to General Partners (345)        
Net Income (Loss) Allocated to Limited Partners $ (24,233)        
Common units issued and outstanding 47,344,351        
v3.20.2
Consolidated Statements of Partners' Capital (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Partners' Capital [Abstract]        
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax $ 0 $ 0 $ 0 $ 0
Distributions $ 0.0000 $ 0.0100 $ 0.0000 $ 0.0100
v3.20.2
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Impairment of Long-Lived Assets Held-for-use $ 14,348 $ 2,311
Proceeds from Sale of Property, Plant, and Equipment 3,641 478
Proceeds from Insurance Settlement, Investing Activities 517 0
Distributionstononcontrollingholders (958) (952)
Operating activities:    
Net income (loss) (38,208) (15,403)
Reconciliation of net income to cash provided by operating activities:    
Depreciation and amortization 40,025 37,586
Provision (benefit) for deferred income taxes 409 946
Insurance Recoveries 517 0
Equity compensation expense 812 955
Provision for doubtful accounts 593 272
Amortization of deferred financing costs 1,356 1,180
Property, Plant and Equipment, Additions 725 0
Payments of Debt Restructuring Costs 4,755 0
Other non-cash charges and credits (157) 374
(Gain) Loss on sale of property, plant, and equipment (443) (262)
Liabilities, Fair Value Adjustment 0 3,600
Changes in operating assets and liabilities:    
Accounts receivable 13,903 (5,254)
Inventories 7,817 (5,378)
Prepaid expenses and other current assets (2,267) 491
Accounts payable and accrued expenses (24,566) 19,942
Other (405) (1,018)
Net cash provided by operating activities 18,180 40,342
Investing activities:    
Purchases of property, plant, and equipment, net (11,249) (40,064)
Net cash used in investing activities (7,091) (39,586)
Financing activities:    
Proceeds from Issuance of Long-term Debt 271,831 0
Repayments of Long-term Debt (273,853) (67)
Preferred Stock Redemption Discount 0 (22,452)
Financing costs (2,207) 0
Payments of Distributions to Affiliates (1,507) 0
Proceeds from Contributions from Affiliates 0 11,142
Net cash used in financing activities (6,694) (12,329)
Effect of Exchange Rate on Cash and Cash Equivalents (8) 11
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect 4,387 (11,562)
Cash and cash equivalents at end of period 6,757  
Supplemental cash flow information:    
Interest paid 29,083 23,852
Income taxes paid 644 1,958
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents $ 6,757 $ 4,296
v3.20.2
Basis of Presentation and Significant Accounting Policies
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES
 
Organization

CSI Compressco LP, a Delaware limited partnership, is a provider of compression services and equipment for natural gas and oil production, gathering, artificial lift, transmission, processing, and storage. We sell standard and custom-designed, engineered compressor packages and provide aftermarket services and compressor package parts and components manufactured by third-party suppliers. We provide these compression services and equipment to a broad base of natural gas and oil exploration and production, midstream, and transmission companies operating throughout many of the onshore producing regions of the United States as well as in a number of foreign locations, including the countries of Mexico, Canada, and Argentina. We design and fabricate a majority of the compressor packages that we use to provide compression services and sell to customers. Going forward, we plan to have such compressor packages fabricated through one or more third party packagers.

Presentation
 
Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. In the opinion of our management, our unaudited consolidated financial statements as of June 30, 2020, and for the three and six month periods ended June 30, 2020 and 2019, include all normal recurring adjustments that are necessary to provide a fair statement of our results for these interim periods. Operating results for the three and six month periods ended June 30, 2020 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2020.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission ("SEC") and do not include all information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2019 and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March 16, 2020.

Segments

Our General Partner has concluded that we operate in one business segment.

Significant Accounting Policies

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K. There have been no significant changes in our accounting policies or the application thereof during the second quarter of 2020.

Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be material.

Reclassifications

Certain previously reported financial information has been reclassified to conform to the current year's presentation. The impact of such reclassifications was not significant to the prior year's overall presentation.

Cash Equivalents

We consider all highly liquid cash investments with maturities of three months or less when purchased to be cash equivalents.

Financial Instruments

Financial instruments that subject us to concentrations of credit risk consist principally of trade accounts receivable, which are primarily due from customers of varying size engaged in oil and gas activities in the United States, Canada, Mexico, and Argentina. Our policy is to review the financial condition of potential customers before extending credit and periodically update their credit information. Payment terms are on a short-term basis. The risk of loss from the inability to collect trade receivables is heightened during prolonged periods of low oil and natural gas commodity prices.

We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. Our risk management activities include the use of foreign currency forward purchase and sale derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected international operations.

We have a $1.5 million outstanding balance under our variable rate revolving credit facility as of June 30, 2020 and face market risk exposure related to changes in applicable interest rates.

Foreign Currencies
 
Accumulated other comprehensive income (loss) is included in partners’ capital in the accompanying consolidated balance sheets and consists of the cumulative currency translation adjustments associated with our international operations. Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $(0.3) million and $1.4 million during the three and six month periods ended June 30, 2020, respectively, and $(0.04) million and $(1.0) million during the three and six month periods ended June 30, 2019, respectively.

Inventories

Inventories consist primarily of compressor package parts and supplies and work in progress and are stated at the lower of cost or net realizable value. For parts and supplies, cost is determined using the weighted average cost method. The cost of work in progress is determined using the specific identification method.

Assets Held for Sale

As of June 30, 2020, we had $2.6 million in net book value of compressor equipment classified as held for sale within net property, plant, and equipment on our consolidated balance sheets. For further details of the impairment recorded to adjust the net book value to fair value upon this classification, see Note 3 - Impairments and Other Charges below.

Impairments and Other Charges

Impairments of long-lived assets, including identified intangible assets, are determined periodically, when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgment as to the future undiscounted operating cash flows to be generated from the relevant assets throughout their remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related assets, an impairment is recognized for the excess of the carrying value over fair value. Fair value of intangible assets is generally determined using the discounted present value of future cash flows using discount rates commensurate with the risks inherent with the specific assets. Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs. See Note 3 - "Impairments and Other Charges" for additional discussion of recorded impairments.

Earnings Per Common Unit
 
Our computations of earnings per common unit are based on the weighted average number of common units outstanding during the applicable period. Basic earnings per common unit are determined by dividing net
income (loss) allocated to the common units after deducting the amount allocated to our General Partner (including any distributions to our General Partner on its incentive distribution rights) by the weighted average number of outstanding common units during the period.
 
When computing earnings per common unit under the two class method in periods when distributions are greater than earnings, the amount of the distribution is deducted from net income (loss) and the excess of distributions over earnings is allocated between the General Partner and common units based on how our Partnership Agreement allocates net losses.
 
Diluted earnings per common unit are computed using the treasury stock method, which considers the potential future issuance of limited partner common units. Unvested phantom units are not included in basic earnings per common unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per common unit. For the three and six month periods ended June 30, 2020 and June 30, 2019, all unvested phantom units were excluded from the calculation of diluted common units because the impact was anti-dilutive. Diluted earnings per common unit are computed using the "if converted" method, whereby the amount of net income (loss) and the number of common units issuable are each adjusted as if the Preferred Units, had been converted as of the beginning of the period presented. The calculation of diluted earnings per common unit for the three and six month period ended June 30, 2019 excludes the impact of the Preferred Units, as the inclusion of the impact from the conversion of the Preferred Units into common units would have been anti-dilutive. All remaining outstanding Preferred Units were redeemed for cash on August 8, 2019.

Revenue Recognition

Performance Obligations. Revenue is recognized when performance obligations under the terms of a contract with our customer are satisfied. Revenue is generally recognized when we transfer control of our products or services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services to our customers. We receive cash equal to the invoice price for most product sales and services and payment terms typically range from 30 to 60 days from the date we invoice our customer. With the exception of the initial terms of our compression services contracts of our medium- and high-horsepower compressor packages, our customer contracts are generally for terms of one year or less. Since the period between when we deliver products or services and when the customer pays for products or services is not to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts.

Depending on the terms of the arrangement, we may also defer the recognition of revenue for a portion of the consideration received because we have to satisfy a future performance obligation. For example, consideration received from customers during the fabrication of new compressor packages is typically deferred until control of the compressor package is transferred to our customer.

For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and amortized over the estimated service period.

Compression and related services. For compression services revenues recognized over time, our customer contracts typically provide agreed upon monthly service rates and we recognize service revenue based upon the number of days that services have been performed. The majority of our compression services are provided pursuant to contract terms ranging from one month to twenty-four months. Monthly agreements are generally cancellable with 30 days written notice by the customer.

Sales taxes, value added taxes, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We recognize the cost for freight and shipping costs when control over our products (i.e. delivery) has transferred to the customer as part of cost of product sales.

Use of Estimates. Our revenues do not include material amounts of variable consideration, as our revenues typically do not require significant estimates or judgments. The transaction price on a majority of our arrangements are fixed and product returns are immaterial. Additionally, our arrangements typically do not include multiple performance obligations that require estimates of the stand-alone purchase price for each performance obligation. Revenue on certain aftermarket service arrangements that include time as a component of the transaction price is not recognized until the performance obligation is complete.

Contract Assets and Liabilities. We consider contract assets to be trade accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain instances, particularly those requiring customer specific documentation prior to invoicing, our invoicing of the customer is delayed until certain documentation requirements are met. In those cases, we recognize a contract asset rather than a billed trade accounts receivable until we are able to invoice the customer. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.
    
We classify contract liabilities as unearned income in our consolidated balance sheets. Such unearned income typically results from advance payments received on orders for new compressor equipment prior to the time such equipment is completed and transferred to the customer in accordance with the customer contract. New equipment sales orders generally take less than twelve months to build and deliver.

Bill-and-Hold Arrangements. We design compressor packages based on our customer’s specifications. In some cases, the customer will request us to hold the equipment, upon completion of the unit, until the job site is ready to receive the equipment. When this occurs, we along with the customer sign a bill-and-hold agreement, which outlines that the customer has title to the equipment, the equipment is ready for delivery, we cannot use the equipment or direct it to another customer, and we have a present right to payment. When those criteria have been met and the agreement is executed, we recognize the revenue on the equipment because control of the equipment has passed to our customer and our performance obligations are complete. Entering into these arrangements is something we have done as a courtesy for certain customers for many years. The equipment subject to the bill-and-hold agreements have generally been invoiced and paid for through progressive billings such that at the time the bill-and-hold agreement is executed, the majority of the contractual cash obligation of the customer has been received by us.

Fair Value Measurements

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements were utilized in the determination of the carrying value of our Series A Preferred Units (a Level 3 fair value measurement). We also utilize fair value measurements on a recurring basis in the accounting for our foreign currency forward purchase and sale derivative contracts. For these fair value measurements, we utilize the quoted value (a Level 2 fair value measurement). Refer to Note 9 - "Fair Value Measurements" for further discussion.
Fair value measurements are also utilized on a nonrecurring basis, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets (a Level 3 fair value measurement) and for the impairment of long-lived assets (a Level 3 fair value measurement).

Distributions

On January 20, 2020, our General Partner declared a cash distribution attributable to the quarter ended December 31, 2019 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit on an annualized basis. This distribution was paid on February 14, 2020, to each of the holders of common units of record as of the close of business on February 1, 2020.

On April 20, 2020, our General Partner declared a cash distribution attributable to the quarter ended March 31, 2020 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit on an annualized basis. This distribution was paid on May 15, 2020, to each of the holders of common units of record as of the close of business on May 1, 2020.

New Accounting Pronouncements

Standards adopted in 2020

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for us the first quarter of fiscal 2020. The adoption of this standard did not have a material impact on our consolidated financial statements.
     
Standards not yet adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairments will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. ASU 2016-13 is effective for us the first quarter of fiscal 2023. We continue to assess the potential effects of these changes to our consolidated financial statements.    
    
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for us the first quarter of fiscal 2021. We continue to assess the potential effects of these changes to our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impacts of the provisions of ASU 2020-04 on our consolidated financial statements.
v3.20.2
Impairment and Other Charges (Notes)
6 Months Ended
Jun. 30, 2020
Asset Impairment Charges [Abstract]  
Asset Impairment Charges [Text Block] IMPAIRMENTS AND OTHER CHARGES

Impairments of Long-Lived Assets

During the first half of 2020, the COVID-19 pandemic and decline in oil and gas prices had a significant impact on our customers and industry, resulting in a decrease in demand in certain of our service lines.

During the first quarter of 2020, we started to see our customers revise their capital budgets downwards and adjust their operations accordingly, which led to a decline in orders for new compression equipment to be fabricated and sold to third parties. We concluded that these events were indicators of impairment for all our asset groups. We performed a recoverability analysis on all our long-lived asset groups and we determined that the carrying values of our Midland manufacturing facility and related new unit sales inventory exceeded their respective fair values. Therefore, we recorded impairments of approximately $5.4 million related to these assets. Fair value was estimated based on a market approach.

During the second quarter of 2020, primarily as a result of continued negative impacts on our compression fleet associated with the COVID-19 pandemic and declines in oil and gas prices, we recorded impairments and
other charges of approximately $9.0 million associated with non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services. Fair value used to determine impairments was estimated based on a market approach. Given the dynamic nature of the events, we are not able to reasonably estimate how long our operations will be impacted and the full impact these events will have on our operations. As a result, we could have indicators of impairment again in future periods resulting in additional asset impairments.
v3.20.2
Inventories Inventories (Notes)
6 Months Ended
Jun. 30, 2020
Inventory Disclosure [Abstract]  
Inventory Disclosure [Text Block] INVENTORIES

Components of inventories as of June 30, 2020 and December 31, 2019, are as follows: 

 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
Parts and supplies
$
30,270

 
$
42,814

Work in progress
9,922

 
13,223

Total inventories
$
40,192

 
$
56,037



Inventories consist primarily of compressor package parts and supplies. Work in progress inventories consist primarily of new compressor packages located at our manufacturing facility in Midland, Texas.
v3.20.2
Long-Term Debt and Other Borrowings
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Long-Term Debt and Other Borrowings LONG-TERM DEBT AND OTHER BORROWINGS

Long-term debt consists of the following:
 
 
 
 
June 30, 2020
 
December 31, 2019
 
 
Scheduled Maturity
 
(In Thousands)
Credit Agreement (presented net of the unamortized deferred financing costs of $0.7 million as of June 30, 2020 and $0.9 million as of December 31, 2019)
 
June 2023
 
$
746

 
$
2,622

7.25% Senior Notes (presented net of the unamortized discount of $0.4 million as of June 30, 2020 and $1.7 million as of December 31, 2019 and unamortized deferred financing costs of $0.6 million as of June 30, 2020 and $2.8 million as of December 31, 2019)
 
August 2022
 
79,745

 
291,444

7.50% First Lien Notes (presented net of the unamortized deferred financing costs of $5.7 million as of June 30, 2020 and $5.8 million as of December 31, 2019, net of the unamortized discount of $0.2 million as of June 30, 2020, and net of deferred restructuring gain of $5.6 million as of June 30, 2020)
 
April 2025
 
399,613

 
344,172

10.00%/10.75% Second Lien Notes (presented net of the unamortized discount of $0.8 million as of June 30, 2020, and net of unamortized deferred financing costs of $1.3 million as of June 30, 2020, and net of deferred restructuring gain of $4 million as of June 30, 2020)
 
April 2026
 
157,475

 

 
 
 
 
637,579

 
638,238

Less current portion
 
 
 

 

Total long-term debt
 
 
 
$
637,579

 
$
638,238



There was a $1.5 million balance outstanding and $2.8 million in letters of credit issued under the Credit Agreement as of June 30, 2020. As of June 30, 2020, and subject to compliance with the covenants, borrowing base, and other provisions of the agreements that may limit borrowings under the Credit Agreement, we had availability of $12.3 million.
    
Our credit and senior note agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments. We are in compliance with all covenants of our credit and senior note agreements as of June 30, 2020.

Refer to Note 7 - "Related Party Transactions," for a discussion of our amounts payable to affiliates and long-term affiliate payable to TETRA.

Second Amendment to Credit Agreement

On June 11, 2020, CSI Compressco, LP and CSI Compressco Sub Inc (the “Borrowers”) entered into the Second Amendment to Loan and Security Agreement (the “Amendment”) amending the Loan and Security Agreement dated June 29, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) with Bank of America, N.A., in its capacity as administrative agent, issuing bank and swing line issuer (“Administrative Agent”), and the other lenders and loan parties party thereto. The Amendment provided for changes and modifications to the Credit Agreement which include, among other things, changes to certain terms of the Credit Agreement as follows: (i) resizing of the maximum credit commitment under the Credit Agreement from $50,000,000 to $35,000,000; (ii) the inclusion of a $5,000,000 reserve with respect to the Borrowing Base (as defined in the Credit Agreement) thereunder, which would result in reduced borrowing availability; (iii) the removal of the financial covenant compliance test with respect to the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement); (iv) an increase in the applicable margin related to (x) LIBOR Rate Loans (as defined in the Credit Agreement) to a range between 3.00% and 3.50% and (y) Base Rate Loans (as defined in the Credit Agreement) to a range between 2.00% and 2.50%, in each case, which shall be determined according to average daily excess availability under the Credit Agreement; and (v) an increase in the rate used to calculate the commitment fee in respect of the unutilized commitments under the Credit
Agreement to 0.50%. In connection to this amendment, $0.2 million of financing costs were incurred, and deferred against the carrying value of the amount outstanding, if any. Additionally, $0.2 million of financing fees were charged to other (income) expense, net during the three month period ended June 30, 2020.

First Supplemental Indenture for the Old Notes

On June 11, 2020, CSI Compressco, LP and CSI Compressco Finance Inc. (the "Issuers") announced that they had accepted for exchange $215,208,000, or approximately 72.7%, of their outstanding 7.25% Senior Notes due 2022 (the "Old Notes") that were validly tendered (and not validly withdrawn) by 11:59 p.m., New York City time, on June 10, 2020, for (i) $50,000,000 of the Issuers' 7.50% Senior Secured First Lien Notes due 2025 (the "7.50% First Lien Notes") and (ii) $155,529,000 aggregate principal amount of new 10.00%/10.75% Senior Secured Second Lien Notes due 2026 (the "10.00%/10.75% Second Lien Notes" and, together with the 7.50% First Lien Notes, the "New Notes"), pursuant to its previously announced exchange offer and consent solicitation (the "Exchange Offer"), which commenced on April 17, 2020. In connection with the exchange offer, we incurred financing fees of $4.8 million which were charged to other (income) expense, net during the three month period ended June 30, 2020.

On June 12, 2020, following receipt of the requisite consents of the holders of the Old Notes, the Issuers entered into the First Supplemental Indenture (the "First Supplemental Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of August 4, 2014 (the "Unsecured Indenture"), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee.

The First Supplemental Indenture eliminated substantially all of the restrictive covenants and certain of the default provisions in the Unsecured Indenture and became operative upon the consummation by the Issuers of the Exchange Offer.

On June 12, 2020, the Issuers issued $50,000,000 in aggregate principal amount of New First Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. In March 2018, the Issuers had issued $350,000,000 in aggregate principal amount of 7.50% Senior Secured Notes due 2025 (the "Existing First Lien Notes" and, together with the New First Lien Notes, the "7.50% First Lien Notes") pursuant to the First Lien Base Indenture. The New First Lien Notes were issued as "additional notes" under the First Lien Base
Indenture and will be treated as a single class with such notes but will not trade fungibly with the Existing First
Lien Notes.

Second Lien Notes Indenture

On June 12, 2020, the Issuers issued $155,529,000 in aggregate principal amount of the 10.00%/10.75% Second Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. The Issuers issued the 10.00%/10.75% Second Lien Notes pursuant to an indenture, dated June 12, 2020 (the "Second Lien Notes Indenture"),by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee (the "Second Lien Trustee"). In connection with the payment of PIK Interest (as defined below), if any, in respect of the 10.00%/10.75% Second Lien Notes, the Issuers will be entitled, without the consent of the Holders, to increase the outstanding aggregate principal amount of the 10.00%/10.75% Second Lien Notes or issue additional notes ("PIK notes") under the Second Lien Notes Indenture on the same terms and conditions as the 10.00%/10.75% Second Lien Notes offered hereby (each such increase or issuance, a "PIK Payment"). The Issuers may issue additional 10.00%/10.75% Second Lien Notes under the Second Lien Notes Indenture from time to time. Any issuance of additional 10.00%/10.75% Second Lien Notes (including PIK notes) is subject to all of the covenants in the Second Lien Notes Indenture. The 10.00%/10.75% Second Lien Notes and any additional 10.00%/10.75% Second Lien Notes subsequently issued under the indenture, will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Subject to the making of PIK Payments, the Issuers will issue 10.00%/10.75% Second Lien Notes in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000; provided that PIK Payments may result in 10.00%/10.75% Second Lien Notes being issued in denominations of $1.00 and integral multiples of $1.00. The 10.00%/10.75% Second Lien Notes will mature on April 1, 2026. Interest on the 10.00%/10.75% Second Lien Notes will be payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2020. The Issuers will make each interest payment to the holders of record on March 15 and September 15 immediately preceding each interest payment date. Interest will accrue at (1) the annual rate of 7.250% payable in cash, plus (2)
at the election of the Issuers (made by delivering a notice to the Second Lien Trustee not less than five business days prior to the record date), the annual rate of (i) 2.750% payable in cash (together with the annual rate set forth in clause (1), the "Cash Interest Rate") or (ii) 3.500% payable by increasing the principal amount of the outstanding 10.00%/10.75% Second Lien Notes or by issuing additional PIK notes, in each case rounding up to the nearest $1.00 (such increased principal amount or additional PIK notes, the "PIK Interest"). In the absence of an interest payment election made by the Issuers as set forth above, interest on the notes will be payable as if the Issuers had elected to pay PIK Interest with respect to the portion of interest payable pursuant to clause (2) above.

The 10.00%/10.75% Second Lien Notes are jointly and severally, and fully and unconditionally, guaranteed (the "Guarantees") on a senior secured basis initially by each of the Partnership's domestic restricted subsidiaries (other than Finance Corp, certain immaterial subsidiaries and certain other excluded domestic subsidiaries, the "Guarantors") and will be secured by a second-priority security interest in substantially all of the Issuers' and the Guarantors' assets (other than certain excluded assets) (the "Collateral") as collateral security for their obligations under the 10.00%/10.75% Second Lien Notes, subject to certain permitted encumbrances and exceptions. At any time prior to April 1, 2023, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 10.00%/10.75% Second Lien Notes issued under the Second Lien Notes Indenture at a redemption price of 110.000% of the principal amount of the 10.00%/10.75% Second Lien Notes, plus accrued and unpaid interest to the redemption date, with an amount of cash equal to the net cash proceeds of certain equity offerings. On or after April 1, 2023, the Issuers may redeem all or part of the 10.00%/10.75% Second Lien Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 107.500% for the twelve month period beginning on April 1, 2023; (ii) 105.000% for the twelve-month period beginning on April 1, 2024 and (iii) 100.000% at any time thereafter, plus accrued and unpaid interest up to, but not including, the redemption date. In addition, at any time prior to April 1, 2023, the Company may redeem all or a part of the 10.00%/10.75% Second Lien Notes at a redemption price equal to 100% of the principal amount of the 10.00%/10.75% Second Lien Notes to be redeemed plus a make-whole premium, plus accrued and unpaid interest up to, but not including, the redemption date.

The Second Lien Notes Indenture contains customary covenants restricting the Partnership's ability and the ability of its restricted subsidiaries to: (i) pay distributions on, purchase or redeem its common units or purchase or redeem its subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to the Partnership. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting the Partnership, subject to the satisfaction of certain conditions, to transfer assets to certain of its unrestricted subsidiaries. Moreover, if the 10.00%/10.75% Second Lien Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the 10.00%/10.75% Second Lien Notes Indenture, many of the restrictive covenants in the Second Lien Notes Indenture will be terminated. The Second Lien Notes Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the Second Lien Notes Indenture, the Second Lien Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 10.00%/10.75% Second Lien Notes may declare all of the 10.00%/10.75% Second Lien Notes to be due and payable immediately.
v3.20.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Market Risks and Derivative Contracts AIR VALUE MEASUREMENTS

Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that may differ from the transaction price or market price of the asset or liability.

Under U.S. GAAP, the fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value. Fair value measurements should maximize the use of observable inputs and minimize the use of unobservable inputs, where possible. Observable inputs are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs may be needed to measure fair value in situations where there is little or no market activity for the asset or liability at the measurement date and are developed based on the best information available in the circumstances, which could include the reporting entity’s own judgments about the assumptions market participants would utilize in pricing the asset or liability.

We have currency exchange rate risk exposure related to transactions denominated in a foreign currency as well as to investments in certain of our international operations. We enter into 30-day foreign currency forward derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of June 30, 2020, we had the following foreign currency derivative contract outstanding relating to a portion of our foreign operations:

 
US Dollar Notional Amount
 
Traded Exchange Rate
 
Settlement Date

 
(In Thousands)
 

 

Forward sale Mexican peso
 
$
5,292

 
22.58
 
7/2/2020


Under a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries, we may enter into similar derivative contracts from time to time. Although contracts
pursuant to this program will serve as economic hedges of the cash flow of our currency exchange risk exposure, they will not be formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period.

The fair values of our foreign currency derivative contracts are based on quoted market values (a Level 2 fair value measurement). The fair values of our foreign currency derivative instruments as of June 30, 2020 and December 31, 2019, are as follows:
Foreign currency derivative contracts
 
Balance Sheet
 
Fair Value at
 
Location
 
June 30, 2020
 
December 31, 2019
 
 
 
 
(In Thousands)
Forward sale contracts
 
Current assets
 
$
95

 
$

Forward sale contracts
 
Current liabilities
 

 
(53
)
Net asset (liability)
 
 
 
$
95

 
$
(53
)


None of our foreign currency derivative instruments contains credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three and six month periods ended June 30, 2020 we recognized $0.3 million and $(1.1) million, respectively, of net (gains) losses associated with our foreign currency derivatives program, and such amounts are included in other (income) expense, net, in the accompanying consolidated statement of operations. During the three and six month periods ended June 30, 2019, we recognized $0.2 million and $0.3 million, respectively, of net (gains) losses associated with our foreign currency derivative program, and such amounts are included in other (income) expense, net, in the accompanying consolidated statement of operations.

During the six months ended June 30, 2020, we recorded impairments of approximately $9.0 million, reflecting the decreased fair value for certain assets. The fair values used in these impairment calculations were estimated based on a market approach, which is based on significant unobservable inputs (Level 3) in accordance with the fair value hierarchy.    

Recurring and nonrecurring fair value measurements by valuation hierarchy as of June 30, 2020 and December 31, 2019 are as follows:
 
 
 
Fair Value Measurements Using
Description
Total as of
June 30, 2020
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
(In Thousands)
Midland manufacturing facility and related assets
$
19,646

 
$

 
$

 
$
19,646

Non-core used compressor equipment held for sale
$
2,600

 
$

 
$

 
$
2,600

Asset for foreign currency derivative contracts
$
95

 
$

 
$
95

 
$

 
$
22,341

 
 
 
 
 
 
    
 
 
 
Fair Value Measurements Using
 
 
 
Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Description
Total as of
December 31, 2019
 
 
 
 
(In Thousands)
Liability for foreign currency derivative contracts
(53
)
 

 
(53
)
 

 
$
(53
)
 
 
 
 
 
 
The fair values of cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings, and variable-rate long-term debt pursuant to our Credit Agreement approximate their carrying amounts. The fair values of our publicly traded long-term 7.25% Senior Notes at June 30, 2020 and December 31, 2019 were approximately $41.6 million and $266.0 million, respectively. Those fair values compare to aggregate principal amounts of such notes at June 30, 2020 and December 31, 2019 of $80.7 million and $295.9 million, respectively. The fair values of our long-term 7.50% Senior Secured Notes at June 30, 2020 and December 31, 2019 were approximately $336.4 million and $344.8 million, respectively. These fair values compare to an aggregate principal amount of such notes at June 30, 2020 and December 31, 2019 of $400.0 million and $350.0 million, respectively. The fair value of the CCLP 10.00%/10.75% Second Lien Notes at June 30, 2020 was approximately $96.8 million. This fair value compares to aggregate principal amount of such notes at June 30, 2020 of $155.5 million. We based the fair values of our 7.25% Senior Notes, our 7.50% Senior Secured Notes, and our 10.00%/10.75% Second Lien Notes as of June 30, 2020 on recent trades for these notes.
v3.20.2
Related Party Transactions
6 Months Ended
Jun. 30, 2020
Related Party Transactions [Abstract]  
Related Party Transactions RELATED PARTY TRANSACTIONS
 
Omnibus Agreement
 
Under the terms of the Omnibus Agreement, our General Partner provides all personnel and services reasonably necessary to manage our operations and conduct our business (other than in Mexico, Canada, and Argentina), and certain of TETRA’s Latin American-based subsidiaries provide personnel and services necessary for the conduct of certain of our Latin American-based businesses. In addition, under the Omnibus Agreement, TETRA provides certain corporate and general and administrative services as requested by our General Partner, including, without limitation, legal, accounting and financial reporting, treasury, insurance administration, claims processing and risk management, health, safety and environmental, information technology, human resources, credit, payroll, internal audit, and tax services. Pursuant to the Omnibus Agreement, we reimburse our General Partner and TETRA for services they provide to us.

TETRA and General Partner Ownership

As of June 30, 2020, TETRA's ownership interest in us was approximately 34% of the outstanding common units and an approximate 1.4% general partner interest, through which it holds incentive distribution rights.

Other Sources of Financing

In February 2019, we entered into a transaction with TETRA whereby TETRA agreed to fund the construction of and purchase from us up to $15.0 million of new compression services equipment and to subsequently lease the equipment back to us in exchange for a monthly rental fee. As of June 30, 2020, pursuant to this arrangement, $14.8 million has been funded by TETRA for the construction of new compression services equipment and all such equipment was completed and deployed under this agreement. For accounting purposes, the inclusion of an option that allows us to repurchase the equipment at a fixed price during certain periods of the agreement caused the transaction to be accounted for as a financing transaction, as opposed to a sale-leaseback, resulting in the funded amount being recorded as a financing obligation. Accordingly, the compression services equipment is included in property, plant, and equipment and the corresponding financing obligations are included in amounts payable to affiliates and long-term affiliate payable in our consolidated balance sheet. As of June 30, 2020, the financing obligation was $15.0 million. Imputed interest expense recognized for the three and six month period ended June 30, 2020 was $0.6 million and $1.2 million, respectively.
v3.20.2
Income Taxes
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
 
As a partnership, we are generally not subject to income taxes at the entity level because our income is included in the tax returns of our partners. Our operations are treated as a partnership for federal tax purposes with each partner being separately taxed on its share of taxable income. However, a portion of our business is conducted through taxable U.S. corporate subsidiaries. Accordingly, a U.S. federal and state income tax provision has been reflected in the accompanying statements of operations. Certain of our operations are located outside of the U.S., and the Partnership, through its foreign subsidiaries, is responsible for income taxes in these countries.

Our effective tax rate for the six month period ended June 30, 2020, was negative 3.3% primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes combined with losses generated in entities for which no related tax benefit has been recorded. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.
v3.20.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
 
From time to time, we are involved in litigation relating to claims arising out of our operations in the normal course of business. While the outcome of any lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse effect on our financial condition, results of operations, or cash flows.
v3.20.2
Revenue from Contract with Customers Revenue from Contract with Customers (Notes)
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer [Text Block] EVENUE FROM CONTRACTS WITH CUSTOMERS

As of June 30, 2020, we had $50.0 million of remaining contractual performance obligations for compression services. As a practical expedient, this amount does not include revenue for compression service contracts whose original expected duration is less than twelve months and does not consider the effects of the time value of money. Expected revenue to be recognized in the future as of June 30, 2020 for completion of performance obligations of compression service contracts are as follows:
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
Total
 
(In Thousands)
Compression service contracts remaining performance obligations
$
35,385

 
$
12,735

 
$
1,807

 
$
62

 
$
46

 
$
50,035


    
Our contract asset balances included in trade accounts receivable in our consolidated balance sheets, primarily associated with customer documentation requirements prior to invoicing, were $8.2 million and $9.6 million as of June 30, 2020 and December 31, 2019, respectively.

Collections associated with progressive billings to customers for the construction of compression equipment is included in unearned income in the consolidated balance sheets. The following table reflects the changes in unearned income in our consolidated balance sheets for the periods indicated:

 
Six Months Ended
June 30,
 
2020
 
2019
 
(In Thousands)
Unearned income, beginning of period
$
9,505

 
$
24,898

Additional unearned income
31,619

 
83,640

Revenue recognized
(29,960
)
 
(77,708
)
Unearned income, end of period
$
11,164

 
$
30,830



During the six months ended June 30, 2020, we recognized in equipment sales revenue $5.7 million from unearned income that was deferred as of December 31, 2019. During the six months ended June 30, 2019, we recognized in equipment sales revenue of $18.7 million from unearned income that was deferred as of December 31, 2018.

As of June 30, 2020 and June 30, 2019, contract costs were immaterial.

Disaggregated revenue from contracts with customers by geography is as follows:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
 
(In Thousands)
Compression and related services
 
 
 
 
 
 
 
U.S.
$
49,084

 
$
55,620

 
$
106,359

 
$
109,637

International
7,252

 
9,256

 
15,742

 
17,941

 
56,336

 
64,876

 
122,101

 
127,578

Aftermarket services
 
 
 
 
 
 
 
U.S.
15,427

 
17,745

 
32,712

 
31,076

International
310

 
411

 
995

 
694

 
15,737

 
18,156

 
33,707

 
31,770

Equipment sales
 
 
 
 
 
 
 
U.S.
24,073

 
52,757

 
30,111

 
78,924

International
267

 
67

 
773

 
1,020

 
24,340

 
52,824

 
30,884

 
79,944

Total Revenue
 
 
 
 
 
 
 
U.S.
88,584

 
126,122

 
169,182

 
219,637

International
7,829

 
9,734

 
17,510

 
19,655

 
$
96,413

 
$
135,856

 
$
186,692

 
$
239,292


v3.20.2
Leases (Notes)
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Lessee, Operating Leases [Text Block] LEASES

We have operating leases for some of our office space, warehouse space, operating locations, and machinery and equipment. Our leases have remaining lease terms ranging from 1 to 10 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. Our leases generally require us to pay all maintenance and insurance costs. During the fourth quarter of 2019, we entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commence upon the completion of the fabrication of the compressor packages. During the first quarter, we took delivery of eight compressor packages. During the second quarter, we took delivery of the remaining six compressor packages. We have no other lease agreement commitments that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In November 2019, we entered into a sale and leaseback transaction with a third-party lessor whereby we received $9.8 million of proceeds from the sale of certain of our compression equipment in service and entered into an associated lease of the same equipment having an initial lease term of seven years.

Lease costs are included in either cost of revenues or selling, general, and administrative expense depending on the use of the underlying asset. Total lease expense (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less), was $3.5 million and $6.7 million for the three and six month period ended June 30, 2020, respectively, of which, $0.6 million and $1.5 million respectively, related to short-term leases. Variable rent expense was not material.

Operating lease supplemental cash flow information:
 
Six Months Ended June 30,
 
2020
 
2019
 
(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
     Operating cash flows - operating leases
$
4,816

 
$
2,285

 
 
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
 
 
     Operating leases
$
12,471

 
$
2,663


Supplemental balance sheet information:
 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
 
 
Operating leases:
 
 
 
     Operating right-of-use asset
$
29,936

 
$
21,006

 
 
 
 
     Accrued liabilities and other
$
8,216

 
$
6,706

     Operating lease liabilities
21,140

 
13,822

     Total operating lease liabilities
$
29,356

 
$
20,528

 
 
 
 


Additional operating lease information:
 
June 30, 2020
 
December 31, 2019
Weighted average remaining lease term:
 
 
 
     Operating leases
5.17 Years

 
4.51 Years

 
 
 
 
Weighted average discount rate:
 
 
 
     Operating leases
9.90
%
 
8.73
%


Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year, consist of the following at June 30, 2020:
 
Operating Leases
 
(In Thousands)
 
 
Remainder of 2019
$
5,192

2020
8,768

2021
6,575

2022
4,322

2023
4,250

Thereafter
8,819

Total lease payments
37,926

Less imputed interest
(8,570
)
Total lease liabilities
$
29,356


Lessee, Finance Leases [Text Block] LEASES

We have operating leases for some of our office space, warehouse space, operating locations, and machinery and equipment. Our leases have remaining lease terms ranging from 1 to 10 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. Our leases generally require us to pay all maintenance and insurance costs. During the fourth quarter of 2019, we entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commence upon the completion of the fabrication of the compressor packages. During the first quarter, we took delivery of eight compressor packages. During the second quarter, we took delivery of the remaining six compressor packages. We have no other lease agreement commitments that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In November 2019, we entered into a sale and leaseback transaction with a third-party lessor whereby we received $9.8 million of proceeds from the sale of certain of our compression equipment in service and entered into an associated lease of the same equipment having an initial lease term of seven years.

Lease costs are included in either cost of revenues or selling, general, and administrative expense depending on the use of the underlying asset. Total lease expense (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less), was $3.5 million and $6.7 million for the three and six month period ended June 30, 2020, respectively, of which, $0.6 million and $1.5 million respectively, related to short-term leases. Variable rent expense was not material.

Operating lease supplemental cash flow information:
 
Six Months Ended June 30,
 
2020
 
2019
 
(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
     Operating cash flows - operating leases
$
4,816

 
$
2,285

 
 
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
 
 
     Operating leases
$
12,471

 
$
2,663


Supplemental balance sheet information:
 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
 
 
Operating leases:
 
 
 
     Operating right-of-use asset
$
29,936

 
$
21,006

 
 
 
 
     Accrued liabilities and other
$
8,216

 
$
6,706

     Operating lease liabilities
21,140

 
13,822

     Total operating lease liabilities
$
29,356

 
$
20,528

 
 
 
 


Additional operating lease information:
 
June 30, 2020
 
December 31, 2019
Weighted average remaining lease term:
 
 
 
     Operating leases
5.17 Years

 
4.51 Years

 
 
 
 
Weighted average discount rate:
 
 
 
     Operating leases
9.90
%
 
8.73
%


Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year, consist of the following at June 30, 2020:
 
Operating Leases
 
(In Thousands)
 
 
Remainder of 2019
$
5,192

2020
8,768

2021
6,575

2022
4,322

2023
4,250

Thereafter
8,819

Total lease payments
37,926

Less imputed interest
(8,570
)
Total lease liabilities
$
29,356


v3.20.2
Subsequent Events
6 Months Ended
Jun. 30, 2020
Subsequent Events [Abstract]  
Schedule of Subsequent Events [Table Text Block] SUBSEQUENT EVENTS
    
On July 2, 2020, we completed the previously announced sale of our Midland manufacturing facility for a total sale price of $17.0 million. In connection with the sale, we have entered into an agreement with the buyer that permits us to continue to operate the facility until the completion and sale of our remaining backlog, which we anticipate will be completed during the third quarter of 2020. While we will continue to operate the facility until the completion and sale of our remaining backlog, we no longer intend to fabricate new compressor packages for sales to third parties or for our own service fleet.

During the second quarter of 2020, we entered into an agreement to sell 58 low-horsepower units to one of our customers for $2.6 million. We received the proceeds prior to June 30, 2020, however, the assets were not transferred to the customer until after June 30,2020. Therefore, they are classified as held for sale at June 30, 2020 in our financial statements. In addition, in late July, we received a purchase order to sell $6.7 million of idle large horsepower compressor units to one of our significant customers. We expect this sale to be completed and proceeds received by the end of the third quarter. We have and will continue to evaluate the sale of other non-core assets, including our low-horsepower compression fleet. We can provide no assurance that we will consummate a future sale of our low-horsepower compression fleet or any other non-core asset.

On July 20, 2020, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended June 30, 2020 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit, on an annualized basis. This distribution will be paid on August 14, 2020 to each of the holders of common units of record as of the close of business on August 1, 2020.
v3.20.2
Basis of Presentation and Significant Accounting Policies (Policies)
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2020
Accounting Policies [Abstract]    
Nature of Operations [Text Block]
Organization

CSI Compressco LP, a Delaware limited partnership, is a provider of compression services and equipment for natural gas and oil production, gathering, artificial lift, transmission, processing, and storage. We sell standard and custom-designed, engineered compressor packages and provide aftermarket services and compressor package parts and components manufactured by third-party suppliers. We provide these compression services and equipment to a broad base of natural gas and oil exploration and production, midstream, and transmission companies operating throughout many of the onshore producing regions of the United States as well as in a number of foreign locations, including the countries of Mexico, Canada, and Argentina. We design and fabricate a majority of the compressor packages that we use to provide compression services and sell to customers.
 
Inventory, Policy [Policy Text Block]
Inventories

Inventories consist primarily of compressor package parts and supplies and work in progress and are stated at the lower of cost or net realizable value. For parts and supplies, cost is determined using the weighted average cost method. The cost of work in progress is determined using the specific identification method.
 
Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block]
Impairments and Other Charges

Impairments of long-lived assets, including identified intangible assets, are determined periodically, when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgment as to the future undiscounted operating cash flows to be generated from the relevant assets throughout their remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related assets, an impairment is recognized for the excess of the carrying value over fair value. Fair value of intangible assets is generally determined using the discounted present value of future cash flows using discount rates commensurate with the risks inherent with the specific assets. Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs. See Note 3 - "Impairments and Other Charges" for additional discussion of recorded impairments.

 
Consolidation policy  
Presentation
 
Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. In the opinion of our management, our unaudited consolidated financial statements as of June 30, 2020, and for the three and six month periods ended June 30, 2020 and 2019, include all normal recurring adjustments that are necessary to provide a fair statement of our results for these interim periods. Operating results for the three and six month periods ended June 30, 2020 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2020.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission ("SEC") and do not include all information and footnotes required by U.S. generally accepted accounting principles ("U.S. GAAP") for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2019 and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March 16, 2020.
Use of estimates policy  
Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be material.
Foreign currencies policy  
Foreign Currencies
 
Accumulated other comprehensive income (loss) is included in partners’ capital in the accompanying consolidated balance sheets and consists of the cumulative currency translation adjustments associated with our international operations. Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $(0.3) million and $1.4 million during the three and six month periods ended June 30, 2020, respectively, and $(0.04) million and $(1.0) million during the three and six month periods ended June 30, 2019, respectively.

Earnings per common unit policy  
Earnings Per Common Unit
 
Our computations of earnings per common unit are based on the weighted average number of common units outstanding during the applicable period. Basic earnings per common unit are determined by dividing net
income (loss) allocated to the common units after deducting the amount allocated to our General Partner (including any distributions to our General Partner on its incentive distribution rights) by the weighted average number of outstanding common units during the period.
 
When computing earnings per common unit under the two class method in periods when distributions are greater than earnings, the amount of the distribution is deducted from net income (loss) and the excess of distributions over earnings is allocated between the General Partner and common units based on how our Partnership Agreement allocates net losses.
 
Diluted earnings per common unit are computed using the treasury stock method, which considers the potential future issuance of limited partner common units. Unvested phantom units are not included in basic earnings per common unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per common unit. For the three and six month periods ended June 30, 2020 and June 30, 2019, all unvested phantom units were excluded from the calculation of diluted common units because the impact was anti-dilutive. Diluted earnings per common unit are computed using the "if converted" method, whereby the amount of net income (loss) and the number of common units issuable are each adjusted as if the Preferred Units, had been converted as of the beginning of the period presented. The calculation of diluted earnings per common unit for the three and six month period ended June 30, 2019 excludes the impact of the Preferred Units, as the inclusion of the impact from the conversion of the Preferred Units into common units would have been anti-dilutive. All remaining outstanding Preferred Units were redeemed for cash on August 8, 2019.
Revenue [Policy Text Block]
Revenue Recognition

Performance Obligations. Revenue is recognized when performance obligations under the terms of a contract with our customer are satisfied. Revenue is generally recognized when we transfer control of our products or services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services to our customers. We receive cash equal to the invoice price for most product sales and services and payment terms typically range from 30 to 60 days from the date we invoice our customer. With the exception of the initial terms of our compression services contracts of our medium- and high-horsepower compressor packages, our customer contracts are generally for terms of one year or less. Since the period between when we deliver products or services and when the customer pays for products or services is not to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts.

Depending on the terms of the arrangement, we may also defer the recognition of revenue for a portion of the consideration received because we have to satisfy a future performance obligation. For example, consideration received from customers during the fabrication of new compressor packages is typically deferred until control of the compressor package is transferred to our customer.

For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and amortized over the estimated service period.

Compression and related services. For compression services revenues recognized over time, our customer contracts typically provide agreed upon monthly service rates and we recognize service revenue based upon the number of days that services have been performed. The majority of our compression services are provided pursuant to contract terms ranging from one month to twenty-four months. Monthly agreements are generally cancellable with 30 days written notice by the customer.

Sales taxes, value added taxes, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We recognize the cost for freight and shipping costs when control over our products (i.e. delivery) has transferred to the customer as part of cost of product sales.

Use of Estimates. Our revenues do not include material amounts of variable consideration, as our revenues typically do not require significant estimates or judgments. The transaction price on a majority of our arrangements are fixed and product returns are immaterial. Additionally, our arrangements typically do not include multiple performance obligations that require estimates of the stand-alone purchase price for each performance obligation. Revenue on certain aftermarket service arrangements that include time as a component of the transaction price is not recognized until the performance obligation is complete.

Contract Assets and Liabilities. We consider contract assets to be trade accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain instances, particularly those requiring customer specific documentation prior to invoicing, our invoicing of the customer is delayed until certain documentation requirements are met. In those cases, we recognize a contract asset rather than a billed trade accounts receivable until we are able to invoice the customer. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.
    
We classify contract liabilities as unearned income in our consolidated balance sheets. Such unearned income typically results from advance payments received on orders for new compressor equipment prior to the time such equipment is completed and transferred to the customer in accordance with the customer contract. New equipment sales orders generally take less than twelve months to build and deliver.

Bill-and-Hold Arrangements. We design compressor packages based on our customer’s specifications. In some cases, the customer will request us to hold the equipment, upon completion of the unit, until the job site is ready to receive the equipment. When this occurs, we along with the customer sign a bill-and-hold agreement, which outlines that the customer has title to the equipment, the equipment is ready for delivery, we cannot use the equipment or direct it to another customer, and we have a present right to payment. When those criteria have been met and the agreement is executed, we recognize the revenue on the equipment because control of the equipment has passed to our customer and our performance obligations are complete. Entering into these arrangements is something we have done as a courtesy for certain customers for many years. The equipment subject to the bill-and-hold agreements have generally been invoiced and paid for through progressive billings such that at the time the bill-and-hold agreement is executed, the majority of the contractual cash obligation of the customer has been received by us.
 
Fair Value of Financial Instruments, Policy [Policy Text Block]
Fair Value Measurements

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements were utilized in the determination of the carrying value of our Series A Preferred Units (a Level 3 fair value measurement). We also utilize fair value measurements on a recurring basis in the accounting for our foreign currency forward purchase and sale derivative contracts. For these fair value measurements, we utilize the quoted value (a Level 2 fair value measurement). Refer to Note 9 - "Fair Value Measurements" for further discussion.
Fair value measurements are also utilized on a nonrecurring basis, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets (a Level 3 fair value measurement) and for the impairment of long-lived assets (a Level 3 fair value measurement).
 
Distributions policy  
Distributions

On January 20, 2020, our General Partner declared a cash distribution attributable to the quarter ended December 31, 2019 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit on an annualized basis. This distribution was paid on February 14, 2020, to each of the holders of common units of record as of the close of business on February 1, 2020.
New accounting pronouncements policy  
New Accounting Pronouncements

Standards adopted in 2020

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for us the first quarter of fiscal 2020. The adoption of this standard did not have a material impact on our consolidated financial statements.
     
Standards not yet adopted

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairments will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. ASU 2016-13 is effective for us the first quarter of fiscal 2023. We continue to assess the potential effects of these changes to our consolidated financial statements.    
    
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for us the first quarter of fiscal 2021. We continue to assess the potential effects of these changes to our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impacts of the provisions of ASU 2020-04 on our consolidated financial statements.
Reclassifications [Text Block]  
Reclassifications

Certain previously reported financial information has been reclassified to conform to the current year's presentation. The impact of such reclassifications was not significant to the prior year's overall presentation.

Cash and Cash Equivalents, Policy [Policy Text Block]  
Cash Equivalents

We consider all highly liquid cash investments with maturities of three months or less when purchased to be cash equivalents.
v3.20.2
Inventories Inventories (Tables)
6 Months Ended
Jun. 30, 2020
Inventory Disclosure [Abstract]  
Schedule of Inventory, Current [Table Text Block]

Components of inventories as of June 30, 2020 and December 31, 2019, are as follows: 

 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
Parts and supplies
$
30,270

 
$
42,814

Work in progress
9,922

 
13,223

Total inventories
$
40,192

 
$
56,037



v3.20.2
Long-Term Debt and Other Borrowings Long-Term Debt and Other Borrowings (Tables)
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Long-Term Debt Table
 
 
 
 
June 30, 2020
 
December 31, 2019
 
 
Scheduled Maturity
 
(In Thousands)
Credit Agreement (presented net of the unamortized deferred financing costs of $0.7 million as of June 30, 2020 and $0.9 million as of December 31, 2019)
 
June 2023
 
$
746

 
$
2,622

7.25% Senior Notes (presented net of the unamortized discount of $0.4 million as of June 30, 2020 and $1.7 million as of December 31, 2019 and unamortized deferred financing costs of $0.6 million as of June 30, 2020 and $2.8 million as of December 31, 2019)
 
August 2022
 
79,745

 
291,444

7.50% First Lien Notes (presented net of the unamortized deferred financing costs of $5.7 million as of June 30, 2020 and $5.8 million as of December 31, 2019, net of the unamortized discount of $0.2 million as of June 30, 2020, and net of deferred restructuring gain of $5.6 million as of June 30, 2020)
 
April 2025
 
399,613

 
344,172

10.00%/10.75% Second Lien Notes (presented net of the unamortized discount of $0.8 million as of June 30, 2020, and net of unamortized deferred financing costs of $1.3 million as of June 30, 2020, and net of deferred restructuring gain of $4 million as of June 30, 2020)
 
April 2026
 
157,475

 

 
 
 
 
637,579

 
638,238

Less current portion
 
 
 

 

Total long-term debt
 
 
 
$
637,579

 
$
638,238


v3.20.2
Fair Value Measurements Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2020
Fair Value Disclosures [Abstract]  
Schedule of Notional Amounts of Outstanding Derivative Positions Table

 
US Dollar Notional Amount
 
Traded Exchange Rate
 
Settlement Date

 
(In Thousands)
 

 

Forward sale Mexican peso
 
$
5,292

 
22.58
 
7/2/2020

Derivatives Designated as Hedging Instruments Table
Foreign currency derivative contracts
 
Balance Sheet
 
Fair Value at
 
Location
 
June 30, 2020
 
December 31, 2019
 
 
 
 
(In Thousands)
Forward sale contracts
 
Current assets
 
$
95

 
$

Forward sale contracts
 
Current liabilities
 

 
(53
)
Net asset (liability)
 
 
 
$
95

 
$
(53
)

v3.20.2
Related Party Transactions Related Party Transactions (Tables)
6 Months Ended
Jun. 30, 2020
Related Party Transactions [Abstract]  
Finance Lease, Liability, Maturity
Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year, consist of the following at June 30, 2020:
 
Operating Leases
 
(In Thousands)
 
 
Remainder of 2019
$
5,192

2020
8,768

2021
6,575

2022
4,322

2023
4,250

Thereafter
8,819

Total lease payments
37,926

Less imputed interest
(8,570
)
Total lease liabilities
$
29,356


v3.20.2
Revenue from Contract with Customers Revenue from Contract with Customers (Tables)
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Contract with Customer, Asset and Liability [Table Text Block]
 
Six Months Ended
June 30,
 
2020
 
2019
 
(In Thousands)
Unearned income, beginning of period
$
9,505

 
$
24,898

Additional unearned income
31,619

 
83,640

Revenue recognized
(29,960
)
 
(77,708
)
Unearned income, end of period
$
11,164

 
$
30,830


Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
Total
 
(In Thousands)
Compression service contracts remaining performance obligations
$
35,385

 
$
12,735

 
$
1,807

 
$
62

 
$
46

 
$
50,035


v3.20.2
Revenue from Contract with Customers Disaggregation of Revenue (Tables)
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue [Table Text Block]
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2020
 
2019
 
2020
 
2019
 
(In Thousands)
Compression and related services
 
 
 
 
 
 
 
U.S.
$
49,084

 
$
55,620

 
$
106,359

 
$
109,637

International
7,252

 
9,256

 
15,742

 
17,941

 
56,336

 
64,876

 
122,101

 
127,578

Aftermarket services
 
 
 
 
 
 
 
U.S.
15,427

 
17,745

 
32,712

 
31,076

International
310

 
411

 
995

 
694

 
15,737

 
18,156

 
33,707

 
31,770

Equipment sales
 
 
 
 
 
 
 
U.S.
24,073

 
52,757

 
30,111

 
78,924

International
267

 
67

 
773

 
1,020

 
24,340

 
52,824

 
30,884

 
79,944

Total Revenue
 
 
 
 
 
 
 
U.S.
88,584

 
126,122

 
169,182

 
219,637

International
7,829

 
9,734

 
17,510

 
19,655

 
$
96,413

 
$
135,856

 
$
186,692

 
$
239,292


v3.20.2
Leases (Tables)
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Lease, Cost [Table Text Block]
Operating lease supplemental cash flow information:
 
Six Months Ended June 30,
 
2020
 
2019
 
(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
     Operating cash flows - operating leases
$
4,816

 
$
2,285

 
 
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
 
 
     Operating leases
$
12,471

 
$
2,663


Additional operating lease information:
 
June 30, 2020
 
December 31, 2019
Weighted average remaining lease term:
 
 
 
     Operating leases
5.17 Years

 
4.51 Years

 
 
 
 
Weighted average discount rate:
 
 
 
     Operating leases
9.90
%
 
8.73
%

Finance Lease, Liability, Maturity
Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year, consist of the following at June 30, 2020:
 
Operating Leases
 
(In Thousands)
 
 
Remainder of 2019
$
5,192

2020
8,768

2021
6,575

2022
4,322

2023
4,250

Thereafter
8,819

Total lease payments
37,926

Less imputed interest
(8,570
)
Total lease liabilities
$
29,356


Assets And Liabilities, Lessee [Table Text Block]
Supplemental balance sheet information:
 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
 
 
Operating leases:
 
 
 
     Operating right-of-use asset
$
29,936

 
$
21,006

 
 
 
 
     Accrued liabilities and other
$
8,216

 
$
6,706

     Operating lease liabilities
21,140

 
13,822

     Total operating lease liabilities
$
29,356

 
$
20,528

 
 
 
 

Lessee, Operating Leases [Text Block] LEASES

We have operating leases for some of our office space, warehouse space, operating locations, and machinery and equipment. Our leases have remaining lease terms ranging from 1 to 10 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. Our leases generally require us to pay all maintenance and insurance costs. During the fourth quarter of 2019, we entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commence upon the completion of the fabrication of the compressor packages. During the first quarter, we took delivery of eight compressor packages. During the second quarter, we took delivery of the remaining six compressor packages. We have no other lease agreement commitments that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In November 2019, we entered into a sale and leaseback transaction with a third-party lessor whereby we received $9.8 million of proceeds from the sale of certain of our compression equipment in service and entered into an associated lease of the same equipment having an initial lease term of seven years.

Lease costs are included in either cost of revenues or selling, general, and administrative expense depending on the use of the underlying asset. Total lease expense (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less), was $3.5 million and $6.7 million for the three and six month period ended June 30, 2020, respectively, of which, $0.6 million and $1.5 million respectively, related to short-term leases. Variable rent expense was not material.

Operating lease supplemental cash flow information:
 
Six Months Ended June 30,
 
2020
 
2019
 
(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
     Operating cash flows - operating leases
$
4,816

 
$
2,285

 
 
 
 
Right-of-use assets obtained in exchange for lease obligations:
 
 
 
     Operating leases
$
12,471

 
$
2,663


Supplemental balance sheet information:
 
June 30, 2020
 
December 31, 2019
 
(In Thousands)
 
 
Operating leases:
 
 
 
     Operating right-of-use asset
$
29,936

 
$
21,006

 
 
 
 
     Accrued liabilities and other
$
8,216

 
$
6,706

     Operating lease liabilities
21,140

 
13,822

     Total operating lease liabilities
$
29,356

 
$
20,528

 
 
 
 


Additional operating lease information:
 
June 30, 2020
 
December 31, 2019
Weighted average remaining lease term:
 
 
 
     Operating leases
5.17 Years

 
4.51 Years

 
 
 
 
Weighted average discount rate:
 
 
 
     Operating leases
9.90
%
 
8.73
%


Future minimum lease payments by year and in the aggregate, under non-cancelable operating leases with terms in excess of one year, consist of the following at June 30, 2020:
 
Operating Leases
 
(In Thousands)
 
 
Remainder of 2019
$
5,192

2020
8,768

2021
6,575

2022
4,322

2023
4,250

Thereafter
8,819

Total lease payments
37,926

Less imputed interest
(8,570
)
Total lease liabilities
$
29,356


v3.20.2
Basis of Presentation and Significant Accounting Policies (Details 1)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Mar. 31, 2020
USD ($)
$ / shares
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Debt Instrument [Line Items]            
Number of Reportable Segments       1    
Impairment of Long-Lived Assets Held-for-use $ 8,977 $ 5,400 $ 2,311 $ 14,348 $ 2,311  
Foreign currency exchange gains (losses) (300)   $ (40) 1,400 $ (1,000)  
Distribution Made to Limited Partner, Distributions Declared, Per Unit | $ / shares   $ 0.01        
Amount of declared distribution on an annualized basis | $ / shares   $ 0.04        
Operating Lease, Right-of-Use Asset 29,936     29,936   $ 21,006
Operating Lease, Liability, Current 8,216     8,216   6,706
Operating Lease, Liability, Noncurrent 21,140     21,140   $ 13,822
Credit Agreement [Member]            
Debt Instrument [Line Items]            
Line of Credit Facility, Fair Value of Amount Outstanding $ 1,500     $ 1,500    
v3.20.2
Basis of Presentation and Significant Accounting Policies Assets Held for Sale (Details) - Fair Value, Recurring [Member] - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Long Lived Assets Held-for-sale [Line Items]    
Financial and Nonfinancial Liabilities, Fair Value Disclosure $ 22,341 $ (53)
Non-core used compressor equipment held for sale [Member]    
Long Lived Assets Held-for-sale [Line Items]    
Financial and Nonfinancial Liabilities, Fair Value Disclosure $ (2,600)  
v3.20.2
Impairment and Other Charges (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Impaired Long-Lived Assets Held and Used [Line Items]          
Impairment of Long-Lived Assets Held-for-use $ 8,977 $ 5,400 $ 2,311 $ 14,348 $ 2,311
Asset Impairment Charges       $ 9,000  
compressor equipment held for sale, low-horsepower class of our compression fleet, and field inventory [Member]          
Impaired Long-Lived Assets Held and Used [Line Items]          
Impairment of Long-Lived Assets Held-for-use $ 9,000        
v3.20.2
Inventories Inventories (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Inventory [Line Items]    
Other Inventory, Supplies, Gross $ 30,270 $ 42,814
Inventory, Work in Process, Gross 9,922 13,223
Inventory, Net $ 40,192 $ 56,037
v3.20.2
Long-Term Debt and Other Borrowings (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 12, 2020
Jun. 11, 2020
Jun. 30, 2020
Mar. 31, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Jun. 10, 2020
Dec. 31, 2019
Mar. 22, 2018
Debt Instrument [Line Items]                    
Impairment of Long-Lived Assets Held-for-use     $ 8,977,000 $ 5,400,000 $ 2,311,000 $ 14,348,000 $ 2,311,000      
Long-term debt     637,579,000     637,579,000     $ 638,238,000  
Less current portion     0     0     0  
Long-term debt, net     637,579,000     637,579,000     638,238,000  
Line of Credit Facility, Remaining Borrowing Capacity     12,300,000     12,300,000        
Credit Agreement [Member]                    
Debt Instrument [Line Items]                    
Line of Credit Facility, Fair Value of Amount Outstanding     1,500,000     1,500,000        
Long-term debt     746,000     746,000     2,622,000  
Letters of Credit Outstanding, Amount     2,800,000     2,800,000        
CSI Compressco Senior Notes [Member]                    
Debt Instrument [Line Items]                    
Long-term debt     $ 79,745,000     $ 79,745,000     $ 291,444,000  
Senior Note interest rate     7.25%     7.25%     7.25%  
Compressco Partners First Lien Notes 7.50% [Member]                    
Debt Instrument [Line Items]                    
Long-term debt     $ 399,613,000     $ 399,613,000     $ 344,172,000  
Senior Note interest rate     7.50%     7.50%        
Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Long-term debt     $ 157,475,000     $ 157,475,000     0  
CSI Compressco [Member] | CSI Compressco Senior Notes [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Unamortized Discount (Premium), Net     400,000     400,000     1,700,000  
Unamortized Debt Issuance Expense     600,000     600,000     2,800,000  
CSI Compressco [Member] | Compressco Partners First Lien Notes 7.50% [Member]                    
Debt Instrument [Line Items]                    
Unamortized Debt Issuance Expense     5,700,000     $ 5,700,000     $ 5,800,000  
Second Amendment to Loan and Security Agreement [Member] | CSI Compressco [Member] | Credit Agreement [Member]                    
Debt Instrument [Line Items]                    
Line Of Credit Facility, Reserve Amount   $ 5,000,000                
Line of Credit Facility, Maximum Borrowing Capacity   $ 35,000,000           $ 50,000,000    
Line of Credit Facility, Commitment Fee Percentage   0.50%                
Debt Related Commitment Fees and Debt Issuance Costs     $ 200,000              
First Supplemental Indenture for the Old Notes [Member] | CSI Compressco [Member] | CSI Compressco Senior Notes [Member]                    
Debt Instrument [Line Items]                    
Senior Note interest rate     7.25%     7.25%        
Debt Related Commitment Fees and Debt Issuance Costs     $ 4,800,000              
Debt Instrument, Amount Outstanding   $ 215,208,000                
Debt Instrument, Percentage Of Debt   72.70%                
First Supplemental Indenture for the Old Notes [Member] | CSI Compressco [Member] | Compressco Partners First Lien Notes 7.50% [Member]                    
Debt Instrument [Line Items]                    
Long-term Debt, Gross $ 50,000,000 $ 50,000,000                
First Supplemental Indenture for the Old Notes [Member] | CSI Compressco [Member] | Senior Secured First Lien Notes Due 2025 [Member]                    
Debt Instrument [Line Items]                    
Long-term Debt, Gross                   $ 350,000,000
First Supplemental Indenture for the Old Notes [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Long-term Debt, Gross   155,529,000                
Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Long-term Debt, Gross   $ 155,529,000                
Debt Instrument, Debt Issued Denomination Amount     $ 2,000     $ 2,000        
Minimum [Member] | First Supplemental Indenture for the Old Notes [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Senior Note interest rate     10.00%     10.00%        
Minimum [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Debt Issued Denomination Integral Multiples Amount     $ 1,000     $ 1,000        
Maximum [Member] | First Supplemental Indenture for the Old Notes [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Senior Note interest rate     10.75%     10.75%        
PIK Payments [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Debt Issued Denomination Amount     $ 1.00     $ 1.00        
Rate 1 [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Senior Note interest rate     7.25%     7.25%        
Rate 2 [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Senior Note interest rate     2.75%     2.75%        
Rate 3 [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Senior Note interest rate     3.50%     3.50%        
Debt Instrument, Redemption, Period One [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Redemption Price, Percentage 110.00%                  
Debt Instrument, Redemption, Period Two [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Redemption Price, Percentage 107.50%                  
Debt Instrument, Redemption, Period Three [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Redemption Price, Percentage 105.00%                  
Debt Instrument, Redemption, Period Four [Member] | Second Lien Notes Indenture [Member] | CSI Compressco [Member] | Compressco Partners Second Lien Notes 10.00%/10.75% [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Redemption Price, Percentage 100.00%                  
London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | Second Amendment to Loan and Security Agreement [Member] | CSI Compressco [Member] | Credit Agreement [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Basis Spread on Variable Rate   3.00%                
London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | Second Amendment to Loan and Security Agreement [Member] | CSI Compressco [Member] | Credit Agreement [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Basis Spread on Variable Rate   3.50%                
Base Rate [Member] | Minimum [Member] | Second Amendment to Loan and Security Agreement [Member] | CSI Compressco [Member] | Credit Agreement [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Basis Spread on Variable Rate   2.00%                
Base Rate [Member] | Maximum [Member] | Second Amendment to Loan and Security Agreement [Member] | CSI Compressco [Member] | Credit Agreement [Member]                    
Debt Instrument [Line Items]                    
Debt Instrument, Basis Spread on Variable Rate   2.50%                
v3.20.2
Fair Value Measurements (Details)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Derivatives, Fair Value [Line Items]          
Liabilities, Fair Value Adjustment $ 0 $ (166) $ 0 $ (3,600)  
Derivative Liability, Fair Value, Gross Liability         $ (53)
Derivative Liability, Fair Value, Gross Asset 95   95    
Net gains associated with foreign currency derivative program 300 $ 200 (1,100) $ 300  
Asset Impairment Charges     9,000    
CSI Compressco Senior Notes [Member]          
Derivatives, Fair Value [Line Items]          
Fair value of Senior Notes 41,600   41,600   266,000
Notes Payable $ 80,700   $ 80,700   $ 295,900
Debt Instrument, Interest Rate, Stated Percentage 7.25%   7.25%   7.25%
Compressco Partners First Lien Notes 7.50% [Member]          
Derivatives, Fair Value [Line Items]          
Fair value of Senior Notes $ 336,400   $ 336,400   $ 344,800
Notes Payable $ 400,000   $ 400,000   350,000
Debt Instrument, Interest Rate, Stated Percentage 7.50%   7.50%    
Compressco Partners Second Lien Notes 10.00%/10.75% [Member]          
Derivatives, Fair Value [Line Items]          
Fair value of Senior Notes $ 96,800   $ 96,800    
Notes Payable 155,500   155,500    
Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Financial and Nonfinancial Liabilities, Fair Value Disclosure 22,341   22,341   (53)
Foreign Currency Contract, Asset, Fair Value Disclosure 95   95    
Foreign Currency Contracts, Liability, Fair Value Disclosure         (53)
Mandatorily Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Financial and Nonfinancial Liabilities, Fair Value Disclosure (19,646)   (19,646)    
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Foreign Currency Contract, Asset, Fair Value Disclosure 0   0    
Foreign Currency Contracts, Liability, Fair Value Disclosure         0
Fair Value, Inputs, Level 1 [Member] | Mandatorily Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Financial and Nonfinancial Liabilities, Fair Value Disclosure 0   0    
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Foreign Currency Contract, Asset, Fair Value Disclosure 95   95    
Foreign Currency Contracts, Liability, Fair Value Disclosure         (53)
Fair Value, Inputs, Level 2 [Member] | Mandatorily Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Financial and Nonfinancial Liabilities, Fair Value Disclosure 0   0    
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Foreign Currency Contract, Asset, Fair Value Disclosure 0   0    
Foreign Currency Contracts, Liability, Fair Value Disclosure         0
Fair Value, Inputs, Level 3 [Member] | Mandatorily Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member]          
Derivatives, Fair Value [Line Items]          
Financial and Nonfinancial Liabilities, Fair Value Disclosure $ (19,646)   $ (19,646)    
Forward Sale Contract, Mexican Pesos [Member]          
Derivative [Line Items]          
Traded exchange rate 22.58   22.58    
Value date     Jul. 02, 2020    
Derivative, Notional Amount $ 5,292   $ 5,292    
Other Current Assets [Member]          
Derivatives, Fair Value [Line Items]          
Derivative Asset, Fair Value, Gross Asset 95   95   0
Current Liabilities [Member]          
Derivatives, Fair Value [Line Items]          
Derivative Liability, Fair Value, Gross Liability $ 0   $ 0   $ (53)
v3.20.2
Related Party Transactions (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2020
Dec. 31, 2019
Related Party Transaction [Line Items]      
Finance Lease, Interest Expense $ 600 $ 1,200  
Due to Related Parties, Noncurrent 12,019 12,019 $ 12,324
Due from Related Parties, Current   14,800  
Finance Lease, Liability 15,000 15,000  
Maximum [Member]      
Related Party Transaction [Line Items]      
Due to Related Parties, Noncurrent $ 15,000 $ 15,000  
Common Unitholders [Member]      
Related Party Transaction [Line Items]      
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest   34.00%  
General Partner [Member]      
Related Party Transaction [Line Items]      
Limited Liability Company (LLC) or Limited Partnership (LP), Managing Member or General Partner, Ownership Interest   1.40%  
v3.20.2
Income Taxes Income Tax (Details)
6 Months Ended
Jun. 30, 2020
Income Statement [Abstract]  
Effective Income Tax Rate Reconciliation, Percent (3.30%)
v3.20.2
Revenue from Contract with Customers Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Disaggregation of Revenue [Line Items]        
Revenue, Remaining Performance Obligation, Amount $ 50,035   $ 50,035  
Compression and related services 56,336 $ 64,876 122,101 $ 127,578
Aftermarket services 96,413 135,856 186,692 239,292
UNITED STATES        
Disaggregation of Revenue [Line Items]        
Compression and related services 49,084 55,620 106,359 109,637
Aftermarket services 88,584 126,122 169,182 219,637
Non-US [Member]        
Disaggregation of Revenue [Line Items]        
Compression and related services 7,252 9,256 15,742 17,941
Aftermarket services 7,829 9,734 17,510 19,655
Service [Member]        
Disaggregation of Revenue [Line Items]        
Aftermarket services 15,737 18,156 33,707 31,770
Service [Member] | UNITED STATES        
Disaggregation of Revenue [Line Items]        
Aftermarket services 15,427 17,745 32,712 31,076
Service [Member] | Non-US [Member]        
Disaggregation of Revenue [Line Items]        
Aftermarket services 310 411 995 694
Product [Member]        
Disaggregation of Revenue [Line Items]        
Aftermarket services 24,340 52,824 30,884 79,944
Product [Member] | UNITED STATES        
Disaggregation of Revenue [Line Items]        
Aftermarket services 24,073 52,757 30,111 78,924
Product [Member] | Non-US [Member]        
Disaggregation of Revenue [Line Items]        
Aftermarket services $ 267 $ 67 $ 773 $ 1,020
v3.20.2
Revenue from Contract with Customers Contract Assets and Liabilities (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Dec. 31, 2018
Revenue from Contract with Customer [Abstract]        
Contract with Customer, Liability, Revenue Recognized $ 5,700 $ 18,700    
Contract with Customer, Asset, before Allowance for Credit Loss 8,200   $ 9,600  
Revenue, Remaining Performance Obligation, Amount 50,035      
Deferred Revenue 11,164 30,830 $ 9,505 $ 24,898
Deferred Revenue, Additions 31,619 83,640    
Deferred Revenue, Revenue Recognized $ (29,960) $ (77,708)    
v3.20.2
Revenue from Contract with Customers Compression and related services (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 50,035
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Amount $ 35,385
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 year
Revenue, Remaining Performance Obligation, Amount $ 12,735
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 year
Revenue, Remaining Performance Obligation, Amount $ 1,807
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 year
Revenue, Remaining Performance Obligation, Amount $ 62
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period 1 year
Revenue, Remaining Performance Obligation, Amount $ 46
v3.20.2
Leases (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Lessee, Lease, Description [Line Items]          
Finance Lease, Interest Expense $ 600   $ 1,200    
Sale Leaseback Transaction, Net Book Value         $ 9,800
Operating Lease, Cost 3,500 $ 600 6,700    
Short-term Lease, Cost     1,500    
Operating Lease, Payments     4,816 $ 2,285  
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability     12,471 $ 2,663  
Operating Lease, Right-of-Use Asset 29,936   29,936   21,006
Operating Lease, Liability, Current 8,216   8,216   6,706
Operating Lease, Liability, Noncurrent 21,140   21,140   13,822
Operating Lease, Liability $ 29,356   $ 29,356   $ 20,528
Operating Lease, Weighted Average Remaining Lease Term 5 years 2 months 1 day   5 years 2 months 1 day   4 years 6 months 3 days
Operating Lease, Weighted Average Discount Rate, Percent 9.90%   9.90%   8.73%
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year $ 5,192   $ 5,192    
Lessee, Operating Lease, Liability, Payments, Due Year Two 8,768   8,768    
Lessee, Operating Lease, Liability, Payments, Due Year Three 6,575   6,575    
Lessee, Operating Lease, Liability, Payments, Due Year Four 4,322   4,322    
Lessee, Operating Lease, Liability, Payments, Due Year Five 4,250   4,250    
Lessee, Operating Lease, Liability, Payments, Due after Year Five 8,819   8,819    
Lessee, Operating Lease, Liability, Payments, Due 37,926   37,926    
Lessee, Operating Lease, Liability, Undiscounted Excess Amount $ (8,570)   $ (8,570)    
Maximum [Member]          
Lessee, Lease, Description [Line Items]          
Operating Lease, Remaining Lease Term     10 years    
Minimum [Member]          
Lessee, Lease, Description [Line Items]          
Operating Lease, Remaining Lease Term     1 year    
v3.20.2
Subsequent Events (Details)
3 Months Ended
Mar. 31, 2020
$ / shares
Subsequent Event [Line Items]  
Amount of declared distribution $ 0.01
Amount of declared distribution on an annualized basis $ 0.04
v3.20.2
Label Element Value
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents $ 2,370,000
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents $ 15,858,000