CSI Compressco LP - Quarter Report: 2015 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2015

[ ] 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 of incorporation)	(I.R.S. Employer Identification No.)

3809 S. FM 1788
Midland, Texas	79706
(Address of principal executive offices)	(zip code)

(432) 563-1170

(Registrant’s telephone number, including area code)

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 [ X ] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ X ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):



Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [X] (Do not check if a smaller reporting company)	Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [ X ]

As of November 10, 2015, there were 33,186,155 Common Units outstanding.

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 (formerly named Compressco Partners, L.P.) 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.

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 September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
Revenues:
Compression and related services	72,766		58,300			220,880		116,270
Aftermarket services	7,013		6,595			21,134		6,595
Equipment and parts sales	49,145		30,997			116,264		34,945
Total revenues	128,924		95,892			358,278		157,810
Cost of revenues (excluding depreciation and amortization expense):
Cost of compression and related services	36,041		30,561			110,509		61,942
Cost of aftermarket services	5,407		5,266			17,774		5,266
Cost of equipment and parts sales	44,667		26,622			102,624		28,617
Total cost of revenues	86,115		62,449			230,907		95,825
Selling, general, and administrative expense	10,469		10,163			32,272		19,265
Depreciation and amortization	20,610		13,476			61,227		20,909
Interest expense, net	8,201		4,998			24,068		5,302
Other expense, net	1,514		8,758			3,923		9,795
Income (loss) before income tax provision	2,015		(3,952		)	5,881		6,714
Provision (benefit) for income taxes	396		(1,351		)	1,291		(183		)
Net income (loss)	$	1,619	$	(2,601	)	$	4,590	$	6,897
General partner interest in net income	$	413	$	30		$	1,133	$	220
Common units interest in net income (loss)	$	1,206	$	(2,306	)	$	3,457	$	3,248
Subordinated units interest in net income (loss)	$	—	$	(325	)	$	—	$	3,429

Net income (loss) per common unit:
Basic and diluted	$	0.04	$	(0.10	)	$	0.10	$	0.35
Weighted average common units outstanding:
Basic and diluted	33,185,073		23,697,093			33,163,757		14,138,668
Net income (loss) per subordinated unit:
Basic and diluted	$	—	$	(0.10	)	$	—	$	0.34
Weighted average subordinated units outstanding:
Basic and diluted	—		3,341,571			—		5,285,762

See Notes to Consolidated Financial Statements

CSI Compressco LP

Consolidated Statements of Comprehensive Income

(In Thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income (loss)	$	1,619		$	(2,601	)	$	4,590		$	6,897
Foreign currency translation adjustment	(324		)	(506		)	(2,001		)	(3,397		)
Comprehensive income (loss)	$	1,295		$	(3,107	)	$	2,589		$	3,500

See Notes to Consolidated Financial Statements

CSI Compressco LP

Consolidated Balance Sheets

(In Thousands, Except Unit Amounts)



	September 30, 2015			December 31, 2014
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	18,305		$	34,066
Trade accounts receivable, net of allowances for doubtful accounts of $1,681 in 2015 and $1,496 in 2014	58,293			78,741
Inventories	72,101			113,343
Deferred tax asset	508			124
Prepaid expenses and other current assets	5,720			5,516
Total current assets	154,927			231,790
Property, plant, and equipment:
Land and building	34,949			34,312
Compressors and equipment	830,824			756,113
Vehicles	13,027			15,915
Construction in progress	9			298
Total property, plant, and equipment	878,809			806,638
Less accumulated depreciation	(172,719		)	(120,642		)
Net property, plant, and equipment	706,090			685,996
Other assets:
Goodwill	233,608			233,548
Deferred tax asset	2,320			1,464
Intangible assets, net of accumulated amortization of $12,181 as of September 30, 2015 and $4,771 as of December 31, 2014	56,486			64,174
Deferred financing costs and other assets	14,988			16,689
Total other assets	307,402			315,875
Total assets	$	1,168,419		$	1,233,661
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable	$	12,155		$	37,815
Unearned income	24,357			65,778
Accrued liabilities and other	26,386			30,378
Amounts payable to affiliates	7,867			6,480
Deferred tax liabilities	1,972			1,117
Total current liabilities	72,737			141,568
Other liabilities:
Long-term debt, net	588,349			539,961
Deferred tax liabilities	3,411			1,788
Other long-term liabilities	349			63
Total other liabilities	592,109			541,812
Commitments and contingencies
Partners' capital:
General partner interest	10,593			11,341
Common units (33,185,742 units issued and outstanding at September 30, 2015 and 33,142,114 units issued and outstanding at December 31, 2014)	498,317			542,276
Accumulated other comprehensive income (loss)	(5,337		)	(3,336		)
Total partners' capital	503,573			550,281
Total liabilities and partners' capital	$	1,168,419		$	1,233,661

See Notes to Consolidated Financial Statements

CSI Compressco LP

Consolidated Statement of Partners’ Capital

(In Thousands)

(Unaudited)



	Partners' Capital						Accumulated Other Comprehensive Income (Loss)			Total Partners' Capital
	Partners' Capital
	General Partner			Common Unitholders

Balance at December 31, 2014	$	11,341		$	542,276		$	(3,336	)	$	550,281
Net income	1,133			3,457			—			4,590
Distributions ($1.48 per unit)	(1,881		)	(49,075		)	—			(50,956		)
Equity compensation	—			1,659			—			1,659
Other comprehensive income (loss)	—			—			(2,001		)	(2,001		)
Balance at September 30, 2015	$	10,593		$	498,317		$	(5,337	)	$	503,573

See Notes to Consolidated Financial Statements

CSI Compressco LP

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Nine Months Ended September 30,
	2015			2014
Operating activities:
Net income	$	4,590		$	6,897
Reconciliation of net income to cash provided by operating activities:
Depreciation and amortization	61,227			20,909
Provision (benefit) for deferred income taxes	1,258			(1,207		)
Equity compensation expense	1,659			919
Provision for doubtful accounts	227			210
Amortization of deferred financing costs	2,089			1,421
Other non-cash charges and credits	412			(2,003		)
(Gain) loss on sale of property, plant, and equipment	(156		)	352
Financing expense	—			6,750
Changes in operating assets and liabilities, net of assets acquired:
Accounts receivable	18,521			(12,572		)
Inventories	41,242			(12,426		)
Prepaid expenses and other current assets	73			(1,032		)
Accounts payable and accrued expenses	(67,197		)	21,452
Other	(403		)	1,671
Net cash provided by operating activities	63,542			31,341
Investing activities:
Purchases of property, plant, and equipment, net	(75,998		)	(28,820		)
Acquisition of CSI	—			(825,000		)
Advances and other investing activities	(66		)	(823		)
Net cash used in investing activities	(76,064		)	(854,643		)
Financing activities:
Proceeds from long-term debt	53,109			572,778
Payments of long-term debt	(5,000		)	(93,584		)
Proceeds from issuance of partnership common units	—			391,798
Distributions	(50,956		)	(21,447		)
Financing costs	—			(22,485		)
Contribution from general partner	—			8,405
Net cash provided by (used in) financing activities	(2,847		)	835,465
Effect of exchange rate changes on cash	(392		)	(493		)
Increase (decrease) in cash and cash equivalents	(15,761		)	11,670
Cash and cash equivalents at beginning of period	34,066			9,477
Cash and cash equivalents at end of period	$	18,305		$	21,147
Supplemental cash flow information:
Interest paid	$	30,950		$	—
Income taxes paid	$	2,117		$	1,784

See Notes to Consolidated Financial Statements

CSI Compressco LP

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

We are a provider of compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage. We also sell standard and custom-designed compressor packages and oilfield fluid pump systems, 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 countries, including Mexico, Canada, and Argentina. We design and fabricate a majority of our compressor packages and use these compressor packages in conjunction with other equipment and personnel from affiliated companies to provide services to our customers.

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 September 30, 2015, and for the three and nine month periods ended September 30, 2015 and 2014, include all normal recurring adjustments that are necessary to provide a fair statement of our results for the interim periods. Operating results for the period ended September 30, 2015 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2015.

Results of operations for the three and nine month periods ended September 30, 2015 and 2014, reflect the impact of our acquisition of Compressor Systems, Inc. ("CSI"), a Delaware corporation, on August 4, 2014. For further discussion of the acquisition, see Note B - Acquisition.

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 generally accepted accounting principles for complete financial statements. These financial statements should be read in connection with the financial statements for the year ended December 31, 2014, and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March 19, 2015.

Certain previously reported financial information has been reclassified to conform to the current year period’s presentation. The impact of such reclassifications was not significant to the prior year period’s overall presentation. These reclassifications include the final allocation of the purchase price of CSI. See Note B - Acquisition for further discussion.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 and expenses during the reporting period. For further discussion of fair value measurements in connection with the allocation of the purchase price of the CSI acquisition, see Note B - Acquisition. Actual results could differ from those estimates, and such differences could be material.

Cash Equivalents

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

Foreign Currencies

We have designated the Canadian dollar and Argentine peso as the functional currencies for our operations in Canada and Argentina, respectively. We are exposed to fluctuations between the U.S. dollar and certain foreign

currencies, including the Canadian dollar, the Mexican peso, and the Argentine peso, as a result of our international operations. Foreign currency exchange gains and (losses) are included in Other Expense and totaled $(1.0) million and $(2.7) million during the three and nine month periods ended September 30, 2015, respectively, and $(0.4) million and $(1.0) million during the three and nine month periods ended September 30, 2014, respectively.

Inventories

Inventories consist primarily of compressor package parts and supplies and work in progress and are stated at the lower of cost or market 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. Work in progress inventories consist primarily of new compressor units located at our fabrication facility in Midland, Texas. Significant components of inventories as of September 30, 2015, and December 31, 2014, are as follows:



	September 30, 2015		December 31, 2014
	(In Thousands)
Parts and supplies	32,435		43,202
Work in progress	39,666		70,141
Total inventories	$	72,101	$	113,343

Compression and Related Services Revenues and Costs

Our compression and related services revenues include revenues from our U.S. corporate subsidiaries' operating lease agreements with customers. For the three and nine month periods ended September 30, 2015 and 2014, the following operating lease revenues and associated costs were included in compression and related service revenues and cost of compression and related services, respectively, in the accompanying consolidated statements of operations. As a result of our customers entering into compression service contracts, our revenues from rental contracts have decreased during the three months ended September 30, 2015 compared to the prior year period.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(In Thousands)
Rental revenue	$	21,564	$	30,293	$	100,058	$	38,019
Cost of rental revenue	$	10,843	$	15,370	$	53,049	$	20,212

Earnings Per Common and Subordinated Unit

The computations of earnings per common and subordinated unit are based on the weighted average number of common and subordinated units, respectively, outstanding during the applicable period. Our subordinated units met the definition of a participating security, and, therefore, we are required to use the two-class method in the computation of earnings per unit. Effective August 18, 2014, all of our 6,273,970 subordinated units were automatically converted into common units on a one-for-one basis. Basic earnings per common and subordinated unit are determined by dividing net income (loss) allocated to the common units and subordinated units, respectively, 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 and subordinated units, respectively, during the period.

When computing earnings per common and subordinated unit under the two-class method when distributions are greater than earnings, the amount of the distribution is deducted from net income and the excess of distributions over earnings is allocated between the General Partner, common, and subordinated units based on how our partnership agreement allocates net losses.

When earnings are greater than distributions, we determine cash distributions based on available cash and determine the actual incentive distributions allocable to our General Partner based on actual distributions. When computing earnings per common and subordinated unit, the amount of the assumed incentive distribution rights, if

any, is deducted from net income and allocated to our General Partner for the period to which the calculation relates. The remaining amount of net income, after deducting the assumed incentive distribution rights, is allocated between the General Partner, common and subordinated units based on how our Partnership Agreement allocates net earnings.

Diluted earnings per unit are computed using the treasury stock method, which considers the potential issuance of limited partner units. Unvested phantom units are not included in basic earnings per unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per unit. For the three and nine months ended September 30, 2015, approximately 289,000 and 274,000 incremental phantom units, respectively, were excluded from the calculation of diluted units because the impact was anti-dilutive.

Accumulated Other Comprehensive Income

Certain of our international operations maintain their accounting records in the local currencies that are their functional currencies. For these operations, the functional currency financial statements are converted to United States dollar equivalents, with the effect of the foreign currency translation adjustment reflected as a component of accumulated other comprehensive income. Accumulated other comprehensive income is included in partners’ capital in the accompanying consolidated balance sheets and consists of the cumulative currency translation adjustments associated with such international operations. Activity within accumulated other comprehensive income during the three and nine month periods ended September 30, 2015 and 2014, is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(In Thousands)
Balance, beginning of period	$	(5,013	)	$	(2,478	)	$	(3,336	)	$	413
Foreign currency translation adjustment	(324		)	(506		)	(2,001		)	(3,397		)
Balance, end of period	$	(5,337	)	$	(2,984	)	$	(5,337	)	$	(2,984	)

Activity within accumulated other comprehensive income includes no reclassifications to net income.

Allocation of Net Income (Loss)

Our net income (loss) is allocated to partners’ capital accounts in accordance with the provisions of our partnership agreement.

Distributions

On January 20, 2015, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended December 31, 2014 of $0.485 per unit. This distribution equates to a distribution of $1.94 per outstanding unit on an annualized basis. This cash distribution was paid on February 13, 2015, to all unitholders of record as of the close of business on January 31, 2015.

On April 21, 2015, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended March 31, 2015 of $0.495 per unit. This distribution equates to a distribution of $1.98 per outstanding unit on an annualized basis. This cash distribution was paid on May 15, 2015 to all unitholders of record as of the close of business on May 1, 2015.

On July 20, 2015, the board of directors of our General Partner declared a cash distribution attributable to the quarter June 30, 2015 of $0.500 per unit. This distribution equates to a distribution of $2.00 per outstanding unit on an annualized basis. This cash distribution was paid on August 14, 2015 to all unitholders of record as of the close of business on July 31, 2015.

Subsequent to September 30, 2015, on October 19, 2015, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended September 30, 2015 of $0.5025 per unit. The distribution equates to a distribution of $2.01 per outstanding unit on an annualized basis. This cash distribution is to be paid on November 13, 2015 to all unitholders of record as of the close of business on October 30, 2015.

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 generally accepted accounting principles, 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, to the extent 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 utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets and goodwill (a level 3 fair value measurement). Fair value measurements may also be utilized on a nonrecurring basis, such as for the impairment of long-lived assets, including goodwill (a level 3 fair value measurement). The fair value of our financial instruments, which may include cash, accounts receivable, short-term borrowings, and variable-rate long-term debt pursuant to our bank credit agreement, approximate their carrying amounts. The fair values of our publicly tradable long-term 7.25% Senior Notes at September 30, 2015 were approximately $287.0 million (a level 2 fair value measurement). Prior to the closing of a public exchange offer on July 20, 2015, and as of December 31, 2014, the fair value of our 7.25% Senior Notes were approximately $354.9 million (a level 2 fair value measurement). These fair values compared to an aggregate principal amount of $350.0 million, as current rates on those dates were different from the stated interest rates on the 7.25% Senior Notes. We calculate the fair value of our 7.25% Senior Notes as of December 31, 2014 internally, using current market conditions and average cost of debt.

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 as determined by our counterparty financial institution (a level 2 fair value measurement). A summary of these fair value measurements as of September 30, 2015 is as follows:



			Fair Value Measurements Using
Description	Total as of September 30, 2015		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)
Asset for foreign currency derivative contracts	$	41	$	—	$	41	$	—
	$	41

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers" (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in the Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of the ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU was originally scheduled to be effective for the first quarter in fiscal 2017, however, in July 2015, the FASB voted to approve a one year deferral of effectiveness of the ASU to annual periods beginning after December 15, 2017, and interim periods within those years, under either full or modified

retrospective adoption. We are currently assessing the potential effects of these changes to our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern” (Topic 250). The ASU provides guidance on management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and in certain circumstances to provide related footnote disclosures. The ASU is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In January 2015, the FASB issued ASU No. 2015-01, “Income Statements - Extraordinary and Unusual Items” (Sub-Topic 225-20), which eliminates from U.S. GAAP the concept of extraordinary items. The ASU eliminates the separate presentation of extraordinary items on the income statement, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or occurring infrequently. The ASU is effective for the annual period beginning after December 15, 2015 and interim periods within those annual periods, with early adoption permitted, and may be applied prospectively or retrospectively. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. The ASU requires entities that have historically presented debt issuance costs as an asset to present those costs as a direct deduction from the carrying amount of the related debt liability. This presentation will result in the debt issuance costs being presented the same way debt discounts have historically been handled. The ASU does not change the recognition, measurement, or subsequent measurement guidance for debt issuance costs. The ASU is effective for the annual period beginning after December 15, 2015 and interim periods within those annual periods and is to be applied retrospectively. Early adoption is permitted. We plan to adopt this change retrospectively, and do not expect the adoption of this standard to have a material impact on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory” (Topic 330), which simplifies the subsequent measurement of inventory by requiring entities to measure inventory at the lower of cost or net realizable value, except for inventory measured using the last-in, first-out (LIFO) or the retail inventory methods. The ASU requires entities to compare the cost of inventory to one measure - net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The ASU is effective for the annual period beginning after December 15, 2015 and interim periods within those annual periods, with early adoption permitted, and is to be applied prospectively. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, “Simplifying the Accounting for Measurement Period Adjustments” (Topic 805), which requires that adjustments to provisional amounts identified during the measurement period of a business combination be recognized in the reporting period in which those adjustments are determined, including the effect on earnings, if any, calculated as if the accounting had been completed at the acquisition date. The ASU eliminates the previous requirement to retrospectively account for such adjustments and requires additional disclosures related to the income statement effects of adjustments to provisional amounts identified during the measurement period. The ASU is effective for the annual period beginning after December 15, 2015 and interim periods within those annual periods, with early adoption permitted, and is to be applied prospectively. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

NOTE B – ACQUISITION

Acquisition of Compressor Systems, Inc.

On August 4, 2014, pursuant to a stock purchase agreement dated July 20, 2014, one of our subsidiaries acquired all of the outstanding capital stock of CSI for $825.0 million cash (the "CSI Acquisition"). Prior to the acquisition, CSI owned one of the largest fleets of natural gas compressor packages in the United States. Headquartered in Midland, Texas, CSI fabricates, sells, and maintains natural gas compressors and provides a full range of compression products and services that covers compression needs throughout the entire natural gas production and transportation cycle to natural gas and oil producing clients. CSI derives revenues through three primary business lines: compression and related services, equipment and parts sales, and aftermarket services. Strategically, the acquisition affords us the opportunity to capture significant synergies associated with our product and service offerings and our fabrication operations, further penetrate new and existing markets, and to achieve administrative efficiencies and other strategic benefits.

Our allocation of the purchase price to the estimated fair value of CSI's net assets is as follows (in thousands):



Current assets	$	101,411
Property and equipment	571,706
Intangible assets	68,000
Goodwill	161,387
Total assets acquired	902,504

Current liabilities	77,504
Total liabilities assumed	77,504
Net assets acquired	$	825,000

The allocation of purchase price includes approximately $161.4 million allocated to deductible goodwill recorded, and is supported by the strategic benefits discussed above that are expected to be generated from the acquisition. Adjustments to the allocation of purchase price affecting inventory, property, plant, and equipment, intangible assets, and other current assets and liabilities have been reflected in the accompanying consolidated balance sheets as of September 30, 2015 and December 31, 2014. The adjustment to the previously presented goodwill balance as of December 31, 2014 was $0.1 million. These adjustments to the allocation of purchase price for long-lived assets did not have a material impact on the depreciation and amortization of these assets. The acquired property, plant, and equipment is stated at fair value, and depreciation of the acquired property, plant, and equipment is computed using the straight-line method over the estimated useful lives of each asset. Buildings are depreciated using useful lives of 15 to 30 years. Machinery and equipment is depreciated using useful lives of 2 to 20 years. Automobiles and trucks are depreciated using useful lives of 3 to 4 years. The acquired intangible assets represents approximately $33.7 million for trademarks/trade names, approximately $21.4 million for customer relationships, and approximately $12.9 million for other intangible assets that are stated at estimated fair value and are amortized on a straight-line basis over their estimated useful lives, which range from 2 to 15 years. These intangible assets are recorded net of approximately $9.7 million of accumulated amortization as of September 30, 2015.

For the three and nine month periods ended September 30, 2014, our revenues, depreciation and amortization, and pretax earnings included $61.0 million, $9.6 million, and $6.4 million, respectively, associated with the CSI Acquisition after the closing on August 4, 2014. In addition, CSI Acquisition-related costs of approximately $2.1 million and $3.0 million were incurred during the three and nine month periods ended September 30, 2014, respectively, consisting of external legal fees and due diligence costs. These costs have been recognized in selling, general, and administrative expenses in the consolidated statements of operations. Approximately $16.6 million of deferred financing costs were incurred in connection with the CSI Acquisition and included in Other Assets as of the acquisition date, and is being amortized over the term of the related debt. An additional $6.8 million of interim financing costs related to the acquisition were incurred and reflected in other expense during the nine months ended September 30, 2014.

Pro Forma Financial Information

The pro forma information presented below has been prepared to give effect to the CSI Acquisition as if it had occurred at the beginning of the periods presented and includes the impact of the allocation of the purchase price for the CSI Acquisition on revenues, depreciation and amortization, and net income. The pro forma information is presented for illustrative purposes only and is based on estimates and assumptions we deemed appropriate. The pro forma information is not necessarily indicative of the historical results that would have been achieved if the acquisition had occurred in the past, and our operating results may have been different from those reflected in the pro forma information below. Therefore, the pro forma information should not be relied upon as an indication of the operating results that we would have achieved if the transaction had occurred at the beginning of the period presented or the future results that we will achieve after the transaction.



	Three Months Ended September 30,		Nine Months Ended September 30,
	2014		2014
	(In Thousands, Except Per Unit Amounts)

Revenues	$	133,441	$	365,708
Depreciation and amortization	18,864		55,866
Net income	4,702		10,985

Per share information:
Net income per common unit:
Basic and diluted	$	0.14	$	0.50

Net income per subordinated unit:
Basic and diluted	$	0.14	$	0.50

NOTE C – LONG-TERM DEBT AND OTHER BORROWINGS

Long-term debt consists of the following:



		September 30, 2015		December 31, 2014
	Scheduled Maturity	(In Thousands)
Credit Agreement	August 4, 2019	$	243,000	$	195,000
7.25% Senior Notes (presented net of the unamortized discount of $4.7 million as of September 30, 2015 and $5.0 million as of December 31, 2014)	August 15, 2022	345,349		344,961
		588,349		539,961
Less current portion		—		—
Total long-term debt		$	588,349	$	539,961

We are in compliance with all covenants and conditions of our debt agreements as of September 30, 2015.

NOTE D – MARKET RISKS AND DERIVATIVE CONTRACTS

We are exposed to financial and market risks that affect our businesses. 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. As a result of our variable rate bank credit facility, we face market risk exposure related to changes in applicable interest rates. We have concentrations of credit risk as a result of trade receivables owed to us by companies in the energy industry. Our financial risk management activities may at times involve, among other measures, the use of derivative financial instruments, such as swap and collar agreements, to hedge the impact of market price risk exposures.

Foreign Currency Derivative Contracts

As of September 30, 2015, we had the following foreign currency derivative contracts outstanding relating to a portion of our foreign operations:



Derivative Contracts	US Dollar Notional Amount		Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward sale Mexican peso	$	3,936	17.06	10/16/2015

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 instruments are based on quoted market values as reported to us by our counterparty (a level 2 fair value measurement). The fair values of our foreign currency derivative instruments as of September 30, 2015 and December 31, 2014, are as follows:



Foreign currency derivative instruments	Balance Sheet	Fair Value at
Foreign currency derivative instruments	Location	September 30, 2015		December 31, 2014
		(In Thousands)
Forward sale contracts	Current assets	$	41	$	—
Net asset		$	41	$	—

None of the foreign currency derivative contracts 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 nine month periods ended September 30, 2015, we recognized approximately $0.2 million and $0.4 million, respectively, of net gains associated with our foreign currency derivative program, and such amount is included in other expense, net, in the accompanying consolidated statement of operations. During the three and nine month periods ended September 30, 2014, we recognized approximately $0.2 million and $0.0 million, respectively, of net gains in other income (expense) associated with our foreign currency derivative program.

NOTE E – RELATED PARTY TRANSACTIONS

Omnibus Agreement

On June 20, 2014, the Partnership, our General Partner and TETRA entered into a First Amendment to Omnibus Agreement (the "First Amendment"). The First Amendment amended the Omnibus Agreement previously entered into on June 20, 2011 (as amended, the "Omnibus Agreement") to extend the term thereof. The Omnibus Agreement will terminate on the earlier of (i) a change of control of the General Partner or TETRA, or (ii) upon any party providing at least 180 days prior written notice of termination.

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.

Under the terms of the Omnibus Agreement, we or TETRA may, but neither of us are under any obligation to, perform for the other such production enhancement or other oilfield services on a subcontract basis as are

needed or desired by the other, for such periods of time and in such amounts as may be mutually agreed upon by TETRA and our General Partner. Any such services are required to be performed on terms that are (i) approved by the conflicts committee of our General Partner’s board of directors, (ii) no less favorable to us than those generally being provided to or available from non-affiliated third parties, as determined by our General Partner, or (iii) fair and reasonable to us, taking into account the totality of the relationships between TETRA and us (including other transactions that may be particularly favorable or advantageous to us), as determined by our General Partner.

Under the terms of the Omnibus Agreement, we or TETRA may, but neither of us are under any obligation to, sell, lease or exchange on a like-kind basis to the other such production enhancement or other oilfield services equipment as is needed or desired to meet either of our production enhancement or other oilfield services obligations, in such amounts, upon such conditions and for such periods of time, if applicable, as may be mutually agreed upon by TETRA and our General Partner. Any such sales, leases, or like-kind exchanges are required to be on terms that are (i) approved by the conflicts committee of our General Partner’s board of directors, (ii) no less favorable to us than those generally being provided to or available from non-affiliated third parties, as determined by our General Partner, or (iii) fair and reasonable to us, taking into account the totality of the relationships between TETRA and us (including other transactions that may be particularly favorable or advantageous to us), as determined by our General Partner. In addition, unless otherwise approved by the conflicts committee of our General Partner’s board of directors, TETRA may purchase newly fabricated equipment from us at a negotiated price, provided that such price may not be less than the sum of the total costs (other than any allocations of general and administrative expenses) incurred by us in fabricating such equipment plus a fixed margin percentage thereof, and TETRA may purchase from us previously fabricated equipment for a price that is not less than the sum of the net book value of such equipment plus a fixed margin percentage thereof.

This description is not a complete discussion of this agreement and is qualified in its entirety by reference to the full text of the complete agreement, which is filed, along with other agreements, as exhibits to our filings with the SEC.

TETRA and General Partner Ownership

To finance a portion of the $825.0 million CSI Acquisition purchase price, in 2014 we issued and sold 15,280,000 additional common units for net proceeds of $346.0 million (the "Common Unit Offering"). TETRA, through a subsidiary of our General Partner, purchased 1,390,290 of these common units for approximately $32.7 million. In addition, in connection with our Common Unit Offering, our General Partner made a $7.3 million capital contribution to us in order to maintain its approximate 2% general partnership interest in us. Following the August 11, 2014, exercise by the underwriters in the Common Unit Offering of their option to purchase 2,292,000 additional common units, our General Partner made an additional $1.1 million capital contribution in order to maintain its approximate 2% general partnership interest in us.

Prior to the Common Unit Offering and other transactions described above, TETRA's ownership in us was approximately 82% through its aggregate ownership of common units, subordinated units, and indirect general partner interest. Common units held by the public represented an approximately 18% ownership in us prior to the above transactions. However, following the CSI Acquisition in 2014, the completion of our Common Unit Offering, and the underwriters' exercise of their option to purchase additional common units, TETRA's ownership interest in us was reduced to approximately 44%, with the common units held by the public representing an approximate 56% interest in us. TETRA's ownership is through various wholly owned subsidiaries and consists of approximately 42% of the limited partner interests plus the approximately 2% general partner interest, through which it holds incentive distribution rights.

NOTE F – 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. We have a tax sharing agreement with TETRA with respect to the Texas franchise tax liability. The resulting state tax expense is included in the provision for income taxes. 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.

In connection with the CSI Acquisition, we and the seller of CSI made a joint Section 338(h) (10) election under the U.S. Internal Revenue Code to treat the purchase of CSI as an asset acquisition for U.S. federal income tax purposes. Accordingly, no U.S. federal deferred tax assets or liabilities were recorded as part of the acquisition.

NOTE G – 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.

NOTE H – SEGMENTS

ASC 280-10-50, “Operating Segments”, defines the characteristics of an operating segment as (i) being engaged in business activity from which it may earn revenues and incur expenses, (ii) being reviewed by the company's chief operating decision maker ("CODM") to make decisions about resources to be allocated and to assess its performance, and (iii) having discrete financial information. Although management of our General Partner reviews our products and services to analyze the nature of our revenue, other financial information, such as certain costs and expenses, and net income are not captured or analyzed by these items. Therefore discrete financial information is not available by product line and our CODM does not make resource allocation decisions or assess the performance of the business based on these items, but rather in the aggregate. Based on this, our General Partner believes that we operate in one business segment.

NOTE I — SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

The $350 million in aggregate principal amount of 7.25% Senior Notes are fully and unconditionally guaranteed, subject to certain customary release provisions, on a joint and several senior unsecured basis, by the following domestic restricted subsidiaries (each a "Guarantor Subsidiary" and collectively the "Guarantor Subsidiaries"):

Compressor Systems, Inc.

CSI Compressco Field Services International LLC

CSI Compressco Holdings LLC

CSI Compressco International LLC

CSI Compressco Leasing LLC

CSI Compressco Operating LLC

CSI Compressco Sub, Inc.

CSI Compression Holdings, LLC

Pump Systems International, Inc.

Rotary Compressor Systems, Inc.

As a result of these guarantees, we are presenting the following condensed consolidating financial information pursuant to Rule 3-10 of Regulation S-X. These schedules are presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions. The Other Subsidiaries column includes financial information for those subsidiaries that do not guarantee the 7.25% Senior Notes. In addition to the financial information of the Partnership, financial information of the Issuers includes CSI Compressco Finance Inc., which had no assets or operations for any of the periods presented.

Condensed Consolidating Balance Sheet

September 30, 2015

(In Thousands)



	Issuers		Guarantor Subsidiaries		Other Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets	$	267	$	128,350	$	26,310	$	—		$	154,927
Property, plant, and equipment, net	—		683,153		22,937		—			706,090
Investments in subsidiaries	536,083		16,587		—		(552,670		)	—
Intangible and other assets, net	8,696		293,342		5,364		—			307,402
Intercompany receivables	309,859		—		—		(309,859		)	—
Total non-current assets	854,638		993,082		28,301		(862,529		)	1,013,492
Total assets	$	854,905	$	1,121,432	$	54,611	$	(862,529	)	$	1,168,419

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities	$	5,938	$	54,318	$	4,613	$	—		$	64,869
Amounts payable to affiliates	44		3,327		4,497		—			7,868
Long-term debt	345,350		242,999		—		—			588,349
Intercompany payables	—		281,850		28,009		(309,859		)	—
Other long-term liabilities	—		2,855		905		—			3,760
Total liabilities	351,332		585,349		38,024		(309,859		)	664,846
Total partners' capital	503,573		536,083		16,587		(552,670		)	503,573
Total liabilities and partners' capital	$	854,905	$	1,121,432	$	54,611	$	(862,529	)	$	1,168,419

Condensed Consolidating Balance Sheet

December 31, 2014

(In Thousands)



	Issuers		Guarantor Subsidiaries		Other Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets	$	28	$	197,485	$	34,277	$	—		$	231,790
Property, plant, and equipment, net	—		669,145		16,851		—			685,996
Investments in subsidiaries	562,290		17,303		—		(579,593		)	—
Intangible and other assets, net	9,650		304,452		1,773		—			315,875
Intercompany receivables	335,151		—		—		(335,151		)	—
Total non-current assets	907,091		990,900		18,624		(914,744		)	1,001,871
Total assets	$	907,119	$	1,188,385	$	52,901	$	(914,744	)	$	1,233,661

LIABILITIES AND PARTNERS' CAPITAL
Current liabilities	$	11,634	$	117,777	$	5,677	$	—		$	135,088
Amounts payable to affiliates	44		987		5,449		—			6,480
Long-term debt	344,961		195,000		—		—			539,961
Intercompany payables	—		311,389		23,762		(335,151		)	—
Other long-term liabilities	199		942		710		—			1,851
Total liabilities	356,838		626,095		35,598		(335,151		)	683,380
Total partners' capital	550,281		562,290		17,303		(579,593		)	550,281
Total liabilities and partners' capital	$	907,119	$	1,188,385	$	52,901	$	(914,744	)	$	1,233,661

Condensed Consolidating Statement of Operations

and Comprehensive Income

Three Months Ended September 30, 2015

(In Thousands)



	Issuers			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	121,106		$	9,520		$	(1,702	)	$	128,924
Cost of revenues (excluding depreciation and amortization expense)	—			80,873			6,944			(1,702		)	86,115
Selling, general and administrative expense	455			9,404			610			—			10,469
Depreciation and amortization	—			19,848			762			—			20,610
Interest expense, net	6,475			1,726			—			—			8,201
Other expense, net	317			222			975			—			1,514
Equity in net income of subsidiaries	(8,866		)	(401		)	—			9,267			—
Income before income tax provision	1,619			9,434			229			(9,267		)	2,015
Provision (benefit) for income taxes	—			568			(172		)	—			396
Net income	1,619			8,866			401			(9,267		)	1,619
Other comprehensive income (loss)	(324		)	(324		)	(324		)	648			(324		)
Comprehensive income (loss)	$	1,295		$	8,542		$	77		$	(8,619	)	$	1,295

Condensed Consolidating Statement of Operations

and Comprehensive Income

Three Months Ended September 30, 2014

(In Thousands)



	Issuers			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	84,598		$	14,281		$	(2,987	)	$	95,892
Cost of revenues (excluding depreciation and amortization expense)	—			54,490			10,946			(2,987		)	62,449
Selling, general and administrative expense	482			8,891			790			—			10,163
Depreciation and amortization	—			12,945			531			—			13,476
Interest expense, net	3,233			1,765			—			—			4,998
Other expense, net	198			8,253			307			—			8,758
Equity in net income of subsidiaries	(1,312		)	(172		)	—			1,484			—
Income (loss) before income tax provision	(2,601		)	(1,574		)	1,707			(1,484		)	(3,952		)
Provision (benefit) for income taxes	—			(2,885		)	1,534			—			(1,351		)
Net income (loss)	(2,601		)	1,311			173			(1,484		)	(2,601		)
Other comprehensive income (loss)	(506		)	(506		)	(506		)	1,012			(506		)
Comprehensive income (loss)	$	(3,107	)	$	805		$	(333	)	$	(472	)	$	(3,107	)

Condensed Consolidating Statement of Operations

and Comprehensive Income

Nine Months Ended September 30, 2015

(In Thousands)



	Issuers			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	341,794		$	31,917		$	(15,433	)	$	358,278
Cost of revenues (excluding depreciation and amortization expense)	—			222,464			23,876			(15,433		)	230,907
Selling, general and administrative expense	1,809			28,858			1,605			—			32,272
Depreciation and amortization	—			58,308			2,919			—			61,227
Interest expense, net	19,416			4,652			—			—			24,068
Other expense, net	935			1,085			1,903			—			3,923
Equity in net income of subsidiaries	(26,750		)	(1,285		)	—			28,035			—
Income before income tax provision	4,590			27,712			1,614			(28,035		)	5,881
Provision for income taxes	—			962			329			—			1,291
Net income	4,590			26,750			1,285			(28,035		)	4,590
Other comprehensive income (loss)	(2,001		)	(2,001		)	(2,001		)	4,002			(2,001		)
Comprehensive income (loss)	$	2,589		$	24,749		$	(716	)	$	(24,033	)	$	2,589

Condensed Consolidating Statement of Operations

and Comprehensive Income

Nine Months Ended September 30, 2014

(In Thousands)



	Issuers			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	131,480		$	34,587		$	(8,257	)	$	157,810
Cost of revenues (excluding depreciation and amortization expense)	—			76,094			27,988			(8,257		)	95,825
Selling, general and administrative expense	919			15,840			2,506			—			19,265
Depreciation and amortization	—			19,783			1,126			—			20,909
Interest expense, net	3,233			2,097			(28		)	—			5,302
Other expense, net	198			8,377			1,220			—			9,795
Equity in net income of subsidiaries	(11,247		)	(525		)	—			11,772			—
Income before income tax provision	6,897			9,814			1,775			(11,772		)	6,714
Provision (benefit) for income taxes	—			(1,434		)	1,251			—			(183		)
Net income	6,897			11,248			524			(11,772		)	6,897
Other comprehensive income (loss)	(3,397		)	(3,397		)	(3,397		)	6,794			(3,397		)
Comprehensive income (loss)	$	3,500		$	7,851		$	(2,873	)	$	(4,978	)	$	3,500

Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2015

(In Thousands)



	Issuers			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	—		$	53,846		$	9,696		$	—		$	63,542
Investing activities:
Purchases of property, plant, and equipment, net	—			(64,472		)	(11,526		)	—			(75,998		)
Intercompany investment activity	50,956			—			—			(50,956		)	—
Advances and other investing activities	—			(66		)	—			—			(66		)
Net cash provided by (used in) investing activities	50,956			(64,538		)	(11,526		)	(50,956		)	(76,064		)
Financing activities:
Proceeds from long-term debt	—			53,109			—			—			53,109
Payments of long-term debt	—			(5,000		)	—			—			(5,000		)
Distributions	(50,956		)	—			—			—			(50,956		)
Intercompany contribution (distribution)	—			(50,956		)	—			50,956			—
Net cash provided by (used in) financing activities	(50,956		)	(2,847		)	—			50,956			(2,847		)
Effect of exchange rate changes on cash	—			—			(392		)	—			(392		)
Increase (decrease) in cash and cash equivalents	—			(13,539		)	(2,222		)	—			(15,761		)
Cash and cash equivalents at beginning of period	—			23,342			10,724			—			34,066
Cash and cash equivalents at end of period	$	—		$	9,803		$	8,502		$	—		$	18,305

Condensed Consolidating Statement of Cash Flows

Nine Months Ended September 30, 2014

(In Thousands)



	Issuers			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	15,387		$	15,057		$	897		$	—		$	31,341
Investing activities:
Purchases of property, plant, and equipment, net	—			(26,095		)	(2,725		)	—			(28,820		)
Acquisition of CSI	—			(825,000		)	—			—			(825,000		)
Intercompany investment activity	(378,756		)	(2,634		)	—			381,390			—
Advances and other investing activities	—			(823		)	—			—			(823		)
Net cash provided by (used in) investing activities	(378,756		)	(854,552		)	(2,725		)	381,390			(854,643		)
Financing activities:
Proceeds from long-term debt	344,778			228,000			—			—			572,778
Payments of long-term debt	—			(93,584		)	—			—			(93,584		)
Proceeds from issuance of partnership common units, net of underwriters' discount	391,798			—			—			—			391,798
Distributions	(21,447		)	—			—			—			(21,447		)
Payment of financing costs	(10,165		)	(12,320		)	—			—			(22,485		)
Intercompany contribution (distribution)	—			378,756			2,634			(381,390		)	—
Intercompany loan activity	(350,000		)	350,000			—			—			—
Contribution from general partner	8,405			—			—			—			8,405
Net cash provided by (used in) financing activities	363,369			850,852			2,634			(381,390		)	835,465
Effect of exchange rate changes on cash	—			—			(493		)	—			(493		)
Increase (decrease) in cash and cash equivalents	—			11,357			313			—			11,670
Cash and cash equivalents at beginning of period	—			4,339			5,138			—			9,477
Cash and cash equivalents at end of period	$	—		$	15,696		$	5,451		$	—		$	21,147

NOTE J – SUBSEQUENT EVENTS

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 filed with the SEC on March 19, 2015. This discussion includes forward-looking statements that involve certain risks and uncertainties.

Business Overview

The inclusion of a full three months of operations from the acquisition of Compressor Systems, Inc. ("CSI") (the "CSI Acquisition"), which closed on August 4, 2014, significantly impacted our revenues, results of operations, and operating cash flow during the three month period ended September 30, 2015 compared to the corresponding prior year period. Revenues generated by CSI during the third quarter of 2015 totaled approximately $100.6 million, compared to approximately $61.0 million for the portion of the third quarter of 2014 after the CSI Acquisition, increasing consolidated revenues for the third quarter of 2015 to $128.9 million, compared to consolidated revenues of $95.9 million for the third quarter of 2014. CSI revenues during the third quarter of 2015 included approximately $46.5 million of compression and related services revenue, approximately $7.0 million of aftermarket services revenues, and approximately $47.1 million of equipment and parts sales revenues.

Due to decreased oil and natural gas prices during the current year period compared to the corresponding prior year period, there has been a reduction in demand for our below-100 horsepower (HP) production enhancement compression services, including in liquids-rich resource plays and vapor recovery applications. As a result, the below-100 HP production enhancement compression service revenues decreased by approximately $5.3 million during the three month period ended September 30, 2015 compared to the corresponding prior year period. More than offsetting this decrease in below-100 HP demand, revenues from our high-HP compression services increased during the three month period ended September 30, 2015 compared to the corresponding prior year pro-forma three month period ended September 30, 2014. The pro-forma three month period ended September 30, 2014 includes the results of CSI for the entire quarter. We expect that oil and gas exploration spending and activity levels will continue to be decreased during the remainder of 2015 and continuing into 2016, compared to 2014. Although our compressor fleet horsepower utilization rate has decreased as of the end of each of the past three quarters, we feel the diversity of our compressor package fleet and the existing levels of natural gas production will continue to support the demand for our compressor packages and services, despite current prices for oil and natural gas. In addition, much of our current equipment sales fabrication backlog is associated with customer projects supporting gas gathering, midstream, and processing. Our fabrication backlog associated with new equipment sales has decreased significantly throughout the first nine months of 2015, to $46.1 million as of September 30, 2015 compared to $120.0 million as of December 31, 2014, as completed new equipment sales during the first nine months of 2015 have far exceeded new equipment sales orders. We expect orders for new equipment sales to continue to be decreased at least for the remainder of 2015 and continuing into early 2016, consistent with the level of natural gas industry spending and activity levels

Our total HP offering exceeded 1,160,000 as of September 30, 2015, and the diversity of our compressor fleet allows us to utilize a wide range of compressor packages (from 20 HP to 2,370 HP) to provide compression services to customers. The CSI Acquisition dramatically expanded our service and equipment sales offerings in the over-100 HP compression services market, complementing our existing strong presence in the below-100 HP compression services market. Strategically, the acquisition afforded us the opportunity to capture significant synergies associated with our service and product offerings and our fabrication operations, to further expand into new and existing markets, and to achieve administrative efficiencies and other strategic benefits. During the third quarter of 2015 we added approximately 22,000 of HP to our compressor fleet, with almost all of this growth related to over-800 HP compressor packages. Our over-800 HP compressor fleet packages have performed at a higher utilization rate than our below-100 HP and our 101-800 HP compressor fleet packages in the current economic environment.

The continued growth of our operations is particularly dependent upon our continued capital expenditure program. Capital expenditures during the first nine months of 2015 totaled $76.0 million and we anticipate that our total capital expenditures during all of 2015 will be approximately $100 million, including approximately $12 million of maintenance capital expenditures. Our growth capital expenditures continue to be focused on opportunities with our larger HP compressor fleet, with approximately 80% of our 2015 growth capital expenditures directed at the over-800 HP compressor package classes in response to the customer needs and our desire to capitalize on

positive growth opportunities. We plan to fund this continuing investment through undistributed operating cash flows, borrowings under our Credit Agreement, and potentially other sources, if necessary.

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, 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. 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 nine month periods ended September 30, 2015, is provided within the Results of Operations sections below.

EBITDA. We view 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 (compared to the prior month, prior year period, and to budget). We define EBITDA as earnings before interest, taxes, depreciation, and amortization. EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements, including investors, to:


•	assess our ability to generate available cash sufficient to make distributions to our 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 our competitors; and


•	determine our ability to incur and service debt and fund capital expenditures.

EBITDA should not be considered an alternative to net income, operating income, cash flows from operating activities, or any other measure of financial performance presented in accordance with generally accepted accounting principles ("GAAP"). Our EBITDA may not be comparable to EBITDA or similarly titled financial metrics of other entities, as other entities may not calculate EBITDA in the same manner as we do. Management compensates for the limitations of EBITDA as an analytical tool by reviewing the comparable GAAP measures, understanding the differences between the measures, and incorporating this knowledge into management’s decision-making processes. EBITDA should not be viewed as indicative of the actual amount 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.

The following table reconciles net income (loss) to EBITDA for the periods indicated:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
	(In Thousands)
Net income (loss)	$	1,619	$	(2,601	)	$	4,590	$	6,897
Provision (benefit) for income taxes	396		(1,351		)	1,291		(183		)
Depreciation and amortization	20,610		13,476			61,227		20,909
Interest expense, net	8,201		4,998			24,068		5,302
EBITDA	$	30,826	$	14,522		$	91,176	$	32,925

The following table reconciles cash flow from operating activities to EBITDA:



	Nine Months Ended September 30,
	2015			2014
	(In Thousands)
Cash flow from operating activities	$	63,542		$	31,341
Changes in current assets and current liabilities	7,764			2,907
Deferred income taxes	(1,258		)	1,207
Other non-cash charges	(2,142		)	(899		)
Financing expense	—			(6,750		)
Interest expense, net	24,068			5,302
Provision (benefit) for income taxes	1,291			(183		)
EBITDA	$	93,265		$	32,925

The CSI Acquisition has had, and is expected to continue to have, a significant impact on EBITDA going forward.

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 fleet as of such date. Management primarily uses this metric to determine our future need for additional compressor packages and to measure marketing effectiveness.

The following table sets forth our total horsepower in our fleet and our total horsepower in service as of the dates shown.



	September 30,
	2015	2014
Horsepower
Total horsepower in fleet	1,160,976	1,072,304
Total horsepower in service	951,268	920,379

Net Increases in Compression Fleet Horsepower. We measure the net increase in our compression fleet horsepower during a given period of time 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 in our compression fleet horsepower in service during a given period of time 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. Management uses these metrics to evaluate our operating performance and our relative size in the market.

Manufacturing and Backlog. Our equipment and parts sales business includes the fabrication and sale of standard compressor packages, custom-designed compressor packages, and oilfield fluid pump systems designed and fabricated primarily at our facilities in Midland, Texas and Oklahoma City, Oklahoma. The equipment is fabricated to applicable customer and standard specifications. Our custom fabrication projects are typically greater in size and scope than standard fabrication projects, requiring more labor, materials, and overhead resources. Our fabrication business requires diligent planning of those resources and project and backlog management in order to meet the customer delivery dates and performance criteria. As of September 30, 2015, our fabrication backlog was approximately $46.1 million, of which approximately $23.4 million is expected to be recognized through the year ended December 31, 2015, based on title passing to the customer, the customer assuming the risks of ownership, reasonable assurance of collectability, and delivery occurring as directed by our customer. Our fabrication backlog consists of firm customer orders for which a purchase or work order has been received, satisfactory credit or financing arrangements exists, and delivery has been scheduled. Our fabrication backlog is a measure of marketing effectiveness that allows us to plan future labor needs and measure our success in winning bids from our customers.

Critical Accounting Policies

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 Form 10-K for the year ended December 31, 2014, except as described below. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. We periodically evaluate these estimates and judgments, including those related to potential impairments of long-lived assets (including goodwill), the useful life of long-lived assets, the collectability of accounts receivable, and the allocation of acquisition purchase price. Our estimates are based on historical experience and on future expectations that we believe are reasonable. The fair values of a large portion of our total assets and liabilities are measured using significant unobservable inputs. The combination of these factors forms the basis for judgments made about the carrying values of assets and liabilities that are not readily apparent from other sources. 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.

Impairment of Goodwill

Goodwill represents the excess of cost over the fair value of the net assets of businesses acquired in purchase transactions. We perform a goodwill impairment test on an annual basis or whenever indicators of impairment are present. We perform the annual test of goodwill impairment following the fourth quarter of each year, and determined that no impairment of goodwill was required as of December 31, 2014. Our annual assessment for goodwill impairment begins with a qualitative assessment of whether it is “more likely than not” that the fair value of our business is less than its carrying value. This qualitative assessment requires the evaluation, based on the weight of evidence, of the significance of all identified events and circumstances. Based on this qualitative assessment, we determined that due to the decrease in the market price of our common units that resulted in our market capitalization being less than the book value of our consolidated partners' capital as of December 31, 2014, it was “more likely than not” that the fair value of our business was less than its carrying value as of December 31, 2014.

When the qualitative analysis indicates that it is “more likely than not” that our business’ fair value is less than its carrying value, the resulting goodwill impairment test consists of a two-step accounting test being performed. The first step of the impairment test is to compare the estimated fair value with the recorded net book value (including goodwill) of our business. If the estimated fair value is higher than the recorded net book value, no impairment is deemed to exist and no further testing is required. If, however, the estimated fair value is below the recorded net book value, then a second step must be performed to determine the goodwill impairment required, if any. In this second step, the estimated fair value from the first step is used as the purchase price in a hypothetical acquisition. Purchase business combination accounting rules are followed to determine a hypothetical purchase price allocation to assets and liabilities. The residual amount of goodwill that results from this hypothetical purchase price allocation is compared to the recorded amount of goodwill, and the recorded amount is written down to the hypothetical amount, if lower. Our estimates of our fair value, if required, are based on a combination of an income approach and a market approach. These estimates are imprecise and subject to our estimates of the future cash flows of our business and our judgment as to how these estimated cash flows translate into our business’ estimated fair value. These estimates and judgments are affected by numerous factors, including the general economic environment at the time of our assessment, which affects our overall market capitalization. If we overestimate the fair value of our business, the balance of our goodwill asset may be overstated. Alternatively, if our estimated fair values are understated, an impairment might be recognized unnecessarily or in excess of the appropriate amount.

During the first nine months of 2015, global oil and natural gas commodity prices, particularly crude oil, were significantly decreased compared to early 2014. These decreases in commodity prices have had, and are expected to continue to have, a negative impact on industry drilling and capital expenditure activity, which affects demand for a portion of our products and services. A decrease in the price of our common units during the last half of 2014 caused an overall reduction in our market capitalization. Our market capitalization as of September 30, 2015 was also less than the recorded net book value, and uncertain market conditions resulting from current oil and natural gas prices continue. As a result, we concluded that it was "more likely than not" that the fair value of our business was less than its carrying value as of September 30, 2015. We have updated our internal business outlook to consider the current global economic environment that affects our operations. As part of the first step of goodwill impairment testing, we updated our assessment of our future cash flows, applying expected long-term growth rates, discount rates, and terminal values that we consider reasonable. We have calculated a present value

of the cash flows to arrive at an estimate of fair value under the income approach, and then used the market approach to corroborate this value. As a result of these estimates, we determined that there was no impairment of goodwill as of September 30, 2015. However, because our estimated fair value exceeded our carrying value by approximately 5% as of September 30, 2015, there is a reasonable possibility that the $233.6 million of goodwill may be impaired in a future period resulting in a non-cash charge to earnings, and the amount of such impairment may be material. Specific uncertainties affecting our estimated fair value include the impact of competition, the prices of oil and natural gas, future overall activity levels in the regions in which we operate, the activity levels of our significant customers, and other factors affecting the rate of our future growth. These factors will continue to be reviewed and assessed going forward. Adverse developments with regard to these factors could have a further negative effect on our fair value.

Results of Operations

Three months ended September 30, 2015 compared to three months ended September 30, 2014



	Three Months Ended September 30,
						Period-to-Period Change			Percentage of Total Revenues				Period-to-Period Change
Consolidated Results of Operations	2015		2014			2015 vs. 2014			2015		2014		2015 vs. 2014
	(In Thousands)
Revenues:
Compression and related services	72,766		58,300			14,466			56.4	%	60.8	%	24.8	%
Aftermarket services	7,013		6,595			418			5.4	%	6.9	%	6.3	%
Equipment and parts sales	49,145		30,997			18,148			38.1	%	32.3	%	58.5	%
Total revenues	128,924		95,892			33,032			100.0	%	100.0	%	34.4	%
Cost of revenues:
Cost of compression and related services	36,041		30,561			5,480			28.0	%	31.9	%	17.9	%
Cost of aftermarket services	5,407		5,266			141			4.2	%	5.5	%	2.7	%
Cost of equipment and parts sales	44,667		26,622			18,045			34.6	%	27.8	%	67.8	%
Total cost of revenues	86,115		62,449			23,666			66.8	%	65.1	%	37.9	%
Selling, general and administrative expense	10,469		10,163			306			8.1	%	10.6	%	3.0	%
Depreciation and amortization	20,610		13,476			7,134			16.0	%	14.1	%	52.9	%
Interest expense, net	8,201		4,998			3,203			6.4	%	5.2	%	64.1	%
Other expense, net	1,514		8,758			(7,244		)	1.2	%	9.1	%	(82.7	)%
Income (loss) before income taxes	2,015		(3,952		)	5,967			1.6	%	(4.1	)%	151.0	%
Provision (benefit) for income taxes	396		(1,351		)	1,747			0.3	%	(1.4	)%	129.3	%
Net income (loss)	$	1,619	$	(2,601	)	$	4,220		1.3	%	(2.7	)%	162.2	%

Revenues

Revenues during the current year quarter increased compared to the prior year period, primarily due to the acquired operations of CSI. CSI compression and related services, aftermarket services, and equipment and part sales revenues during the current year quarter include a full three-month period of activity compared to approximately two months of activity in the prior year quarter , due to the August 4, 2014 acquisition date of CSI. Compression and related services revenues increased by $14.5 million, of which approximately $19.8 million of the increase was attributable to the CSI Acquisition. Service revenues from pre-CSI Acquisition production enhancement operations decreased approximately $5.3 million due to the significant decrease in oil and natural gas prices compared to the prior year quarter. Decreased commodity prices have adversely impacted the demand for below-100 horsepower production enhancement compression and related services applications, including for liquids-rich resource plays and vapor recovery applications. Demand for compression and related services has been driven by the significant investments made in recent years related to increased exploration and production of oil and natural gas and the related infrastructure, including midstream gas transmission, gathering, processing, vapor recovery, and wellhead compression. We have continued to increase the overall size of our compressor

package service fleet, particularly our high-horsepower fleet, to serve the current levels of demand for midstream gas transmission, gathering, processing, and other services applications.

In addition to the increase in consolidated compression and related services and aftermarket services revenues, there was an increase of approximately $18.1 million in revenues from the sales of equipment and parts during the current year quarter, compared to the prior year quarter . This increase is primarily due to the acquisition of CSI, which generated approximately $19.4 million of increased equipment and parts sales revenues for the full three-months during the current year quarter. This increase was partially offset by decreased equipment and parts sales from our non-CSI operations. The level of revenues from equipment and parts sales is volatile and typically difficult to forecast, as these revenues are tied to specific projects that vary in scope, design, complexity, and customer needs. In comparison, our revenues from compression and related services and aftermarket services are typically more consistent and predictable. As reflected by the decreased level of new equipment sales fabrication backlog as of September 30, 2015, we expect future new equipment sales revenues to decrease compared to prior periods.

Cost of revenues

The increase in cost of compression and related services revenues during the current year quarter, compared to the prior year quarter was primarily due to the impact for the full quarter of the CSI Acquisition, which generated approximately $21.6 million of cost during the current year quarter. This increase was partially offset by decreased activity for pre-CSI operations. Cost of compression and related services as a percentage of compression and related services revenues was 49.5% during the current year quarter, compared to 52.4% from the prior year period. We are continuing to capture additional synergies anticipated as part of the integration of CSI's operations. These efforts will continue going forward, and are expected to result in increased cost efficiencies in future periods.

Cost of equipment and parts sales increased compared to the prior year due to the increased sales, primarily related to the CSI Acquisition, discussed above.

Selling, general and administrative expense

Selling, general and administrative expense increased slightly for the current year quarter, compared to the prior year quarter. Largely due to the inclusion of a full three months of administrative costs of CSI, employee expenses increased by approximately $1.1 million. In addition, allocated costs from TETRA pursuant to our Omnibus Agreement increased approximately $0.9 million as a result of increased administrative requirements following the CSI Acquisition. These increases were largely offset by $2.1 million of decreased professional fees, primarily from transaction costs associated with the CSI Acquisition that were incurred during the prior year quarter. The ongoing efforts to integrate the administrative functions of CSI are expected to result in further efficiencies going forward. Selling, general and administrative expense as a percentage of revenues decreased compared to the prior year quarter, reflecting the increased efficiency of our expanded operations.

Depreciation and amortization

Depreciation and amortization expense primarily consists of the depreciation of compressor packages in our service fleet. In addition, it includes the depreciation of other operating equipment and facilities. Depreciation and amortization expense increased compared to the prior year period primarily as a result of approximately $7.0 million of increased depreciation and amortization related to the operations of CSI for the full three month current year quarter, and includes the impact of the allocation of the purchase price to the estimated fair values of CSI's property, plant, and equipment and identified intangible assets.

Interest expense

Interest expense increased compared to the prior year quarter due to increased borrowings under the Credit Agreement and the issuance of the 7.25% Senior Notes in connection with the CSI Acquisition. As of September 30, 2015, our total outstanding borrowing under our Credit Agreement was $243.0 million. Interest expense is expected to continue to be increased compared to prior year periods as a result of the borrowings associated with the financing of capital expenditures.

Other expense, net

Other expense, net, was $1.5 million during the current year quarter compared to $8.8 million of expense during the corresponding prior year quarter, primarily due to approximately $6.7 million of interim financing cost associated with the CSI Acquisition that were incurred during the prior year quarter.

Provision for income taxes

Our U.S. operations are not subject to U.S. federal income tax other than with respect to the operations that are conducted through our taxable U.S. corporate subsidiaries. We also incur state and local income taxes in certain states, and we incur income taxes related to our foreign operations in the foreign countries in which we operate.

Results of Operations

Nine months ended September 30, 2015 compared to nine months ended September 30, 2014



	Nine Months Ended September 30,
						Period-to-Period Change			Percentage of Total Revenues				Period-to-Period Change
Consolidated Results of Operations	2015		2014			2015 vs. 2014			2015		2014		2015 vs. 2014
	(In Thousands)
Revenues:
Compression and related services	220,880		116,270			104,610			61.7	%	73.7	%	90.0	%
Aftermarket services	21,134		6,595			14,539			5.9	%	4.2	%	220.5	%
Equipment and parts sales	116,264		34,945			81,319			32.5	%	22.1	%	232.7	%
Total revenues	358,278		157,810			200,468			100.0	%	100.0	%	127.0	%
Cost of revenues:
Cost of compression and related services	110,509		61,942			48,567			30.8	%	39.3	%	78.4	%
Cost of aftermarket services	17,774		5,266			12,508			5.0	%	3.3	%	237.5	%
Cost of equipment and parts sales	102,624		28,617			74,007			28.6	%	18.1	%	258.6	%
Total cost of revenues	230,907		95,825			135,082			64.4	%	60.7	%	141.0	%
Selling, general and administrative expense	32,272		19,265			13,007			9.0	%	12.2	%	67.5	%
Depreciation and amortization	61,227		20,909			40,318			17.1	%	13.2	%	192.8	%
Interest expense, net	24,068		5,302			18,766			6.7	%	3.4	%	353.9	%
Other expense, net	3,923		9,795			(5,872		)	1.1	%	6.2	%	(59.9	)%
Income (loss) before income taxes	5,881		6,714			(833		)	1.6	%	4.3	%	(12.4	)%
Provision (benefit) for income taxes	1,291		(183		)	1,474			0.4	%	(0.1	)%	805.5	%
Net income (loss)	$	4,590	$	6,897		$	(2,307	)	1.3	%	4.4	%	(33.4	)%

Revenues

Revenues during the current year period significantly increased compared to the prior year period primarily due to the acquired operations of CSI. Approximately $107.5 million of the $104.6 million increase in compression and related services revenues were generated by CSI, and is attributable to nine months of activity in the current year period compared to approximately two months of activity in the prior year period, due to the August 4, 2014 acquisition date of CSI. Service revenues from pre-CSI Acquisition operations decreased approximately $2.9 million. Decreased oil and natural gas commodity prices have adversely impacted the demand for below-100 horsepower production enhancement compression services applications, including for liquids-rich resource plays and vapor recovery applications. In addition, $14.5 million of increased aftermarket services revenues were also recognized primarily as a result of the full nine months activity from the CSI Acquisition. Demand for compression and related services in the U.S. has been driven by the significant investments made in recent years related to increased exploration and production of oil and natural gas and the related infrastructure, including midstream gas transmission, gathering, processing, vapor recovery, and wellhead compression. We have continued to increase the

overall size of our compressor package service fleet, particularly our high-horsepower fleet, to serve the current levels of demand for midstream gas transmission, gathering, processing, and other services applications.

In addition to the increase in consolidated compression and related services and aftermarket services revenues, there was an increase of approximately $81.3 million in revenues from the sales of equipment and parts during the current year period, compared to the prior year period. This increase is primarily due to nine months of activity of CSI which generated increased equipment and parts sales revenues of $85.1 million during the current year period. This increase was partially offset by decreased equipment and parts sales from our non-CSI operations of approximately $3.8 million. As reflected by the decreased level of new equipment sales fabrication backlog as of September 30, 2015, we expect future new equipment sales revenues to decrease compared to prior periods.

Cost of revenues

The increase in cost of compression and related services revenues during the current year period, compared to the prior year period was primarily due to the impact of the CSI Acquisition, which generated approximately $62.9 million of cost during the current year period. This increase was partially offset by decreased activity for pre-CSI operations. Cost of compression and related services as a percentage of compression and related services revenues was 50.0% during the current year period, compared to 53.3% from the prior year period. CSI cost of compression services as a percentage of compression services revenues was 46.9% during the current year period. We are continuing to capture additional synergies anticipated as part of the integration of CSI's operations. These efforts will continue going forward, and are expected to result in increased cost efficiencies in future periods.

Cost of equipment and parts sales increased compared to the prior year period due to the increased sales, primarily related to the CSI Acquisition, discussed above.

Selling, general and administrative expense

Selling, general and administrative expense increased for the current year period, compared to the prior year period, primarily due to approximately $8.8 million of increased administrative personnel and facility costs from including nine months of operations of CSI. Also, selling, general and administrative costs increased approximately $3.0 million compared to the prior year period as a result of increased allocated costs from TETRA pursuant to our Omnibus Agreement as a result of increased administrative requirements following the CSI Acquisition. Selling, general and administrative expenses were also increased due to $2.3 million of increased insurance, taxes, sales and marketing and general expenses, also largely due to the added operations of CSI. These increases were partially offset by approximately $1.1 million of decreased professional services expense, as the prior year period included approximately $3.0 million of CSI Acquisition transaction-related costs. The ongoing efforts to integrate the administrative functions of CSI are expected to result in further efficiencies going forward. Selling, general and administrative expense as a percentage of revenues decreased significantly compared to the prior year period, reflecting the increased efficiency of our expanded operations.

Depreciation and amortization

Depreciation and amortization expense primarily consists of the depreciation of compressor packages in our service fleet. In addition, it includes the depreciation of other operating equipment and facilities. Depreciation and amortization expense increased approximately $39.3 million as a result of including depreciation and amortization from CSI for the full nine months during the current year period. CSI depreciation and amortization includes the impact of the allocation of the purchase price to the estimated fair values of CSI's property, plant, and equipment and identified intangible assets.

Interest expense

Interest expense increased due to increased borrowings under the Credit Agreement and the issuance of the 7.25% Senior Notes in connection with the CSI Acquisition, which resulted in increased borrowings subsequent to the August 4, 2014 acquisition closing date. As of September 30, 2015, our total outstanding borrowings under our Credit Agreement was $243.0 million. Interest expense is expected to continue to be increased compared to the prior year periods as a result of the borrowings associated the financing of capital expenditures.

Other expense, net

Other expense, net, was $3.9 million during the current year period, compared to $9.8 million of expense during the corresponding prior year period, primarily due to approximately $6.7 million of interim financing cost associated with the CSI Acquisition incurred in the prior year period, partially offset by $0.8 million of increased amortization of deferred finance costs of the current year period.

Provision for income taxes

Liquidity and Capital Resources

Our primary cash requirements are for distributions, working capital requirements, normal operating expenses, and capital expenditures. Our sources of funds are our existing cash balances, cash generated from our operations, long-term and short-term borrowings, and operating leases, which we believe will be sufficient to meet our working capital requirements. Increasingly competitive market environments, along with the continuation of decreased oil and natural gas prices experienced beginning in late 2014, have resulted in additional challenges in many of our domestic and international business regions. We reported significantly increased revenues and profitability as a result of the acquisition of CSI. Despite the growth in revenues and profitability, we continue to experience decreased activity from project delays by certain customers as a result of the oil and natural gas price declines that began in 2014.

Our cash flows from operating activities increased for the nine months ended September 30, 2015, when compared to the corresponding prior year period, by $32.2 million, primarily as a result of the increased operations following the CSI Acquisition on August 4, 2014. Cash flows used in investing activities for the nine months ended September 30, 2015, decreased $778.6 million when compared to the same period in 2014, primarily as a result of the $825.0 million purchase price for the CSI Acquisition in 2014. Cash flows used by financing activities was $2.8 million for the nine months ended September 30, 2015, as compared to cash flows provided by financing activities of $835.5 million in the prior year period, primarily as a result of the proceeds from increased borrowings and the issuance of common units that were used to finance a portion of the CSI Acquisition purchase price in 2014. A summary of our sources and uses of cash during the nine month periods ended September 30, 2015 and 2014 are as follows:



	Nine Months Ended September 30,
	2015			2014
Operating activities	$	63,542		$	31,341
Investing activities	(76,064		)	(854,643		)
Financing activities	(2,847		)	835,465

As a result of the transactions undertaken to finance the CSI Acquisition in 2014, our consolidated capital structure significantly changed. We believe that we have sufficient liquid assets, cash flow from operations, and other capital resources to meet our financial commitments, debt service obligations, and anticipated capital expenditures. We expect to fund any future acquisitions and capital expenditures with cash flow generated from our expanded operations, funds borrowed under our Credit Agreement and funds received from the issuance of additional debt and equity. However, we are subject to business and operational risks that could materially adversely affect our cash flows. Please read Part I, Item 1A "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Continued growth in our operations, both internationally and in the U.S, will require ongoing significant capital expenditure investment. We anticipate that our total capital expenditures during 2015 will be approximately $100 million, including approximately $12 million of maintenance capital expenditures. Continued growth or

expansion of our operations or increased working capital requirements could result in the need for additional borrowings or equity offerings.

Our capital expenditure program consists of both expansion capital expenditures and maintenance capital expenditures. Expansion capital expenditures consist of expenditures for acquisitions or capital improvements that increase our capacity, either by fabricating new compressor packages to expand our compressor fleet, purchasing support equipment or other assets, or through the upgrading of existing compressor packages to increase their capabilities. Expansion capital expenditures generally result in our ability to generate increased revenues. Maintenance capital expenditures consist of expenditures to maintain our compressor package fleet or support equipment without increasing its capacity. Maintenance capital expenditures are intended to maintain or sustain the current level of operating capacity and include the maintenance of existing assets and the replacement of obsolete assets. Routine repair and maintenance is charged to expense as incurred.

On October 19, 2015, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended September 30, 2015 of $0.5025 per unit. This distribution equates to a distribution of $2.01 per outstanding unit, on an annualized basis. This quarterly cash distribution is to be paid on November 13, 2015 to all unitholders of record as of the close of business on October 30, 2015. The amount to be distributed on November 13, 2015, will also include the impact of incentive distribution rights of our General Partner, for amounts distributed in excess of $0.445625 per common unit.

Cash Flows

Operating Activities

Net cash from operating activities increased by $32.2 million during the nine month period ended September 30, 2015 to $63.5 million compared to $31.3 million for the corresponding prior year period. Cash provided from operating activities increased during the nine months of 2015 as a result of increased operations following the CSI Acquisition. A portion of our cash from operating activities is generated from the sale of new compressor equipment. As reflected by the decreased level of new equipment sales fabrication backlog as of September 30, 2015, we expect new equipment sales revenues to decrease compared to prior periods.

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, security concerns, the timing of collection of our receivables, and the repatriation of cash generated by our operations.

Investing Activities

Capital expenditures during the nine month period ended September 30, 2015 increased by $47.2 million compared to the corresponding prior year period, reflecting the impact of our expanded operations subsequent to the CSI Acquisition. The capital expenditure requirements of CSI are significantly increased compared to our pre-CSI Acquisition operations, due to the size and scope of the operations of CSI and the significantly higher horsepower of CSI compressor packages. Total capital expenditures during the current year period of $76.0 million include $7.9 million of maintenance capital expenditures. Our growth capital programs for 2015 are focused on increasing our fleet to meet customer needs, and we currently plan to spend up to approximately $100 million on capital expenditures during all of 2015 including approximately $12 million of estimated maintenance capital expenditures. Future growth capital expenditures depend on forecasted demand for compression services. If the forecasted demand for compression services decreases, the amount of planned expenditures on growth and expansion will also decrease. Additionally, we continue to review the carrying value of our long-lived assets when events or changes in circumstances indicate that the carrying value of these assets may not be recoverable, based on their expected future cash flows.

Financing Activities

Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash to our unitholders of record on the applicable record date and to our General Partner. During the nine month period ended September 30, 2015, we distributed approximately $51.0 million to our unitholders and General Partner. On October 19, 2015, the board of directors of our General Partner declared a cash distribution attributable to the quarter ended September 30, 2015 of $0.5025 per unit. This distribution equates to a distribution

of $2.01 per outstanding unit, on an annualized basis. This cash distribution is to be paid on November 13, 2015 to all unitholders of record as of the close of business on October 30, 2015.

7.25% Senior Notes

In August 2014, we and one of our indirect wholly owned subsidiaries, CSI Compressco Finance Inc., a Delaware corporation (we, together with CSI Compressco Finance Inc., the "Issuers"), issued $350.0 million aggregate principal amount of the Issuers’ 7.25% Senior Notes due 2022 (the "7.25% Senior Notes") in a private offering exempt from the registration requirements under the Securities Act of 1933, as amended pursuant to a Note Purchase Agreement dated July 29, 2014. The CCLP Senior Notes were subsequently registered through a public exchange offer that closed on July 20, 2015.

The obligations under the 7.25% Senior Notes are jointly and severally, and fully and unconditionally, guaranteed on a senior unsecured basis by each of our domestic restricted subsidiaries (other than CSI Compressco Finance) that guarantee our other indebtedness (the "Guarantors" and together with the Issuers, the "Obligors"). The 7.25% Senior Notes and the subsidiary guarantees thereof (together, the "Securities") were issued pursuant to an indenture described below.

The Obligors issued the Securities pursuant to the Indenture dated as of August 4, 2014 (the "Indenture") by and among the Obligors and U.S. Bank National Association, as trustee (the "Trustee"). The 7.25% Senior Notes accrue interest at a rate of 7.25% per annum. Interest on the 7.25% Senior Notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2015. The 7.25% Senior Notes are scheduled to mature on August 15, 2022.

The Indenture contains customary covenants restricting our ability and the ability of our restricted subsidiaries to: (i) pay dividends and make certain distributions, investments and other restricted payments; (ii) incur additional indebtedness or issue certain preferred shares; (iii) create certain liens; (iv) sell assets; (v) merge, consolidate, sell or otherwise dispose of all or substantially all of our or their assets; (vi) enter into transactions with affiliates; and (vii) designate our or their subsidiaries as unrestricted subsidiaries under the Indenture. The 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 Indenture, the Trustee or the holders of at least 25% in aggregate principal amount of the 7.25% Senior Notes then outstanding may declare all amounts owing under the 7.25% Senior Notes to be due and payable. We are in compliance with all covenants and conditions of the Indenture as of September 30, 2015.

Bank Credit Facilities

Under the Credit Agreement, we and our CSI Compressco Sub, Inc. subsidiary are named as the borrowers and all obligations under the Credit Agreement are guaranteed by all of our existing and future, direct and indirect, domestic restricted subsidiaries (other than domestic subsidiaries that are wholly owned by foreign subsidiaries). The Credit Agreement includes a maximum credit commitment of $400.0 million, and included within such amount is availability for letters of credit (with a sublimit of $20.0 million) and swingline loans (with a sublimit of $60.0 million). As of November 9, 2015, we have a balance outstanding under the Credit Agreement of $243.0 million, and $0.8 million letters of credit and performance bonds outstanding, leaving availability under the Credit Agreement of $156.2 million.

The Credit Agreement is available to provide our working capital needs, letters of credit, and for general partnership purposes, including capital expenditures and potential future expansions or acquisitions. So long as we are not in default, the Credit Agreement can also be used to fund our quarterly distributions at the option of the board of directors of our General Partner (provided, that after giving effect to such distributions, the borrowers will be in compliance with the financial covenants). The maturity date of the Credit Agreement is August 4, 2019.

Borrowings under the Credit Agreement bear interest at a rate per annum equal to, at our option, either (a) LIBOR (adjusted to reflect any required bank reserves) for an interest period equal to one, two, three, or six months (as selected by us), plus a leverage based margin or (b) a base rate plus a leverage-based margin; such base rate shall be determined by reference to the highest of (1) the prime rate of interest per annum announced from time to time by Bank of America, N.A. (2) the Federal Funds rate plus 0.50% per annum and (3) LIBOR (adjusted to reflect any required bank reserves) for a one-month interest period on such day plus 1.00% per annum. LIBOR based loans will have an applicable margin that will range between 1.75% and 2.50% per annum and base

rate loans will have an applicable margin that will range between 0.75% and 1.50% per annum, each based on our consolidated total leverage ratio when financial statements are delivered. In addition to paying interest on outstanding principal under the Credit Agreement, we are required to pay a commitment fee in respect of the unutilized commitments thereunder at the applicable rate ranging from 0.375% to 0.50% per annum, paid quarterly in arrears based on our consolidated total leverage ratio. We are required to pay a customary letter of credit fee equal to the applicable margin on revolving credit LIBOR loans, fronting fees and other fees agreed to with the administrative agent and lenders.

The Credit Agreement requires us to maintain (i) a minimum consolidated interest coverage ratio (ratio of consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) to consolidated interest charges) of 3.0 to 1.0, (ii) a maximum consolidated total leverage ratio (ratio of consolidated total indebtedness to consolidated EBITDA ) of 5.5 to 1.0 (with step downs to 5.0 to 1.0), and (iii) a maximum consolidated secured leverage ratio (consolidated secured indebtedness to consolidated EBITDA ) of 4.0 to 1.0, in each case, as of the last day of each fiscal quarter, calculated on a trailing four quarters basis. At September 30, 2015, our consolidated total leverage ratio was 4.41 to 1. In addition, the Credit Agreement includes customary negative covenants that, among other things, limit our ability to incur additional debt, incur, or permit certain liens to exist, or make certain loans, investments, acquisitions, or other restricted payments. The Credit Agreement provides that we can make distributions to holders of our common units, but only if there is no default or event of default under the facility. We are in compliance with all covenants and conditions of the Credit Agreement as of September 30, 2015.

All obligations under the Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a first lien security interest in substantially all of our assets and the assets of our existing and future domestic subsidiaries, and all of the capital stock of our existing and future subsidiaries (limited in the case of foreign subsidiaries, to 65% of the voting stock of first tier foreign subsidiaries).

Off Balance Sheet Arrangements

As of September 30, 2015, 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. During the first nine months of 2015, there were no material changes outside of the ordinary course of business in the specified contractual obligations.

For additional information about our contractual obligations as of December 31, 2014, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual Report on Form 10-K for the year ended December 31, 2014.

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 annual report are identifiable by the use of the following 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”.

Such forward-looking statements reflect our current views with respect to future events and financial performance and are based on assumptions that we believe to be reasonable but such forward-looking statements are subject to numerous risks, and uncertainties, including, but not limited to:


•	economic and operating conditions that are outside of our control, including the supply, demand, and prices of crude oil and natural gas;


•	the levels of competition we encounter;


•	the activity levels of our customers;


•	the availability of adequate sources of capital to us;


•	our ability to comply with contractual obligations, including those under our financing arrangements;


•	our operational performance;


•	risks related to acquisitions and our growth strategy, including our recent acquisition of Compressor Systems, Inc.;


•	the availability of raw materials and labor at reasonable prices;


•	risks related to our foreign operations;


•	the effect and results of litigation, regulatory matters, settlements, audits, assessments, and contingencies; and


•	other risks and uncertainties under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, and as included in our other filings with the U.S. Securities and Exchange Commission (“SEC”), which are available free of charge on the SEC website at www.sec.gov.

The risks and uncertainties referred to above are generally beyond our ability to control and we cannot predict all the risks and uncertainties that could cause our actual results to differ from those indicated by the forward-looking statements. If any of these risks or uncertainties materialize, or if any of the underlying assumptions prove incorrect, actual results may vary from those indicated by the forward-looking statements, and such variances may be material.

All subsequent written and oral forward-looking statements made by or attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements we may make, except as may be required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. We do not take title to any natural gas or oil in connection with our services and, accordingly, have no direct exposure to fluctuating commodity prices. While we have a significant number of customers who have retained our services through periods of high and low commodity prices, we generally experience less growth and more customer attrition during periods of significantly high or low commodity prices. For a discussion of our indirect exposure to fluctuating commodity prices, please read “Risk Factors — Certain Business Risks” in our Annual Report on Form 10-K filed with the SEC on March 19, 2015. We depend on domestic and international demand for and production of natural gas and oil and a reduction in this demand or production could adversely affect the demand or the prices we charge for our services, which could cause our revenues and cash available for distribution to our unitholders to decrease in the future. We do not currently hedge, and do not intend to hedge, our indirect exposure to fluctuating commodity prices.

Interest Rate Risk

Through September 30, 2015, there have been no material changes in the information pertaining to our interest rate risk exposures as disclosed in our Form 10-K for the year ended December 31, 2014.

Exchange Rate Risk

We have exposure to changes in foreign exchange rates associated with our operations in Latin America and Canada. Most of our billings under our contracts with PEMEX and other clients in Mexico are denominated in U.S. dollars; however, a large portion of our expenses and costs under those contracts are incurred in Mexican pesos, and we retain cash balances denominated in Mexican pesos. As such, we are exposed to fluctuations in the value of the Mexican peso against the U.S. dollar. As Mexican peso denominated assets are largely offset by Mexican peso denominated liabilities, a hypothetical increase or decrease in the U.S. dollar-Mexican peso foreign exchange rate of 10.0% would have a $64,000 impact on our net income for the three month period ended September 30, 2015.

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 September 30, 2015, we had the following foreign currency derivative contract outstanding relating to a portion of our foreign operations:



Derivative Contracts	US Dollar Notional Amount		Traded Exchange Rate	Settlement Date
	(In Thousands)
Forward sale Mexican peso	$	3,936	17.06	10/16/2015

Under this program, we may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as an economic hedge 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 value of foreign currency derivative instruments are based on quoted market values as reported to us by our counterparty (a Level 2 fair value measurement). The fair value of our foreign currency derivative instruments as of September 30, 2015, is as follows:



	Balance Sheet	Fair Value at
Foreign currency derivative instruments	Location	September 30, 2015
		(In Thousands)
Forward sale contracts	Current assets	$	41
	Current liabilities	—
Net asset		$	41

None of the foreign currency derivative contracts contain credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the period ended September 30, 2015, we recognized approximately $0.2 million of net gains associated with our foreign currency derivative program, and such amount is included in Other Income in the accompanying consolidated statement of operations.

Item 4. Controls and Procedures.

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 Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Principal Executive Officer and Principal Financial Officer of our General Partner concluded that, except with respect to the event described below, our disclosure controls and procedures were effective as of September 30, 2015, the end of the period covered by this quarterly report.

We are currently integrating CSI into our internal control over financial reporting processes. In executing this integration, we are analyzing, evaluating, and, where necessary, making changes in controls and procedures related to the CSI business, which we expect to be completed in fiscal year 2015.

Other than the changes described above in the preceding paragraph, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

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.

There have been no material changes in the information pertaining to our Risk Factors as disclosed in our Annual Report on Form 10-K filed with SEC on March 19, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) None.

(b) None.



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
July 1 – July 30, 2015	—	$	—	N/A	N/A
August 1 – August 31, 2015	—	—		N/A	N/A
September 1 – September 30, 2015	—	—		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.

Item 6. Exhibits.

Exhibits:



31.1*	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Principal Executive Officer Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Principal Financial Officer Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+	XBRL Instance Document
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


*	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 nine month periods ended September 30, 2015 and 2014; (ii) Consolidated Statements of Comprehensive Income for the three and nine month periods ended September 30, 2015 and 2014; (iii) Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014; (iv) Consolidated Statement of Partners’ Capital for the nine month period ended September 30, 2015; (v) Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2015 and 2014; and (iv) Notes to Consolidated Financial Statements for the nine months ended September 30, 2015.

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:	November 10, 2015	By:	/s/Timothy A. Knox
			Timothy A. Knox, President
			Principal Executive Officer

Date:	November 10, 2015	By:	/s/Elijio V. Serrano
			Elijio V. Serrano
			Chief Financial Officer, Treasurer and Secretary
			Principal Financial Officer

Date:	November 10, 2015	By:	/s/Susan R. Makovy
			Susan R. Makovy
			Controller
			Principal Accounting Officer

EXHIBIT INDEX



31.1*	Certification of Principal Executive Officer Furnished Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Furnished Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Principal Executive Officer Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Principal Financial Officer Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+	XBRL Instance Document
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


*	Filed with this report.


**	Furnished with this report.