2017 WELLS FARGO PIPELINE, MLP AND UTILITY SYMPOSIUM

Transcription

1 207 WELLS FARGO PIPELINE, MLP AND UTILITY SYMPOSIUM December 6, 207

2 Forward Looking Statements All statements in this presentation (and oral statements made regarding the subjects of this presentation) other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 995. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Archrock Partners, L.P. ( Archrock Partners or APLP ) and Archrock, Inc. ( Archrock or AROC ). Forward-looking information includes, but is not limited to: industry fundamentals, including the attractiveness of returns and valuation, stability of cash flows, demand dynamics and overall outlook, and Archrock Partners ability to realize the benefits thereof; Archrock Partners expectations regarding future economic and market conditions and trends; Archrock Partners operational and financial strategies, including growth activities, and ability to successfully effect those strategies and the expected results therefrom; Archrock Partners financial and operational outlook and ability to fulfill that outlook; demand and growth opportunities for Archrock Partners services; statements related to performance, profitability, structural and process improvement initiatives, the expected timing thereof, Archrock Partners ability to successfully effect those initiatives and the expected results therefrom; the operational and financial synergies provided by Archrock s and Archrock Partners size; and statements about Archrock Partners distributions, the anticipated impact of the distribution rate on its business and the anticipated impact of Archrock Partners actions on its balance sheet, liquidity position and need for future capital. While Archrock Partners and Archrock believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their businesses. The factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: actions by governmental and regulatory authorities; local, regional and national economic and financial market conditions and the impact they may have on Archrock Partners and its customers; changes in tax laws that impact master limited partnerships; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; changes in economic conditions in key operating markets; the financial condition of Archrock Partners customers; the failure of any customer to perform its contractual obligations; and changes in safety, health, environmental, tax and other regulations. These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Archrock Partners Annual Report on Form 0-K for the year ended December 3, 206, Archrock s Annual Report on Form 0-K for the year ended December 3, 206, and those set forth from time to time in Archrock Partners and Archrock s filings with the Securities and Exchange Commission, which are currently available at Except as required by law, Archrock Partners and Archrock expressly disclaim any intention or obligation to revise or update any forwardlooking statements whether as a result of new information, future events or otherwise. 2

3 Investment Highlights Visible Long-Term Growth U.S natural gas demand is forecasted to increase to ~90 bcf/d by 202 from ~78 bcf/d in 206, an approximate 6% increase Business tied to long-term natural gas production Fee-based contracts for must-run production and midstream infrastructure assets Relative Cash Flow Stability Production, not drilling and completions, leveraged business model generates steady demand for services and relatively stable cash flow Cash flow generation provides capital to fund capital investments in an up-cycle and stability in a down-cycle Largest Player with Benefit of Scale and Market Presence Largest fleet among outsourced compression services providers Fleet is deployed across all major U.S. producing basins Combined operating fleet of 3.2 mm HP 2 with Archrock Partners Access to Capital Liquidity of $56mm at AROC 3 and $24mm at APLP 4 Total leverage covenant of 5.95x Debt/EBITDA through 207 and 5.75x through 208 at Archrock Partners 5 Third quarter 207 Archrock Partners distributable cash flow coverage of.46x 6 Data from Drilling Info, Fundamental Edge (September 207). 2 As of September 30, As of September 30, 207, Archrock had undrawn capacity of $259.4 million under its revolving credit facility. The Archrock credit agreement limits the Total Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 4.25 to.00. As a result of this limitation, $02.9 million of the $259.4 million of undrawn capacity under Archrock s revolving credit facility was unavailable to Archrock for additional borrowings as of September 30, As of September 30, 207, Archrock Partners had undrawn capacity of $468.5 million under its revolving credit facility. The Archrock Partners credit agreement limits the Total Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 5.95 to.0; and the Senior Secured Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 3.50 to.00. As a result of this limitation, $254.9 million of the $468.5 million of undrawn capacity under our revolving credit facility was unavailable for additional borrowings as of September 30, As defined in the Archrock Partners credit agreement. 3 6 See Addendum I regarding non-gaap measures for information on distributable cash flow coverage

4 Overview of Archrock Archrock is a pure play U.S. provider of contract compression Archrock Companies Simplified Structure and Asset Overview AROC Assets Public Stockholders (AROC) ~$76mm Debt 2 GP and IDRs of APLP (2%) 29 mm LP Units 2 Operating HP ~0.3mm 2 U.S. Aftermarket Services Business 00% GP 4% LP 2% GP 00% IDR APLP Assets Public Unitholders 57% (APLP) ~$.3bn Net Debt 2 Operating HP ~2.9mm 2 Distributable Cash Flow Coverage of.46x for the quarter ended September 30, Based on APLP units outstanding as of September 30, As of September 30, See Addendum I regarding non-gaap measures for information on Archrock Partners distributable cash flow and distributable cash flow coverage. 4

5 What Does Compression Do? Increases pressure from suction to discharge Suction Pressure 50 PSI Inlet Sources Wellhead Gathering System Discharge Pressure,200 PSI Outlet Sources Gathering System Pipeline Processing Plant Storage Facility Reservoir Pressures based on an illustrative example from the Eagle Ford shale. 5

6 Crude Oil Natural Gas Where is Compression Used? Compression is an essential service utilized all along the production cycle to transport gas to the end user 78% of Fleet Power Generation Storage Industrial Residential Exports - Pipelines Wellhead Production Gathering System Processing LNG Chemical Feed-Stocks and Fuels 22% of Fleet Enhanced Oil Recovery Gas Lift Based on operating horsepower of Archrock and Archrock Partners combined U.S. compression fleet as of September 30,

7 Positioned for Growth Archrock is ready to meet increasing natural gas demand Growing Natural Gas Production Strong natural gas demand fundamentals to be met by growing U.S. production Demand driven by increases in LNG, exports to Mexico, power generation, and petrochemical project development Demand for Compression Growing U.S. production requires additional compression Generally shale development requires more compression than conventional wells Financial Strength Proven operating trackrecord Liquidity to support growth Sustainable distribution and dividend Cash flow stability Positioned for Growth Committed to meeting the market s growing demand for reliable contract compression Increased growth capital budget Successfully executed third party acquisitions 7

8 U.S. Forecasted Production Growth Driven by Strong Demand Outlook Sources of Demand Forecasted Supply 3 U.S. LNG Exports U.S. Natural Gas Demand Growth 2 Growing Gas Production Demand for Compression Financial Strength Positioned for Growth. North America LNG Export Terminals approved by the Federal Energy Regulatory Commission and under construction as of May, 207. Timing estimates based management estimates and sponsor publications. 2. Data from Drilling Info, Fundamental Edge. (September 207) Data from EIA Annual Energy Outlook 207 (January 207).

9 Growth Play Focused Archrock s geographic diversity provides stability and growth opportunities across the U.S. Strong Presence in All Major Growing U.S. Producing Basins Permian Growth of 8 bcf/d Associated gas production growth Low break-even economics Competitive market Demand for centralized gas lift Eagle Ford Growth of bcf/d Outsourced compression leader Participated in development of play Marcellus / Utica Growth of bcf/d Large resource base Pipeline build-out will lead to de-bottlenecking MidCon Growth of 4 bcf/d SCOOP/STACK development Long-term presence in market Growing Gas Production Demand for Compression Financial Strength Positioned for Growth Note: Excludes offshore units in the Gulf of Mexico. Source: Tudor Pickering Holt & Co. (September 207); growth in natural gas production per day from 206 to

10 Large Horsepower Growth Drivers U.S. natural gas production growth increasing demand for Archrock s Services Associated Gas Development Associated gas production from shale is generally at a lower initial pressure than dry gas wells and requires more compression Pad Drilling Pad drilling brings multiple laterals to a single wellsite and increases flow at the wellsite Efficiency Large HP is more cost effective than a series of small horsepower units Drilling Predictability High probability drilling programs allow for efficient surface infrastructure planning Increasing Lateral Lengths Longer lateral lengths increases flow to the wellhead Growth in Contract Compression Growing Gas Production Demand for Compression Financial Strength Positioned for Growth 0

11 Leader in U.S. Contract Compression Services Archrock, together with Archrock Partners, is the largest outsourced compression provider in the U.S. U.S. Outsourced Compression Competitors Operating HP at Archrock Highlights We are proud of the quality of our service, delivering an average availability of over 99% Operating HP at Archrock is the leading contract compression services operator in the U.S. Archrock s business size and scale provide significant operational and financial synergies Growing Gas Production Demand for Compression Financial Strength Positioned for Growth SEC filings and management estimates as of September 30, 207.

12 Modern Fleet Meeting Customer Demand Archrock has the largest fleet of large HP in the industry Consolidated Available Fleet by HP Range 2 HP by Play Type HP 333k HP 9% Offshore 5% Other 3% 20-,00 HP,20k HP 29% Conventional 28% Non- Conventional 64% >,00 HP 2,366k HP 62% HP by Application Application (k HP) Other 7% Gas Lift 22% Wellhead 3% Gathering 58% Growing Gas Production Demand for Compression Financial Strength Positioned for Growth As of September 30, Archrock consolidated fleet as of December 3, 206. Horsepower reported as original equipment manufacturer (OEM) horsepower. 2

13 Market Leader in Large Horsepower Archrock has the largest fleet of large HP in the industry Large Horsepower Fleet Comparison 2,400 Available Large Horsepower Units Average Large HP Unit Size per Unit (HP) Available HP (000s),800, ,366,22 Archrock >,00 HP Competitor >,000 HP Competitor 2 >800 HP,565,5 82, , Archrock Competitor Competitor 2 Growing Gas Production Demand for Compression Financial Strength Positioned for Growth Horsepower reported as OEM horsepower and unit data as of December 3, 206. Presented as Archrock units greater than,00 HP/unit; Competitor units greater than,000 HP/unit; and Competitor 2 units greater than 800 HP/unit. Archrock presented as consolidated fleet with Archrock Partners. 3

14 Revenue ($millions) Stability of Business Model Fee-based compression services provide relatively stable cash flow Compression Services Revenue and Oil & Gas Prices,2,3 $ % $800 $700 50% $600 $500 $400 $300 00% 50% 0% Indexed to 2/3/08 $200 $00-50% $ LTM Q3-7 Contract Operations Henry Hub WTI -00% Growing Gas Production Demand for Compression Financial Strength Positioned for Growth Note: Historical data should not be relied upon as being indicative of future results. Henry Hub indexed to $5.63 per million BTU at December 3, 2008; WTI indexed to $44.60 per barrel at December 3, Prices presented through October 30, Data represents combined Archrock and Archrock Partners U.S. compression services revenue for the periods presented. 3 In December 203, Archrock abandoned its contract water treatment business. All periods exclude results from Archrock s contract water treatment business. 4

15 2 Archrock Partners Profitability Trend Archrock Partners gross margin per horsepower benefitted from profit improvement initiatives and fleet high grading including the MidCon acquisitions Archrock Partners Gross Margin per Horsepower per Month,2 Growing Gas Production Demand for Compression Financial Strength Positioned for Growth Note: Historical data should not be relied upon as being indicative of future results. See Addendum I regarding non-gaap measures for information on Archrock Partners gross margin and gross margin per horsepower. 2 A customer s exercise of purchase options on two natural gas processing plants increased gross margin per average operating horsepower per month by $0.97 in the second quarter

16 (000's) Proven Track Record Demonstrated stability through the down-turn and recent return to operating horsepower growth Archrock Partners Operating Horsepower Archrock Partners EBITDA, as adjusted 3,200 2,800 3,040 3,030 2,874 2,90 2,400 2,264 2,000,99,728,600,384, , Growing Gas Production Demand for Compression Financial Strength Positioned for Growth Note: Historical data should not be relied upon as being indicative of future results. See Addendum I regarding non-gaap measures for information on Archrock Partners EBITDA, as adjusted. 6

17 Archrock Partners Distributions & Coverage Distributable Cash Flow Coverage,2,3,4 Total Distributions Declared 2,4 $60 $54 $40 $37 $20 $3 ($ in millions) $00 $80 $74 $92 $22 $34 $72 $82 $60 $04 $85 $40 $70 $7 $80 $20 $0 $5 $6 $9 $5 $2 $ $ Q 207 Annualized GP Interest LP Interest Growing Gas Production Demand for Compression Financial Strength Positioned for Growth Note: Historical data should not be relied upon as being indicative of future results. See Addendum I regarding non-gaap measures for information on Archrock Partners distributable cash flow and distributable cash flow coverage. 2 Distribution levels with respect to future quarters have not been declared and will be determined by the board of the managing general partner of APLP. 3 Q-4 pro forma for acquisition of compression assets from MidCon closed April 0, Archrock Partners cash distribution of $0.285 per limited partner unit for the first-quarter of 206 through the second-quarter of 207 is approximately 50 percent lower than the fourth-quarter 205 distribution. 7

18 ($ in millions) Enhanced Credit Profile Archrock has ample access to capital to execute its growth strategy No near-term maturities Highlights Committed to maintaining leverage and liquidity metrics through the cycle APLP covenant allows for 5.95x leverage through 207 and 5.75x throughout 208 $,400 $,200 $,000 Debt Maturity Profile $468 Liquidity Profile ($ in millions) Archrock Partners Liquidity Revolving credit facility capacity $,00.0 Revolving credit facility unavailable due to covenant constraints ($254.9) Borrowings under facility ($63.5) $800 $600 $632 Liquidity at Archrock Partners Standalone $23.6 Archrock Standalone Liquidity 2 Revolving credit facility capacity $350.0 Borrowings under facility and letters of credit ($90.6) Revolving credit facility unavailable due to covenant constraints ($02.9) Liquidity at Archrock Standalone $56.5 Total Liquidity of Archrock Companies $370. $400 $200 $0 $350 $350 $259 $ AROC RCF APLP RCF APLP Notes Growing Gas Production Demand for Compression Financial Strength Positioned for Growth As of September 30, 207, Archrock Partners had undrawn capacity of $468.5 million under its revolving credit facility. The Archrock Partners credit agreement limits the Total Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 5.95 to.0; and the Senior Secured Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 3.50 to.00. As a result of this limitation, $254.9 million of the $468.5 million of undrawn capacity under our revolving credit facility was unavailable for additional borrowings as of September 30, As of September 30, 207, Archrock had undrawn capacity of $259.4 million under its revolving credit facility. The Archrock credit agreement limits the Total Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 4.25 to.00. As a result of this limitation, $02.9 million of the $259.4 million of undrawn capacity under Archrock s revolving credit facility was unavailable to Archrock for additional borrowings as of September 30, Archrock Partners $. billion asset-based credit facility will mature the earlier of (i) March 30, 2022 or (ii) December 2, 2020 if any portion of Archrock Partners Senior Notes due April 202 are outstanding on such date. Graph assumes Senior Notes due 202 are refinanced prior to December 2,

19 Overview of Growth Strategies Demonstrated track record of executing growth strategies Growth Third Party Acquisitions Demonstrated ability to source and execute deals with MidCon acquisitions Opportunity to source from customers and competitors Dual currency structure provides cost of capital and execution advantages Drop Down Growth Successfully executed drop downs of contract compression assets in 205 & 206 Organic Growth and Operational Enhancements Strategy to leverage our market position, service capability, and existing fleet and capital strength Secular growth drivers expected to increase natural gas production and compression demand ~.2 million HP of new units added to combined AROC/APLP fleet in last ~5 years Continued focus on improving field operations, operating costs, and competitiveness and profitability of fleet Growing Gas Production Demand for Compression Financial Strength Positioned for Growth Five years ended December 3, 206; includes units added through third party acquisitions. 9

20 207 Growth Highlights Near-term Growth Highlights Expect solid year end operating horsepower growth in 207 Operating horsepower increased by 50,000 horsepower in Q3-7 In the third quarter, drove new orders at the highest quarterly rate on record setting the foundation for a strong growth capital of approximately $50 million Continued investment in large horsepower deployed in growth plays Expect trailing twelve month EBITDA to begin to increase in Q-8 and contribute to deleveraging at Archrock Partners Growing Gas Production Demand for Compression Financial Strength Positioned for Growth 20

21 Investment Highlights Relative Stability Available Liquidity Largest Fleet Deployed to Major Basins Optimized Structure for Growth Full Cycle Outsourced Provider Long-term Growth Opportunities Growing Gas Production Demand for Compression Financial Strength Positioned for Growth 2

22 Appendix 22

23 Compression Applications & Customers Services Provided Average HP / Unit,2 Units 2 Overview Customer Types Archrock Focus Wellhead 370,57 Compression located at the well site Often smaller units that are compressing a single well Upstream E&P Gathering 947,959 Transports gas from multiple wells to a compressor or compressor station Often larger units compared to wellhead Upstream E&P Midstream G&P Gas Lift 337 2,7 Use of gas to artificially lift oil or fluids from a well Unit size can vary based on the volume and number of wells being lifted Upstream E&P Other Includes plant compression, flash gas, residue plant compression, CO2 injection and storage Various More limited opportunities Horsepower reported as OEM horsepower and unit data as of September 30, Data represents Archrock and Archrock Partners combined U.S. compression fleet as of September 30,

24 Addendum I: Non-GAAP Financial Measures 24

25 Non-GAAP Financial Measures Archrock Partners, L.P.: EBITDA, as adjusted, a non-gaap measure, is defined as net income (loss) (a) excluding income taxes, interest expense, depreciation and amortization expense, impairment charges, restructuring charges, expensed acquisition costs, debt extinguishment costs, non-cash selling, general and administrative ( SG&A ) costs and other items (b) plus the amounts reimbursed to Archrock Partners by Archrock as a result of caps on cost of sales and SG&A costs provided in the omnibus agreement to which Archrock and Archrock Partners are parties (the Omnibus Agreement ), which amounts are treated as capital contributions from Archrock for accounting purposes. Under the Omnibus Agreement, the caps on cost of sales and SG&A costs terminated effective January, 205. EBITDA, as adjusted (without the benefit of the cost caps) is defined as EBITDA, as further adjusted, less the amounts reimbursed to Archrock Partners by Archrock as a result of caps on cost of sales and SG&A costs provided in the Omnibus Agreement. Distributable cash flow, a non-gaap measure, is defined as net income (loss) (a) plus depreciation and amortization expense, impairment charges, restructuring charges, expensed acquisition costs, non-cash SG&A costs, debt extinguishment costs, interest expense and any amounts reimbursed to Archrock Partners by Archrock as a result of the caps on cost of sales and SG&A costs provided in the Omnibus Agreement, which amounts are treated as capital contributions from Archrock for accounting purposes, (b) less cash interest expense (excluding amortization of deferred financing fees, amortization of debt discount and non-cash transactions related to interest rate swaps) and maintenance capital expenditures, and (c) excluding gains or losses on asset sales and other items. Under the Omnibus Agreement, the caps on cost of sales and SG&A costs terminated effective January, 205. Distributable cash flow (without the benefit of cost caps) is defined as distributable cash flow less the amounts reimbursed to Archrock Partners by Archrock as a result of caps on cost of sales and SG&A costs provided in the Omnibus Agreement. Gross margin, a non-gaap measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense). Gross margin percentage is defined as gross margin divided by total revenue. 25 Addendum I-A

26 Non-GAAP Financial Measures Archrock Partners, L.P. ($ in thousands) Net income (loss) $ 9,40 $ 29,847 $ 4,784 $ (23,333) $ 6,053 $ 0,509 $ 64,023 $ 6,79 $ (84,025) $ (0,757) Depreciation and amortization 6,570 27,053 36,452 52,58 67,930 88,298 03,7 28,96 55,786 53,74 Long-lived asset impairment - - 3,5 24,976,060 29,560 5,350 2,80 38,987 46,258 Restructuring charges ,309 Goodwill impairment ,757 - Selling, general and administrative 3,730 6,085 24,226 34,830 39,380 49,889 6,97 80,52 85,586 79,77 Interest expense,658 8,039 20,303 24,037 30,400 25,67 37,068 57,8 74,58 77,863 Other income, net (22) (,430) (,208) (34) (392) (35) (9,48) (74) (,39) (2,594) Provision for income taxes ,506,33,035,42 Gross margin 6,609 90,49 98,249 3,394 45, , ,48 342, ,36 352,949 Cap on operating costs provided by AROC 8,68 2,480 7,246 2,404 26,492 6,562 2,382 2, Cap on selling, general and administrative costs provided by AROC ,36 5,905 8,96 2,798, Non-cash selling, general and administrative costs 3,84 (2,090) 8, ,74,376,059,203 Expensed acquisition costs (in Other (income) expense, net) , Plus: Non-recurring cash selling, general and administrative reimbursement 2 (848) Less: Selling, general and administrative (3,730) (6,085) (24,226) (34,830) (39,380) (49,889) (6,97) (80,52) (85,586) (79,77) Less: Other income, net 22,430, ,48 74,39 2,594 EBITDA, as adjusted 59,38 86,004 84,643 05,63 39,804 80, , ,248 35, ,552 Less: Provision for income taxes (272) (555) (54) (680) (98) (945) (,506) (,33) (,035) (,42) Less: Gain on sale of property, plant and equipment (in Other income, net) - (,435) (2,0) (667) (99) (689) (0,40) (2,466) (,747) (3,585) Less: loss on non-cash consideration in March 206 acquisition 635 Less: Cash interest expense (,258) (7,567) (9,697) (2,087) (8,822) (22,76) (32,80) (53,525) (70,8) (73,594) Less: Maintenance capital expenditures (7,079) (9,45) (2,585) (5,898) (28,86) (38,368) (4,40) (45,36) (5,829) (23,900) Distributable cash flow $ 40,529 $ 56,996 $ 49,809 $ 66,83 $ 90,284 $ 7,966 $ 52,976 $ 77,628 $ 90,690 $ 75,696 Distributions declared to all unitholders for the period, including incentive distribution rights $ 24,575 $ 34,64 $ 39,404 $ 54,93 $ 74,24 $ 9,67 $ 2,705 $ 36,829 $ 54,349 $ 7,646 Distributable cash flow coverage 3.65x.67x.26x.22x.22x.29x.36x.30x.24x 2.45x Distributable cash flow coverage (without the benefit of the cost caps) 3,4.29x.30x.07x 0.77x 0.78x.02x.3x.20x.24x 2.45x EBITDA, as adjusted $ 59,38 $ 86,004 $ 84,643 $ 05,63 $ 39,804 $ 80,729 $ 238,833 $ 280,248 $ 35,482 $ 277,552 Less: Cap on operating and selling, general and administrative costs provided by AROC (8,90) (2,600) (7,798) (24,720) (32,397) (24,758) (25,80) (3,850) - - EBITDA, as adjusted (without the benefit of the cost caps),4 $ 50,237 $ 73,404 $ 76,845 $ 80,443 $ 07,407 $ 55,97 $ 23,653 $ 266,398 $ 35,482 $ 277,552 Distributable cash flow $ 40,529 $ 56,996 $ 49,809 $ 66,83 $ 90,284 $ 7,966 $ 52,976 $ 77,628 $ 90,690 $ 75,696 Less: Cap on operating and selling, general and administrative costs provided by AROC (8,90) (2,600) (7,798) (24,720) (32,397) (24,758) (25,80) (3,850) - - Distributable cash flow (without the benefit of the cost caps),4 $ 3,628 $ 44,396 $ 42,0 $ 42, $ 57,887 $ 93,208 $ 27,796 $ 63,778 $ 90,690 $ 75,696 See Addendum I-A for information on gross margin, EBITDA, as adjusted, EBITDA, as adjusted (without the benefit of the cost caps), distributable cash flow and distributable cash flow (without the benefit of the cost caps). 2 Consists of a cash reimbursement from Archrock of non-cash merger-related expenses incurred by Archrock Partners. 3 Defined as distributable cash flow divided by distributions declared to all unit holders for the period, including incentive distributions rights. 4 Provisions in the Omnibus Agreement that provided caps on our obligation to reimburse Archrock for operating and SG&A expenses terminated on January, 205. Excluding the benefit of the cost caps from our previously defined non-gaap measures of EBITDA, as adjusted, and distributable cash flow provides external users of our consolidated financial statements comparable measures to assess operating performance in the current year period with operating performance in the prior year periods. 26 Addendum I-B

27 Non-GAAP Financial Measures Archrock Partners, L.P. ($ in thousands) Q 2Q 3Q 4Q Q 2 2Q 2 3Q 2 4Q 2 Q 3 2Q 3 3Q 3 4Q 3 Net income (loss) $ 223 $ (,938) $ 3,253 $ 4,55 $ 4,505 $ (9,050) $ 0,380 $ 4,674 $ 4,733 $ 27,896 $ 0,035 $,359 Depreciation and amortization 4,49 5,459 9,087 9,235 20,362 22,788 2,930 23,28 22,706 27,030 27,58 26,87 Long-lived asset impairment ,22-633, ,0 Restructuring charges Goodwill impairment Selling, general and administrative 0,26 9,927 0,594 8,643 2,222 3,450,762 2,455 2,607 5,203 6,948 7,23 Interest expense 7,075 7,553 7,860 7,92 5,882 6,399 6,465 6,42 7,424 0,299 9,735 9,60 Other (income) expense, net (22) 455 (338) (288) 527 (26) (37) (64) (407) (7,270) (639) (,65) Provision for (benefit from) income taxes Gross margin 3,677 32,07 4,082 40,573 44,584 5,725 50,672 57,352 59,00 74,644 64,330 66,64 Cap on operating costs provided by AROC 6,877 8,349 6,93 5,073 5,323 3,5 5,84,886 3,503,729 3,22 3,938 Cap on selling, general and administrative costs provided by AROC 2,252,85,802-2,482 2,80,090,85,854 2,368 4,64 4,42 Non-cash selling, general and administrative costs (207) Expensed acquisition costs (in Other (income) expense, net) Less: Selling, general and administrative (0,26) (9,927) (0,594) (8,643) (2,222) (3,450) (,762) (2,455) (2,607) (5,203) (6,948) (7,23) Less: Other income (expense), net 22 (455) (527) , ,65 EBITDA, as adjusted 3,75 32,502 38,64 37,53 40,680 44,997 46,50 48,902 52,995 7,43 55,682 59,03 Less: (Provision for) benefit from income taxes (235) (256) (242) (85) (28) (277) (272) (5) (407) (56) (309) (229) Less: Gain on sale of property, plant and equipment (in Other (income) expense, net) (22) (5) (39) (273) (74) (244) (27) (44) (935) (7,249) (64) (,342) Less: Loss on non-cash consideration in March 206 Acquisition Less: Cash interest expense (4,207) (4,652) (4,95) (5,02) (5,208) (5,78) (5,905) (5,930) (6,98) (9,036) (8,802) (8,774) Less: Maintenance capital expenditures (5,457) (8,454) (7,382) (7,568) (8,7) (,46) (0,345) (8,490) (8,349) (9,558) (2,675) (0,89) Distributable cash flow $ 2,064 $ 9,025 $ 25,720 $ 24,475 $ 26,900 $ 27,342 $ 29,50 $ 34,223 $ 37,06 $ 44,739 $ 33,282 $ 37,849 Distributions declared to all unitholders for the period, including incentive distribution rights $ 6,243 $ 9,06 $ 9,322 $ 9,58 $ 22,480 $ 22,762 $ 23,044 $ 23,33 $ 27,598 $ 27,927 $ 28,340 $ 28,840 Distributable cash flow coverage².30x.00x.33x.25x.20x.20x.28x.47x.34x.60x.7x.3x Distributable cash flow coverage (without the benefit of the cost caps) 2,3 0.73x 0.46x 0.92x 0.99x 0.85x 0.92x 0.98x.3x.5x.46x 0.9x.02x EBITDA, as adjusted $ 3,75 $ 32,502 $ 38,64 $ 37,53 $ 40,680 $ 44,997 $ 46,50 $ 48,902 $ 52,995 $ 7,43 $ 55,682 $ 59,03 Less: Cap on operating and selling, general and administrative costs provided by AROC (9,29) (0,200) (7,995) (5,073) (7,805) (6,32) (6,93) (3,70) (5,357) (4,097) (7,376) (8,350) EBITDA, as adjusted (without the benefit of the cost caps),3 $ 22,046 $ 22,302 $ 30,69 $ 32,440 $ 32,875 $ 38,676 $ 39,29 $ 45,20 $ 47,638 $ 67,046 $ 48,306 $ 50,663 Distributable cash flow $ 2,064 $ 9,025 $ 25,720 $ 24,475 $ 26,900 $ 27,342 $ 29,50 $ 34,223 $ 37,06 $ 44,739 $ 33,282 $ 37,849 Less: Cap on operating and selling, general and administrative costs provided by AROC (9,29) (0,200) (7,995) (5,073) (7,805) (6,32) (6,93) (3,70) (5,357) (4,097) (7,376) (8,350) Distributable cash flow (without the benefit of the cost caps),3 $,935 $ 8,825 $ 7,725 $ 9,402 $ 9,095 $ 2,02 $ 22,570 $ 30,522 $ 3,749 $ 40,642 $ 25,906 $ 29,499 See Addendum I-A for information on gross margin, EBITDA, as adjusted, EBITDA, as adjusted (without the benefit of the cost caps), distributable cash flow and distributable cash flow (without the benefit of the cost caps). 2 Defined as distributable cash flow divided by distributions declared to all unit holders for the period, including incentive distribution rights. 3 Provisions in the Omnibus Agreement that provided caps on our obligation to reimburse Archrock for operating and SG&A expenses terminated on January, 205. Excluding the benefit of the cost caps from our previously defined non-gaap measures of EBITDA, as adjusted, and distributable cash flow provides external users of our consolidated financial statements comparable measures to assess operating performance in the current year period with operating performance in the prior year periods. 27 Addendum I-C

28 Non-GAAP Financial Measures Archrock Partners, L.P. ($ in thousands) Q 4 2Q 4 3Q 4 4Q 4 Q 5 2Q 5 3Q 5 4Q 5 Q 6 2Q 6 Q3 6 Q4 6 Net income (loss) $ 6,939 $ 7,752 $ 8,03 $ 8,925 $ 20,085 $ 22,327 $,498 $ (37,935) $ 520 $ 3,3 $ (567) $ (4,02) Depreciation and amortization 27,92 3,708 33,598 34,969 36,05 39,487 40,262 39,932 39,237 38,627 38,087 37,790 Long-lived asset impairment 2,486,99 3,558 4,775 3,484,826 7,63 26,54 6,35 8,283 7,909 23,75 Restructuring charges ,39,208,946 6 Goodwill impairment , Selling, general and administrative 9,376 9,047 20,734 2,364 2,69 20,72 20,729 22,967 23,679 9,74 7,97 8,380 Interest expense 9,689 4,756 6,4 7,225 7,832 9,082 9,048 8,69 8,742 9,33 20,034 9,774 Other (income) expense, net 87 (34) (649) (62) (9) (,52) 585 (273) (890) (2,64) Provision for (benefit from) income taxes (299) (72) Gross margin 67,843 85,859 9,3 97,985 99,27 0,859 99,46 97,94 93,564 90,742 84,624 84,09 Cap on operating costs provided by AROC 2, Cap on selling, general and administrative costs provided by AROC 3,620,399 2,685 3, Non-cash selling, general and administrative costs Expensed acquisition costs (in Other (income) expense, net), Less: Selling, general and administrative (9,376) (9,047) (20,734) (2,364) (2,69) (20,72) (20,729) (22,967) (23,679) (9,74) (7,97) (8,380) Less: Other income (expense), net (87) ,52 (585) 273 (838) (72) 890 2,64 EBITDA, as adjusted 56,052 68,563 75,25 80,508 78,74 83,99 78,200 75,342 69,48 7,20 67,920 69,004 Less: (Provision for) benefit from income taxes (82) (54) 299 (889) (643) 72 (3) (333) (94) (87) (88) (943) Less: Gain on sale of property, plant and equipment (in Other (income) expense, net) (673) (70) (,44) (209) (280) (,782) 566 (25) (795) (2,946) Less: Loss on non-cash consideration in March 206 Acquisition Less: Cash interest expense (8,838) (3,563) (4,962) (6,62) (6,768) (7,893) (7,780) (7,740) (8,08) (8,527) (8,449) (8,600) Less: Maintenance capital expenditures (0,26) (,896) (3,366) (9,838) (0,079) (5,294) (5,69) (0,765) (8,047) (5,878) (4,785) (5,90) Distributable cash flow $ 36,43 $ 42,393 $ 45,682 $ 53,40 $ 50,97 $ 48,302 $ 45,64 $ 46,254 $ 43,947 $ 46,72 $ 43,703 $ 4,325 Distributions declared to all unitholders for the period, including incentive distribution rights $ 33,093 $ 33,649 $ 34,764 $ 35,323 $ 35,903 $ 39,084 $ 39,682 $ 39,680 $ 7,57 $ 7,53 $ 7,53 $ 9,07 Distributable cash flow coverage².09x.26x.3x.5x.42x.24x.4x.7x 2.5x 2.67x 2.50x 2.6x Distributable cash flow coverage (without the benefit of the cost caps) 2,3 0.9x.22x.24x.4x.42x.24x.4x.7x 2.5x 2.67x 2.50x 2.6x EBITDA, as adjusted $ 56,052 $ 68,563 $ 75,25 $ 80,508 $ 78,74 $ 83,99 $ 78,200 $ 75,343 $ 69,48 $ 7,20 $ 67,920 $ 69,004 Less: Cap on operating and selling, general and administrative costs provided by AROC (6,56) (,399) (2,685) (3,60) EBITDA, as adjusted (without the benefit of the cost caps),3 $ 49,896 $ 67,64 $ 72,440 $ 76,898 $ 78,74 $ 83,99 $ 78,200 $ 75,342 $ 69,48 $ 7,20 $ 67,920 $ 69,004 Distributable cash flow $ 36,43 $ 42,393 $ 45,682 $ 53,40 $ 50,97 $ 48,302 $ 45,64 $ 46,253 $ 43,947 $ 46,72 $ 43,703 $ 4,325 Less: Cap on operating and selling, general and administrative costs provided by AROC (6,56) (,399) (2,685) (3,60) Distributable cash flow (without the benefit of the cost caps),3 $ 29,987 $ 40,994 $ 42,997 $ 49,800 $ 50,97 $ 48,302 $ 45,64 $ 46,253 $ 43,947 $ 46,72 $ 43,703 $ 4,325 See Addendum I-A for information on gross margin, EBITDA, as adjusted, EBITDA, as adjusted (without the benefit of the cost caps), distributable cash flow and distributable cash flow (without the benefit of the cost caps). 2 Defined as distributable cash flow divided by distributions declared to all unit holders for the period, including incentive distribution rights. 3 Provisions in the Omnibus Agreement that provided caps on our obligation to reimburse Archrock for operating and SG&A expenses terminated on January, 205. Excluding the benefit of the cost caps from our previously defined non-gaap measures of EBITDA, as adjusted, and distributable cash flow provides external users of our consolidated financial statements comparable measures to assess operating performance in the current year period with operating performance in the prior year periods. Addendum I-C Continued 28

29 Non-GAAP Financial Measures Archrock Partners, L.P. ($ in thousands) Q 7 2Q 7 4 3Q 7 Net income (loss) $ (4,36) $ 5,275 $ (4,03) Depreciation and amortization 36,885 36,275 35,787 Long-lived asset impairment 6,20 3,08 5,368 Restructuring charges Goodwill impairment Selling, general and administrative 20,3 8,303 20,7 Interest expense 20,223 2,299 2,839 Debt extinguishment costs Other (income) expense, net 2 (933) (2,793) Provision for (benefit from) income taxes, Gross margin 8,08 84,260 77,607 Cap on operating costs provided by AROC Cap on selling, general and administrative costs provided by AROC Non-cash selling, general and administrative costs Expensed acquisition costs (in Other (income) expense, net) Less: Selling, general and administrative (20,3) (8,303) (20,7) Less: Other income (expense), net (2) 933 2,793 EBITDA, as adjusted 6,5 66,927 59,885 Less: (Provision for) benefit from income taxes (,302) (960) (708) Less: Gain on sale of property, plant and equipment (in Other (income) expense, net) 48 (907) (2,759) Less: Loss on non-cash consideration in March 206 Acquisition Less: Cash interest expense (8,254) (9,659) (9,262) Less: Maintenance capital expenditures (7,275) (6,320) (7,347) Distributable cash flow $ 34,432 $ 39,08 $ 29,809 Distributions declared to all unitholders for the period, including incentive distribution rights $ 9,0 $ 9,2 $ 20,459 Distributable cash flow coverage².80x 2.04x.46x Distributable cash flow coverage (without the benefit of the cost caps) 2,3.80x 2.04x.46x EBITDA, as adjusted $ 6,5 $ 66,927 $ 59,885 Less: Cap on operating and selling, general and administrative costs provided by AROC EBITDA, as adjusted (without the benefit of the cost caps),3 $ 6,5 $ 66,927 $ 59,885 Distributable cash flow $ 34,432 $ 39,08 $ 29,809 Less: Cap on operating and selling, general and administrative costs provided by AROC Distributable cash flow (without the benefit of the cost caps),3 $ 34,432 $ 39,08 $ 29,809 See Addendum I-A for information on gross margin, EBITDA, as adjusted, EBITDA, as adjusted (without the benefit of the cost caps), distributable cash flow and distributable cash flow (without the benefit of the cost caps). 2 Defined as distributable cash flow divided by distributions declared to all unit holders for the period, including incentive distribution rights. 3 Provisions in the Omnibus Agreement that provided caps on our obligation to reimburse Archrock for operating and SG&A expenses terminated on January, 205. Excluding the benefit of the cost caps from our previously defined non-gaap measures of EBITDA, as adjusted, and distributable cash flow provides external users of our consolidated financial statements comparable measures to assess operating performance in the current year period with operating performance in the prior year periods. 4 Excludes impact of Q2-7 distribution paid on the sale of 4,600,000 common units priced on August 3, Addendum I-C Continued

30 Non-GAAP Financial Measures Archrock Partners, L.P. (in thousands) Q 2Q 3Q 4Q Q 2 2Q 2 3Q 2 4Q 2 Q 3 2Q 3 3Q 3 4Q 3 Revenue $ 68,729 $ 7,84 $ 84,437 $ 83,267 $ 88,697 $ 97,7 $ 99,324 $ 02,30 $ 06,062 $ 25,453 $ 5,808 $ 8,870 Gross margin $ 3,677 $ 32,07 $ 4,082 $ 40,573 $ 44,584 $ 5,725 $ 50,672 $ 57,352 $ 59,00 $ 74,644 $ 64,330 $ 66,64 Gross margin percentage 46% 45% 49% 49% 50% 53% 5% 56% 56% 59% 56% 56% Average Operating Horsepower,387,442,69,706,763,96,924,960,982 2,236 2,27 2,242 Gross margin per Horsepower per Quarter $ $ $ $ $ $ $ $ $ $ $ $ 29.5 Gross margin per Horsepower per Month $ 7.6 $ 7.40 $ 8.0 $ 7.93 $ 8.43 $ 9.00 $ 8.78 $ 9.75 $ 9.92 $.3 $ 9.67 $ 9.84 Q 4 2Q 4 3Q 4 4Q 4 Q 5 2Q 5 3Q 5 4Q 5 Q 6 2Q 6 3Q 6 4Q 6 Revenue $ 2,046 $ 45,694 $ 53,63 $ 6,33 $ 64,295 $ 67,80 $ 63,293 $ 6,49 $ 5,424 $ 40,052 $ 35,478 $ 35,406 Gross margin $ 67,843 $ 85,859 $ 9,3 $ 97,985 $ 99,27 $ 0,859 $ 99,46 $ 97,94 $ 93,564 $ 90,742 $ 84,624 $ 84,09 Gross margin percentage 56% 59% 60% 6% 60% 6% 6% 6% 62% 65% 62% 62% Average Operating Horsepower 2,269 2,708 2,877 2,985 3,034 3,28 3,9 3,065 2,96 2,85 2,75 2,86 Gross margin per Horsepower per Quarter $ $ 3.7 $ 3.74 $ $ $ $ 3.87 $ 3.95 $ 3.60 $ $ $ Gross margin per Horsepower per Month $ 9.97 $ 0.57 $ 0.58 $ 0.94 $ 0.89 $ 0.85 $ 0.62 $ 0.65 $ 0.53 $ 0.75 $ 0.25 $ 9.95 Q 7 2Q 7 3Q 7 Revenue $ 37,295 $ 38,255 $ 40,9 Gross margin $ 8,08 $ 84,260 $ 77,607 Gross margin percentage 59% 6% 55% Average Operating Horsepower 2,86 2,843 2,890 Gross margin per Horsepower per Quarter $ $ $ Gross margin per Horsepower per Month $ 9.44 $ 9.88 $ 8.95 See Addendum I-A for information on gross margin and gross margin percentage. Addendum I-D 30