Archrock Inc (AROC) 2024年10-K年度報告「NYSE」.pdf

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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549Form 10-K(MARK ONE)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year ended December 31,2024or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXC

2、HANGE ACT OF1934For the transition period from toCommission file no.001-33666Archrock,Inc.(Exact name of registrant as specified in its charter)9807 Katy Freeway,Suite 100,Houston,Texas 77024(Address of principal executive offices,zip code)(281)836-8000(Registrants telephone number,including area co

3、de)Securities registered pursuant to Section 12(b)of the Act:Securities registered pursuant to 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to

4、file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant w

5、as requiredto file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapte

6、r)during the preceding 12 months(or for suchshorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,asmaller reporting company,or an emerging growth company.Se

7、e the definitions of“large accelerated filer,”“acceleratedfiler,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition periodfor complying with an

8、y new or revised financial accounting standards provided pursuant to Section 13(a)of the ExchangeAct.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of theeffectiveness of its internal control over financial reporting under Section 40

9、4(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements ofthe registrant included in the filing reflect the

10、 correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period

11、 pursuant to240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No Delaware74-3204509(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)Title of each classTrading SymbolName of e

12、xchange on whichCommon Stock,$0.01 par value perhAROCNew York Stock ExchangefilerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm1/

13、166Aggregate market value of the common stock of the registrant held by non-affiliates as of June 30,2024:$3,066,717,416.Number of shares of the common stock of the registrant outstanding as of February 18,2025:175,268,710 shares.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants definit

14、ive proxy statement for the 2024 Meeting of Stockholders,which is expected to be filedwith the Securities and Exchange Commission within 120 days after December 31,2024,are incorporated by reference intoPart III of this Form 10-K.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archive

15、s/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm2/166Table of Contents2TABLE OF CONTENTS PageGlossary3Forward-Looking Statements5Part IItem 1.Business6Item 1A.Risk Factors19Item 1B.Unresolved Staff Comments33Item 1C.Cybersecurity33Item 2.Properties36Item 3.Legal Proceedings36Item 4.Mine

16、 Safety Disclosures36Part IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and IssuerPurchases of Equity Securities36Item 6.Reserved38Item 7.Managements Discussion and Analysis of Financial Condition and Results ofOperations38Item 7A.Quantitative and Qualitative Disclosures

17、About Market Risk50Item 8.Financial Statements and Supplementary Data50Item 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure50Item 9A.Controls and Procedures51Item 9B.Other Information54Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections54

18、Part IIIItem 10.Directors,Executive Officers and Corporate Governance54Item 11.Executive Compensation54Item 12.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters54Item 13.Certain Relationships and Related Transactions and Director Independence55Item 14.Prin

19、cipal Accountant Fees and Services55Part IVItem 15.Exhibits and Financial Statement Schedules55Signatures612025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm3/166Table of Contents3GLOSSARYThe following terms and abbrevi

20、ations appearing in the text of this report,including theFinancial Statements,have the meanings indicated below.2020 Plan2020 Stock Incentive PlanForm 10KAnnual Report on Form 10K for the year ended December 31,20242027 Notes$500.0 million of 6.875%senior notes due April 20272027 Notes TenderOffer$2

21、00.0 million partial redemption of the 2027 Notes,completed in August20242028 Notes$800.0 million of 6.25%senior notes due April 20282032 Notes$700.0 million of 6.625%senior notes due September 2032,issued inAugust 2024Amended and RestatedCredit AgreementAmended and Restated Credit Agreement,dated M

22、ay 16,2023,whichamended and restated that Credit Agreement,dated as of March 30,2017,and which governs the Credit FacilityAMNAXAlerian Midstream Energy IndexAMZAlerian MLP IndexArchrock ELTArchrock ELT LLC,an indirect,wholly owned subsidiary of ArchrockArchrock,our,we,usArchrock,Inc.,individually an

23、d together with its wholly owned subsidiariesARRCAlternative Reference Rates CommitteeASUAccounting Standards UpdateATM AgreementEquity Distribution Agreement,dated February 23,2021,entered into withWells Fargo Securities,LLC and BofA Securities,Inc.,as sales agents,relating to the atthemarket offer

24、 and sale of shares of our common stockfrom time to timeBcf/dBillion cubic feet per dayBoLMU.S.Department of the Interiors Bureau of Land ManagementCAAClean Air ActCERCLAComprehensive Environmental Response,Compensation,and Liability ActCIS CSCCenter for Internal Security Critical Security ControlsC

25、ISSPCertified Information Systems Security ProfessionalCodeInternal Revenue Code of 1986,as amendedCODMChief operating decision makerCongressThe United States Congress is the legislature of the federal government ofthe United States,composed of a lower body,the House of Representatives,and an upper

26、body,the SenateCOPConference of the Parties of the United Nations Framework Convention onClimate ChangeCredit Facility$1.1 billion asset-based revolving credit facility due May 2028,as governedby the Amended and Restated Credit AgreementCWAClean Water ActDebt AgreementsCredit Facility,2027 Notes,202

27、8 Notes and 2032 Notes,collectivelyDOEDepartment of EnergyDSDPDirectors Stock and Deferral PlanEBITDAEarnings before interest,taxes,depreciation and amortizationECOTECEcotec International Holdings,LLCEIAU.S.Energy Information AdministrationEIA OutlookFebruary 2025 EIA Short Term OutlookEPAU.S.Enviro

28、nmental Protection AgencyERPEnterprise Resource PlanningESGEnvironmental,Social and GovernanceESPPEmployee Stock Purchase PlanExchange ActSecurities Exchange Act of 1934,as amendedFASBFinancial Accounting Standards BoardFederal Funds EffectiveRateThe target interest rate depository institutions char

29、ge each other forovernight loans of funds2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm4/1662025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231

30、x10k.htm5/166Table of Contents4Financial StatementsConsolidated financial statements included in Part IV Item 15 of thisForm 10KFirst Amendment to theAmended andRestated CreditAgreementFirst Amendment to the Amended and Restated Credit Agreement,datedAugust 28,2024,which amended the Amended and Rest

31、ated CreditAgreementGAAPAccounting principles generally accepted in the U.S.GHGGreenhouse gases(carbon dioxide,methane and water vapor for example)HilcorpHilcorp Energy CompanyIonadaIonada PLCIRSInternal Revenue ServiceITInformation TechnologyJuly 2024 EquityOfferingPublic underwriting offering wher

32、eby Archrock sold approximately 12.7million shares of its common stock,completed in July 2024LIBORLondon Interbank Offered RateLNGLiquified natural gasMMb/dMillion barrels per dayNAAQSNational Ambient Air Quality StandardsNOLNet operating lossNSPSNew Source Performance StandardsOOOOb and OOOOcSubpar

33、t of the NSPS commonly referred to as the EPAs methane rule fornew and existing sourcesOSHAOccupational Safety and Health ActOTCOverthecounter,as related to aftermarket services parts and componentsParis AgreementResulting agreement of the 21st Conference of the Parties of the UnitedNations Framewor

34、k Convention on Climate Change held in Paris,FranceppbParts per billionPrime RateRate of interest last quoted by The Wall Street Journal as the prime rate inthe U.S.RCRAResource Conservation and Recovery ActROURightofuse,as related to operating leasesS&P 500S&P 500 Composite Stock Price IndexSECU.S.

35、Securities and Exchange CommissionSG&ASelling,general and administrativeShare RepurchaseProgramShare repurchase program approved by our Board of Directors on April 27,2023 that allowed us to repurchase up to$50.0 million of outstandingcommon stock for a period of twelve months,which prior to its exp

36、irationwas extended on April 25,2024 for an additional 24-month period and areplenishment of the authorized share repurchase amount to$50.0 millionSOFRSecured Overnight Financing RateSpinoffSpinoff of our international contract operations,international aftermarketservices and global fabrication busi

37、nesses into a standalone public companyoperating as Exterran Corporation in November 2015.Exterran Corporationwas subsequently acquired by Enerflex Ltd.in October 2022.TOPSTotal Operations and Production Services,LLC,a portfolio companymanaged by certain affiliates of Apollo Global Management,Inc.TO

38、PS AcquisitionTransaction completed on August 30,2024(“acquisition date”)pursuant tothat certain purchase and sale agreement,dated as of July 22,2024,by andamong Archrock,Archrock ELT,TOPS Pledge1,LLC,TOPS Pledge2,LLCand for limited purposes therein,TOPS Holdings,LLC,whereby Archrockacquired all of

39、the issued and outstanding equity interests in TOPSUNFCCCUnited Nations Framework Convention on Climate ChangeU.S.United States of AmericaVOCVolatile organic compoundsWACCWeighted average cost of capital2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138

40、905025000009/aroc-20241231x10k.htm6/1662025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm7/166Table of Contents5FORWARDLOOKING STATEMENTSThis Form 10-K contains“forward-looking statements”intended to qualify for the saf

41、e harbors fromliability established by the Private Securities Litigation Reform Act of 1995.All statements other thanstatements of historical fact contained in this Form 10-K are forward-looking statements within themeaning of the Exchange Act,including,without limitation,statements regarding our bu

42、siness growthstrategy and projected costs;future financial position;the sufficiency of available cash flows to fundcontinuing operations and pay dividends;the expected amount of our capital expenditures;anticipatedcost savings;future revenue,adjusted gross margin and other financial or operational m

43、easures relatedto our business;the future value of our equipment;and plans and objectives of our management for ourfuture operations.You can identify many of these statements by words such as“believe,”“expect,”“intend,”“project,”“anticipate,”“estimate,”“will continue”or similar words or the negative

44、 thereof.Such forward-looking statements are subject to various risks and uncertainties that could cause actualresults to differ materially from those anticipated as of the date of this Form 10-K.Although we believethat the expectations reflected in these forward-looking statements are based on reas

45、onable assumptions,no assurance can be given that these expectations will prove to be correct.Known material factors thatcould cause our actual results to differ materially from the expectations reflected in these forward-looking statements are described in Part I,Item 1A.“Risk Factors”and Part II,I

46、tem 7.“ManagementsDiscussion and Analysis of Financial Condition and Results of Operations”of this Form 10K.Theserisk factors include,but are not limited to,risks related to macroeconomic conditions,including anincrease in inflation and trade tensions;pandemics and other public health crises;ongoing

47、 internationalconflicts and tensions;risks related to our operations;competitive pressures;risks of acquisitions toreduce our ability to make distributions to our common stockholders;inability to make acquisitions oneconomically acceptable terms;risks related to our sustainability initiatives;uncert

48、ainty to paydividends in the future;risks related to a substantial amount of debt and our debt agreements;inabilityto access the capital and credit markets or borrow on affordable terms to obtain additional capital;inability to fund purchases of additional compression equipment;vulnerability to inte

49、rest rate increases;erosion of the financial condition of our customers;risks related to the loss of our most significantcustomers;uncertainty of the renewals for our contract operations service agreements;risks related tolosing management or operational personnel;dependence on particular suppliers

50、and vulnerability toproduct shortages and price increases;information technology and cybersecurity risks;tax-related risks;legal and regulatory risks,including climate-related and environmental,social and governance risks.All forward-looking statements included in this Form 10-K are based on informa

51、tion available to us onthe date of this Form 10-K.Except as required by law,we undertake no obligation to publicly update orrevise any forward-looking statement,whether as a result of new information,future events orotherwise.All subsequent written and oral forward-looking statements attributable to

52、 us or personsacting on our behalf are expressly qualified in their entirety by the cautionary statements containedthroughout this Form 10-K.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm8/166Table of ContentsPART I

53、Item 1.BusinessWe were incorporated in February 2007 as a wholly owned subsidiary of Universal CompressionHoldings,Inc.In August 2007,Universal Compression Holdings,Inc.and Hanover CompressorCompany merged into our wholly owned subsidiaries and we became Exterran Holdings,Inc.,theparent entity of Un

54、iversal Compression Holdings,Inc.and Hanover Compressor Company.InNovember 2015,we completed the spinoff of our international contract operations,internationalaftermarket services and global fabrication business into a standalone public company operating asExterran Corporation,and we were renamed“Ar

55、chrock,Inc.”We are an energy infrastructure company with a primary focus on midstream natural gas compressionand a commitment to helping our customers produce,compress and transport natural gas in a safe andenvironmentally responsible way.We are a premier provider of natural gas compression services

56、 tocustomers in the energy industry throughout the U.S.,and a leading supplier of aftermarket services tocustomers that own compression equipment in the U.S.Our business supports a mustrun service that isessential to the production,processing,transportation and storage of natural gas.Our mission to

57、helpour customers deliver natural gas in an affordable and responsible manner,to a variety of criticalindustries is more critical now than ever.We operate in two business segments:Contract Operations Our contract operations business is comprised of our owned fleet ofnatural gas compression equipment

58、 that we use to provide compression services to ourcustomers.Aftermarket Services Our aftermarket services business provides a full range of services tosupport the compression needs of our customers that own compression equipment,includingoperations,maintenance,overhaul and reconfiguration services

59、and sales of parts andcomponents.Natural Gas Compression Industry OverviewNatural gas compression is a mechanical process whereby the pressure of a given volume of natural gasis increased to a desired higher pressure for transportation from one point to another.It is essential to theproduction and t

60、ransportation of natural gas.Compression is also critical to minimizing flaring andreducing the waste of natural gas and natural gas liquids that results from insufficient gathering andprocessing capacity.Compression is typically required throughout the natural gas production and transportation cycl

61、e,including at the wellhead,throughout gathering and distribution systems,into and out of processing andstorage facilities and along intrastate and interstate pipelines.Our service offerings focus primarily onmidstream applications,with 64%of our operating fleet being used in the gathering and proce

62、ssingcycle stages.The remaining 36%of our operating fleet is used in gas lift applications.Wellhead and Gathering Systems.Natural gas compression is used to transport natural gas from thewellhead through the gathering system.At some point during the life of natural gas wells,reservoirpressures typic

63、ally fall below the line pressure of the natural gas gathering or pipeline system used totransport the natural gas to market.At that point,natural gas no longer naturally flows into the pipeline.Compression equipment is applied in both field and gathering systems to boost the pressure levels of then

64、atural gas flowing from the well,allowing it to be transported to market.Changes in pressure levels innatural gas fields require periodic changes to the size and/or type of onsite compression equipment.Compression equipment is also used to increase the efficiency of a lowcapacity natural gas field b

65、yproviding a central compression point from which the natural gas can be produced and injected into apipeline for transmission to facilities for further processing.Processing Applications.Compressors may be used in combination with natural gas production andprocessing equipment to process natural ga

66、s into other marketable energy sources.In addition,compression services are used for compression applications in refineries and petrochemical plants.Processing applications typically utilize multiple large horsepower compressors.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives

67、/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm9/16662025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm10/166Table of Contents7Gas Lift Applications.Compression is used to reinject natural gas into producin

68、g oil wells to help liftliquids to the surface,which is known as natural gas lift.These applications utilize low to midrangehorsepower compression equipment located at or near the wellhead or large horsepower compressionequipment of over 1,000 horsepower for a centralized gas lift system servicing m

69、ultiple wells.Many oil and natural gas producers,transporters and processors outsource their compression servicesdue to the benefits and flexibility of contract compression.Changing well and pipeline pressures andconditions over the life of a well often require producers to reconfigure or replace th

70、eir compressionpackages to optimize the well production or gathering system efficiency.We believe outsourcing compression operations to compression service providers such as us offerscustomers:the ability to efficiently meet their changing compression needs over time while limiting theunderutilizati

71、on of their owned compression equipment;access to the compression service providers specialized personnel and technical skills,including engineers and field service and maintenance employees,which we believe generallyleads to improved production rates and/or increased throughput;the ability to incre

72、ase their profitability by transporting or producing a higher volume of naturalgas and crude oil through decreased compression downtime and reduced operating,maintenanceand equipment costs by allowing the compression service provider to efficiently manage theircompression needs;andthe flexibility to

73、 deploy their capital on projects more directly related to their primary businessby reducing their compression equipment and maintenance capital requirements.We believe the U.S.natural gas compression services industry continues to have growth potential overtime due to,among other things,increased n

74、atural gas production in the U.S.from unconventionalsources,the aging of producing natural gas fields that will require more compression to continueproducing the same volume of natural gas due to lower pressures and the rise in gas-to-oil ratios formaturing wells and expected increased demand for na

75、tural gas in the U.S.for power generation,industrial uses and exports,including liquefied natural gas exports and exports of natural gas viapipeline to Mexico.Contract Operations OverviewCompression ServicesWe provide comprehensive contract operations services including the personnel,equipment,tools

76、,materials and supplies to meet our customers natural gas compression needs.Based on the operatingspecifications at the customer location and each customers unique needs,these services includedesigning,sourcing,owning,installing,operating,servicing,repairing and maintaining the equipment.We work clo

77、sely with our customers field service personnel so that compression services can beadjusted to efficiently match changing characteristics of the reservoir and the natural gas produced andmay repackage or reconfigure our existing fleet to adapt to our customers compression needs.During the years ende

78、d December 31,2024,2023 and 2022,we generated 85%,82%and 80%,respectively,of our total revenue from contract operations.Compression FleetThe compressors that we own and use to provide contract operations services are predominantly largehorsepower,which we define as greater than 1,000 horsepower per

79、unit,and consist primarily ofreciprocating compressors driven by natural gaspowered or electric motor drive engines.Our fleet islargely standardized around major components and key suppliers,which minimizes our fleet operatingcosts and maintenance capital requirements,reduces inventory costs,facilit

80、ates lowcost compressorresizing and improves technical proficiency in our maintenance and overhaul operations,which in turnallows us to achieve higher uptime while maintaining lower operating costs.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/00013890502

81、5000009/aroc-20241231x10k.htm11/1662025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm12/166Table of Contents8All of our compressors are designed to automatically shut down if operating conditions deviate from apredeterm

82、ined range and substantially all are also equipped with telematic devices that enable us toremotely monitor the units.We maintain field service locations from which we service and overhaul ourfleet.Our equipment undergoes routine and preventive maintenance in accordance with our establishedmaintenan

83、ce schedules,standards and procedures,which we update as technology changes and as ouroperations group develops new techniques and procedures to better service our equipment.In ourexperience,these maintenance practices maximize equipment life and unit availability,minimizeemissions and avoidable dow

84、ntime while reducing the overall maintenance expenditures over theequipment life.As of December 31,2024,the average age of our operating fleet was 10 years.The following table summarizes the size of our natural gas compression fleet as of December 31,2024:Aggregate NumberHorsepower%of of Units(in th

85、ousands)Horsepower0 1,000 horsepower per unit 2,994 1,146 26%1,001 1,500 horsepower per unit 1,241 1,683 38%Over 1,500 horsepower per unit 729 1,572 36%Total 4,964 4,401 100%General Terms of our Contract Operations Service AgreementsWe typically enter into a master service agreement with each custom

86、er that sets forth the general termsand conditions of our services,and then enter into a separate supplemental service agreement for eachdistinct site at which we provide contract operations services.The following describes select materialterms common to our standard contract operations service agre

87、ements.Term and Termination.Our customers typically contract for our contract operations services on a sitebysite basis that is generally reduced if we fail to operate in accordance with the contract requirements.Following the initial minimum term,which generally ranges from 12 to 36 months,or up to

88、 60 monthsfor the largest horsepower units in our fleet,contract operations services generally continue on a monthtomonth basis until terminated by either party with 30 days advance notice.Fees and Expenses.Our customers pay a fixed monthly fee for our contract operations services,whichgenerally is

89、based on the amount of horsepower associated with a specific application.In certaincircumstances,such as limited or disrupted natural gas flows,our customers may be provided a reducedmonthly fee.We are typically responsible for the costs and expenses associated with our compressionequipment except f

90、or fuel gas or electricity,which is provided by our customers.Service Standards and Specifications.We provide contract operations services according to theparticular specifications of each job,as set forth in the applicable contract.These are typically turnkeyservice contracts under which we supply

91、all services and support and use our compression equipment toprovide the contract operations services necessary for a particular application.In certain circumstances,if the availability of our services does not meet certain percentages specified in our contracts,ourcustomers are generally entitled,u

92、pon request,to specified credits against our service fees.Title and Risk of Loss.We own and retain title to or have an exclusive possessory interest in allcompression equipment used to provide contract operations services and we generally bear risk of lossfor such equipment to the extent the loss is

93、 not caused by gas conditions,our customers acts oromissions or the failure or collapse of the customers overwater job site upon which we provide thecontract operations services.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-2024123

94、1x10k.htm13/166Table of Contents9Insurance.Typically,both we and our customers are required to carry general liability,workerscompensation,employers liability,automobile and excess liability insurance.Our insurance coverageincludes property damage,general liability and commercial automobile liabilit

95、y and other coverage webelieve is appropriate.Additionally,we are substantially self-insured for workers compensation andemployee group health claims in view of the relatively high per-incident deductibles we absorb underour insurance arrangements for these risks.We are also self-insured for propert

96、y damage to our offshoreassets.Aftermarket Services OverviewOur aftermarket services business sells parts and components and provides operations,major androutine maintenance,overhaul and reconfiguration services to customers who own compressionequipment.We believe that we are particularly wellqualif

97、ied to provide these services because ourhighly experienced operating personnel have access to the full range of our compression services andfacilities.In addition,our aftermarket services business provides opportunities to crosssell our contractoperations services.During the years ended December 31

98、,2024,2023 and 2022,we generated 15%,18%and 20%,respectively,of our total revenue from aftermarket services.Competitive StrengthsWe believe we have the following key competitive strengths:Superior safety performance.We believe our collective safety performance is pivotal to the success ofour busines

99、s and is of primary importance to our customers.We have a strong safety culture and aproven ability to safely manage our business in a variety of commodity and economic environments.Our safetycentric culture has consistently produced industryleading safety performance for manyyears,including a 2024

100、total recordable incident rate of 0.17.Large horsepower.As of December 31,2024,we have the largest fleet of large horsepower equipmentamong all outsourced compression service providers in the U.S.In addition,74%of our fleet,asmeasured by operating horsepower,was comprised of units that exceed 1,000

101、horsepower per unit.Webelieve the trends driving demand for large horsepower units will continue.These trends include(i)high levels of associated gas production from shale wells,which are generally produced at a lowerinitial pressure than dry gas wells,(ii)pad drilling,which brings multiple wells to

102、 a single well site withlarger volumes of gas,(iii)increasing well lateral lengths,which increase natural gas flow through gasgathering systems,and(iv)high probability drilling programs that allow for efficient infrastructureplanning.Excellent customer service.We operate in a relationshipdriven,serv

103、iceintensive industry andtherefore need to provide superior customer service.We believe that our regionallybased network,local presence,experience and indepth knowledge of our customers operating needs and growth plansenable us to respond to our customers needs and meet their evolving demands on a t

104、imely basis.Inaddition,we focus on achieving a high level of reliability for the services we provide in order tomaximize uptime and our customers production levels.Our sales efforts concentrate on demonstratingour commitment to enhancing our customers cash flows through superior customer service and

105、 aftermarket support.Large and stable customer base.We have strong relationships with a deep base of midstreamcompanies and natural gas and crude oil producers.Our contract operations revenue base is sourcedfrom approximately 280 customers operating throughout all major U.S.natural gas and crude oil

106、producing regions.Feebased cash flows.We charge a fixed monthly fee for our contract operations services and areduced monthly fee during periods of limited or disrupted natural gas flows.Our compressionpackages,on average,operate at a customer location for approximately four years.We believe this fe

107、estructure and the longevity of our operations reduces volatility and enhances the stability andpredictability of our cash flows.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm14/1662025/5/19 12:48Archrock,Inc_Decemb

108、er 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm15/166Table of ContentsDiversified geographic footprint.We operate in substantially all major natural gas and crude oilproducing regions in the U.S.We have a meaningful presence in associated gas plays,i

109、ncluding thePermian and Eagle Ford shales,which,combined,account for approximately three-fourths of ouroperating horsepower.Increased size and geographic density offer compression services providersoperating and cost advantages.As the number of compression locations and size of the compressionfleet

110、increases,the number of required sales,administrative and maintenance personnel increases at alesser rate,resulting in operational efficiencies and potential cost advantages.Additionally,broadgeographic scope allows compression service providers to more efficiently provide services to allcustomers,p

111、articularly those with compression applications in remote locations.Our large fleet andnumerous operating locations throughout the U.S.,combined with our ability to efficiently moveequipment among producing regions,mean that we are not dependent on production activity in anyparticular region.We beli

112、eve our size,geographic scope and broad customer base give us moreflexibility in meeting our customers needs than many of our competitors and provide us with improvedoperating expertise and business development opportunities.Long operating history.We have a long,sustained history of operating in the

113、 compression industry anda robust database of fleet financial and operating metrics that provides an advantage compared to ouryounger competitors.We have extensive experience working with our customers to meet their evolvingneeds.Financial resilience and flexibility.We have historically shown and ar

114、e committed to maintainingcapital discipline and financial strength,which is critical in a cyclical industry and business such asours.Maintaining ample liquidity and a prudent balance sheet supports our ability to continue to deliveron our longterm strategies and positions us to take advantage of fu

115、ture growth opportunities as theyarise.Technology Deployment.We are focused on harnessing technology across all aspects of our business todrive operational efficiencies and enhance our value proposition to our customers.This includes theautomation of workflows,integration of digital and mobile tools

116、 for our field service technicians,expanded remote monitoring capabilities of our compression fleet and emissions solutions.We believethese efforts,among other things,will help us achieve increased asset uptime,improve the efficiency ofour field service technicians,improve our supply chain and inven

117、tory management and reduce ouremissions and carbon footprint,thereby improving our profitability as discussed further below in“Business Strategies.”Business StrategiesWe intend to continue to capitalize on our competitive strengths to meet our customers needs throughthe following key strategies:Capi

118、talize on the longterm fundamentals for the U.S.natural gas compression industry.We believeour ability to efficiently meet our customers evolving compression needs,our longstanding customerrelationships and our large compression fleet will enable us to capitalize on what we believe arefavorable long

119、term fundamentals for the U.S.natural gas compression industry.These fundamentalsinclude significant natural gas resources in the U.S.,increased unconventional oil and natural gasproduction,decreasing natural reservoir pressures,rising gas-to-oil ratios for maturing wells andexpected increased natur

120、al gas demand in the U.S.from the growth of liquefied natural gas exports,exports of natural gas via pipeline to Mexico,power generation and industrial uses.Improve profitability.We are focused on increasing productivity and optimizing our processes.Between 2019 and 2021,we invested in a process and

121、 technology transformation project that replacedour existing ERP,supply chain and inventory management systems and expanded the remotemonitoring capabilities of our compression fleet.Beginning in 2023,our focus shifted to fullyharnessing these technologies across our business.We expect the technolog

122、ical transformations to lowerour internal costs and improve our profitability over time.Implementing telematics and advanced dataanalysis across our fleet has enabled us to respond more quickly and optimally to downtime events,minimize prolonged troubleshooting,prevent unnecessary unit touches and s

123、tops,which are the primarycause of wear and tear of the equipment,and,ultimately,predict failures before they occur.We expectthis will increase the number of units a field service technician can oversee and reduce vehicle milestraveled and fuel consumption,thereby also reducing emissions.2025/5/19 1

124、2:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm16/166102025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm17/166Table of Contents11In addition,our

125、primary focus is on large horsepower equipment as we aim to continue to capitalize onthe trends that have been driving,and that we believe will continue to drive the demand for these units.As part of this strategy,we sold approximately 175,000 and 199,000 of horsepower units during theyears ended De

126、cember 31,2024 and 2023,respectively.Of the units sold during the years endedDecember 31,2024 and 2023,approximately 75%and 80%,respectively,were small horsepower units.Optimize our business to generate attractive returns.We plan to continue to invest in strategicallygrowing our business both organi

127、cally and through thirdparty acquisitions.We see opportunities togrow our contract operations business over the long term by putting idle units back to work andprofitably adding new horsepower in key growth areas.In addition,because a large amount ofcompression equipment is owned by natural gas and

128、crude oil producers,processors,gatherers,transporters and storage providers,we believe there will be additional opportunities for our aftermarketservices business to provide services and parts to support the operation of this equipment.Oil and Natural Gas Industry Cyclicality and VolatilityDemand fo

129、r our products and services is correlated to natural gas and crude oil production.Fluctuationsin energy prices can affect the levels of expenditures by our customers,production volumes andultimately,demand for our products and services,however,we believe our contract operations businessis typically

130、less impacted by commodity prices for the following reasons:feebased contracts minimize our direct commodity price exposure;the natural gas we use as fuel for our compression packages is supplied by our customers,further reducing our direct exposure to commodity price risk;compression services are a

131、 necessary part of midstream energy infrastructure that facilitate thetransportation of natural gas through gathering systems;our contract operations business is tied primarily to oil and natural gas production,transportationand consumption,which are generally less cyclical in nature than exploratio

132、n and new welldrilling and completion activities;the need for compression services and equipment has grown over time due to the increasedproduction of natural gas,the natural pressure decline of natural gasproducing basins and theincreased percentage of natural gas production from unconventional sou

133、rces;andour compression packages operate at a customer location for an average of approximatelyfour years,during which time our customers are generally required to pay a fixed monthly feefor our contract operations services or a reduced monthly fee during periods of limited ordisrupted natural gas f

134、lows.Seasonal FluctuationsOur results of operations have not historically reflected any material seasonal tendencies and we do notbelieve that seasonal fluctuations will have a material impact on us in the foreseeable future.Sales and MarketingOur marketing and client service functions are coordinat

135、ed and performed by our sales and field servicepersonnel.Salespeople,application engineers and field service personnel qualify,analyze and scopenew compression applications as well as regularly visit our customers to ensure customer satisfaction,determine customer needs as to services currently bein

136、g provided and ascertain potential futurecompression services requirements.This ongoing communication allows us to respond swiftly tocustomer requests.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm18/166Table of Con

137、tents12CustomersOur customer base consists primarily of companies engaged in all aspects of the oil and natural gasindustry,including large integrated and independent oil and natural gas processors,gatherers andtransporters.We have entered into preferred vendor arrangements with some of our customer

138、s that giveus preferential consideration for their compression needs.In exchange,we provide these customers withenhanced product availability,product support and favorable pricing.During the years endedDecember 31,2024,2023 and 2022,our five most significant customers collectively accounted for35%,3

139、3%and 32%,respectively,of our contract operations and aftermarket services revenue.Duringthe year ended December 31,2024,one customer accounted for$121.4 million,or more than 10%ofour consolidated revenue,and another customer accounted for more than 13%of our consolidated tradeaccounts receivable,bo

140、th primarily related to our contract operations segment.SuppliersWe have pricing agreements in place with all of our primary suppliers of compression equipment,partsand services,and work closely with these key suppliers on value engineering,to lower total lifecyclecost and improve equipment reliabil

141、ity.Though we rely on these suppliers to a significant degree,webelieve alternative sources for compression equipment,parts and services are generally available.CompetitionThe natural gas compression services business is highly competitive with low barriers to entry.Overall,we experience considerabl

142、e competition from companies that may be able to more quickly adapt tochanging technology within our industry and changes in economic conditions as a whole,more readilytake advantage of acquisitions and other opportunities and adopt more aggressive pricing policies.Webelieve we are competitive with

143、respect to price,equipment availability,customer service,flexibility inmeeting customer needs,technical expertise and quality and reliability of our compression packages andrelated services.See“Competitive Strengths”above for further discussion.Governmental RegulationEnvironmental RegulationOur oper

144、ations are subject to stringent and complex U.S.federal,state and local laws and regulationsgoverning the discharge of materials into the environment or otherwise relating to protection of theenvironment and to occupational safety and health.Compliance with these environmental laws andregulations ma

145、y expose us to significant costs and liabilities and cause us to incur significant capitalexpenditures in our operations.Failure to comply with these laws and regulations may result in theassessment of administrative,civil and criminal penalties,imposition of investigatory and remedialobligations an

146、d the issuance of injunctions delaying or prohibiting operations.We believe that ouroperations are in substantial compliance with applicable environmental,health and safety laws andregulations and that continued compliance with currently applicable requirements would not have amaterial adverse effec

147、t on us.However,the trend in environmental regulation has been to place morerestrictions on activities that may affect the environment,and thus,any changes in these laws andregulations that result in more stringent and costly waste handling,storage,transport,disposal,emissionor remediation requireme

148、nts could have a material adverse effect on our results of operations andfinancial position.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm19/166Table of ContentsThe primary U.S.federal environmental laws to which ou

149、r operations are subject include the CAA andregulations thereunder,which regulate air emissions;the CWA and regulations thereunder,whichregulate the discharge of pollutants in industrial wastewater and storm water runoff;the RCRA andregulations thereunder,which regulate the management and disposal o

150、f hazardous and nonhazardoussolid wastes;and the CERCLA and regulations thereunder,known more commonly as“Superfund,”which impose liability for the remediation of releases of hazardous substances in the environment.Weare also subject to regulation under the OSHA and regulations thereunder,which regu

151、late the protectionof the safety and health of workers.Analogous state and local laws and regulations may also apply.Wealso acknowledge the potential for policy shifts that could impact our operations.On January 20,2025,the current administration issued a series of executive orders and memoranda sig

152、naling a shift inenvironmental and energy policy in the U.S.,including the revocation of approximately 80 formeradministration-era executive orders related to public health,the environment,climate change andclimate-related financial risks.The current administration also declared a“national energy em

153、ergency,”directing agencies to expedite conventional energy projects.While the extent of the currentadministrations changes to the environmental regulatory landscape in the U.S.is unknown at this time,it is possible that additional changes in the future could impact our results of operation and thos

154、e of ourcustomers.Air EmissionsThe CAA and analogous state laws and their implementing regulations regulate emissions of airpollutants from various sources,including natural gas compressors,and also impose various monitoringand reporting requirements.Such laws and regulations may require a facility

155、to obtain preapproval forthe construction or modification of certain projects or facilities expected to produce air emissions orresult in the increase of existing air emissions,obtain and strictly comply with air permits containingvarious emissions and operational limitations,or utilize specific emi

156、ssion control technologies to limitemissions.Our standard contract operations agreement typically provides that the customer will assumepermitting responsibilities and certain environmental risks related to site operations.New Source Performance Standards.In June 2016,the EPA issued final regulation

157、s under the CAAamending the NSPS for the oil and natural gas source category and applying to sources of emissions ofmethane and VOC from certain processes,activities and equipment that is constructed,modified orreconstructed after September 18,2015.Specifically,the regulation imposed both methane an

158、d VOCstandards for several emission sources not previously covered by the NSPS,such as fugitive emissionsfrom compressor stations and pneumatic pumps and methane standards for certain emission sources thatare already regulated for VOC,such as equipment leaks at natural gas processing plants.Theamend

159、ments also established methane standards for a subset of equipment that the NSPS regulates,including reciprocating compressors and pneumatic controllers,and extend the VOC standards to theremaining unregulated equipment.On March 8,2024,the EPA published even more stringent rules with respect to meth

160、ane and VOC fornew and existing sources,via NSPS Subparts OOOOb and OOOOc,with the OOOOb rules for sourcesconstructed,modified,or reconstructed after December 6,2022,which became effective on May 7,2024.The OOOOc rules for existing sources gives the States a two-year deadline to develop and submitto

161、 EPA plans for addressing emissions from those sources.On April 10,2024,BoLM published a separate final rule,known as the“Waste Prevention,ProductionSubject to Royalties,and Resource Conservation”rule,to address methane emissions from oil and gasactivities on public lands,which became effective on J

162、une 10,2024.The rule is currently stayedpending litigation in North Dakota,Texas,Montana,Wyoming,and Utah.Among the newly adoptedmethane requirements that may impact our operations are broader applicability to compressionequipment relative to the existing rules,increased work practices and inspectio

163、n requirements andmandates for certain new zeroemissions equipment.Both the EPA rules and the BoLM rules are subject to ongoing judicial challenges.Meanwhile,several states including,most notably,New Mexico and Colorado have continued todevelop their own more stringent methane rules that will or are

164、 anticipated to impose additionalrequirements on the industry.For example,Colorados Air Quality Control Commission adopted the“Midstream Rule”on December 20,2024,to address GHG emissions from midstream oil and gas2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389

165、050/000138905025000009/aroc-20241231x10k.htm20/16613operations,including from natural gas compressor stations.Under the Midstream Rule,midstreamfacilities must begin taking steps to reduce GHG emissions from combustion fuel equipment byFebruary 14,2025.2025/5/19 12:48Archrock,Inc_December 31,2024htt

166、ps:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm21/166Table of ContentsWe do not believe that these rules will have a material adverse impact on our business,financialcondition,results of operations or cash flows,but we cannot yet definitively predict the impact o

167、f anyrevision of the current rules or issuance of new rules,which impact could be material.National Ambient Air Quality Standards.On October 1,2015,the EPA issued a new NAAQS ozonestandard of 70 ppb,which is a tightening from the 75-ppb standard set in 2008.This new standardbecame effective on Decem

168、ber 28,2015,and the EPA completed designating attainment/nonattainmentregions under the revised ozone standard in 2018.In November 2016,the EPA proposed animplementation rule for the 2015 NAAQS ozone standard,but the agency has yet to issue a finalimplementation rule.State implementation of the revi

169、sed NAAQS could result in stricter permittingrequirements,delay or prohibit our customers ability to obtain such permits and result in increasedexpenditures for pollution control equipment,the costs of which could be significant.By law,the EPAmust review each NAAQS every five years.In December 2018

170、and again in December 2020,the EPAannounced that it was retaining without revision the 2015 NAAQS ozone standard.In June 2021,theEPA commenced a process for reconsidering the December 2020 decision.In August 2023,the EPAannounced a new review of the ozone NAAQS and most recently released reports on

171、December 23,2024,related to its review.We do not believe continued implementation of the NAAQS ozone standardwill have a material adverse impact on our business,financial condition,results of operations or cashflows,but we cannot yet predict the impact,if any,of any new Federal Implementation Plan i

172、nvolvingnew NAAQS standards.General.New environmental regulations and proposals similar to these,when finalized,and any othernew regulations requiring the installation of more sophisticated pollution control equipment or theadoption of other environmental protection measures,could have a material ad

173、verse impact on ourbusiness,financial condition,results of operations and cash flows.Notably,opposition to energydevelopment and infrastructure projects has led to regulatory and judicial challenges to new facilities,including compression facilities,in many states.While we have not directly faced an

174、y such challengesto the facilities at which we provide contract operations and know of no pending or threatened effortstargeting those facilities,expanded opposition to energy infrastructure,including facilities at which weprovide contract operations or in the future might otherwise have an opportun

175、ity to provide contractoperations,could potentially give rise to material impacts in the future.Climate ChangeClimate change legislation and regulatory initiatives may arise from a variety of sources,includinginternational,national,regional and state levels of government and associated administrativ

176、e bodies,seeking to restrict or regulate emissions of GHGs such as carbon dioxide and methane.Congress and various federal and state legislative and regulatory bodies have previously consideredlegislation to restrict or regulate emissions of GHG.Energy legislation and other initiatives continueto be

177、 proposed that may be relevant to GHG emissions issues.For example,the SEC adoptedrules in March 2024 that would,if the rules survive legal challenge,mandate extensive disclosure forcertain public companies of climate-related data,risks and opportunities,including financial impacts,physical and tran

178、sition risks,related governance and strategy,and greenhouse gas emissions.Almosthalf of the states,either individually or through multistate regional initiatives,have begun toaddress GHG emissions,primarily through the planned development of emission inventories orregional GHG cap and trade programs

179、.Various states,such as California,Colorado and New York havepassed or proposed similar climate change disclosure laws.Although most of the statelevel initiativeshave to date been focused on large sources of GHG emissions,such as electric power plants,it ispossible that smaller sources such as our n

180、atural gaspowered compressors could become subject toGHGrelated regulation.Depending on the particular program,we could be required to controlemissions or to purchase and surrender allowances for GHG emissions resulting from our operations.Our customers or other business partners may require us to p

181、rovide additional climate-relatedinformation if they are also subject to these or additional climate-related disclosure laws or regulations.These actions could result in increased(i)costs to operate and maintain our facilities,(ii)capitalexpenditures to install new emission controls on our facilitie

182、s,and(iii)costs to administer and manageany potential GHG emissions regulations or carbon trading or tax programs.Such climate-relateddisclosure requirements could result in increased compliance costs,and possible litigation andreputational risks if such disclosures are incomplete,inaccurate,mislead

183、ing or do not otherwise meetthe expectations of our stakeholders.Moreover,such requirements may not always be uniform across2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm22/16614jurisdictions,which may result in inc

184、reased complexity and cost for compliance.In addition,we maytake voluntary steps to mitigate any impact our operations might have on climate change.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm23/166Table of Conten

185、tsAs a result,we may experience increases in energy,transportation and raw material costs,capitalexpenditures or insurance premiums;however,there is no guarantee that such efforts will have thedesired effects.The$1 trillion legislative infrastructure package passed by Congress in November 2021 inclu

186、des anumber of climate-focused spending initiatives targeted at climate resilience,enhanced response andpreparation for extreme weather events,and clean energy and transportation investments.Significantadditional legislative action by Congress also occurred in August 2022 with the Inflation Reductio

187、n Act,signed into law by the former administration,which provides$391 billion in funding for research anddevelopment and incentives for low-carbon energy production methods,carbon capture,and otherprograms directed at encouraging de-carbonization and addressing climate change.The IRA alsoamends the

188、Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program forpetroleum and natural gas systems.This program requires the EPA to impose a“waste emissionscharge”on certain natural gas and oil sources that are already required to report under EPAs GHGReporting Program.In Novemb

189、er 2024,the EPA released its final rule to implement the methaneemissions fee with an effective date in January 2025,which is expected to apply to reporting year 2024emissions.Twenty-three states have filed a lawsuit challenging the rule,and the change in U.S.presidential administration provides add

190、itional uncertainty as to the rules future.While the currentadministration has issued an executive order pausing the disbursement of funds appropriated throughthe IRA and roll back these environmental policies implemented during the former administration,U.S.climate leaders have vowed to continue pr

191、otecting and building on climate progress.Such legislation,regulations,and initiatives,as well as uncertainty regarding the future success of such regulations andinitiatives in reducing demand for oil and gas,could indirectly affect our business and our results ofoperations by reducing demand for ou

192、r services.Separately,the EPA has promulgated regulations controlling GHG emissions under its existing CAAauthority.The EPA has adopted rules requiring many facilities,including petroleum and natural gassystems,to inventory and report their GHG emissions.In 2024,we did not operate any facilities tha

193、twere subject to these reporting obligations.In addition,the EPA rules provide air permittingrequirements for certain large sources of GHG emissions.The requirement for large sources of GHGemissions to obtain and comply with permits will affect some of our and our customers largest new ormodified fa

194、cilities going forward but is not expected to cause us to incur material costs.As noted above,the EPA has undertaken efforts to regulate emissions of methane,considered a GHG,in the oil and gassector,and could develop additional,more stringent rules in the future.In an executive order issued on Janu

195、ary 20,2021,the former administration asked the heads of allexecutive departments and agencies to review and take action to address any federal regulations,orders,guidance documents,policies and any similar agency actions promulgated during the prioradministration that may be inconsistent with or pr

196、esent obstacles to the administrations stated goals ofprotecting public health and the environment,and conserving national monuments and refuges.Theexecutive order also established an Interagency Working Group on the Social Cost of GreenhouseGases,which is called on to,among other things,capture the

197、 full costs of GHG emissions,including the“social cost of carbon,”“social cost of nitrous oxide”and“social cost of methane,”which are“themonetized damages associated with incremental increases in greenhouse gas emissions,”including“changes in net agricultural productivity,human health,property damag

198、e from increased flood risk,andthe value of ecosystem services.”The former administration adopted an interim social cost of carbon of$51 per ton in February 2021,but in recent reports the EPA has referenced a figure as high as$2,400 perton of methane effective in 2030.The EPA published a final repor

199、t in December 2023 with the socialcost of carbon at$190 per metric ton of carbon dioxide emitted in 2020 at a 2%discount rate.Thisfigure is intended to be used to guide federal decisions on the costs and benefits of various policies andapprovals;such efforts have been the subject of a series of judi

200、cial challenges,which have been largelyunsuccessful to date.With the re-election of the current administration,however,these climate-focusedinitiatives have and will likely face major headwinds,and regulations will likely be scaled back(duringhis first term,more than 125 U.S.environmental rules and

201、policies were rolled back).Already,thecurrent administration has released a series of executive orders impacting the energy sector.Rangingfrom declaring a national emergency due to the U.S.s inadequate energy supply,infrastructure,andprices,to halting wind energy leasing and promoting fossil fuel ex

202、ploration.These executive orders arealready reshaping the current direction of the U.S.climate agenda.At this time,we cannot determinehow the current administration will continue to proceed and cannot accurately predict the ensuing2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archiv

203、es/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm24/16615impact on social cost or other interagency climate efforts,which may give rise to a material adverseeffect on our business,financial condition,results of operations and cash flows.2025/5/19 12:48Archrock,Inc_December 31,2024https:

204、/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm25/166Table of ContentsAt the international level,the U.S.joined the international community at the 21st COP of the UNFCCCin Paris,France,which resulted in the“Paris Agreement,”which intended for signatory countries ton

205、ationally determine their contributions and set GHG emission reduction goals every five yearsbeginning in 2020.While the Paris Agreement did not impose direct requirements on emitters,nationalplans to meet its pledge resulted in new regulatory requirements.After withdrawing from the ParisAgreement i

206、n November 2020,the U.S.re-entered the Paris Agreement in April 2021 along with a new“nationally determined contribution”that the U.S.would achieve GHG emissions reductions of at least50%relative to 2005 levels by 2030.In November 2021,at COP26 in Glasgow,the U.S.and EuropeanUnion jointly announced

207、the launch of the“Global Methane Pledge,”by which signatory countries aimto cut global methane pollution at least 30%by 2030 relative to 2020 levels,including“all feasiblereductions”in the energy sector.The December 2023 COP28 meeting in Dubai reaffirmed commitmentsto the Paris Agreement and conclud

208、ed that the world should move away from fossil fuel energy in a just,orderly,and equitable manner and aim to achieve net zero GHG emissions by 2050,while recognizing atransitional role for fossil fuels.In November 2024,at COP29 in Azerbaijan,countries agreed on thefinal building blocks that set out

209、how carbon markets will operate under the Paris Agreement,amongother outcomes that further indicate the global push to mitigate climate change.Given that the currentadministration has issued an executive order that initiated the process to withdraw the U.S.from theParis Agreement and from any commit

210、ments made under the UNFCCC,however,it remains to be seenwhich of these aforementioned U.S.commitments will survive in 2025 and beyond.Just as we cannotfully anticipate the impact of the methane rules discussed above,we also cannot predict whetherpotential future re-entry into,or pending withdrawal

211、from,the Paris Agreement or other internationalpledges will result in any particular new federal regulatory requirements or whether such requirementswill cause us to incur material costs.Nevertheless,several states and geographic regions in the U.S.have adopted legislation and regulations to reduce

212、emissions of GHGs,including cap and trade regimesand commitments to contribute to meeting the goals of the Paris Agreement.Increasingly,parties have sought to bring suit against various natural gas and oil companies alleging thatthe companies have been aware of the adverse effects of climate change

213、but defrauded their investors orcustomers by failing to adequately disclose those impacts.Any such litigation targeting our customerscould negatively impact their operation and,in turn,decrease demand for our operations,which couldhave an adverse impact on our financial condition.In sum,any legislat

214、ion,regulatory programs or social pressures related to climate change could increaseour costs and require substantial capital,compliance,operating and maintenance costs,reduce demandfor our services and reduce our access to financial markets.Current,as well as potential future,laws andregulations th

215、at limit GHG emissions or that otherwise promote the use of renewable energy over fossilfuel energy sources could increase the cost of our services and,thereby,further reduce demand andadversely affect our sales volumes,revenues and margins.Water DischargesThe CWA and analogous state laws and their

216、implementing regulations impose restrictions and strictcontrols with respect to the discharge of pollutants into state waters or waters of the U.S.The dischargeof pollutants into regulated waters is prohibited,except in accordance with the terms of a permit issuedby the EPA or an analogous state age

217、ncy.In addition,the CWA regulates storm water dischargesassociated with industrial activities depending on a facilitys primary standard industrial classification.Four of our facilities have applied for and obtained industrial wastewater discharge permits and/or havesought coverage under local wastew

218、ater ordinances.U.S.federal laws also require development andimplementation of spill prevention,controls and countermeasure plans where petroleum storagequantities exceed certain thresholds,including appropriate containment berms and similar structures tohelp prevent the contamination of navigable w

219、aters in the event of a petroleum hydrocarbon tank spill,rupture or leak at such facilities.The definition of“waters of the U.S.”and,relatedly,the scope of CWAjurisdiction,have been the subject of notable rulemaking efforts and judicial challenges over severaldecades.In May 2023,the U.S.Supreme Cour

220、t announced a decision that sharply narrowed thatdefinition to relatively permanent bodies of water connected to traditional navigable waters andwetlands with a continuous surface connection to other jurisdictional waters,thereby invalidatingprotections for many other historically regulated wetlands

221、 and waters.The EPA and the Army Corps ofEngineers issued a final rule effective September 8,2023 to implement the terms of that decision.As aresult of prior litigation,that amended rule has gone into effect in only part of the country,and newlegislation with respect to the amended rule is ongoing.2

222、025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm26/166162025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm27/166Table of Contents17Waste

223、Management and DisposalRCRA and analogous state laws and their implementing regulations govern the generation,transportation,treatment,storage and disposal of hazardous and nonhazardous solid wastes.During thecourse of our operations,we generate wastes(including,but not limited to,used oil,antifreez

224、e,used oilfilters,sludges,paints,solvents and abrasive blasting materials)in quantities regulated under RCRA.The EPA and various state agencies have limited the approved methods of disposal for these types ofwastes.CERCLA and analogous state laws and their implementing regulations impose strict,and

225、undercertain conditions,joint and several liability without regard to fault or the legality of the originalconduct on classes of persons who are considered to be responsible for the release of a hazardoussubstance into the environment.These persons include current and past owners and operators of th

226、efacility or disposal site where the release occurred and any company that transported,disposed of,orarranged for the transport or disposal of the hazardous substances released at the site.Under CERCLA,such persons may be subject to joint and several liability for the costs of cleaning up the hazard

227、oussubstances that have been released into the environment,for damages to natural resources and for thecosts of certain health studies.In addition,where contamination may be present,it is not uncommon forneighboring landowners and other third parties to file claims for personal injury,property damag

228、e andrecovery of response costs allegedly caused by hazardous substances or other pollutants released intothe environment.Additionally,emerging contaminants,like per-and polyfluoroalkyl substances such asperfluorooctanoic acid and perfluorooctanesulfonic acid compounds,have become subject to CERCLAr

229、egulation in addition to existing federal and state chemicals regulation,and polyfluoroalkyl substanceshave recently been regulated under the Toxic Substances Control Act.Other emerging contaminantscould also become subject to regulation under CERCLA,Toxic Substances Control Act or comparablestate l

230、aws.We cannot provide any assurance that the costs and liabilities associated with the futureimposition of such remedial or regulatory compliance obligations upon us would not have a materialadverse effect on our operations or financial position.We currently own or lease,and in the past have owned o

231、r leased,a number of properties that have beenused in support of our operations for a number of years.Although we have utilized operating anddisposal practices that were standard in the industry at the time,hydrocarbons,hazardous substances,orother regulated wastes may have been disposed of or relea

232、sed on or under the properties owned orleased by us or on or under other locations where such materials have been taken for disposal bycompanies subcontracted by us.In addition,many of these properties have been previously owned oroperated by third parties whose treatment and disposal or release of

233、hydrocarbons,hazardous substancesor other regulated wastes was not under our control.These properties and the materials released ordisposed thereon may be subject to CERCLA,RCRA and analogous state laws.Under such laws,wecould be required to remove or remediate historical property contamination,or t

234、o perform certainoperations to prevent future contamination.At certain of such sites,we are currently working with theprior owners who have undertaken to monitor and clean up contamination that occurred prior to ouracquisition of these sites.We are not currently under any order requiring that we und

235、ertake or pay forany cleanup activities.However,we cannot provide any assurance that we will not receive any suchorder in the future.Occupational Safety and HealthWe are subject to the requirements of the OSHA and comparable state statutes.These laws and theimplementing regulations strictly govern t

236、he protection of the safety and health of employees.TheOSHAs hazard communication standard,the EPAs community righttoknow regulations underTitle III of CERCLA and similar state statutes require that we organize and/or disclose informationabout hazardous materials used or produced in our operations.H

237、uman CapitalAs of December 31,2024,we employed approximately 1,300 employees in 13 states and conductedbusiness in 42 states.None of our employees are subject to a collective bargaining agreement.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/0001389050250

238、00009/aroc-20241231x10k.htm28/1662025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm29/166Table of ContentsWe consider our employees to be our greatest asset and believe that our success depends on our abilityto attract,

239、develop and retain our employees.While we operate on a merit-based approach,we supportdiversity and inclusion in hiring,as is reflected in the diversity of our Board of Directors,of which threeof our independent directors are female or identify as a member of an underrepresented racial/ethnicgroup.S

240、imilarly,onethird of our executive leadership team is female and 28%of our total workforce isethnically diverse.We support pay equity and believe we offer competitive and comprehensive compensation benefitspackages that include bonuses,an employee stock purchase plan,a 401(k)plan with employercontri

241、bution,healthcare and insurance benefits,health savings and flexible spending accounts withemployer contribution,paid time off(including 16 hours per year as paid time to volunteer),familyleave,an employee assistance program and tuition assistance,among many others.We believe in the ultimate goal of

242、 serving as the best corporate citizen possible and are dedicated toinspiring and empowering our employees to operate continuously according to our core values of safety,service,integrity,respect and pride.To that end,the Governance and Sustainability Committee of ourBoard of Directors provides over

243、sight of our policies,practices and programs regarding the fair andequitable promotion of employees within our company and the health and safety of our employees andcommunities.Learning and Talent DevelopmentWe invest significant resources to develop the talent needed to provide our industryleading

244、natural gascompression services.We work closely with suppliers to develop training programs for our field servicetechnicians.Our field service technicians are supported by a dedicated training team and collectivelycompleted over 41,000 hours of operational and technical training during 2024.Generall

245、y,new hirefield employees enter a program whereby they are assigned an experienced mentor,for an average of sixmonths,under whose direct supervision they apply their classroom learning in the real world setting.In addition,we offer a number of nontechnical,targeted skillsbased and careerenhancing tr

246、ainingprograms,including technical orientation for nontechnical employees,supervisor coaching,performance management and conflict resolution.Our talent development programs provide employeeswith the resources they need to help achieve their career goals,build management skills and lead theirorganiza

247、tions.Safety,Health and WellnessThe success of our business is fundamentally connected to the wellbeing of our people and so we arecommitted to the safety,health and wellness of our employees.Safety is a core value of our company,and safety performance is a key measure of success that has beeninclud

248、ed in our shortterm incentive program for over 18 years.We actively promote the higheststandards of safety behavior and environmental awareness and strive to meet or exceed all applicablelocal and national regulations.“Stop the Job”is an adopted edict that establishes the obligation of andprovides t

249、he authority to all employees to stop any task or operation where they perceive that a risk topeople,the environment or assets is not properly controlled.We believe that all incidents arepreventable and that through proper training,planning and hazard recognition,we can achieve aworkplace with zero

250、incidents.To this end,we created the TARGET ZERO program that includes over90 safety and environmental procedures,and their necessary tools,equipment and training,which aredesigned to foster a mindset that integrates safety into every work process.Through this program,weachieved excellent safety per

251、formance,with a total recordable incident rate of 0.17 in 2024.While noincidents are acceptable,the incidents we experienced were extremely minor in nature and resulted inno lost time.It will be our continuous goal that we achieve a rate of zero in all future periods.We also provide our employees an

252、d their families with access to a variety of flexible and convenienthealth and wellness programs that support the maintenance or improvement of our employees physicaland mental health and encourage engagement in healthy behaviors,including our employeeledRockFIT program that develops and sponsors co

253、rporate health and fitness challenges throughout theyear.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm30/166182025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/0001389050250

254、00009/aroc-20241231x10k.htm31/166Table of Contents19Building Employee and Community ConnectionsWe consider ourselves a member of every community in which we operate and believe that buildingconnections between our employees,their families and our communities creates a more meaningful andenjoyable wo

255、rkplace.Our employees give generously and are passionate towards many causes,forwhich they receive 16 hours per year of paid time off to volunteer.Our employeeled Archrock Caresprogram brings together employees across functions and backgrounds to break down traditionalcorporate barriers and form str

256、ong bonds through the pursuit of shared interests and volunteering andgiving opportunities across the country.Available InformationOur annual reports on Form 10K,quarterly reports on Form 10Q,current reports on Form 8K andany amendments to those reports are available free of charge on our website,as

257、soon as reasonably practicable after they are filed electronically with the SEC.Information on ourwebsite is not incorporated by reference in this Form 10K or any of our other securities filings.Papercopies of our filings are also available,without charge,from Archrock,Inc.,9807 Katy Freeway,Suite 1

258、00,Houston,Texas 77024,Attention:Investor Relations.The SEC also maintains a website thatcontains reports,proxy and information statements and other information regarding issuers who fileelectronically with the SEC.The SECs website address is www.sec.gov.Additionally,we make available free of charge

259、 on our website:our Code of Business Conduct;our Corporate Governance Principles;and the charters of our audit,compensation and nominating and corporate governance committees.Item 1A.Risk FactorsAs described in“ForwardLooking Statements,”this Form 10K contains forwardlooking statementsregarding us,o

260、ur business and our industry.The risk factors described below,among others,could causeour actual results to differ materially from the expectations reflected in the forwardlooking statements.If any of the following risks actually occur,our business,financial condition,results of operations andcash f

261、lows could be negatively impacted.Industry and General Economic RisksMacroeconomic conditions,including an increase in inflation and trade tensions,could have adverseeffects on our results of operations.Uncertainty on future inflation trends and fluctuations on interest rates have created further un

262、certaintyfor the economy and for our customers.Elevated inflation will increase our labor costs and the costs ofparts,lube oil and other materials used in our operations.An increase in inflation rates could negativelyaffect our profitability and cash flows,due to higher wages,higher operating costs,

263、higher financingcosts,and/or higher supplier prices.We may be unable to pass along such higher costs to our customers.In addition,inflation may adversely affect customers financing costs,cash flows,and profitability,which could adversely impact their operations and our ability to collect receivables

264、.Additionally,trade tensions or restrictions on free trade,including the tariffs that have been proposed bythe current administration,could exacerbate these effects.Any widespread imposition of new orincreased tariffs could increase the cost of imported materials and products,such as steel,whichacco

265、rdingly could increase costs of our products,disrupt our supply chain,cause adverse financialimpacts due to volatility in foreign exchange rates and interest rates,increase inflationary pressures onraw materials and energy,and negatively impact our profit margins.New or increased tariffs could alson

266、egatively affect U.S.national or regional economies,which could affect the demand for our products.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm32/1662025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/A

267、rchives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm33/166Table of Contents20Pandemics and other public health crises may negatively affect demand for our services,and mayhave a material adverse impact on our financial condition,results of operations and cash flows.Pandemics or other

268、public health crises could significantly impact public health,economic growth,supply chains and markets.The extent to which our operating and financial results may be affected byfuture pandemics or other public health crises will depend on various factors and consequences beyondour control,such as t

269、he duration and scope of such pandemic or public health crisis,additional actionsby businesses and governments in response to the pandemic and the speed and effectiveness ofresponses to combat any such pandemic or public health crisis.Any future pandemic or public healthcrisis may materially adverse

270、ly affect our operating and financial results in a manner that is notcurrently known to us or that we do not currently consider to present significant risks to our operations.Ongoing International Conflicts and TensionsThe conflict in Ukraine,the Israel-Hamas war and related price volatility and geo

271、political instabilitycould negatively impact our business.In late February 2022,Russia launched significant military action against Ukraine,and in October 2023,Israel launched a military response against Hamas in Gaza.These ongoing conflicts have caused,andcould intensify,volatility in oil and natur

272、al gas prices,and the extent and duration of these militaryactions,sanctions and resulting market disruptions could be significant and could potentially have asubstantial negative impact on the global economy and/or our business for an unknown period of time.Any such volatility and disruptions may a

273、lso magnify the impact of other risks described in this“RiskFactors”section.Business and Operational RisksOur operations entail inherent risks that may result in substantial liability.We do not insure againstall potential losses and could be seriously harmed by unexpected liabilities.Our operations

274、entail inherent risks,including equipment defects,malfunctions and failures and naturaldisasters,which could result in uncontrollable flows of natural gas or well fluids,fires and explosions.These risks may expose us,as an equipment operator,to liability for personal injury,wrongful death,property d

275、amage,pollution and other environmental damage.The insurance we carry against many ofthese risks may not be adequate to cover our claims or losses.Our insurance coverage includes propertydamage,general liability and commercial automobile liability and other coverage we believe isappropriate.Addition

276、ally,we are substantially selfinsured for workers compensation and employeegroup health claims in view of the relatively high perincident deductibles we absorb under ourinsurance arrangements for these risks.We are also selfinsured for property damage to our offshoreassets.Further,insurance covering

277、 the risks we expect to face or in the amounts we desire may not beavailable in the future or,if available,the premiums may not be commercially justifiable.If we were toincur substantial liability and such damages were not covered by insurance or were in excess of policylimits,or if we were to incur

278、 liability at a time when we are not able to obtain liability insurance,ourbusiness,results of operations and financial condition could be negatively impacted.We face significant competitive pressures that may cause us to lose market share and harm ourfinancial performance.Our business is highly com

279、petitive,and there are low barriers to entry.Our competitors may be able tomore quickly adapt to technological changes within our industry and changes in economic and marketconditions as a whole,more readily take advantage of acquisitions and other opportunities and adoptmore aggressive pricing poli

280、cies.Our ability to renew or replace existing contract operations serviceagreements with our customers at rates sufficient to maintain current revenue and cash flows could beadversely affected by the activities of our competitors.If our competitors substantially increase theresources they devote to

281、the development and marketing of competitive products,equipment or servicesor substantially decrease the price at which they offer their products,equipment or services,we may notbe able to compete effectively.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/

282、000138905025000009/aroc-20241231x10k.htm34/1662025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm35/166Table of ContentsIn addition,we could face significant competition from new entrants into the compression servicesbus

283、iness.Some of our existing competitors or new entrants may expand or fabricate new compressorsthat would create additional competition for the services we provide to our customers.In addition,ourcustomers may purchase and operate their own compression fleets in lieu of using our natural gascompressi

284、on services.We also may not be able to take advantage of certain opportunities or makecertain investments because of our debt levels and our other obligations.Any of these competitivepressures could have a material adverse effect on our business,results of operations and financialcondition.Any acqui

285、sitions we complete are subject to substantial risks that could reduce our ability to makedistributions to our common stockholders.Even if we do make acquisitions that we believe will increase the amount of cash available fordistribution to our common stockholders,these acquisitions may nevertheless

286、 result in a decrease in theamount of cash available for distribution to our common stockholders.Any acquisition involvespotential risks,including,among other things:the assumption of unknown liabilities,losses or costs for which we are not indemnified or forwhich any indemnity we receive is inadequ

287、ate;our inability to obtain satisfactory title to the assets we acquire;andthe occurrence of other significant changes,such as impairment of long-lived assets,assetdevaluation or restructuring charges.If we do not make acquisitions on economically acceptable terms,our future growth could be limited.

288、Our ability to grow depends,in part,on our ability to make accretive acquisitions.If we are unable tomake accretive acquisitions either because we are(i)unable to identify attractive acquisition candidatesor negotiate acceptable purchase contracts with them,(ii)unable to obtain financing for theseac

289、quisitions on economically acceptable terms or(iii)outbid by competitors,then our future growth andability to maintain dividends could be limited.Furthermore,even if we make acquisitions that webelieve will be accretive,these acquisitions may nevertheless result in a decrease in the cash generatedfr

290、om operations.Any acquisition involves potential risks,including,among other things:an inability to successfully integrate the businesses we acquire;the assumption of unknown liabilities;limitations on rights to indemnity from the seller;mistaken assumptions about the cash generated or anticipated t

291、o be generated by the businessacquired or the overall costs of equity or debt;the diversion of managements attention from other business concerns;unforeseen operating difficulties;andcustomer or key employee losses at the acquired businesses.If we consummate any future acquisitions,our capitalizatio

292、n and results of operations may changesignificantly and we will not have the opportunity to evaluate the economic,financial and other relevantinformation that we will consider in determining the application of our future funds and other resources.In addition,competition from other buyers could reduc

293、e our acquisition opportunities or cause us to paya higher price than we might otherwise pay.Our sustainability initiatives,including emissions reduction and our public statements anddisclosures regarding the same,expose us to numerous risks.We have developed,and we will continue to develop objectiv

294、es related to sustainability matters.Statements related to these objectives are made using various underlying assumptions and reflect ourcurrent intentions,and do not constitute a guarantee that they will be achieved.Our efforts to research,establish,accomplish,and accurately report on these objecti

295、ves expose us to numerous operational,reputational,financial,legal and other risks.Our ability to achieve any objective is subject to numerousfactors and conditions,many of which are outside of our control,including the availability of alternative2025/5/19 12:48Archrock,Inc_December 31,2024https:/ww

296、w.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm36/16621energy sources in the jurisdictions in which we operate,the capacity of electrical grids to supporttraditional2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/0001389050250

297、00009/aroc-20241231x10k.htm37/166Table of Contents22and alternative energy sources,and the broader economic and legal circumstances affecting energy andelectricity locally.We cannot predict the ultimate impact of achieving our objectives,or the variousimplementation aspects,on our financial conditio

298、n and results of operations.There can be no assurance that we will pay dividends in the future.We cannot provide assurance that we will,at any time in the future,again generate sufficient surpluscash that would be available for distribution to the holders of our common stock as a dividend or thatour

299、 Board of Directors would determine to use any of our net profits to pay a dividend.Future dividends may be affected by,among other factors:the availability of surplus or net profits,which in turn depend on the performance of ourbusiness and operating subsidiaries;our debt service requirements and o

300、ther liabilities;our ability to refinance our debt in the future or borrow funds and access capital markets;restrictions contained in our Debt Agreements;our future capital requirements,including to fund our operating expenses and other workingcapital needs;the rates we charge for our services;the l

301、evel of demand for our services;the creditworthiness of our customers;our level of operating expenses;andchanges in U.S.federal,state and local income tax laws or corporate laws.We cannot provide assurance that we will declare or pay dividends in any particular amount or at all inthe future.A decisi

302、on not to pay dividends or a reduction in our dividend payments in the future couldhave a negative effect on our stock price.Financial RisksWe have a substantial amount of debt that could limit our ability to fund future growth andoperations and increase our exposure to risk during adverse economic

303、conditions.As of December 31,2024,we had$2.2 billion in outstanding debt obligations,net of unamortized debtpremiums and unamortized deferred financing costs,outstanding under our Credit Facility and SeniorNotes.Many factors,including factors beyond our control,may affect our ability to make payment

304、s onour outstanding indebtedness.These factors include those discussed elsewhere in these Risk Factors.Our substantial debt level and associated commitments could have important consequences to ourliquidity,particularly to the extent our borrowing capacity becomes covenant restricted.For example,the

305、se commitments could:make it more difficult for us to satisfy contractual obligations;increase our vulnerability to general adverse economic and industry conditions;limit our ability to fund future working capital,capital expenditures,acquisitions or othercorporate requirements;increase our vulnerab

306、ility to interest rate fluctuations because the interest payments on a portionof our debt are based upon variable interest rates,and a portion can adjust based on our creditstatistics;limit our flexibility in planning for,or reacting to,changes in our business and our industry;place us at a disadvan

307、tage compared to our competitors that have less debt or less restrictivecovenants in such debt;and limit our ability to incur indebtedness in the future.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm38/166Table of C

308、ontents23Covenants in our Debt Agreements may impair our ability to operate our business.Our Debt Agreements contain various covenants with which we or certain of our subsidiaries mustcomply,including,but not limited to,restrictions on the use of proceeds from borrowings,limitations onthe incurrence

309、 of indebtedness,investments,acquisitions,making loans,liens on assets,repurchasingequity,making dividends,transactions with affiliates,mergers,consolidations,dispositions of assets andother provisions customary in similar types of agreements.The Debt Agreements also contain variouscovenants requiri

310、ng mandatory prepayments from the net cash proceeds of certain asset transfers.Our Credit Facility is also subject to financial covenants,including the following ratios,as defined inthe corresponding agreement:EBITDA to Interest Expense2.5 to 1.0Senior Secured Debt to EBITDA3.0 to 1.0Total Debt to E

311、BITDA(1)5.25 to 1.0(1)Subject to a temporary increase to 5.50 to 1.0 for any quarter during which an acquisition satisfying certain thresholds iscompleted and for the two quarters immediately following such quarter.If we were to anticipate noncompliance with these financial ratios,we may take action

312、s to maintaincompliance with them.These actions include reductions in our general and administrative expenses,capital expenditures or the payment of cash dividends.Any of these measures may reduce the amount ofcash available for payment of dividends and the funding of our business requirements,which

313、 could havean adverse effect on our business,operations,cash flows or the price of our common stock.The breach of any of the covenants under the Debt Agreements could result in a default under the DebtAgreements,which could cause indebtedness under the Debt Agreements to become due and payable.Ifthe

314、 repayment obligations under the Debt Agreements were to be accelerated,we may not be able torepay the debt or refinance the debt on acceptable terms and our financial position would be materiallyadversely affected.A material adverse effect on our assets,liabilities,financial condition,business orop

315、erations that,taken as a whole,impacts our ability to perform the obligations under the DebtAgreements could lead to a default under those agreements.Further,a default under one or more of theDebt Agreements would trigger crossdefault provisions under the other Debt Agreements,whichwould accelerate

316、our obligation to repay the indebtedness under those agreements.As of December 31,2024,we were in compliance with all covenants under the Debt Agreements.We may be unable to access the capital and credit markets or borrow on affordable terms to obtainadditional capital that we may require.Historical

317、ly,we have financed acquisitions,operating expenditures and capital expenditures with acombination of cash provided by operating and financing activities.However,to the extent we areunable to finance our operating expenditures,capital expenditures,scheduled interest and debtrepayments and any future

318、 dividends with net cash provided by operating activities and borrowingsunder the Credit Facility,we may require additional capital.Periods of instability in the capital andcredit markets(both generally and in the oil and gas industry in particular)could limit our ability toaccess these markets to r

319、aise debt or equity capital on affordable terms or to obtain additional financing.Among other things,our lenders may seek to increase interest rates,enact tighter lending standards,refuse to refinance existing debt at maturity at favorable terms or at all and may reduce or cease toprovide funding to

320、 us.If we are unable to access the capital and credit markets on favorable terms,or ifwe are not successful in raising capital within the time period required or at all,we may not be able togrow or maintain our business,which could have a material adverse effect on our business,results ofoperations

321、and financial condition.2025/5/19 12:48Archrock,Inc_December 31,2024https:/www.sec.gov/Archives/edgar/data/1389050/000138905025000009/aroc-20241231x10k.htm39/166Table of Contents24Our inability to fund purchases of additional compression equipment could adversely impact ourfinancial results.We may n

322、ot be able to maintain or increase our asset and customer base unless we have access tosufficient capital to purchase additional compression equipment.Cash flow from our operations andavailability under our Credit Facility may not provide us with sufficient cash to fund our capitalexpenditure requir

323、ements,including any funding requirements related to acquisitions.Our ability togrow our asset and customer base could be impacted by limits on our ability to access additional capital.We may be vulnerable to fluctuations in interest rates due to our variable rate debt obligations.Borrowings under o

324、ur Credit Facility are subject to variable interest rates.Changes in economicconditions outside of our control could result in fluctuations in interest rates,and higher interest rateswill thereby increase our interest expense and reduce the funds available for capital investment,operations or other

325、purposes.In addition,a substantial portion of our cash flow must be used to serviceour debt obligations.Any increase in our interest expense could negatively impact our results ofoperations and cash flows,including our ability to pay dividends in the future.Our Amended and Restated Credit Agreement

326、changed the referenced rate from LIBOR to SOFR so thatborrowings under the Credit Facility bear interest at,based on our election,either a base rate or SOFR,plus an applicable margin.The Amended and Restated Credit Agreement contains SOFR benchmarkreplacement provisions.At this time,there can be no

327、assurance as to whether any alternative benchmarkor resulting interest rates may be more or less favorable than SOFR.Customer and Contract RisksThe erosion of the financial condition of our customers could adversely affect our business.Many of our customers finance their exploration and production a

328、ctivities through cash flow fromoperations,the incurrence of debt or the issuance of equity.During times when the oil or natural gasmarkets weaken,our customers are more likely to experience a downturn in their financial condition.Additionally,some of our midstream customers may provide their gather

329、ing,transportation and relatedservices to a limited number of companies in the oil and gas production business.A reduction inborrowing bases under reservebased credit facilities,the lack of availability of debt or equity financingor other factors that negatively impact our customers financial condit

330、ion could result in a reduction inour customers spending for our products and services,which may result in their cancellation ofcontracts,the cancellation or delay of scheduled maintenance of their existing natural gas compressionequipment,their determination not to enter into new natural gas compre

331、ssion service contracts or theirdetermination to cancel or delay orders for our services.Furthermore,the loss by our midstreamcustomers of their key customers could reduce demand for their services and result in a deterioration oftheir financial condition,which would in turn decrease their demand fo

332、r our services.Any such actionby our customers would reduce demand for our services.Reduced demand for our services couldadversely affect our business,results of operations,financial condition and cash flows.In addition,inthe event of the financial failure of a customer,we could experience a loss on

333、 all or a portion of ouroutstanding accounts receivable associated with that customer.The loss of any of our most significant customers would result in a decline in our revenue and cashavailable to pay dividends to our common stockholders.Our five most significant customers collectively accounted for 35%,33%and 32%of our revenuesduring the years ended December 31,2024,2023 and 2022,respectively.O