cclp-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to______

Commission File Number 001-35195

CSI Compressco LP

(Exact name of registrant as specified in its charter)


Delaware			94-3450907
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

1735 Hughes Landing Boulevard, Suite 200
The Woodlands,
TX			77380
(Address of Principal Executive Offices)			(Zip Code)

(832) 365-2257

(Registrant’s Telephone Number, Including Area Code)

_______________________________________________________________________

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
COMMON UNITS REPRESENTING LIMITED PARTNERSHIP INTERESTS	CCLP	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 2, 2023, there were 141,995,028 Common Units outstanding.


CSI Compressco LP
Table of Contents
			Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations			1
Consolidated Statements of Comprehensive Income (Loss)			2
Consolidated Balance Sheets			3
Consolidated Statements of Partners’ Capital			4
Consolidated Statements of Cash Flows			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3. Quantitative and Qualitative Disclosures about Market Risk			26
Item 4. Controls and Procedures			26

PART II—OTHER INFORMATION
Item 1. Legal Proceedings			26
Item 1A. Risk Factors			26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3. Defaults Upon Senior Securities			26
Item 4. Mine Safety Disclosures			27
Item 5. Other Information			27
Item 6. Exhibits			28
SIGNATURES			29

CERTAIN REFERENCES IN THIS QUARTERLY REPORT

References in this Quarterly Report to “CSI Compressco,” “we,” “our,” “us,” “the Partnership” or like terms refer to CSI Compressco LP and its wholly owned subsidiaries. References to “CSI Compressco GP” or “our general partner” refer to our general partner, CSI Compressco GP LLC. References to “Spartan” refer to Spartan Energy Partners LP and its controlled subsidiaries. References to “TETRA” refer to TETRA Technologies, Inc. and TETRA’s controlled subsidiaries, other than us.

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

CSI Compressco LP

Consolidated Statements of Operations

(In Thousands, Except Unit and Per Unit Amounts)

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Revenues:
Contract services	$	69,647	$	62,807
Aftermarket services	17,351		12,868
Equipment rentals	4,114		3,500
Equipment sales	259		837
Total revenues	91,371		80,012
Cost of revenues (excluding depreciation and amortization expense):
Cost of contract services	36,827		31,040
Cost of aftermarket services	14,214		10,633
Cost of equipment rentals	555		516
Cost of equipment sales	207		452
Total cost of revenues	51,803		42,641
Depreciation and amortization	18,851		19,359
Impairments and other charges	—		—

Selling, general, and administrative expense	9,979		10,841

Interest expense, net of capitalized interest of $0 in 2023 and $78 in 2022	13,315		12,381

Other (income) expense, net	(516)		544
Loss before taxes and discontinued operations	(2,061)		(5,754)
Provision for income taxes	552		816


Net loss	$	(2,613)	$	(6,570)

General partner interest in net loss	$	(12)	$	(31)
Common units interest in net loss	$	(2,601)	$	(6,539)


Basic and diluted net loss per common unit:	$	(0.02)	$	(0.05)



Weighted average common units outstanding:
Basic	141,611,588		140,770,406
Diluted	141,611,588		140,770,406

See Notes to Consolidated Financial Statements

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CSI Compressco LP

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Net loss	$	(2,613)	$	(6,570)
Foreign currency translation adjustment, net of tax of $0 in 2023 and 2022	—		12
Comprehensive loss	$	(2,613)	$	(6,558)

See Notes to Consolidated Financial Statements

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CSI Compressco LP

Consolidated Balance Sheets

(In Thousands, Except Unit Amounts)


	March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	13,615	$	8,475

Trade accounts receivable, net of allowance for doubtful accounts of $478 as of March 31, 2023 and $736 as of December 31, 2022	64,394		65,085
Trade receivable - affiliate	1,013		948
Inventories	50,876		45,902


Prepaid expenses and other current assets	7,951		7,905

Total current assets	137,849		128,315
Property, plant, and equipment:
Land and building	7,227		7,227
Compressors and equipment	1,117,915		1,103,657
Vehicles	8,583		8,640
Construction in progress	31,097		37,183
Total property, plant, and equipment	1,164,822		1,156,707
Less accumulated depreciation	(627,236)		(611,734)
Net property, plant, and equipment	537,586		544,973
Other assets:

Intangible assets, net of accumulated amortization of $37,367 as of March 31, 2023 and $36,627 as of December 31, 2022	18,400		19,140
Operating lease right-of-use assets	30,701		27,205
Deferred tax assets	3		3
Other assets	2,748		2,767
Total other assets	51,852		49,115
Total assets	$	727,287	$	722,403
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable	$	29,982	$	34,589
Unearned income	4,098		2,590
Accrued liabilities and other	58,777		47,076



Total current liabilities	92,857		84,255
Other liabilities:
Long-term debt, net	630,717		634,016
Deferred tax liabilities	1,320		1,245

Operating lease liabilities	20,163		19,419
Other long-term liabilities	11,463		8,742
Total other liabilities	663,663		663,422
Commitments and contingencies
Partners' capital:
General partner interest	(1,637)		(1,618)
Common units (141,995,028 units issued and outstanding at March 31, 2023 and 141,237,462 units issued and outstanding at December 31, 2022)	(13,190)		(9,250)
Accumulated other comprehensive loss	(14,406)		(14,406)
Total partners' capital	(29,233)		(25,274)
Total liabilities and partners' capital	$	727,287	$	722,403

See Notes to Consolidated Financial Statements

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CSI Compressco LP

Consolidated Statements of Partners’ Capital

(In Thousands)

(Unaudited)


	Partners’ Capital					Accumulated Other Comprehensive Income (Loss)		Total Partners’ Capital

			Limited Partners
	General Partner		Common Unitholders
	Amount		Units	Amount

Balance at December 31, 2022	$	(1,618)	141,237	$	(9,250)	$	(14,406)	$	(25,274)
Net loss	(12)		—	(2,601)		—		(2,613)
Distributions ($0.01 per unit)	(7)		—	(1,414)		—		(1,421)
Equity compensation, net	—		—	75		—		75
Vesting of Phantom Units	—		758	—		—		—
Translation adjustment, net of taxes of $0	—		—	—		—		—


Balance at March 31, 2023	$	(1,637)	141,995	$	(13,190)	$	(14,406)	$	(29,233)


	Partners’ Capital					Accumulated Other Comprehensive Income (Loss)		Total Partners’ Capital

			Limited Partners
	General Partner		Common Unitholders
	Amount		Units	Amount

Balance at December 31, 2021	$	(1,486)	140,386	$	17,049	$	(14,404)	$	1,159
Net loss	(31)		—	(6,539)		—		(6,570)
Distributions ($0.01 per unit)	(7)		—	(1,404)		—		(1,411)
Equity compensation, net	—		—	52		—		52
Vesting of Phantom Units	—		828	—		—		—
Translation adjustment, net of taxes of $0	—		—	—		12		12


Balance at March 31, 2022	$	(1,524)	141,214	$	9,158	$	(14,392)	$	(6,758)

See Notes to Consolidated Financial Statements

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CSI Compressco LP

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Operating activities:
Net loss	$	(2,613)	$	(6,570)
Reconciliation of net loss to cash provided by operating activities:
Depreciation and amortization	18,851		19,359


Provision (benefit) for deferred income taxes	(8)		39



Equity compensation expense	75		52
Provision (recovery) for doubtful accounts	(1)		22
Amortization of deferred financing costs	(39)		125


Other non-cash charges and credits	94		953
Gain on sale of property, plant, and equipment	189		231

Changes in operating assets and liabilities:
Accounts receivable	583		(11,805)
Inventories	(7,179)		(7,720)
Prepaid expenses and other current assets	(357)		1,105
Accounts payable and accrued expenses	9,839		15,194
Other	420		785
Net cash provided by operating activities	19,854		11,770
Investing activities:
Purchases of property, plant, and equipment, net	(14,369)		(9,202)
Proceeds from sale of property, plant, and equipment	58		3,267




Net cash used in investing activities	(14,311)		(5,935)
Financing activities:
Proceeds from long-term debt	113,399		4,227
Payments of long-term debt	(116,594)		(5,568)


Distributions	(1,421)		(1,411)

Equipment financing lease, net	4,278		7,612
Other financing activities	(65)		—
Net cash (used in) provided by financing activities	(403)		4,860
Effect of exchange rate changes on cash	—		1
Increase (decrease) in cash and cash equivalents	5,140		10,696
Cash and cash equivalents at beginning of period	8,475		6,598
Cash and cash equivalents at end of period	$	13,615	$	17,294
Supplemental cash flow information:
Interest paid	$	1,217	$	6
Income taxes paid	$	775	$	2,151
Decrease (increase) in accrued capital expenditures	$	5,455	$	(756)

See Notes to Consolidated Financial Statements

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CSI Compressco LP

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 — ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES

Organization

CSI Compressco LP, a Delaware limited partnership, is a provider of compression and treating services. Natural gas compression is used for oil production, gathering, artificial lift, transmission, processing, and storage. Treating services include the removal of contaminants from a natural gas stream and cooling to reduce the temperature of produced gas and liquids. We also sell used standard compressor packages and provide aftermarket services and compressor package parts and components manufactured by third-party suppliers. We provide contract and treating services and compressor parts and component sales to a broad base of natural gas and oil exploration and production, midstream, and transmission companies operating throughout many of the onshore producing regions of the United States as well as in a number of international locations, including the countries of Mexico, Canada, Argentina, Egypt and Chile. Previously, our equipment sales (new unit sales) business included the fabrication and sale of new standard and custom-designed, engineered compressor packages fabricated primarily at our facility in Midland, Texas. In the fourth quarter of 2020, we fully exited the new unit sales business and we have reflected these operations as discontinued operations for all periods presented. See Note 2 - “Discontinued Operations.” Used equipment sales revenue continues to be included in equipment sales revenue. Unless the context requires otherwise, when we refer to “the Partnership,” “we,” “us,” and “our,” we are describing CSI Compressco LP and its wholly owned subsidiaries.

Presentation

Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. In the opinion of our management, our unaudited consolidated financial statements as of March 31, 2023, and for the three-month periods ended March 31, 2023 and March 31, 2022 include all normal recurring adjustments that are necessary to provide a fair statement of our results for these interim periods. Operating results for the three-month period ended March 31, 2023 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2023.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. Securities and Exchange Commission (“SEC”) and do not include all information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2022 and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March 13, 2023.

Segments

Our general partner has concluded that we operate in one reportable segment.

Significant Accounting Policies

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2022 included in our Annual Report on Form 10-K. There have been no significant changes in our accounting policies or the application thereof during the three-months ended March 31, 2023.

Use of Estimates

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

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Cash Equivalents

We consider all highly liquid cash investments with maturities of three months or less when purchased to be cash equivalents. We have concentrated credit risk for cash by maintaining deposits in a major bank, which may at times exceed amounts covered by insurance provided by the United States Federal Deposit Insurance Corporation (“FDIC”). We monitor the financial health of the bank and have not experienced any losses in such accounts and believe we are not exposed to any significant credit risk. Management believes the financial institutions are financially sound and risk of loss is minimal.

Financial Instruments

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

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

We have $59.0 million outstanding under our variable rate revolving credit facilities as of March 31, 2023 and face market risk exposure related to changes in applicable interest rates.

Foreign Currencies

We have designated the Canadian dollar, Mexican peso, Egyptian pound, Chilean peso and the Euro as the functional currency for Canada, Mexico, Egypt, Chile, and the Netherlands, respectively. We are exposed to fluctuations between the U.S. dollar and certain foreign currencies, including the Canadian dollar, the Mexican peso, the Argentine peso, the Egyptian pound, the Chilean peso, and Euro as a result of our international operations. Foreign currency exchange (gains) losses are included in other (income) expense, net and totaled $0.04 million and $0.4 million during the three-month periods ended March 31, 2023 and March 31, 2022, respectively.

Leases

Lessee

As a lessee, unless the lease meets the criteria of short-term and is excluded per our policy election described below, we initially recognize a lease liability and related right-of-use asset on the commencement date. The right-of-use asset represents our right to use an underlying asset and the lease liability represents our obligation to make lease payments to the lessor over the lease term.

All of our long-term leases are operating leases and are included in operating lease right-of-use assets, accrued liabilities and other, and operating lease liabilities in our consolidated balance sheet as of March 31, 2023 and December 31, 2022. We determine whether a contract is or contains a lease at inception of the contract. Where we are a lessee in a contract that includes an option to extend or terminate the lease, we include the extension period or exclude the period covered by the termination option in our lease term in determining the right-of-use asset and lease liability, if it is reasonably certain that we would exercise the option.

As an accounting policy election, we do not include short-term leases on our balance sheet. Short-term leases include leases with a term of 12 months or less, inclusive of renewal options we are reasonably certain to exercise. The lease payments for short-term leases are included as operating lease costs on a straight-line basis over the lease term in cost of revenues or selling, general, and administrative expense based on the use of the underlying asset. We recognize lease costs for variable lease payments not included in the determination of a lease liability in the period in which an obligation is incurred.

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As allowed by U.S. GAAP, we do not separate nonlease components from the associated lease component for our contract services contracts and instead account for those components as a single component based on the accounting treatment of the predominant component. In our evaluation of whether Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 842 “Leases” or ASC 606 “Revenue from Contracts with Customers” is applicable to the combined component based on the predominant component, we determined the services nonlease component is predominant, resulting in the ongoing recognition of our compression services contracts following ASC 606.

Our operating leases are recognized at the present value of lease payments over the lease term. When the implicit discount rate is not readily determinable, we use our incremental borrowing rate to calculate the discount rate used to determine the present value of lease payments. Consistent with other long-lived assets or asset groups that are held and used, we test for impairment of our right-of-use assets when impairment indicators are present.

Lessor

Our agreements for rental equipment contain an operating lease component under ASC 842 because we, as the lessor, retain substantial exposure to changes in the underlying asset’s value, unlike a sale or secured lending arrangement. Therefore, we do not derecognize the underlying asset, and recognize income associated with providing the lessee the right to control the use of the asset ratably over the lease term.

As a lessor, we recognize operating lease revenue on our statement of operations as equipment rentals. This revenue is recognized on a straight-line basis over the term of the lease based on the monthly rate in the agreement. The leased asset remains on the balance sheet consistent with other property, plant and equipment. Cash receipts associated with all leases are classified as cash flows from operating activities in the statement of cash flows.

The leased equipment primarily consists of the Spartan Treating amine plants, cooling units and production equipment. All of this equipment is modular and skid mounted. It can be moved between locations. Lease terms for this equipment vary in length. Amine plants range from one to five years while the cooling units range from six months to two years.

Allowance for Credit Losses

Trade accounts receivable are stated at their net realizable value. The allowance for credit losses against gross trade accounts receivable reflects the best estimate of expected credit losses of the receivables portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. In developing the estimate for expected credit losses, trade accounts receivables are segmented into pools of assets depending on market (U.S. versus international), delinquency status, and customer type, and fixed reserve percentages are established for each pool of trade accounts receivables.

In determining the reserve percentages for each pool of trade accounts receivables, we considered our historical experience with certain customers and customer types, regulatory and legal environments, country and political risk, and other relevant current and future forecasted macroeconomic factors. These credit risk indicators are monitored on a quarterly basis to determine whether there have been any changes in the economic environment that would indicate the established reserve percentages should be adjusted, and are considered on a regional basis to reflect more geographic-specific metrics. Additionally, write-offs and recoveries of customer receivables are tracked against collections on a quarterly basis to determine whether the reserve percentages remain appropriate. When management becomes aware of certain customer-specific factors that impact credit risk, specific allowances for these known troubled accounts are recorded. Trade accounts receivable are written off after all reasonable means to collect the full amount (including litigation, where appropriate) have been exhausted.

During the first quarter of 2023, additions to the allowance for credit losses, write-offs and recoveries of customer receivables were not material to our condensed consolidated financial statements.

Inventories

Inventories consist primarily of compressor package spare parts and supplies and work in process, and cost is determined using the weighted average cost method. The cost of work in progress is determined using the specific identification method.

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Impairments and Other Charges

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

We did not record any impairments of long-lived assets during the three-month periods ended March 31, 2023 and March 31, 2022.

Income Taxes

Our operations are not subject to U.S. federal income tax other than the operations that are conducted through taxable subsidiaries. We incur state and local income taxes in certain areas of the U.S. in which we conduct business. We incur income taxes and are subject to withholding requirements related to certain of our operations in Latin America, Canada, and other foreign countries in which we operate. Furthermore, we also incur Texas Margin Tax, which, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, is classified as an income tax for reporting purposes. A portion of the carrying value of certain deferred tax assets is subject to a valuation allowance.

Earnings Per Common Unit

Our computations of earnings per common unit are based on the weighted average number of common units outstanding during the applicable period. Basic earnings per common unit are determined by dividing net income (loss) allocated to the common units after deducting the amount allocated to our general partner by the weighted average number of outstanding common units during the period.

When computing earnings per common unit under the two class method in periods when distributions are greater than earnings, the amount of the distribution is deducted from net income (loss) and the excess of distributions over earnings is allocated between the general partner and common units based on how our Partnership Agreement allocates net losses.

Diluted earnings per common unit are computed using the treasury stock method, which considers the potential future issuance of limited partner common units. Unvested phantom units are not included in basic earnings per common unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per common unit. For the three-month periods ended March 31, 2023 and March 31, 2022, all unvested phantom units were excluded from the calculation of diluted common units because the impact was anti-dilutive.

Fair Value Measurements

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. We utilize fair value measurements on a recurring basis in the accounting for our foreign currency forward purchase and sale derivative contracts. For these fair value measurements, we utilize the quoted value (a Level 2 fair value measurement). Refer to Note 7 – “Fair Value Measurements” for further discussion.

Fair value measurements are also utilized on a nonrecurring basis, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets (a Level 3 fair value measurement) and for the impairment of long-lived assets (a Level 3 fair value measurement).

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Distributions

On January 19, 2023, the board of directors of our general partner declared a cash distribution attributable to the quarter ended December 31, 2022 of $0.01 per outstanding common unit. This distribution equates to a distribution of $0.04 per outstanding common unit on an annualized basis. This quarterly distribution was paid on February 14, 2023 to each of the holders of common units of record as of the close of business on January 31, 2023.

New Accounting Pronouncements

Standards adopted in 2023

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairments will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. We adopted this new standard on January 1, 2023 and our adoption of this standard did not have a material impact on our consolidated financial statements.

NOTE 2 — REVENUE FROM CONTRACTS WITH CUSTOMERS

As of March 31, 2023, we had $141.0 million of remaining contractual performance obligations for compression services. As a practical expedient, this amount does not include revenue for compression service contracts whose original expected duration is less than twelve months and does not consider the effects of the time value of money. Expected revenue to be recognized in the future as of March 31, 2023 for completion of performance obligations of compression service contracts are as follows:


	2023		2024		2025		2026		Thereafter		Total
	(In Thousands)
Compression service contracts remaining performance obligations	$	54,196	$	62,182	$	20,177	$	3,699	$	741	$	140,995

Our contract asset balances included in trade accounts receivable in our consolidated balance sheet, primarily associated with revenue accruals prior to invoicing, were $7.7 million and $4.2 million as of March 31, 2023 and December 31, 2022, respectively.

The following table reflects the changes in unearned income in our consolidated balance sheets for the periods indicated:


	Three Months Ended March 31,
	2023		2022
	(In Thousands)
Unearned income, beginning of period	$	2,590	$	2,187
Additional unearned income	2,868

SEC Form 10-Q filed by CSI Compressco LP