Csi Compressco Lp (CCLP) SEC Filing 10-Q Quarterly report for the period ending Wednesday, September 30, 2020

Exhibit 99.1

CSI COMPRESSCO LP ANNOUNCES

THIRD QUARTER 2020 RESULTS

THE WOODLANDS, Texas (November 2, 2020) / PRNewswire / - CSI Compressco LP (“CSI Compressco” or the “Partnership”) (NASDAQ: CCLP) today announced third quarter 2020 results.

Net loss for the third quarter ended September 30, 2020 was $12.6 million, inclusive of $0.8 million of non-recurring charges. This compares to a net loss of $24.6 million, in the second quarter of 2020, which included $15.8 million of non-recurring charges.  Revenues for the quarter ended September 30, 2020 were $79 million, a decrease of 18% from the second quarter of 2020 driven by lower equipment sales following the closure of our fabrication operations. Adjusted EBITDA in the third quarter was $27.8 million (35.1% of revenue) compared to $27.0 million (28.1% of revenue) in the second quarter of 2020. Adjusted EBITDA in the third quarter included the benefit of $5.0 million from the sale of used equipment.

Third Quarter 2020

Brady Murphy, President of CSI Compressco commented, “Despite the industry macro environment with another 36% sequential decline in drilling rigs in the U.S., our business continues to perform very well. Excluding New Equipment Sales, which we are exiting, revenue decreased 1% to $72.3 million in the third quarter of 2020. Adjusted EBITDA improved by $722,000 and Adjusted EBITDA margins improved by 700 basis points. Contributing to our improved Adjusted EBITDA margins was the sale of some lower horsepower used unit sales as we continue to rationalize the fleet and upgrade to larger horsepower, and from continued efforts on cost reductions and streamlining our operations”.

“As part of our exit of the New Equipment Sales business, our Midland, Texas fabrication facility and real estate was sold in early July for $17 million in gross cash proceeds. We also completed or expect to complete during the third and fourth quarters of this year the sale of used compressors in three separate transactions for a total of $13 million. We expect these sales of non-strategic and under-utilized assets may generate, in aggregate, incremental liquidity totaling approximately $30 million, $21 million of which was generated in the third quarter.”

“As a key part of our strategy going forward, I am very pleased to announce the introduction of our new Helix^TM digitally enhanced compression telemetry system. The Helix digitally enhanced compression system communicates at significantly higher fidelity rates, streaming data 1,440 times faster than our current telemetry solution. Our new telemetry system will leapfrog existing compression industry systems and allow the use of big data to improve performance, reliability and predictive maintenance. As part of our Helix digitally enhanced compression development, we are pleased to be the only oilfield services company to partner with Houston’s Rice University D2K program, a partnership specifically designed to analyze big data and develop machine learning models that enhance our current predictive maintenance programs. Currently we have completed  25% of the hardware upgrade roll outs and expect to be fully deployed by the end of 2021.”

Compression Services revenue declined 5% sequentially while gross margins decreased 200 basis points to 52.9% in third quarter due to the full impact from pricing discounts and lower utilization. Utilization decreased from 82.1% at the end of June 2020 to 80.3% at the end of September 2020. We believe our strategy to invest in higher horsepower equipment will allow us to maintain utilization rates above the low point of the last downturn, which was 75.2% in the third quarter of 2016. Equipment on standby improved significantly from a peak of 226,000 horsepower in May of this year (approximately 20% of our fleet), to 78,000 horsepower at the end of September 2020 (approximately 8% of our fleet) as our customers started bringing production and units back online. We believe that production enhancement strategies on existing wells are becoming a greater priority for producers as the natural gas pricing outlook improves and producers focus on maximizing return on assets and free cash flow amidst the back drop of capital discipline. Compression is a low operating cost solution which allows producers to increase liquids and gas production when integrated with their artificial lift strategies. With regards to pricing, being a strategic compression service provider to our top three customers allowed us to stabilize pricing discounts to high single digits.

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