CSI Compressco (CCLP) 8-K Completion of Compressor Systems, Inc. Acquisition

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

The following unaudited pro forma condensed combined balance sheet as of March 31, 2014 and unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2014 and the year ended December 31, 2013 of Compressco Partners, L.P. (the “Partnership,” “us,” “we” and “our”), reflect the following transactions:

• the consummation of our acquisition of all of the capital stock of Compressor Systems, Inc. (“CSI”) on August 4, 2014 (the “CSI Acquisition”), for cash consideration in the amount of approximately $825.0 million, subject to adjustment for working capital and other matters, including the termination and no assumption of any of CSI’s currently existing long-term indebtedness. The following table summarizes the preliminary allocation of the purchase price to the estimated fair value of the assets expected to be acquired and liabilities expected to be assumed at the date of acquisition (in thousands):

Current assets	$	112,147
Property and equipment		559,507
Intangible and other assets		236,738
Total assets acquired		908,392
Current liabilities		83,392
Long-term debt		0
Other long-term liabilities		0
Total liabilities assumed		83,392
Net assets acquired	$	825,000

We expect to incur approximately $8.0 million of acquisition costs in connection with the CSI Acquisition.

• the issuance and sale of $350.0 million aggregate principal amount of 7.25% Senior Notes due 2022 (the “Notes”) on August 4, 2014, in connection with the financing of the CSI Acquisition;

• the issuance and sale of 15,280,000 common units for estimated aggregate gross proceeds of approximately $359.1 million (excluding the up to 2,292,000 of additional common units that may be purchased at the option of the underwriters) and the contribution by our general partner of approximately $7.3 million in order to maintain its approximate 2.0% general partner interest;

• the repayment in full of all borrowings outstanding under our existing credit agreement, if any; and

• our entry into a Credit Agreement (the “New Credit Agreement”) among the Partnership and Compressco Partners Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Partnership (“Compressco Sub”), as borrowers, the lenders from time to time party thereto (the “Lenders”), Bank of America, N.A., in its capacity as administrative agent, collateral agent L/C issuer and swing line issuer, and the other parties thereto, on August 4, 2014, and estimated initial borrowings thereunder in connection with the financing of the CSI Acquisition.

Adjustments for the above-listed transactions on an individual basis are presented in the notes to the unaudited pro forma financial statements. Certain information normally included in the financial statements prepared in accordance with GAAP has been condensed or omitted in accordance with the rules and regulations of the SEC.

The unaudited pro forma, as adjusted, condensed combined financial statements do not purport to be indicative of the results of operations or financial position that we actually would have achieved if the transactions had been consummated on the dates indicated, nor do they project our results of operations or financial position for any future period or date.

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COMPRESSCO PARTNERS, L.P.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2014

(in thousands)

	Historical			CSI Historical			Pro Forma Adjustments				Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	12,633		$	1,559		$	23,508		(A)	$	37,700
Trade accounts receivable, net		18,726			32,612			—				51,338
Inventories		13,545			75,443			—				88,988
Deferred tax asset		57			4,870			(4,870	)	(B)		57
Prepaid expenses and other current assets		1,502			2,533			—				4,035
Total current assets		46,463			117,017			18,638				182,118
Property, plant, and equipment:
Land and building		2,178			69,695			9,806				81,679
Compressors and equipment		177,782			623,212			114,444				915,438
Vehicles		12,656			—			1,975				14,631
Total property, plant, and equipment		192,616			692,907			126,225		(C)		1,011,748
Less accumulated depreciation		(92,162	)		(259,625	)		—				(351,787	)
Net property, plant, and equipment		100,454			433,282			126,225				659,961
Other assets:
Goodwill		72,161			—			166,083		(D)		238,244
Deferred tax assets		1,750			—			—				1,750
Other assets		2,803			1,555			15,725		(E)		20,083
Intangible assets		—			—			69,100		(E)		69,100
Total other assets		76,714			1,555			250,908				329,177
Total assets	$	223,631		$	551,854		$	395,771			$	1,171,256
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	6,524		$	34,666		$	—			$	41,190
Accrued liabilities and other		4,154			48,726			—				52,880
Accrued payroll and benefits		634			—			—				634
Amounts payable to affiliates		4,698			—			—				4,698
Deferred tax liabilities		2,021			—			—				2,021
Total current liabilities		18,031			83,392			—				101,423
Other liabilities:
Long-term debt, net		32,220			95,803			423,577		(F)		551,600
Deferred tax liabilities		4,725			113,308			(113,308	)	(B)		4,725
Other long-term liabilities		50			—			—				50
Total other liabilities		36,995			209,111			310,269				556,375
Commitments and contingencies
Partners’ capital:
General partner interest		3,112						7,309		(G)		10,421
Common units		103,709						359,100		(G)		441,253
								(21,556	)	(A, G)
Subordinated units		64,339						—				64,339
Accumulated other comprehensive income (loss)		(2,555	)		(378	)		378		(H)		(2,555	)
Common stock					18			(18	)	(H)		—
Additional paid-in capital					14,455			(14,455	)	(H)		—
Retained earnings					245,256			(245,256	)	(H)		—
Total partners’ capital		168,605			259,351			85,502				513,458
Total liabilities and partners’ capital	$	223,631		$	551,854		$	395,771			$	1,171,256

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COMPRESSCO PARTNERS, L.P.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2014

(in thousands)

	Historical		CSI Historical			Pro Forma Adjustments				Pro Forma
Revenues:
Compression and other services	$	27,927	$	46,614		$	—			$	74,541
Sales of compressors and parts		1,883		46,417			—				48,300
Total Revenues		29,810		93,031			—				122,841
Cost of revenues (excluding depreciation and amortization expense):
Cost of compression and other services		15,154		22,936			—				38,090
Cost of compressors and parts sales		929		39,523			—				40,452
Total cost of revenues		16,083		62,459			—				78,542
Selling, general and administrative expense		4,094		8,561			—				12,655
Depreciation and amortization		3,682		9,858			2,102		(C)		18,128
							2,486		(E)
Interest expense, net		159		342			6,507		(I)		7,408
							1,163		(J)
							(763	)	(K)
Other expense (income), net		539		(191	)		—				348
Income (loss) before income tax provision		5,253		12,002			(11,495	)			5,760
Provision (benefit) for income taxes		634		4,380			(4,182	)	(L)		832
Net income (loss)	$	4,619	$	7,622		$	(7,313	)		$	4,928
General partner interest in net income	$	92								$	99
Common units interest in net income	$	2,700								$	3,846
Subordinated units interest in net income	$	1,827								$	983

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COMPRESSCO PARTNERS, L.P.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2013

(in thousands)

	Historical		CSI Historical			Pro Forma Adjustments				Pro Forma
Revenues:
Compression and other services	$	112,937	$	178,530		$	—			$	291,467
Sales of compressors and parts		8,364		152,969			—				161,333
Total Revenues		121,301		331,499			—				452,800
Cost of revenues (excluding depreciation and amortization expense):
Cost of compression and other services		63,425		82,286			—				145,711
Cost of compressors and parts sales		4,691		128,600			—				133,291
Total cost of revenues		68,116		210,886			—				279,002
Selling, general and administrative expense		17,467		31,792			—				49,259
Depreciation and amortization		14,642		37,726			8,406		(C)		70,718
							9,944		(E)
Interest expense, net		469		1,256			26,028		(I)		29,090
							4,653		(J)
							(3,316	)	(K)
Other expense (income), net		782		(695	)		—				87
Income (loss) before income tax provision		19,825		50,534			(45,715	)			24,644
Provision (benefit) for income taxes		2,258		16,966			(16,630	)	(L)		2,594
Income (loss) before discontinued operations	$	17,567	$	33,568		$	(29,085	)		$	22,050
General partner interest in net income before discontinued operations	$	351								$	441
Common units interest in net income before discontinued operations	$	10,251								$	17,205
Subordinated units interest in net income before discontinued operations	$	6,965								$	4,404

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Pro Forma Adjustments

A. Reflects the cash impact of the following transactions:

• $825.0 million of the preliminary cash consideration paid for the CSI Acquisition. The final cash consideration will be subject to certain working capital and other adjustments.

• $344.8 million of cash proceeds from the issuance of the Notes after original issue discount. In addition, $10.0 million of initial purchasers’ discounts and estimated offering expenses are estimated to be incurred.

• $359.1 million of cash proceeds from the offering of common units, which includes approximately $32.7 million of cash proceeds from the contribution from an affiliate of our general partner in return for common units. In addition, $13.6 million of underwriting discounts and estimated offering expenses are estimated to be incurred.

• Approximately $7.3 million of cash proceeds from the contribution from our general partner in connection with the common unit offering in order to maintain its approximate 2.0% general partner interest.

• $32.2 million repayment of our Existing Credit Agreement.

• $206.8 million of estimated initial borrowings under our New Credit Agreement, and $5.7 million of estimated financing expenses.

• $8.0 million of expenses related to the CSI Acquisition.

B. The Partnership and seller of CSI will make a joint Section 338(h)(10) election to treat the purchase of CSI as an asset acquisition for U.S. federal income tax purposes. Therefore, no deferred tax assets or liabilities have been recorded on the opening balance sheet. As such, adjustments have been made to eliminate historical book/tax differences.

C. Reflects fair value adjustments for property, plant and equipment acquired and related pro forma depreciation expense adjustments. Pro forma depreciation expense is calculated based on an average remaining useful life of 15 years for the acquired assets (in thousands).

	Property, plant and equipment						Depreciation expense
	Historical amounts		Fair value		Fair value adjustment		For the three months ended March 31, 2014		For the year ended December 31, 2013
Land	$	1,126	$	1,245	$	119	$	—	$	—
Buildings & improvements		21,208		29,914		8,706		145		580
Compressors		404,473		516,526		112,053		1,868		7,470
Machinery & equipment		2,994		5,385		2,391		40		159
Vehicles/rolling stock		1,786		3,761		1,975		33		132
Office furniture & equipment		773		1,752		979		16		65
Leasehold improvements		—		2		2		—		—
Construction in progress		922		922		—		—		—
Total	$	433,282	$	559,507	$	126,225	$	2,102	$	8,406

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D. Reflects the goodwill related to the CSI Acquisition. Please see discussion above for further details on the preliminary purchase price allocation.

E. Reflects the fair value of acquired identifiable intangible assets and deferred financing costs related to this Offering and related amortization expense adjustments, as follows (in thousands):

	Fair value		Remaining useful life (years)		Amortization expense
					For the three months ended March 31, 2014		For the year ended December 31, 2013
Intangible assets:
Backlog	$	800		1.5	$	133	$	533
Trade name		33,000		10		825		3,300
Customer relationships		35,300		9.5		929		3,716
Total intangible assets		69,100				1,887		7,549
Deferred financing costs:
Senior Notes		10,000		8		313		1,250
New Credit Agreement		5,725		5		286		1,145
Total deferred financing costs		15,725				599		2,395
Total	$	84,825			$	2,486	$	9,944

F. Reflects the repayment of our Existing Credit Agreement of $32.2 million and entry into our New Credit Agreement and our initial estimated initial borrowings thereunder of $206.8 million, repayment of CSI related party debt prior to the CSI Acquisition close of $95.8 million, and also the issuance of $350.0 million of Notes, including an original issue discount of $5.2 million.

G. Reflects the issuance and sale of 15,280,000 common units representing limited partner interests for gross proceeds of approximately $359.1 million, $13.6 million of underwriting discounts and estimated offering expenses, and $8.0 million of expenses related to the CSI Acquisition (excluding the up to 2,292,000 of additional common units that may be purchased at the option of the underwriters). In addition, the adjustment reflects a $7.3 million contribution from our general partner to maintain its general partner interest in connection with the common unit offering.

H. Reflects the elimination of CSI’s historical stockholders’ equity balances.

I. Reflects the additional interest expense related to this offering of our notes based on an interest rate of 7 ¹⁄₄%.

J. Reflects additional interest expense related to the draw on the New Credit Agreement.

K. Reflects the total decrease to interest expense of $0.3 million and $1.0 million for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively as a result of a repayment under our Existing Credit Agreement and the reduction to interest expense related to the termination of CSI’s long-term debt prior to the closing of the CSI Acquisition of $0.5 million and $2.2 million for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively.

L. Reflects the tax impact of the CSI Acquisition based on a blended statutory rate of approximately 36.4%.

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