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Fair Value Measurements
 3 Months Ended
Mar. 31, 2025
Fair Value Measurements  
Fair Value Measurements

15. Fair Value Measurements

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

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Investment in ECOTEC

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As of March 31, 2025, we owned a 25% equity interest in ECOTEC (see Note 6 (“Investments in Unconsolidated Affiliates”)). We have elected the fair value option to account for this investment. As of March 31, 2025 and March 31, 2024, the fair value of our investment in ECOTEC was $14.7 million and $14.9 million, respectively. There were no purchases of equity interests or unrealized changes in the fair value of our investment in ECOTEC recognized during both the three months ended March 31, 2025 and 2024.

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The fair value determination of this investment primarily consisted of unobservable inputs, which creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement, which was valued through an average of an income approach (discounted cash flow method) and a market approach (guideline public company method), are the WACC and the revenue multiples. Significant increases (decreases) in these inputs in isolation would result in a significantly higher (lower) fair value measurement.

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This fair value measurement is classified as Level 3. The significant unobservable inputs are as follows:

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Significant

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Three Months Ended

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Three Months Ended

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Unobservable

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March 31, 2025

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March 31, 2024

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Inputs

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Range

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Median

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Range

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Median

Valuation technique:

      

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Discounted cash flow

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WACC

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0.0% - 17.0%

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12.9%

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0.4% - 20.0%

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13.5%

Guideline public company

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Revenue multiple

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1.6x - 7.3x

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7.3x

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1.5x - 7.2x

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3.8x

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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Investment in Ionada

As of March 31, 2025 and December 31, 2024, we had a fully diluted ownership equity interest in Ionada of 12% (see Note 6 (“Investments in Unconsolidated Affiliates”)). We have elected the fair value measurement alternative to account for this investment. On November 19, 2024, subject to the same terms and conditions of our initial investment of $3.8 million, we invested an additional $1.2 million dollars and as a result, the carrying value of our investment in Ionada at both March 31, 2025 and December 31, 2024 was $5.5 million, which includes cumulative transaction costs of $0.5 million. There were no upward adjustments, impairments or downward adjustments to the carrying value of the investment as of March 31, 2025. Subject to certain contractual conditions, we will invest, on the same terms and conditions as the initial investment, $1.3 million in November 2025, and $4.8 million prior to July 2026, for a fully diluted ownership interest of 15% and 24%, respectively.

Compressors

During the three months ended March 31, 2025, we recorded nonrecurring fair value measurement adjustments related to our idle compressors. Our estimate of the compressors’ fair value was primarily based on the expected net sale proceeds compared with other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use. We discounted the expected proceeds, net of selling and other carrying costs, using a weighted average disposal period of four years. These fair value measurements are classified as Level 3.

The fair value of our compression fleet impaired as of March 31, 2025 and December 31, 2024 was as follows:

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(in thousands)

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March 31, 2025

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December 31, 2024

Impaired compression fleet

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$

119

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$

1,048

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The significant unobservable inputs used to develop the above fair value measurements were weighted by the relative fair value of the compressors being measured. Additional quantitative information related to our significant unobservable inputs follows:

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Range

       

   Weighted Average (1)

Estimated net sale proceeds:

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As of March 31, 2025

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$0 - $241 per horsepower

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$47 per horsepower

As of December 31, 2024

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$0 - $188 per horsepower

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$46 per horsepower

(1)Calculated based on an estimated discount for market liquidity of 25% as of both March 31, 2025 and December 31, 2024.

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See Note 11 (“Long-Lived and Other Asset Impairments”) for further details.

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Other Financial Instruments

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The carrying amounts of our cash, accounts receivable and accounts payable approximate fair value due to the short–term nature of these instruments.

The carrying amount of borrowings outstanding under our Credit Facility approximates fair value due to the variable interest rate. The measurement of the fair value of these outstanding borrowings is a Level 3 measurement.

The fair value of our fixed rate debt is estimated using yields observable in active markets, which are Level 2 inputs, and was as follows:

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(in thousands)

    

March 31, 2025

    

December 31, 2024

Carrying amount of fixed rate debt (1)

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$

1,790,442

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$

1,790,051

Fair value of fixed rate debt

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1,803,000

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1,796,000

(1) Carrying amounts are shown net of unamortized premium and deferred financing costs. See Note 7 (“Long-Term Debt”).

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