(2) Acquisitions

On August 30, 2013, the Partnership completed the acquisition of assets and certain liabilities related to the business of providing compression services to third parties engaged in the exploration, production, gathering, processing, transportation or distribution of oil and gas (the “S&R Acquisition”) in exchange for 7,425,261 common units, which were valued at $181.9 million at the time of issuance. The S&R Acquisition was consummated pursuant to the Contribution Agreement dated August 12, 2013 (the “Contribution Agreement”) with S&R Compression, LLC, (“S&R”) and Argonaut Private Equity, L.L.C. (“Argonaut”). The S&R Acquisition had an effective date (from a standpoint of revenues and selected costs) of June 30, 2013. In connection with the S&R Acquisition, Argonaut and certain related parties agreed to participate in the Partnership’s Distribution Reinvestment Plan (the “DRIP”) through the distribution relating to the quarter ended June 30, 2014 (subsequently extended through the first quarter of 2015), provided that USA Compression Holdings continues to participate in the DRIP through that same period. The effective purchase price of $178.5 million reflects customary effective-date adjustments such as a $3.4 million purchase price adjustment due to working capital changes from the effective date to the closing date.

There were no adjustments during the six months ended June 30, 2014 to the S&R Acquisition purchase accounting disclosed in the Partnership’s 2013 Annual Report. Expenses associated with acquisition activities and transaction activities related to the S&R Acquisition for the six months ended June 30, 2014 and the year ended December 31, 2013 were $0.05 million and $2.1 million, respectively, and are included in selling, general and administrative expenses (“SG&A”).

Revenue, Net Income and Pro Forma Financial Information — Unaudited

The assets acquired in the S&R Acquisition were not included in the Partnership’s consolidated results until the closing date of August 30, 2013. The unaudited pro forma financial information was prepared assuming the S&R Acquisition occurred on January 1, 2013. The financial information was derived from the Partnership’s unaudited historical condensed consolidated financial statements for the three and six months ended June 30, 2013 and S&R’s unaudited interim financial statements for the three and six months ended June 30, 2013.

The pro forma adjustments were based on currently available information and certain estimates and assumptions by management. If the S&R Acquisition had been in effect on the dates or for the periods indicated, the results may have been substantially different. For example, we may have operated the assets differently than S&R, realized revenue may have been different and costs of operation of the acquired assets may have been different. This pro forma financial information is provided for illustrative purposes only and may not provide an indication of results in the future. The following table presents a summary of our pro forma financial information (in thousands, except unit amounts):

	Three Months Ended		Six Months Ended
	June 30, 2013		June 30, 2013 (1)
Total revenues	$	42,088	$	82,613
Net income	$	5,120	$	9,447
Net income allocated to:
General partner’s interest in net income	102		189
Common units interest in net income	3,095		5,704
Subordinated units interest in net income	1,923		3,554
Basic and diluted net income per common unit:	$	0.14	$	0.25
Basic and diluted net income per subordinated unit:	$	0.14	$	0.25

(1) The Partnership did not complete its initial public offering until January 18, 2013.

In preparing the pro forma financial information, certain information was derived from financial records and certain information was estimated. The sources of information and significant assumptions are described below:

(a) Revenues and direct operating expenses for S&R were derived from the historical financial records of S&R. Incremental revenue related to the S&R Acquisition was $8.8 million and $16.7 million for the three and six months ended June 30, 2013, respectively. Incremental operating costs related to the S&R Acquisition were $3.7 million and $7.4 million for the three and six months ended June 30, 2013, respectively.

(b) Depreciation and amortization was estimated using the straight-line method and reflects the incremental depreciation and amortization expense incurred due to adding the compression assets and intangible assets at fair value. Incremental depreciation and amortization was estimated at $2.4 million and $4.8 million for the three and six months ended June 30, 2013, respectively.

(c) The S&R Acquisition was financed solely with common units issued as consideration for the acquired assets and liabilities.

(d) The capital contribution made by the General Partner to maintain its 2% general partner interest in the Partnership in connection with the issuance of common units in the S&R Acquisition was used to pay down the Partnership’s revolving credit facility resulting in a reduction of interest expense. Incremental interest expense reduction was estimated at $0.05 million and $0.1 million for the three and six months ended June 30, 2013.