ARCHROCK, INC. (AROC) ACQUISITION OF ARCHROCK PARTNERS, L.P. (APLP) TAX FREQUENTLY ASKED QUESTIONS (FAQS)

On April 26, 2018, Archrock, Inc. (NYSE: AROC) ("Archrock" or "AROC") completed the acquisition of all outstanding common units of Archrock Partners, L.P. ("Archrock Partners" or "APLP") it did not previously own. The combined company will continue to operate as the leading provider of natural gas contract compression services to customers throughout the U.S.

As of April 27, 2018, common units of Archrock Partners are no longer publicly traded. Shares of Archrock, Inc. are publicly traded on the New York Stock Exchange under the trading symbol “AROC”.

THIS DOCUMENT IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONTAIN A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL U.S. FEDERAL, STATE, LOCAL, AND NON-U.S. INCOME TAX CONSEQUENCES RELATED TO THE TRANSACTION, INCLUDING THE RECEIPT, OWNERSHIP AND DISPOSITION OF SHARES OF ARCHROCK COMMON STOCK RECEIVED IN THE TRANSACTION. EACH HOLDER OF ARCHROCK PARTNERS COMMON UNITS IS STRONGLY URGED TO CONSULT WITH AND RELY UPON ITS OWN TAX ADVISOR AS TO THE SPECIFIC U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES TO SUCH HOLDER RELATED TO THE TRANSACTION, INCLUDING THE RECEIPT, OWNERSHIP AND DISPOSITION OF SHARES OF ARCHROCK COMMON STOCK RECEIVED IN THE TRANSACTION, TAKING INTO ACCOUNT EACH HOLDERS' OWN PARTICULAR CIRCUMSTANCES.

  1. When did the transaction close?

    The transaction closed on April 26, 2018.
  2. What consideration did I receive for my APLP units?

    Holders of APLP units on April 26, 2018 received 1.4 shares of AROC common stock for each APLP unit. However, no fractional shares of AROC common stock were issued; instead, the fractional shares each investor otherwise would have been entitled to receive were aggregated together and rounded up to the nearest whole share of AROC common stock.
  3. If you have tax related questions, you are strongly urged to contact, and rely upon, a tax advisor familiar with partnership taxation, and specifically, the taxation of Master Limited Partnership unitholders. Archrock personnel do not provide personal tax advice.
  4. What are the expected U.S. federal income tax consequences to the APLP unitholders resulting from the transaction?

    The transaction resulted in APLP unitholders being considered to have sold their APLP units for AROC shares in a taxable transaction for U.S. federal income tax purposes. Accordingly, a U.S. holder of APLP units should recognize a gain or loss on the receipt of AROC shares in exchange for APLP units.

    You will not be able calculate your final gain or loss on the transaction until you receive your final APLP Schedule K-1 and supporting documentation (expected to be delivered in March 2019).

    Prior to that time, you can estimate your gain or loss from the transaction through the following process:

    1. First, calculate your estimated consideration received in the transaction by multiplying the number of APLP units you own by 1.4 to estimate the number of whole shares of AROC common stock you will receive.
      1. For the whole share component, multiply the number of whole shares by $10.85, AROC’s closing stock price on April 26, 2018.
      2. For the fractional share component, add all the fractional shares you would expect to receive and round up to the nearest whole share. Then multiply the number of whole shares by $10.85, AROC’s closing stock price on April 26, 2018.
      3. The total “Sales Price” is the value of the whole share component plus the value of the fractional share component.
    2. Next, calculate your adjusted tax basis in APLP units.
      1. You can currently obtain an estimated adjusted basis in your units from your 2017 K-1. Reduce this amount by the distributions you have received in 2018. (The 2017 K-1 will not include your portion of 2018 partnership income or loss nor your 2018 distributions received.  You will not be able to perform the final calculation until March 2019, when you receive your 2018 K-1.  Note in the final calculation, you can use the adjusted basis on your 2018 K-1, which will include the impact of your share of the partnership income or loss allocated to you in 2018 as well as distributions given to you in 2018.)
      2. Please consult your tax advisor for help in determining your tax basis.
    3. Next, calculate your gain or loss by subtracting your estimated adjusted tax basis in APLP units from your consideration received in the transaction or “sales price.”
    4. Once you have estimated your gain or loss on the transaction, consider the impact of the passive activity loss limitations rules. Any ordinary gain generated from the transaction may be reduced by any passive loss carryforwards, to the extent such passive loss carryforwards are available.

    The tax consequences of the transaction to each APLP unitholder will be unique and depend on the APLP unitholder's particular facts and circumstances. You should consult your own tax advisor to determine the specific consequences to you of the transaction, including under the laws of any applicable federal, state, local or foreign jurisdiction, and under any applicable U.S. federal laws other than those pertaining to income taxes.

    You can also visit the website https://www.taxpackagesupport.com/aplp to estimate your gain or loss on this transaction via the online K-1 support. Unitholders not registered with the website will need to register to access the website. Please note the gain/loss calculator will currently calculate a unitholder's estimated gain or loss based on the unitholders tax basis at December 31, 2017. It will not have final information from the transaction close until March 2019. Any ordinary gain generated from the transaction may be reduced by any passive loss carryforwards to the extent such passive loss carryforwards are available.

    THE LINK TO THE TAX PACKAGE SUPPORT WEBSITE IS PROVIDED FOR CONVENIENCE ONLY, AND THE INFORMATION CONTAINED ON THE TAX PACKAGE SUPPORT WEBSITE IS EXPRESSLY NOT INCORPORATED BY REFERENCE INTO THIS DOCUMENT. YOUR ORIGINAL BASIS INFORMATION WAS PROVIDED TO THE OPERATOR OF THE TAX PACKAGE SUPPORT WEBSITE BY YOUR BROKER AND YOU SHOULD CONSULT YOUR BROKER AND TAX ADVISOR TO CONFIRM YOUR BASIS INFORMATION. ARCHROCK DOES NOT OPERATE THE WEBSITE, CANNOT GUARANTEE THE ACCURACY OF THE INFORMATION ON THE WEBSITE AND DISCLAIMS ANY RESPONSIBILITY FOR SUCH INFORMATION.

  5. What are the expected state and local income tax consequences to the APLP unitholders resulting from the transaction?

    The taxable transaction may have state and local income tax consequences in the various jurisdictions in which we conduct business or own property or in which an APLP unitholder is a resident. You should consult your own tax advisor to determine the specific state and local income tax consequences to you of the transaction.
  6. What are the expected U.S. federal income tax consequences to the AROC stockholders resulting from the transaction?

    The transaction will not have any tax consequences for AROC stockholders that do not own any APLP units.
  7. What tax documents will I receive after the close of the transactions? When should I expect to receive a K-1?

    APLP unitholders: You will receive a final Tax Package that will include a Schedule K-1, an Ownership Schedule, a Sales Worksheet, and a State Tax Schedule (expected to be delivered in March 2019).

    AROC stockholders: You will not receive any tax documents as a result of the APLP transaction.

  8. Will an IRS Form 8937 be filed as a result of this transaction?

    An IRS Form 8937 will not be filed and will not be published to the investor website. To determine the fair market value of the consideration received in the transaction please refer to question number 4 above.
  9. What is my tax basis in my new shares of AROC?

    A U.S. holder’s tax basis in the shares of AROC common stock received in the transaction is $10.85, the closing AROC share price on April 26, 2018, the transaction close date. The holding period for these shares will begin on April 27, 2018, the day after the transaction closed.
  10. Will AROC continue being a corporation that generates an IRS Form 1099?

    Yes. AROC stockholders will receive an annual IRS Form 1099-DIV reflecting their dividend income.
  11. Will I receive dividends after the transaction?

    AROC has previously paid quarterly dividends and expects to continue to pay quarterly cash dividends to its stockholders. Management intends to recommend to the Archrock board of directors a ten percent increase to the annual dividend rate beginning with the second quarter of 2018. However, AROC cannot guarantee that any dividends will be declared or paid in the future.
  12. What type of dividend does AROC pay?

    AROC is classified as a corporation for U.S. federal income tax purposes. A distribution of cash by AROC to a U.S. stockholder will generally be included in the U.S. stockholder’s income as ordinary dividend income to the extent of AROC’s current and accumulated ‘‘earnings and profits’’ as determined under U.S. federal income tax principles. Your 1099-DIV will note if the dividend is a taxable or non-taxable dividend. Please contact your tax advisor specific tax related questions.
  13. Can I access the Registration Statement, Proxy Statement / Prospectus and other documents filed with the SEC by AROC and APLP online?

    These materials are available online at www.sec.gov and on Archrock’s investor relations website at http://www.archrock.com/aroc and http://www.archrock.com/aplp.

  14. Can you provide a phone number for additional questions?

    Yes, you can call 1-877-527-6399 if you have additional tax related questions.




Forward-Looking Statements

All statements in this communication (and oral statements made regarding the subjects of this communication) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of Archrock and Archrock Partners, which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: statements regarding the expected benefits of the transaction to Archrock and Archrock Partners and their stockholders and unitholders, respectively, and the expected U.S. federal and state income tax consequences resulting from the transaction.

While Archrock believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their businesses. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: the failure to realize the anticipated costs savings, synergies and other benefits of the transaction; the possible diversion of management time on transaction-related issues; local, regional and national economic conditions and the impact they may have on Archrock, Archrock Partners and their customers; changes in tax laws that impact master limited partnerships; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; the financial condition of Archrock’s and Archrock Partners’ customers; any non-performance by customers of their contractual obligations; changes in customer, employee or supplier relationships resulting from the transaction; changes in safety, health, environmental and other regulations; the results of any reviews, investigations or other proceedings by government authorities; the results of any shareholder actions that may be filed relating to the restatement of Archrock’s financial statements; the potential additional costs relating to Archrock’s restatement, cost-sharing with Exterran Corporation and to addressing any reviews, investigations or other proceedings by government authorities or shareholder actions; and the performance of Archrock Partners.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in each of Archrock’s and Archrock Partners’ Annual Reports on Form 10-K for the year ended December 31, 2017, and those set forth from time to time in each party’s filings with the Securities and Exchange Commission (the “SEC”), which are available at www.archrock.com. Except as required by law, Archrock and Archrock Partners expressly disclaim any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.