Archrock, Inc. Commitments Disclosure

16. Commitments and Contingencies

Insurance Matters

Our business can be hazardous, involving unforeseen circumstances such as uncontrollable flows of natural gas or well fluids and fires or explosions. As is customary in our industry, we review our safety equipment and procedures and carry insurance against some, but not all, risks of our business. Our insurance coverage includes property damage, general liability and commercial automobile liability and other coverage we believe is appropriate. We believe that our insurance coverage is customary for the industry and adequate for our business; however, losses and liabilities not covered by insurance would increase our costs.

Additionally, we are substantially self–insured for workers’ compensation and employee group health claims in view of the relatively high per–incident deductibles we absorb under our insurance arrangements for these risks. Losses up to the deductible amounts are estimated and accrued based upon known facts, historical trends and industry averages. We are also self–insured for property damage to our offshore assets.

Tax Matters

We are subject to a number of state and local taxes that are not income–based. As many of these taxes are subject to audit by the taxing authorities, it is reasonably possible that an audit could result in additional taxes due. We accrue for such additional taxes when we determine that it is probable that we have incurred a liability and we can reasonably estimate the amount of the liability. As of both December 31, 2025 and 2024, we accrued $7.9 million and $8.6 million, respectively, for the outcomes of non–income–based tax audits. We do not expect that the ultimate resolutions of these audits will result in a material variance from the amounts accrued. We do not accrue for unasserted claims for tax audits unless we believe the assertion of a claim is probable, it is probable that it will be determined that the claim is owed and we can reasonably estimate the claim or range of the claim. We believe the likelihood is remote that the impact of potential unasserted claims from non–income–based tax audits could be material to our consolidated financial position, but it is reasonably possible that the resolution of future audits could be material to our consolidated results of operations or cash flows.

As of December 31, 2024, $0.6 million of the tax contingencies mentioned above related to audits that had advanced to the contested hearing phase, and by December 31, 2025, these audits are now closed. As of December 31, 2025 and 2024, $3.1 million and $4.3 million of the tax contingencies mentioned above had an offsetting indemnification asset, respectively.

We settled certain sales and use tax audits for which we recorded a net benefit of $27.8 million during the year ended December 31, 2025, which is primarily reflected as a decrease to cost of sales, exclusive of depreciation and amortization. For subsequent open certain sales and use tax periods, we recorded tax credits as a net benefit of $8.0 million during the year ended December 31, 2025, which is primarily reflected as a decrease to cost of sales, exclusive of depreciation and amortization. As of December 31, 2025, these settlements and credits were reflected in our consolidated balance sheet as a $41.5 million tax refund receivable and an offsetting $9.9 million in accrued liabilities and $1.0 million in other liabilities.

Litigation and Claims

In the ordinary course of business, we are involved in various pending or threatened legal actions. While we are unable to predict the ultimate outcome of these actions, we believe that any ultimate liability arising from any of these actions will not have a material adverse effect on our consolidated financial position, results of operations or cash flows, including our ability to pay dividends. However, because of the inherent uncertainty of litigation and arbitration proceedings, we cannot provide assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material adverse effect on our consolidated financial position, results of operations or cash flows, including our ability to pay dividends.