USA Compression Partners, LP

What they do

USAC owns and operates a fleet of natural gas compression units, providing compression services under fixed-fee contracts primarily for infrastructure applications such as centralized gathering systems and processing facilities, and for gas-lift applications on crude oil wells. The company engineers, designs, operates, services and repairs its units and maintains related support inventory. As of December 31, 2025, the fleet totaled 3.9 million horsepower, and the January 2026 J-W Power Acquisition added 1.0 million total horsepower (0.8 million active).

Revenue drivers

• Natural gas infrastructure compression — Fixed-fee compression services at centralized gathering systems and processing facilities, using large-horsepower units; management describes this as the core of the business and a source of stable service rates and high fleet utilization.
• Gas-lift / crude oil applications — Compression used to inject natural gas into producing oil wells to reduce hydrostatic pressure and increase oil flow; a portion of both the small- and large-horsepower fleet serves these applications in oil basins.
• Geographic basin exposure — Services concentrated in unconventional plays including the Utica, Marcellus, Permian, Denver-Julesburg, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville and, after the J-W Power Acquisition, the Bakken.

Recent performance

Second-quarter 2026 total revenues were $342.1 million versus $250.1 million in second-quarter 2025, with net income of $45.7 million versus $28.6 million. Adjusted EBITDA was $193.2 million versus $149.5 million, and Distributable Cash Flow was $125.3 million versus $89.9 million, giving a coverage ratio of 1.65x versus 1.40x. Average revenue-generating horsepower rose to 4.45 million from 3.55 million, and average revenue per revenue-generating horsepower per month rose to $22.84 from $21.31. Average horsepower utilization was 92.0% versus 94.4% a year earlier. The company declared a second-quarter distribution of $0.525 per common unit, consistent with second-quarter 2025.

Strategy

Management is focused on integrating the J-W Power business, adding 0.8 million active horsepower across the Northeast, Mid-Con, Rockies, Gulf Coast, Bakken and Permian Basin. The CEO stated the SAP platform is fully operational, the combined operational organization is unified, and the commercial team is building momentum with an integrated customer base. The company reported that approximately half of planned 2027 new horsepower is already contracted, with meaningful 2028 commitments in hand. Expansion capital expenditures were $46.8 million and maintenance capital expenditures were $16.9 million in second-quarter 2026. As of June 30, 2026, the company had 97,650 large horsepower on order, of which 53,650 was expected within 12 months.

Risks

• Customer concentration — The 10-K states USAC has several key customers and that the loss of any of them would decrease revenues and cash available for distribution.
• Month-to-month contracts — A significant portion of services is provided on a month-to-month basis, and discontinuation by a significant number of those customers could materially adversely affect the business.
• Commodity price exposure — Although contracts do not bear direct commodity price exposure, the business has indirect exposure because drilling and production activity, and therefore demand for compression, are influenced by oil and natural gas prices.
• Debt and interest rates — The 10-K states the company's debt level and any increases in interest rates may limit flexibility in obtaining additional financing and pursuing other business opportunities.

Outlook

Management said the second quarter reflected steady sequential improvement during an important integration year, with a strong foundation reflected in multi-year commercial results. The company cited approximately half of planned 2027 new horsepower already contracted and meaningful 2028 commitments. It also noted customers signaling long-term confidence in natural gas infrastructure. The 10-K says production and transportation volumes in the unconventional plays USAC serves are expected by EIA studies to increase over the long term.