USA Compression Partners Q1 2026 Earnings Report

USA Compression Partners EPS Results

• Actual EPS: $0.27
• Consensus EPS: $0.35
• Beat/Miss: Missed by -$0.08
• One Year Ago EPS: N/A

USA Compression Partners Revenue Results

• Actual Revenue: $331.28 million
• Expected Revenue: $308.35 million
• Beat/Miss: Beat by +$22.93 million
• YoY Revenue Growth: N/A

USA Compression Partners Announcement Details

• Quarter: Q1 2026
• Date: 5/5/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 5, 2026
• Conference Call Time: 11:00AM ET

USA Compression Partners (NYSE:USAC) LP (NYSE: USAC) is a publicly traded master limited partnership that provides natural gas compression services to customers across the United States. The company supports the movement of natural gas through gathering, processing, transmission, storage and related midstream systems.

USA Compression owns and operates a fleet of natural gas compression equipment, including large reciprocating compressors and associated infrastructure. Its services help maintain the pressure needed to transport natural gas from production areas to processing facilities, pipelines, storage locations and end markets. The company primarily serves producers, processors, gatherers, marketers and interstate and intrastate pipeline operators.

The partnership operates in major U.S. oil and gas regions and is headquartered in Austin, Texas. USA Compression Partners was formed in 1998 and completed its initial public offering in 2013. The company is led by President and Chief Executive Officer Eric D. McGinnis.

USA Compression Partners Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: J‑W Power integration completed and operations combined under a new ERP, with management targeting $10–$20M of annual run‑rate synergies by year‑end 2027 and >90% of 2026 new horsepower already contracted.
• Positive Sentiment: Management is proactively securing supply as engine lead times have stretched to ~150 weeks, placing multi‑year engine orders and using J‑W’s manufacturing to buy engines with optionality to deploy internally or resell, which they say limits downside.
• Positive Sentiment: Company reported record average pricing of $22.73/HP (up 5% sequential, 8% YoY), adjusted gross margin of 64.4%, net income of $38.3M and strengthened DCF/leverage metrics while maintaining full‑year guidance ranges.
• Negative Sentiment: Management acknowledges J‑W’s operations have a lower gross margin profile (manufacturing/AMS represented ~10% of legacy EBITDA), average utilization dipped after the acquisition, and leverage may temporarily tick higher in Q2 as new horsepower is delivered.
• Neutral Sentiment: Capital plan calls for continued growth (~100k–125k HP/year), expansion capex focused on new units with maintenance normalization, and management says the high‑yield market is open if they choose to access capital to smooth debt tranches.

Presentation

[Operator]

Good morning. Welcome to USA Compression Partners first quarter 2026 earnings conference call. During today's call, all parties will be in the listen-only mode. At the conclusion of management's prepared remarks, the call will be open for question-and-answer session. If you would like to ask a question during this time, please press star one on your telephone keypad. To withdraw your question, please press star one again. Thank you. This conference is being recorded today, May 5th, 2026. I would now like to turn the call over to Clint Green, President and CEO. You may begin.

[Clint Green, President and CEO at USA Compression Partners]

Good morning, everyone, and thank you for joining us. With me today is Chris Paulsen, Senior Vice President and CFO, Chris Wauson, Senior Vice President and COO, other members of our leadership team. This morning, we released our operational and financial results for quarter ending March 31st, 2026. Today's call will contain forward-looking statements based on our current beliefs and certain non-GAAP measures. Please refer to our earnings release and SEC filings for reconciliations and definitions of non-GAAP measures and related risk factors. As we discuss performance, please note that J-W acquisition closed on January 12, therefore, Q1 earnings excludes the impact of revenues and expenses for J-W Power for the 11 days of the quarter. Before we get into the quarter, I want to take a moment to recognize our team on safety.

[Clint Green, President and CEO at USA Compression Partners]

Our people go to work in the field every day, working around complex equipment, driving millions of miles a month, and the way they return to their family matters more than any financial metric we report. In 2025, our combined TRIR finished at a 0.39, a 50% reduction from 2024 and well below the BLS industry average of 0.70. A benchmark we have now beaten for 12 consecutive years. We are proud of these results, and we remain committed to continuous improvement. Moving to the quarter, which included two integrations that established upward momentum for the company. First, we kicked off the integration of J-W Power at the time when horsepower lead times continued to extend. Customer discussions commenced immediately upon closing, starting the process of onboarding new customers to the USA Compression platform.

[Clint Green, President and CEO at USA Compression Partners]

As of early March, we have integrated the combined operations organization and established a new reporting structure. Second, on February 1st, our integration of legacy USA Compression data into a new ERP system was completed. Our respective integration teams worked long hours to enable a smooth transition of both, and I can't be more appreciative of their efforts. Throughout it all, we have maintained our operational momentum while delivering DCF and leverage metrics that show meaningful year-over-year improvement to our unit holders. The company is now broadly diversified across every major basin, horsepower class, and customer type. In the last few months, we have contracted over 90% of our 2026 horsepower, which will more than double the new horsepower deployed in 2025. Additionally, we have continued the momentum in our small horsepower class with utilization up nearly 10% year-over-year.

[Clint Green, President and CEO at USA Compression Partners]

The introduction of J-W Power's manufacturing capabilities is enabling us to manage a dynamic compression market differently than the past. Certain new engine lead times have recently tripled from 50 weeks to approximately 150 weeks. While historically we might hesitate to commit to the full horsepower cost that far in advance, we are now able to directly acquire highly marketable engines with optionality to package for our own internal contract compression needs or future resale to third parties. Engine costs represent approximately 25%-40% of the total skid cost, with just a fraction of that cost provided as a deposit. In the event of an unexpected contract compression market shift over the next several years, we believe we could also divest those engines for other use cases, further reducing any unlikely downside exposure.

[Clint Green, President and CEO at USA Compression Partners]

Additionally, the diversity of our manufactured compression products, including midsize, large horsepower, electric, and high-pressure gas lift, supports more competitive pricing for our customers while enabling us to adapt to the ever-changing marketplace. So far, the oil-directed rig count remains flat this year, but producers are showing more optimism looking out over 12-month horizon than we have seen for some time, reflecting a much improved commodity backdrop. The 12-month oil strip has significantly lagged physical spot prices and arguably is underpriced for an immediate and permanent ceasefire, much less a long-term conflict. We believe spot natural gas prices do not reflect the LNG risk associated with the Strait of Hormuz. Waha pricing is anticipated to materially improve with export capacities increasing in Q4 of 2026.

[Clint Green, President and CEO at USA Compression Partners]

I will now turn the call over to Chris Wauson, our Chief Operating Officer, who will provide additional insights to our current operations and our out-year growth plan.

[Chris Wauson, SVP and COO at USA Compression Partners]

Thanks, Clint. As of today, the operations and commercial organizations have been integrated with both J-W employees and legacy USA employees under new reporting structures consistent with a best-in-class approach. The longer-term result will be streamlined route optimization, customer contracts, vendors, inventory, safety protocols, and systems data. As discussed in the prior quarter, we expect approximately $10 million-$20 million of annual run rate synergies by year-end 2027, and we are still tracking towards those estimates. The current new compression lead times have presented a new challenge for near-term business continuity and long-term planning for both contract compression and manufacturing. As a result, we have already placed orders for engines and packaged components for 2027 and engines for 2028 and a portion of 2029.

[Chris Wauson, SVP and COO at USA Compression Partners]

Packaged component lead times remain well inside of engine lead times, but we'll continue to monitor and place these orders when needed. These advanced planning efforts should enable new contract compression growth to stay largely consistent with 2026, in excess of 100,000 hp each year. As far as our manufacturing book is concerned, we have some specialty horsepower slated for resale, but the vast majority is expected to go into our fleet. Our 2028 orders are nearly entirely weighted to large 3,600 series engines, which are the most desired by our compression customers while also having substantial optionality for sale should the market shift.

[Chris Wauson, SVP and COO at USA Compression Partners]

We continue to have robust conversations across our diverse customer portfolio, and as Clint mentioned, we have contracted more than 90% of nearly 110,000 new horsepower expected to be added to the fleet in 2026, and are presently in the middle of multi-year strategic planning discussions with some of our strongest customers to shore up our 2027 book. Notably, we experienced lower churn rates than expected in Q1, which is a reflection of a tightness in the current market. This backdrop, coupled with the idle units acquired from J-W, positions us for outside horsepower growth in the back half of the year and into early 2027. Finally, while oil prices have moved up significantly in the last month, we are focused on minimizing cost increases tied to lubricants.

[Chris Wauson, SVP and COO at USA Compression Partners]

If oil prices were to remain at current levels, we would expect much of that increase to show up in the second half of the year as our lubricant contracts renew. I will now turn the call over to Chris Paulsen to discuss our financial results in detail.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

Thanks, Chris. For basis of comparison, our quarter and year-ago financials exclude the benefits of J-W that closed on January 12th. For Q1 2026, our income statement reflects the results of J-W's contributions for 79 days in the quarter, and therefore our non-GAAP financial numbers, including EBITDA and DCF, reflect the same. By contrast, our non-GAAP operating metrics tied to horsepower, including utilization, average revenue per horsepower per month, and average active horsepower are calculated based on month-end, and therefore fully reflect J-W's horsepower contribution for the quarter. As we highlighted in our December 1st deal announcement, while J-W provides meaningful near-term accretion and immediate deleveraging, the company in aggregate also has lower gross margin than our legacy asset base, in part due to the manufacturing and AMS operations that contributed approximately 10% of legacy EBITDA.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

Turning the page to Q1 results, we increased pricing to an all-time high, averaging $22.73 per horsepower, a 5% increase in sequential quarters and an 8% increase compared to a year ago. Average active horsepower ended at 4.438 million. Our first quarter adjusted gross margins came in at 64.4%. Regarding the consolidated financial results, our first quarter 2026 net income was $38.3 million, operating income was $91.4 million, net cash provided by operating activities was $86.1 million, and cash interest expense net was $47.1 million. Our leverage ratio at the end of the fourth quarter was 3.74x.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

Turning to operational results, our total fleet horsepower at the end of the quarter was approximately 4.931 million horsepower, adding approximately 1.037 million horsepower as compared to the prior quarter, largely tied to the J-W acquisition. Our average utilization for the first quarter was 91.9%, a decrease compared to the prior quarter after incorporating J-W. First quarter 2026 expansion capital expenditures were $26.4 million, and our maintenance capital expenditures were $9.2 million. Expansion capital spending in Q1 primarily consisted of new units, while maintenance capital activity was deferred for a few weeks in February due to the implementation of SAP on February 1st. For the remainder of the year, most growth capital will be focused on new horsepower and reconfigurations, while maintenance capital will normalize towards our full-year projections.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

We continue to maintain our full-year adjusted EBITDA range of $778 million-$100 million, distributable cash flow range of $480 million-$510 million, maintenance capital range of $60 million-$70 million, and expansion capital range of $230 million-$250 million. As Chris Wauson noted, we are nearly fully contracted for 2026 and are placing advanced orders to maintain full utilization of our manufacturing complex for several years. As stated in February, our near-term target is to maintain a 3.75x debt to EBITDA, and we made significant progress towards this goal in Q1. While we hit this target for the quarter, we anticipate it will tick higher in Q2 as we take delivery of new horsepower, but trend back lower by year-end.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

The energy high-yield market has remained open and very resilient throughout the Iran conflict. Our improved leverage metrics put the company in a strong position to access capital markets later this year to the extent we want to provide more consistency in our debt tranche sizing and duration. This quarter was a whirlwind of activity for our operations and finance teams as we implement new systems with new assets and new faces. The execution was nothing short of exceptional as we laid the foundation for more acquisition opportunities to come. We will stay disciplined and evaluate opportunities that fit with our financial goals and core competencies. In the near term, our business will be improved through a gross margin push, working to improve structural cost and the efficiency of the J-W organization in the face of an inflationary oil environment.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

With that, I'll turn the call back to Clint for concluding remarks.

[Clint Green, President and CEO at USA Compression Partners]

Thanks, Chris. This business demands that we stay close to our customers every single day, understanding their needs, anticipating where they're headed, and making sure we're ready when they call. The discipline doesn't change with the commodity cycle. What is changing is the opportunity in front of us. The demand for natural gas, both to move it and to power the infrastructure around it, continues to grow, and we feel very good about our position in that story. The relationships we've built with our suppliers, combined with our manufacturing capabilities, gives us a real advantage in an environment where equipment lead times remain extended. We intend to use that advantage. We're bullish on contract compression overall, and I'm excited about where we're headed. I will now open up the call to questions.

[Operator]

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Nate Pendleton with Texas Capital. Please go ahead.

[Nate Pendleton, Analyst at Texas Capital]

Good morning, and congrats on the record results. You had a really strong quarter across the board. Can you talk for a moment how this compared to your internal expectations following the J-W integration, then maybe your decision to keep the guidance the same here in lieu of those results?

[Clint Green, President and CEO at USA Compression Partners]

Yeah, Nate. Thank you for that. Yeah, I mean, I feel like we're in line with where we thought we would be as we put this model together late last year and decided to move forward with the acquisition. You know, we've already worked through some of the operational changes in the structure. We're working hard on you know, our routing and ways to save going forward. Overall, we're really happy with where we're at in the process and excited about where we're headed by year-end and then through the future.

[Nate Pendleton, Analyst at Texas Capital]

Got it. Thanks, Clint. This is my follow-up maybe for Chris. I believe last call you talked about looking for distribution coverage expanding beyond the 1.6 times marker as sparking some conversations. With coverage now over 1.7 times, can you talk about how you weigh adding to an already strong distribution versus other uses of capital?

[Chris Paulsen, SVP and CFO at USA Compression Partners]

Nate, just before that, just to add a little bit to Clint's comments as it relates to J-W transaction as well. I think we mentioned this before, I think we've been generally very pleased with the sophistication of their operations. As we start to embark upon another SAP implementation for their operations in particular, we're seeing some things that we wanna adopt in our own, which is fantastic and which is probably expected from a company that's been doing it for 60 years. There are areas of manufacturing that are done exceptionally well, areas as it relates to customer interaction and outreach that have been done exceptionally well, the retail side of the business. I'll just point to that as well.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

As it relates to your distribution question, you know, we were pleased to see that number tick up to 1.72x. Part of that relates to the fact that we kind of had a bit of a partial quarter. We ultimately had lower maintenance expenditures. That was part, you know, that was due to the SAP implementation itself. We did two weeks of paper stacking as it related to the transition. We really had kind of a quiet period for about 1.5 weeks where we really told our folks to limit their maintenance expenditures. As a result, our maintenance expenditures were down and therefore DCF ticked up.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

That being said, we also did not account for the DCF over those 11 days while fully accounting for maintenance capital. I think net-net, we feel really good about, you know, setting up for, you know, a durable and, and really a disciplined approach to, you know, our distribution over time and our distribution policy. You know, we wanna see something sustained for a period of time and continue to hit both our financial metrics in terms of leverage, but also continue to see and repeat kind of these type of numbers before I think we would begin to approach the conversation about any change in distribution policy.

[Nate Pendleton, Analyst at Texas Capital]

Understood. I really appreciate all the detail. Congrats again.

[Clint Green, President and CEO at USA Compression Partners]

Thanks, Nate.

[Operator]

The next question comes from the line of Jim Rosen with Raymond James. Please go ahead.

[Jim Rosen, Analyst at Raymond James]

Hey, good morning, gentlemen. Clint, you talked about lead time stretching out. It's pretty remarkable to see how quickly that has spread to numbers we've never seen before. It seems to be you guys are pretty well ahead of the game by, you know, placing orders for engines, you know, out multiple years. I'm curious how you're seeing your customers and maybe even competitors in terms of how they are set for planning out this far in advance. It wasn't long ago that customers were kind of caught by surprise when, you know, a couple years ago, lead times were beyond a year, now we're, you know, almost three years. I'm just kinda curious how you think the, you know, the customer base and the industry is set for planning on these extended time horizons.

[Clint Green, President and CEO at USA Compression Partners]

Yeah. You know, it was a little bit of a surprise at one point, the lead times. You know, we were running around 55 to 70 weeks, just depending on the day. Overnight, you know, Caterpillar went to 100 weeks or 108 weeks, and that's when we got in gear pretty quickly to try and figure out, you know, how we were gonna cover that. We got creative for 27, and we're able to pull some stuff in. 28, we decided to go ahead and make that engine order for 28. You know, the customers, I think they're dealing with it just like we are. You know, thankfully, we're able to provide for our customers with our plans for the future.

[Clint Green, President and CEO at USA Compression Partners]

Competition, I haven't really heard what they're doing on any front. I'm sure they're trying to figure it out just like we are. You know, I think our capital program has gone from a one year program to probably a three year outlook and taking pieces of it at a time as we have to order engines. Now, you know, a lot of it is driven by the generation. It's the generator orders because you see that Ariel and cooler manufacturers, those lead times are still at 25 to 30 weeks. They're not stretched way out. I think everybody's taking it in stride, and we're trying to make sure our customers are taken care of.

[Jim Rosen, Analyst at Raymond James]

Yeah. Well, kudos for being ahead of the game.

[Clint Green, President and CEO at USA Compression Partners]

Thank you.

[Jim Rosen, Analyst at Raymond James]

As a follow-up, maybe you guys, Chris, you talked about OpEx or mainly higher oil prices that'll drive lube oil and fuel costs up to some extent in the second half if oil prices stay up here. Curious how you think about, you know, your ability to pass that on given how tight the market is and maybe the lag effect of being able to price that on. Obviously, you didn't change your guidance, so it's not impacting your margins at this point, but just kind of curious how you're all thinking about that.

[Chris Wauson, SVP and COO at USA Compression Partners]

Yeah. No, thanks for that. It's Chris Wauson. One thing with inflation, you know, with oil prices, you know, everything, all of our costs are going up, so, you know, we're continuing to drive efficiencies in the organization to protect that margin, you know. As contracts expire and renewals come up, we do plan to address that accordingly. You know, it's kind of twofold. We're going to manage it as best we can and continue to drive for efficiencies. That's the biggest win here.

[Jim Rosen, Analyst at Raymond James]

Appreciate the color, guys. Thanks.

[Clint Green, President and CEO at USA Compression Partners]

Thank you.

[Operator]

The next question comes from the line of Eli Jossen with JPMorgan.

[Eli Jossen, Analyst at JPMorgan]

Hey, good morning. Just wanted to start on the outlook for new unit procurement. It seems like you've got orders placed for the next several years. How should we think about the cadence of unit additions over these next couple of years? I know some of your peers have given an outlook through the decade, but just curious, you know, how we should think about, you know, new units in the fleet. Thanks.

[Chris Wauson, SVP and COO at USA Compression Partners]

You know, one thing we're trying to do is stick to that 100,000-ish horsepower of growth year-over-year. With, you know, maybe even up to 125, just depends on how things shake out. You know, that's the beauty of our manufacturing business, we can control that a whole lot better now. It's a lot more optionality. You know, it enables us to really make those decisions and do what's best for our customers and the organization.

[Clint Green, President and CEO at USA Compression Partners]

Yeah. Hey, this is Clint. I wanna add on that. You know, I talked about a three year capital program, We're really only talking about the cost of the engine for that three years. We have the engines ordered, but we will wait until We'll monitor lead times on compressors and coolers, and that way we can order those, you know, at 40 weeks or something like that to have them in time for the engines to arrive. I wanna make sure everybody understands we're not committed to the full compressor costs going out three years. It's just a deposit on the engine so far.

[Eli Jossen, Analyst at JPMorgan]

Got it. That's a helpful clarification. You know, maybe shifting over to some of the stronger pricing we saw this quarter as well as the utilization noise from the J-W integration. Can we help frame run rate levels on both of those metrics going forward? Should we expect continued pricing growth, and how will fleet utilization, you think, ultimately shake out once you're fully integrated? Thanks.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

Hey, Eli Jossen. Chris Paulsen. As it relates to the first part of that question on the utilization front, you know, the utilization is reflective of the fact that we brought in over 1 million horsepower and essentially got that optionality, I think, on the cheap. As we mentioned in our acquisition call, we noted that, you know, we felt like there were 900,000+ readily deployable. We've taken the initial path through that fleet and that's why you see in the, you know, the over 1 million horsepower that's within our total count. We'll continue to review that and look more deeply into that total capacity, and part of that will be as we continue to increase orders, increase our small horsepower utilization. As we noted, we increased it over 10% year-over-year.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

We see that potential to improve from here. Those are some of those units that we'll evaluate. Presently, the horsepower utilization that you see, I think, is a baseline for new run rate. I think it can only improve from here, both in terms of small horsepower utilization, but also as we dig deeper into some of that capacity, we may ultimately decide that that capacity is no longer deployable within our operations, but can be used on other operations elsewhere. As it relates to the revenue side of the question, you know, the revenue, you know, has continued to improve, as we noted 5% and 8% in terms of the revenue relative improvement.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

We see that, you know, continuing to improve consistent kind of with the way in which we've approached in the past. I think as we see cost increase, you know, many of our contracts, and I should say most are CPIU-based. We've seen CPIU tick up almost 100 basis points from not that very long ago. One, we'll have the CPIU support as it relates to revenue. Two, we are partnering with our upstream and midstream companies. We always do just that.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

They understand through any cycle that there's a give and take, and we recognize that too and have partnered as it relates to the business and would anticipate that, you know, as our cost increase, that there will be some relative cost increase on the other side of that and just need to have constructive conversations. That's a big part of having great relationships within the business and being around since 98 and having, you know, nearly two decades of relationships with our top 10 customers.

[Eli Jossen, Analyst at JPMorgan]

Got it. Super helpful. Leave it there. Thanks.

[Operator]

Once again, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Doug Irwin with Citi. Please go ahead.

[Doug Irwin, Analyst at Citi]

Hey, team. Thanks for the question. Maybe one on J-W Power here. It sounds like the manufacturing business is already maybe changing the way you approach your growth backlog a little bit. Just curious now that you've had a bit more time with these assets under your belt, if there maybe been any other opportunities or surprises you've been able to uncover with regard to synergy opportunities that maybe you hadn't fully appreciated beforehand?

[Clint Green, President and CEO at USA Compression Partners]

Clint, this is Clint, Doug. Thanks for your question. We fully expect to or we hope to find some diamonds in the rough, you know, that we weren't expecting. Definitely the manufacturing business. You know, the capacity there is between 100 and 125,000 hp in that facility, which is kind of what we expect to grow or plan to grow and maybe a little north of that over the next few years. We feel like that'll give us a lot of flexibility. The operations side of it being in every basin now, and having facilities that are across the road from each other in several spots, you know, there may be some synergy opportunity there.

[Clint Green, President and CEO at USA Compression Partners]

We think there's more to come. We're just trying to dig through the all the opportunities and figure out which ones really come to life.

[Doug Irwin, Analyst at Citi]

Got it. That makes sense. Then maybe just a higher level one as a follow-up. Looking at Slide four here in your slide deck. You call out the need for over 10 million incremental horsepower by 2030, which is obviously a huge number. Just curious what you see as your role in meeting that demand here moving forward. Do you potentially see a need to lean even further into growth, kind of relative to what you already messaged here over the next couple years? If you can maybe talk about what basins on that map you see yourself as having the biggest advantage in.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

Yeah, this is Chris. Great question. As it relates to that, you know, part of it is what is that right forecast? We're actively reviewing kind of the overall forecast for natural gas, understanding the LNG markets, the data center markets. They're exceptionally fluid, as you well know. I think ultimately we feel really good about kind of the forecast that was put forth on that particular slide and the forecast as it relates to those basins. I think it's all related to the relative natural gas price as well.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

You know, ultimately, I think the Rockies, for instance, is an area that we would say, at a higher gas price that would probably most certainly be kind of a flattish range, whereas I think those rest of those areas are well established in terms of their growth trajectories, at current pricing, if not above. Ultimately, as we think about our place in this, in this trajectory, I mean, we want to be in a position to maintain our current standing and our current market share, if you will. We know that in areas like the Northeast, we have an outsized market share, and it's an area that has returned to growth and there's really fundamentally sound measures that support that 5-7 BCF.

[Chris Paulsen, SVP and CFO at USA Compression Partners]

I think if we see coal to gas switching, that number increases from here. That's really based on announced projects. I mean, there's still probably more to come there. As it relates to the Gulf Coast and the Permian that are gonna make up more than half of that, we're well situated there. You know, we're a big player in the Permian. We're a huge player on the Gulf Coast and MidCon, and we wanna maintain our market share, if not grow it in those respective areas as well.

[Doug Irwin, Analyst at Citi]

Awesome. Thanks for the time.

[Clint Green, President and CEO at USA Compression Partners]

Thank you.

[Operator]

The next question comes from the line of Selman Akyol with Stifel. Please go ahead.

[Selman Akyol, Managing Director at Stifel]

Thank you. I just kind of wanted to follow up on that last question. You know, listening to the Energy Transfer call, they're certainly talking about the U.S. when everything settles out from Middle East war. The U.S. becomes certainly a preferred supplier to the global outlook. As you think about that, should we expect to see an acceleration of your business?

[Clint Green, President and CEO at USA Compression Partners]

We fully expect so. This is Clint. I'm sorry. You know, if you look at the whole market, there's 15%-20% of the LNG capacity locked into the Strait of Hormuz, locked in because of the Strait of Hormuz right now. JKM prices yesterday they were at $16, U.S. gas prices are at, you know, $2.80-$3. If you back up to March, January and February of this year, JKM was, you know, $9-$10, U.S., you know, Henry Hub pricing was $2.80-$3.20. We haven't even though JKM's gone up, we haven't seen the pricing increase here in the U.S. Part of that is takeaway capacity, right?

[Clint Green, President and CEO at USA Compression Partners]

The, the, I guess, the major driver of it is. By the end of the year, we're gonna have a lot more capacity coming out of the Permian. There's, there's several LNG facilities either expanding now under construction or, you know, completely being built under construction. If you look at the U.S. Department of Energy's website, they show five of those facilities will be online within the next 24 months. With all that said, you know, if gas takeaway is able to get out of the Permian and get to the facilities on the Gulf Coast or, and, you know, are able to get on boats and go across the ocean, the demand for U.S. natural gas is gonna go up.

[Clint Green, President and CEO at USA Compression Partners]

You know, we couldn't be more excited about the natural gas story right now, whether it's DJ Basin or the Permian or wherever. Any of that growth, with us being in all the basins, means that we have to grow with it. We're super excited about the prospects of the future here.

[Selman Akyol, Managing Director at Stifel]

All right. Appreciate that. Let me just ask you about the extended lead times. I guess when you look at the 3600s and you're talking, I believe, 2,500 hp and up, is that all just being driven by, I guess, sort of AI backup power, or primary power, you're competing against that? Is that what's really taking the lead times up, or is it something else?

[Clint Green, President and CEO at USA Compression Partners]

It's both. It's natural gas driven engines or generators that are driving, you know That market has increased extremely, right? A lot of people ordering generation, you have folks ordering natural gas compression engines that to supply the gas to the generators. Cat is really doesn't have a lot of big plans to expand their manufacturing facility in the near future for the 3,600 series, which is the 2,000 hp 2,500 hp up to 5,000 hp. Those are the drivers behind it.

[Clint Green, President and CEO at USA Compression Partners]

I mean, I think we're to the point now where we're starting to look at other engine manufacturers as options, whether it's domestic or international, because I believe there's a hole that we've got to start filling in the future if this is gonna continue out.

[Operator]

Thank you. There are no further questions at this time. I would like to turn it back to Clint Green for closing remarks.

[Clint Green, President and CEO at USA Compression Partners]

Yeah. Thank you all for joining our call today. As always, we're deeply appreciative of our employees and the stakeholders that enable us to conduct our business every day. With that, we want y'all to have a great day. Thank you for joining and see you next time.

[Operator]

Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect.

Participants

Executives

• Clint Green, President and CEO
• Chris Wauson, SVP and COO
• Chris Paulsen, SVP and CFO

Analysts

• Nate Pendleton, Analyst at Texas Capital
• Jim Rosen, Analyst at Raymond James
• Eli Jossen, Analyst at JPMorgan
• Doug Irwin, Analyst at Citi
• Selman Akyol, Managing Director at Stifel