USA Compression Announces Acquisition of J-W Power for $860 Million

USA Compression Partners, LP USAC, Dallas, TX, an oil and gas equipment and services provider, recently announced a definitive agreement to acquire J-W Power Company, a major privately-held player in the compression services sector, for a total value of approximately $860 million. This acquisition marks a key step in USAC’s strategic growth, significantly expanding its operational footprint and fleet capabilities in the natural gas compression market.

Expanding Scale and Fleet Capacity

The acquisition of J-W Power strengthens USAC’s market position by combining its fleets to total approximately 4.4 million active horsepower. This enhanced scale ensures that USAC is better positioned to meet the growing demand for natural gas compression, an essential service in the energy industry. By adding J-W Power’s equipment to its portfolio, USAC now commands a larger, more diverse fleet, able to cater to a wider range of customer needs across multiple regions.

Geographic Diversification and Market Reach

One of the key benefits of this acquisition is the expanded geographic footprint that USAC gains by integrating J-W Power’s assets. The deal adds more than 0.8 million active horsepower across critical regions, including the Northeast, Mid-Con, Rockies, Gulf Coast, Bakken and the Permian Basin. These regions represent some of the most vital and active areas for natural gas production in the United States, and USAC’s increased presence in these basins ensures its continued growth in the face of evolving market demands.

This geographic diversification helps USAC to reduce risks associated with regional downturns or regulatory changes, ensuring a more stable and resilient operational base. The acquisition enhances the company’s ability to service customers in both established and emerging markets, driving long-term value and supporting growth initiatives.

Broader Business Model and Service Offerings

The addition of J-W Power brings more than just horsepower to USAC. The acquisition introduces new business lines, including aftermarket services and parts distribution, which are critical for maintaining the longevity and efficiency of compression equipment. Additionally, USAC gains greater flexibility through specialized manufacturing services that will allow it to offer more customized solutions to meet diverse customer requirements.

These expanded capabilities align with USAC’s long-term strategy of becoming a comprehensive service provider across the natural gas compression industry. The company now has the tools and resources to address an even wider array of client needs, from initial equipment supply to ongoing maintenance and support, further solidifying its role as a leading player in the sector.

Stronger Customer Base With Long-Term Relationships

USAC’s customer base is set to grow substantially with the acquisition of J-W Power. The deal adds a highly diversified portfolio of customers, many of whom have established long-term relationships with J-W Power. These relationships are invaluable as they represent a steady, recurring revenue stream for USAC, providing a solid foundation for growth.

The combination of two strong customer bases creates additional opportunities for cross-selling and deepening client relationships. By integrating both companies' customer service operations, USAC is poised to deliver even higher levels of support and innovation, ensuring continued satisfaction and loyalty among existing and new customers.

Enhanced Market Leadership in Mid-to-Large Horsepower Compression

USAC’s acquisition of J-W Power not only expands fleet but also solidifies its leadership in the mid-to-large horsepower compression market. The integration of J-W Power’s high-quality fleet allows USAC to increase its market share in this critical segment, where demand is rapidly growing due to increased natural gas production across the United States.

The acquisition further strengthens USAC’s position as a key player in compression services, enabling it to cater to larger-scale projects with higher horsepower needs. This expanded capacity ensures that USAC can continue to deliver cutting-edge solutions to its customers, maintaining a competitive edge in a fast-evolving market.

Financially Attractive and Deleveraging Transaction

The acquisition is expected to be accretive to its distributable cash flow on a near-term basis, providing an immediate financial boost to USAC. The transaction is also financially attractive, with a valuation of approximately 5.8x, the estimated adjusted EBITDA for 2026, before considering expected synergies. This favorable multiple positions USAC for growth and profitability.

Additionally, the deal is structured in a way that accelerates USAC’s path to a sub-4.0x leverage ratio. It plans to fund the acquisition with a combination of $430 million in cash and approximately 18.3 million new USAC common units, which will be issued to J-W Power’s seller. This transaction structure is designed to enhance USAC’s financial flexibility and de-leverage the balance sheet, positioning it for even greater operational efficiency and shareholder value.

Looking Ahead: A Bright Future for USAC

This acquisition represents a major milestone for USA Compression Partners, reinforcing its status as a dominant force in the natural gas compression sector. With a stronger fleet, an expanded customer base and a diversified set of services, USAC is well-positioned to meet the evolving needs of its clients while capitalizing on new growth opportunities in key regions across the United States.

As USAC looks ahead to the first quarter of 2026, when the transaction is expected to close, it is poised to continue the upward trajectory, delivering long-term value to unitholders and further cementing the leadership role in the compression services industry.

Conclusion

The acquisition of J-W Power by USA Compression Partners is a significant step in strengthening its position as a market leader in natural gas compression services. By enhancing its fleet, expanding geographic reach and diversifying service offerings, USAC is set to meet the growing demand for compression services while ensuring long-term stability and growth in the years to come. With strong operational synergies, a diversified customer base and a robust financial structure, USAC is poised to boom in the evolving energy landscape.

USAC's Zacks Rank & Other Key Picks

Currently, USAC sports a Zacks Rank #1 (Strong Buy).

Investors interested in the energy sector might look at other-ranked stocks like  Par Pacific PARR, Oceaneering International OII and Canadian Natural Resources Limited CNQ, which sport a Zacks Rank #1 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Par Pacific is valued at $2.30 billion. It is a vertically integrated energy company that operates in refining, marketing and logistics, with a significant presence in the U.S. mainland and Hawaii. With a focus on operational efficiency and sustainability, Par Pacific leverages its portfolio of refineries, retail networks and transportation infrastructure to deliver value while meeting the evolving demands of the energy industry.

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