USA Compression Partners LP

Good morning. Welcome to USA Compression Partners' second quarter 2025 earnings conference call. During today's call, all parties will be in a listen-only mode. At the conclusion of management's prepared remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. This conference is being recorded today, August 6, 2025. I now would like to turn the call over to Chris Porter, Vice President, General Counsel, and Secretary.

Good morning, everyone, and thank you for joining us. This morning we released our operational and financial results for the quarter ending June 30, 2025. You can find a copy of our earnings release as well as a recording of this call in the investor relations section of our website at usacompression.com. During this call, our management will reference certain non-GAAP measures. You will find definitions and reconciliations of these non-GAAP measures to the most comparable US GAAP measures in our earnings release. As a reminder, our conference call will include forward-looking statements. These statements are based on management's current beliefs and include projections and expectations regarding our future performance and other forward-looking matters. Actual results may differ materially from these statements. Please review the risk factors included in this morning's earnings relief and in our other public filings. Please note that the information provided on this call speaks only to managers' views as of today, August 6, 2025, and may no longer be accurate at the time of a replay. I will now turn the call over to Clint Green, President and CEO of USA Compression.

Thank you, Chris, and good morning, and thank you for joining our call. We are pleased to deliver a record-setting quarter for revenues and average revenue per horsepower. while also maintaining consistent margins and utilization. Despite bearish macro commentary related to GDP, tariffs, inflation, and commodities that could have presented headwinds for our quarter, our business continues to march forward with strong execution in the first half of the year. While certain of our EMP customers took a brief pause in Q2 as WTI dipped below $60 and Henry Hub marched lower, Most have shown a resolve into the back half of this year and into 26 to support their current levels of production. For example, our contracted horsepower in the northeast in Q4 is expected to be 5% higher than today. As we look to 2026, we believe we have significant reason for optimism given the number of RFQs in the pipeline. Bear in mind our top 10 customers comprise over 45% of our revenues And most are expected to grow production next year, not just maintain it. In the longer term, we still expect to see significant growth in the natural gas demand from AI, cloud services, and related power needs as major tech firms continue to significantly increase budgets to expand their infrastructure. Three of the largest tech firms in the U.S. are anticipated to spend over $265 billion in capital this year combined. largely to expand their infrastructure for AI and cloud services. In addition, new data center investments are continuously being announced. In the last several weeks alone, two new data center complexes tied to natural gas generation were announced, one totaling 4.4 gigawatts and another at 190 megawatts. Coming alongside tech and private equity investments, utilities are also investing over $200 billion this year to meet this growing power demand. Substantially more than any year since 2000, we continue to believe that the only way to provide suitable, consistent, and clean energy to power these needs is natural gas, and our country needs compression to get it there. Turning to U.S. oil and gas production, the July EIA short-term energy outlook showed considerable natural gas growth projections, including annualized gas growth of 6% in the permian. Natural gas out of the Northeast and the Haynesville is also expected to grow. Finally, crude oil production in the Permian continues to stay resilient and above the average for the first half of the last year, despite a lower rig count. At the corporate level, we are beginning to reap the benefits from our new shared services model with energy transfer. For example, we have seen licensing savings and enhanced functionality from our IT group and expect to reap the benefits of larger centralized procurement organization moving forward. We are just two quarters into the process, and it's too early to understand the full impact of shared services, but we like what we see this far. Operationally, we have acquired approximately 48,000 new horsepower in 2025, the majority of which will be delivered before year-end. We anticipate 10,000 of this horsepower will be online January of 2026. And we'll update our 2025 capital forecast in Q3 to the extent deliveries hit next year. We continue to seek and have success with buy and contract back opportunities as additional ways to grow horsepower. Although our average total active horsepower was down slightly on a sequential quarter basis, our large horsepower continues to be nearly fully utilized. Across the fleet, the majority of the unit releases for the quarter have been recontracted, and we anticipate Q4 active horsepower to exceed 3.6 million, which would represent a new record for the company. In terms of day-to-day operations, we continue to focus on our three biggest costs, parts, labor, and lube oil. For several of our most costly parts, we are revisiting certain vendor discussions to solve for optimal quality, cost, and warranty coverage. Although labor costs increased in the quarter due to overtime and contract labor, we expect these costs to reduce going forward as we fill these needs with internal hires through enhanced recruiting efforts. We also anticipate seeing significant savings in our lube oil costs related to our new agreement with a large lube oil vendor. To date, tariffs have had minimal impacts on our business as the manufacturing of most components we utilize originate in the U.S. Lead times also have not materially changed from historical averages with our engines currently running 34 to 45 weeks and compressors 24 to 28 weeks. As I previously stated, we are still getting quotes for Q1 or Q2 2026 delivery at the moment. As parts inventories are generally around six months, and we would likely not see any material inventory impacts from tariffs until next year at the earliest. With that, I will turn the call over to Chris Paulson. Our Chief Financial Officer discussed our second quarter highlights and our 2025 guidance in more detail.