AUSTIN, Texas--(BUSINESS WIRE)--Jan. 6, 2015--
USA Compression Partners, LP (NYSE: USAC) (the “Partnership”) today
announced the closing of the Second Amendment to its Fifth Amended and
Restated Credit Agreement, which provides for an increase in the
revolving credit facility capacity from $850 million to $1.1 billion and
an extension of the maturity to 2020. The revolving credit facility
contains an accordion feature whereby it can be expanded to $1.3 billion
under certain conditions. In addition, the amendment also provides
additional flexibility under the financial covenants. As of September
30, 2014, the Partnership had approximately $510 million of
variable-rate indebtedness outstanding under its revolving credit
facility.
“This amendment provides the Partnership with incremental liquidity and
capacity, affording us flexibility in managing our balance sheet,
leverage and coverage as we continue to execute our organic growth
strategy,” said Eric D. Long, President and Chief Executive Officer of
the Partnership. “We view the meaningful upsize as a strong show of
support by our lender group. Being able to significantly increase the
facility during this volatile time in the market demonstrates the trust
of our lenders, many of whom have over a decade-long relationship with
USA Compression, and their in-depth understanding as to the stability of
our fee based, demand driven business.
“Our business is driven largely by the continued increase in overall
natural gas production,” Mr. Long continued, “and while cuts to producer
capital expenditure budgets are grabbing most of the headlines, lower
capital expenditure budgets do not necessarily equate to declining
natural gas production. In fact, the EIA projects 3% production growth
in 2015 in its most recent Short-Term Energy Outlook (December 9, 2014).
Growth in demand for US natural gas also remains strong, driven
especially by both increased pipeline exports to Mexico as well as LNG
projects beginning service towards the end of 2015. We believe that
low-cost shale gas prospects will be the sources of supply to fill this
incremental demand, and that in 2015 and beyond, domestic producers will
shift their focus to emphasize development of these natural gas shale
prospects, as well as develop only their highest quality oil projects.
As an example, on December 29, 2014, the Partnership’s largest customer,
Southwestern Energy, announced an approximately 28% increase in expected
gas and oil production over its 2014 level along with a 2015 capital
spending increase of approximately 8% – driven primarily from their
increasing development in Northeast and Southwest Appalachia for
Marcellus and Utica natural gas. This is a great example of one of our
large, well-capitalized customers continuing to focus on high-grading
its capital deployment towards the most attractive investment
opportunities – which we believe to be shale resources. We should be in
a position to discuss as-yet unannounced capital expenditure budgets of
other customers when we hold our next earnings call.
“Entering 2015,” added Mr. Long, “we currently see strong market demand
for our compression services, which we believe is based on the expected
build out of large regional natural gas infrastructure projects
primarily tied to the long-term increasing demand for natural gas. Our
geographic diversity continues to benefit our business, as our presence
across many of the major natural gas producing basins provides not only
cash flow stability but also opportunities to capitalize on shifting
areas of focus. Additionally, as access to capital becomes constrained
for some producers and midstream operators, we may potentially see an
uptick in outsourced compression services, which is consistent with past
market downturns.
“Regarding the small portion (approximately 15% of total fleet
horsepower) of our fleet engaged in gas-lift applications on crude oil
wells, we currently maintain high utilization,” noted Mr. Long. “Given
the current commodity price environment, we continue to closely monitor
and evaluate growth capital plans for compression services from the gas
lift units.”
Year-End 2014 Operational Update
The following year-end 2014 operational update is based on preliminary
data and therefore remains subject to change in all respects.
USA Compression ended the 4th quarter of 2014 with
approximately 1.5 million total HP in its fleet, a 29% increase over Q4
2013. Over the same 12-month period, revenue generating HP increased to
approximately 1.4 million HP, a 26% increase. During 2014, the
Partnership invested more than $360 million in expansion capital,
primarily in new compression units.
For the year ended December 31, 2014, USAC’s average fleet utilization
was 94.0%(1). This compares to 93.8%(1) for the
year ended December 31, 2013. Regarding the continued strong fleet
utilization, Mr. Long commented, “USAC has demonstrated its ability over
the last 15 years, throughout multiple commodity price cycles, to keep
our assets in the field and working, and Q4 2014 was no different. Our
strategic focus on large horsepower compression continues to prove our
business thesis – assets used primarily in large midstream-oriented
applications have significantly less volatility and longer deployment
cycles, and as a result generate very stable fee-based cash flows.”
Demand for services from new compression units delivered in 2014, as
well as those scheduled for delivery in 2015, currently remains strong.
As of December 31, 2014, USAC had executed and pending compression
service contracts for approximately 95% of the total midstream-oriented
HP delivered in 2014. Of the approximately 200,000 midstream-oriented HP
currently scheduled for 2015 delivery, about 48% has already been
committed to customers on a long-term basis. Mr. Long added, “We are
currently ahead of our historical pace in terms of locking in new
fee-based service contracts for units being delivered in 2015.”
2014 / 2015 Guidance
USA Compression is reaffirming that it expects to be at the high end of
its previously-issued guidance for 2014. The Partnership will be
providing 2015 guidance during its regularly-scheduled 2014 full year
earnings conference call, expected to take place in early to
mid-February 2015.
(1) Calculated as the average utilization for the
months in the period based on utilization at the end of each month in
the period. Utilization is calculated as (i)(a) revenue generating HP
plus (b) HP in the Partnership's fleet that is under contract, but is
not yet generating revenue plus (c) HP not yet in the Partnership's
fleet that is under contract not yet generating revenue and that is
subject to a purchase order, divided by (ii) total available HP less
idle HP that is under repair.
ABOUT USA COMPRESSION PARTNERS, LP
USA Compression Partners, LP is a growth-oriented Delaware limited
partnership that is one of the nation’s largest independent providers of
compression services in terms of total compression unit HP. The company
partners with a broad customer base composed of producers, processors,
gatherers and transporters of natural gas. USA Compression focuses on
providing compression services to infrastructure applications primarily
in high volume gathering systems, processing facilities and
transportation applications. More information is available at www.usacpartners.com.
FORWARD-LOOKING STATEMENTS
Statements in this press release may be forward-looking statements as
defined under federal law. These forward-looking statements rely on a
number of assumptions concerning future events and are subject to a
number of uncertainties and factors, many of which are outside the
control of the Partnership, and a variety of risks that could cause
results to differ materially from those expected by management of the
Partnership. These risks include, but are not limited to, the additional
capacity under the revolving credit facility enabling the Partnership to
execute its growth strategy, changes in the long-term demand for crude
oil and natural gas, the demand for the Partnership’s compression
services and actions taken by its customers, competitive conditions in
the industry, and changes in general economic conditions, including the
overall economic outlook of the oil and natural gas industry. The
Partnership undertakes no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over time.
Source: USA Compression Partners, LP
USA Compression Partners, LP
Joseph “Jody” C. Tusa, Jr.,
512-473-2662
Chief Financial Officer
jtusa@usacompression.com
or
Matt
Liuzzi, 512-369-1624
SVP – Strategic Development
mliuzzi@usacompression.com
or
William
Lehner, 512-369-1623
Director – Business Development / IR
wlehner@usacompression.com
