USA Compression Buys J-W Power in $860M Midstream Deal
Acquisition to add significant scale, expanding total fleet to 4.4 million horsepower and accelerating the company's deleveraging targets.
USA Compression Partners (NYSE: USAC), a major provider of natural gas compression services, announced Monday it has agreed to acquire J-W Power Company in a deal valued at approximately $860 million, a move that significantly expands its operational scale in key U.S. energy basins.
The transaction, a material event representing over 27% of USA Compression's roughly $3.1 billion market capitalization, is structured with an even split of cash and equity. The deal includes the issuance of 18.3 million new USAC common units and cash, funded through borrowings from its revolving credit facility.
Shares of USAC traded up 0.75% to $25.44 in early market hours following the announcement. The deal will bolster USA Compression's total fleet to approximately 4.4 million horsepower, solidifying its position as a leader in the midstream energy infrastructure sector.
“This transformative transaction further solidifies USA Compression’s position as the premier provider of large-horsepower compression services in the U.S.,” Eric Long, President and CEO of USA Compression, said in a company press release. “The acquisition provides a highly complementary asset base and a robust platform for future growth.”
The strategic rationale for the deal centers on enhancing scale, diversifying its geographic footprint, and broadening its customer base. The acquisition of J-W Power, a privately-held company with a strong presence in natural gas compression and equipment services, is expected to be immediately accretive to USA Compression’s distributable cash flow per unit.
Company management highlighted the favorable financial metrics of the deal, noting an acquisition multiple of approximately 5.8 times J-W Power’s estimated 2026 Adjusted EBITDA, excluding synergies. According to a report from Seeking Alpha, the deal is also expected to accelerate USA Compression’s path to achieving its leverage target of below 4.0x, a key metric for financial health in the capital-intensive midstream sector.
The addition of J-W Power’s operations diversifies USA Compression’s business into aftermarket services and manufacturing, providing new revenue streams and greater operational control. The expanded fleet will enhance its service offerings across critical energy-producing regions, including the Permian Basin, Appalachia, and the Rockies.
The natural gas compression industry provides essential infrastructure for transporting natural gas from wellheads to pipelines. Demand for these services is closely tied to domestic energy production, which has remained robust. The deal reflects ongoing consolidation within the energy services sector as companies seek to build scale and operational efficiencies to better serve large producers.
USA Compression has delivered a strong year-to-date return of over 16% for its unitholders and currently offers a substantial dividend yield of over 8%. The transaction is expected to close in the first quarter of 2026, subject to customary regulatory approvals. Vinson & Elkins LLP acted as legal advisor to USA Compression, while Jefferies served as the exclusive financial advisor.