USA Compression Partners (USAC) is buying J-W Power Company for $860 million. The payment is split into two parts:
- 18.3 million USAC units
- $430 million in cash
The cash will come from a short-term loan. The deal is expected to close in early 2026, but since J-W is a private company, it may finish even sooner.
⚡ The Asset
J-W Power brings 847,000 horsepower across key U.S. regions like the Northeast, Rockies, Gulf Coast, Bakken, and Permian Basin.
- 90% of J-W’s earnings (EBITDA) are locked into long-term contracts. This means steady income and less risk.
- With small extra spending, horsepower can grow to 900,000, giving USAC even more strength.
📈 The Impact
This deal is a smart move for USAC:
- J-W is being bought at 5.8x 2026 EBITDA, while USAC alone was trading at 8.9x. Together, the combined company will trade at 8.4x, which is better value.
- Earnings per unit rise from $5.17 (standalone) to $5.50 (combined).
- More distributable cash flow is expected, which is good news for investors.
💵 Distribution & Debt
- No near-term increase in payouts (distribution) is expected.
- Current yield is already strong at 8.3%.
- Instead of raising payouts, USAC plans to reduce debt faster, aiming for less than 4x net debt to EBITDA. This makes the company safer and stronger long term.
Why It Matters
USAC is part of the YIELD portfolio. Demand for compression is growing as the U.S. boosts natural gas production to meet rising LNG exports and power needs.
Compression acts as a bridge solution until new pipelines are built. That means USAC is well-positioned for the future.
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