USA Compression To Buy About $187 Mln Of Compression Assets From S&R Compression

(RTTNews) - USA Compression Partners, LP (USAC) has agreed to acquire nearly $187 million of compression assets owned by S&R Compression, LLC, a Tulsa-based company majority owned and controlled by Argonaut Private Equity, an affiliate of George B. Kaiser. In return for the contribution of assets, the Kaiser affiliate would receive USAC common units representing 20% of the pro forma limited partner interest in USAC. This transaction is likely to be immediately accretive to distributable cash flow.

Located mainly in Texas and Oklahoma, the assets being purchased are used primarily relating to crude oil production, by means of gas lift operations. There are 983 compression units being acquired with total horsepower of some 138,000.

Both the Kaiser affiliate and USA Compression Holdings, LLC, the owner of the general partner interest and IDRs in USAC, have committed to receiving distributions in the form of additional common units through the Partnership's Distribution Reinvestment Plan through the second quarter of 2014. USAC would begin a commercial relationship with the S&R Compression fabrication business, which would continue to be owned and operated by the Kaiser affiliate.

The assets' acquisition would be financed via. the issuance of USAC common units, currently estimated to be 7.4 million units. Further, USAC would buy, for cash at closing, certain additional compression units added to the fleet since the June 30, 2013 transaction effective date. The Partnership expects the transaction to close in the third quarter of 2013.

Additionally, USA Compression is revising its full-year 2013 guidance to take into account an estimated four months of operations of the acquired assets, and projects adjusted EBITDA in the range of $82.0 million - $86.0 million.