USA Compression Partners, LP (USAC) stock intrinsic value fair value estimate & owner earnings analysis

USA Compression Partners rents and services natural gas compression equipment. Its fleet of about 3.9 million horsepower at the end of 2025 keeps gas flowing through processing plants and pipelines, and helps wells lift gas. Customers pay fixed monthly fees under contracts that typically run six months to five years, and usually stay on after the first term through renewal or month-to-month. Utilization was 94.7% at the end of 2025, and revenue per horsepower rose 4.7% in 2025 on market-based rates for newly deployed units and CPI-based increases on existing contracts. The ten largest customers were 46% of 2025 revenue. What we measured. We start from cash from operations, remove working-capital swings, and subtract unit-based pay and the capital spending needed to keep the fleet running. Because the company's growth spending is large and lumpy, we split it using the company's own capex-to-revenue history. That treats most spending as maintenance, which is much stricter than the company's own figure of $39.4 million of maintenance capex in 2025 and $31.9 million in 2024. We also left inventory purchases in as a cost, since they are parts and equipment spending rather than a timing swing. On this basis owner earnings were $164 million in 2020, $201 million in 2021, $124 million in 2022, $43 million in 2023, $99 million in 2024 and $270 million in 2025. Those swings mostly reflect capex timing, so we use the median of these six years, about $144 million, as the standalone level. In 2020 the company wrote off $619 million of goodwill, which is a non-cash charge and does not affect these figures. What changed in 2026. On January 12, 2026 the company bought J-W Energy and J-W Power for about $860 million: 18,175,323 new common units plus about $430 million in cash. The deal added roughly 1.0 million horsepower and two compression manufacturing facilities. In the first half of 2026 revenue was $673 million versus $495 million a year earlier, and operating cash flow was $232 million versus $179 million. Two quarters of results are limited evidence, so we credit only about $50 million a year of added owner earnings from J-W, and we spread the total over about 145 million units now outstanding. That gives a starting level of roughly $1.34 per unit. Before the deal, 2025 owner earnings were $2.24 per unit, but that year was unusually strong compared with the prior five. Base case, about $20.70 per unit. Owner earnings of $1.34 per unit grow 2% a year for five years and 1% a year for the next five, reflecting the CPI-based and market-based rate increases the company has demonstrated. Owner earnings in 2025 grew far faster than that from a depressed 2024, so year one is set below the trailing rate. Earnings then stay flat through year 30, on the record that this fleet has kept contracting at high utilization through the 2020 downturn. Growth from new horsepower is not credited, since the company plans $230 to $250 million of expansion spending in 2026 that depends on future demand. Bear case, about $8.00 per unit. The company carried $2.5 billion of debt at the end of 2025 ($1.0 billion of senior notes due 2029, $750 million due 2033 and $795 million on its revolving credit facility) before the cash portion of the J-W price. Contracts as short as six months, and ten customers making up 46% of revenue, leave it exposed to a repeat of 2020 and 2021, when revenue fell in both years. This case assumes owner earnings of about $0.79 per unit, falling 3% a year for five years and staying flat to year 20, with no lasting value after that. Bull case, about $36.70 per unit. The company's standalone 2025 level holds and J-W delivers closer to what the first two quarters imply, for about $2.21 per unit. Rate increases of 3% a year for five years and 2% for the next five follow the 4.7% seen in 2025, then flat through year 30. What could make this wrong. The J-W integration is the largest swing factor: the company's own filing warns integration may be difficult and may bring unknown liabilities. The maintenance-spend figure is deliberately harsh; if the company's own maintenance figure is the true need, owner earnings would be materially higher. Budgeted 2026 maintenance capex of $60 to $70 million, including parts from inventory, rises with the larger fleet. The latest 10-Q could not be opened, so only its financial figures were used. We did not net debt against value because owner earnings are already after interest, and leverage is reflected in the bear case.