Good morning, everyone, and welcome to our call. So this morning we released our financial results for the quarter ended June 30, 2013. You can find our earnings release in the Investor Relation section of our website at www.usacpartners.com. During this call, USA Compression will discuss certain non-GAAP measures, such as adjusted EBITDA, gross operating margin and distributable cash flow. You will find definitions in a reconciliation of these measures to GAAP measures in the summary pages of the earnings release and on our website. I want to remind listeners that the news release issued this morning as well as the prepared remarks and the related comments made during the question-and-answer session during our conference call, will include forward-looking statements. These statements include projections and expectations of our performance and represent USA Compression's current beliefs. Information concerning the risks, challenges and uncertainties that could cause actual results to differ materially from those in the forward-looking statements can be found in our press releases, as well as is in our other filings with the SEC, all of which are available on our website at www.usacpartners.com. Except as required by law, USA Compression expressly disclaims any intention or obligation to revise or update any forward-looking statements. Your host for this morning's call is Eric Long, President and Chief Executive Officer of USA Compression. I will now turn the call over to Eric.

Thank you, Greg, and good morning, everyone. Also with me today are Jody Tusa, Vice President and Chief Financial Officer; and Matt Liuzzi, who is Senior VP of Strategic Development and heads up our business development efforts. This morning in additional to announcing our second quarter earnings, we also announced a very significant and strategic acquisition of a fleet of compression assets from an affiliate of George B. Kaiser for approximately $187 million. I'd like to begin with a high level look at the transaction, before touching on the results for the second quarter of 2013, and providing commentary on our growth opportunities for the remainder of 2013 and beyond. I'll then ask Matt to provide a more detailed look at the deal; and Jody will finish up with details of our financial results, and how the pending transaction will impact our balance sheet and 2013 guidance. If you're participating in our call today by telephone, you may want to take a moment to go to our website, where you'll find the slide deck Matt will refer to, located next to the webcast link for today's call on the Investor Relation's page. And with that I'll pause for a minute to give everybody an opportunity to go to the deck. This morning's announcement for the acquisition of the rental compression fleet from Tulsa based S&R Compression, represents USAC's first acquisition since our IPO in January of this year. As Jody and I have discussed with many of you, either during our IPO roadshow, investor conferences or in various other forums, USA Compression has always been and remains a story of stability and growth. We convey to you that while our primary focus would be on organic growth, we would also pursue acquisition opportunities that are one or more the following:…

Thanks, Eric. My comments will be directed to the slides, which Eric mentioned have been posted on our website, under the Investor Relations tab. On Slide 2, this morning, we announce an agreement to acquire substantially all the compression assets of S&R Compression, and the transaction was approximately $187 million. The assets being acquired consist of 983 compression units, representing approximately 138,000 horsepower. This is a young fleet. The average age is approximately 2.2 years, with an established footprint in the Mid-Continent region. These compressions assets are predominantly used in gas lift operations associated with the very active crude oil production in the various. The seller has agreed to take back 100% equity consideration for the assets, and in doing so, will become a 20% unitholder in USAC. In addition to gaining an experienced strategic investor in USAC, the equity consideration also meaningfully reduced USAC's debt-to-leverage ratio strengthening the balance considerably. We expect to be able to close the transaction in the third quarter. At closing, USAC will also be purchasing for cash, additional S&R units that have been build and deployed since the effective date of June 30, 2013. While the transaction is immediately accretive to distributable cash flow, because of the timing of closing, the impact will really not be seen until Q4 of this year and end of 2014. On Slide 3, I'll add more to what Eric shared, as to why we believe this is an attractive investment for us. The S&R compression fleet compliments what we've been doing at USAC, providing services that address infrastructure needs. Whether it is USAC's large horsepower gathering system compression units, S&R smaller horsepower gas lift equipment, all of our assets are focused on the medium-to-long term service requirement of our customers. The units we're acquiring have been fabricated to…

Thanks, Matt, and good morning, everyone. As Eric mentioned, USA Compression reported record revenue, adjusted EBITDA and distributable cash flow for the second quarter of 2013, and we continue to generate improvement in our gross operating margins. Revenue in the second quarter of 2013 of $33.3 million increased 15.4% over the same period last year, and that was primarily driven by an increase in our contract operations revenue, as a result of adding additional revenue generating horsepower. Contract operations revenue in the second quarter of 2013 increased 17% to $33.1 million as compared to the second quarter of 2012, which was $28.4 million. The year-over-year increase in our contract operations revenue was driven almost exclusively by the growth in our revenue generating horsepower. Revenue generating horsepower was 836,427 for the second quarter of 2013 as compared to 869,106 for the same period forecasted in our final IPO prospectus. While we had lower revenue generating horsepower, we generated $13.55 average revenue per horsepower per month, which is higher than what we had expected. Average revenue generating horsepower increased 12.4% to 829,684 as compared to 738,186 for the same period of the prior year. Adjusted EBITDA increased 17% to $18.1 million as compared to $15.5 million for the second quarter of 2012. Distributable cash flow in the second quarter of 2013 was $11.9 million as compared to $6.8 million for the same period last year, which is an increase of 75.2%. Gross operating margin increased 17.4% to $23.2 million as compared to $19.7 million a year ago. The gross operating margin percentage increased from 68.4% in the second quarter of 2012 to 69.6% in the second quarter of 2013. These increases primarily resulted from the operating leverage we achieved by adding large horsepower compression units for our revenue generating horsepower portion of…

(Operator Instructions) And your first question comes from the line of Ted Durbin with Goldman Sachs.

Just on the transaction, I am trying to figure out the EBITDA being generated by the assets that you just acquired, so maybe you can help us here. It looks like the change in the guidance on the full year, it would imply, call it, a $12 million of new EBITDA. If I look at the $95 million, you say, pro forma, maybe that's $15 million. I'm just trying to actually get a sense of what you think the EBITDA generation from these assets is?

When we look at the EBITDA, the business has been ramping up so quickly. But I think that, kind of an, LTM basis, it's probably not nearly is relevant. As of June 30, when we look at it, we would get about, kind of, 8 times to 9 times on a forward-looking EBITDA basis as of June 30. As that moves into, sort of, the end of this year, you're sorted down in the 8 to 8.5 range, and then looking forward through 2014, you're ended up, kind of, 7 to 8 times range on a multiple basis.

So there's a pretty steep ramp in the EBITDA. And is there anything that's changed in the base business sort of pre-acquisition that would have made the guidance shift, or is this guidance shift all just related to the acquisition?

Ted, we certainly expect to be within our guidance range, that we previously provided, so no significant shift in the base business. We would expect to run likely somewhere between the low-end to the mid-point of what we previously provided, so again, no significant underwriting shift in the core business.

And then, if I can just ask one more on the new assets. Can you talk about what the margin profile we should expect for these? You have obviously, as you mentioned, you've got much lower average horsepower per units, so I would imagine its lower margin, and then maybe talk about the contract length?

I'll take up the margins units. Here exactly like, Ted, we do get better operating margins on the larger horsepower. So these assets will run in the 60% to 65% gross margin range, so a little bit softer the composite for the existing fleet. With that said, as Matt, mentioned the ramp on the volumes and the assets that we're putting to work here is significant. So the margins run a little bit smaller on the smaller horsepower, but the volume growth in the S&R business has been significant.

Could you mention the contract length?

No. There was a little interruptions there, Ted.

On the contract, these contracts are generally six to 12 months initial term and that's just a really a matter of the nature of the business, and that's kind of how all of them are on, kind of, when you're closer to the well, but interestingly that if we find it's a very similar to the way USAC has operated where units go out and then they stay sticky in the field. The S&R units on average have remained in the field for 20 months after they have been deployed out there. And in terms of, kind of, reviewing them and looking through them, even when units have had left the initial site, they've been quickly redeployed either on that same customers leads in the different area or they comeback and they go right back out. When we look at utilization, again, it's similar of the USAC were historically since, if you look at when all of these new units were actually or initially placed out the field, they've basically been utilized 95%, 96% of the time.

Your next question comes from the line of Sharon Lui with Wells Fargo.

I'm just wondering if you could maybe comment on the commitments to acquire additional units. So how much capital is that, I guess, to acquire the additional 200 units earmarked? And if you could also, maybe talk about the return on investments of these smaller horsepower units versus your traditional compressor units?

Sure, Sharon, it's Matt again. In terms of our capital, the CapEx plan, we've obviously entered into this agreement with S&R to buy a certain amount of units, is that that CapEx basically for the second half of this year will total roughly around $35 million and it will be an equal amount next year throughout the entire year. So you're looking at about $65 million to $70 million kind of from July 1 of this year through December of 2014. And then, on the return, the return on the unit, I think it's still very, very attractive from our standpoint. These are kind of mid teens-ish returns, so it's similar profile as the stuff that we're putting out, the bigger horsepower stuff.

And in terms of, I guess, the units owned by Kaiser, is there any type of restriction on the sale of those units for a certain period of time?

We do have a contractual lockout of six months on all of the units. And as you may know, George and his team have agreed to drip the units through the second quarter of next year, which is essentially a structure that lockup in that regard as well.

And I guess just following-up on the drip, so is the GP's intention to just drip until, I guess, the second quarter and pay cash distributions thereafter?

No, not necessarily, Sharon. So what's going to occur is the both for the units that are being issued to the Kaiser Group as well as the existing units held by our sponsor those will be drift through the second quarter 2014 and potentially after that point in time. So the arrangement that we have doesn't necessarily means that the sponsor would not continue to drift their distributions. And again, besides the delivering that we get from this transaction down to around 4 times, which is, of course, significant for giving us runway for growth in the business, that continued drip by the sponsor in the Kaiser Group would allow us to further de-lever.

And Sharon, it's Matt again, just a follow-up. I was thinking more about your question on the rates of return. I was thinking of the whole fleet, but when you look at the stuff that we are purchasing going forward, we've obviously agreed with S&R on a process. And I think we find that to be a very attractive agreement with them. And I think you could probably model that we're buying stuff in kind of the 6.5 to 7.5 EBITDA multiple range going forward. So as times goes on and we are spending that capital, we'll see the benefit of that attractive organic growth.

Before we take the next question, this is Eric. I am glad that the analysts are digging into some of the details here. And clearly we're focusing on that, but I want to make sure, we don't lose site of what we have accomplished with this transaction. That this is a very transformative opportunity for USA Compression to diversify our asset mix, to expand our customer focus, to pickup some incremental customers that we currently don't have, as well as, being able to provide a new type of product line and services to an existing customer compliment we have. This opportunity is immediately accretive to the company. It provides us with a substantial de-levering and requires no capital raise, because we were able to issue equity to a long-term shareholder. So I really want to make sure that, we don't lose sight of the forest from the trees here, of what was actually accomplished today with this transaction. It's extremely meaningful, it's consistent with what we have shared with the group all along, which is we intend to de-lever the balance sheet, to focus on high quality assets, to be able to focus on expanding our footprint and to continue the stability and growth story of USA Compression. So with that, obviously, let's take our next question.

And your next question comes from the line of Marc Silverberg with Barclays.

I guess, following up on that, just a quick question as far as coverage moving forward here. In the past, I think you've had an average contract life of about three years, and that was sort of a 115% target coverage that you've indicated in the past. With a growing piece of, sort of, six to 12 month type contracts here, do you envision the long-term coverage maybe being a bit more supportive going forward or how do you think about that?

So in terms of the transaction for this year, Marc, this would put us at about 1.05 times coverage. So we would expect to get a little bit of lift out of the transaction itself. Moving forward, I think the predictability to cash flows is still very strong, even though the contract tender maybe a little bit shorter with these assets, but we would see a sale targeting of 1.1 to 1.15 times coverage as we look forward to the next several years.

And then, you sort of touched upon this earlier with I think Sharon's question, but the ongoing agreements that you have with S&R Fabrication to purchase some new units there, do you envision that as being incremental to call it the roughly $100,000 that you've generally guided towards in the past as far as achieving your long-term growth rates or is this complementary in addition to that?

Well, we do see this is as incremental. So the kind of view that we've tried to guide folks is looking at a growth rate of the 100,000 horsepower per year leased, purchases that Matt was describing under the requirements agreement to buy additional compression units from S&R will be incremental to that. And just please be mindful that we continue to evaluate new horsepower unit growth for the base business. So the potential for growing above the 100,000 horsepower rate, with the strength in demand that we're seeing now is still there.

Your next question comes from the line of James Rollyson with Raymond James.

Eric, going back to your interlude, when you look at the mix of where these guys are running, it doesn't jump off the page as being the most oily regions in the country that are the most active, which would seem to me to be opportunity for you to get into places like the Eagle Ford and some of the up-and-coming oily plays. Can you maybe talk a minute about where you see opportunities to take S&R's current footprint into some of the other operating regions you're in?

Jim, great question, if you look at where S&R operates predominantly today it would be the Texas Panhandle, the Oklahoma Panhandle, you can draw a circle, a 100 mile or so Canadian County. Clearly, gas lift equipment in the Eagle Ford, ultimately gas lift equipment up in North Dakota and Montana, in the Bakken play, and clearly the footprint of operations that we have in the Marcellus, as well as the Utica, both extremely well for deployment of this type of equipment. The other opportunity that we see, Jim, is clearly pull through with the S&R existing customer base. There is a group of customers that USA Compression has never had dealings with before and this is the way that we can get in our foot in the door with the gas lift equipment and then start to focus on our intermediate and larger horsepower equipment that has typically been our core area of focus. So I think its opportunity to expand geographically. As we mentioned on a previous call, we have identified the West Texas area, there is an area for growth and we are starting to deploy some larger horsepower equipment in that area. Clearly, there will be tons and tons of gas lift equipment required with the oil focus in West Texas and Southeast to Mexico. So I think this is a spring board for us to substantially amp up our rate of growth, not just with the existing S&R fleet, but the USA infrastructure larger horsepower fleet as well.

And then as a follow-up, you mentioned historically your, kind of, rule of thumb is the 100,000 horsepower of growth, and then hopefully there is it seems like last year and maybe this year and going forward there's room to top that. Any rough rule of thumb of how we should think about the growth rate in terms of horsepower maybe for this? And then Jody, maybe just some rough revenue per horsepower kind of ballpark numbers we can use, at least kind of build up to the EBITDA numbers that Matt implied?

Actually, Matt, I'll go ahead and let you pickup the horsepower. Jim, the obviously with the smaller units the revenue per horsepower per month is north of our fleet that exist today. It runs roughly at about $25 per horsepower per month and so just to help, guide you a little bit, that would bring the average composite for USA Compression combined to $15 to $15.5 per horsepower per month. So that will help you, I gave you a little bit of color there and then Matt, maybe on the horsepower addition, as you look forward.

And it's a little difficult because the range of units is somewhat wide. All these units that S&R makes are kind of under 400 horsepower, but it does range from 150 up to 380. But I think if you look at kind of our commitments for the year, you're probably talking about 200 machines for the rest of 2013. So depending on the assumption that you made you're probably in the 30,000 to 40,000 horsepower. As we look at it, as I mentioned, we are still very much a large horsepower entity. And I think as we project out, we look at the smaller horsepower as a percent of, kind of the total horsepower, and we're in that kind of 15% to 20% range of the stuff that we're buying. So we continue to grow it. But obviously, the smaller horsepower nature of it, we can add a lot of units without skewing the balance too much.

And then are you going to break this out separately or is this going to get all aggregated together?

It will be aggregated together, Jim, so it's just still one business, one segment.

And your next question comes from the line of TJ Schultz with RBC.

You've really hit on most of what I had, but maybe just one question on the Kaiser organization. Obviously, as you said, Eric, a new long-term, kind of, strategic partner here. If you could just expand on maybe some of the Kaiser industry experience and really what this is giving you, that maybe wasn't in your wheelhouse before this transaction?

Well, TJ, I said, there was a lot of things that come associated with this. And I want to focus back on the S&R side, and then go back into Kaiser side. Historically, by not having this horsepower range of equipment, some of our competitors have this type of equipment. It has allowed some of our competitors, some entree into some of our core customers and this is frankly in addition to being a growth opportunity gives us some additional arrows in our quiver from which to quell some of the alternative product offerings from our customers. So I am really excited about what this means for us to be able to effectively offer a broader range of compression services and compression horsepower than what we've been able to do in the past. Clearly, with de-levering opportunity and the no issuance or not requiring any cash equity on the deal, this is going to help our expanded focus on a high horsepower market place. By de-levering our balance sheet it's going to allow us to continue to amp up our growth. We're excited about the demand signals that we're seeing coming from the marketplace, right now, in the big horsepower as well as the smaller horsepower. Do keep in mind, when Jody and Matt had been talking about the S&R transaction those were some contractual minimums that we have committed too, and that's not necessarily to say, that's all we're going limit ourselves to. So we're very excited about the growth prospects that we see for big horsepower, extremely excited about what this means for the S&R side as well. On the Kaiser side, George has a major, major presence in the LNG business. He is involved in the gas storage business, the Kaiser-Francis organization has major production assets located in the Rocky Mountain arena of the world as well as some areas in the Mid-Continent area. George is a very bullish proponent of the domestic gas business, as evidenced by in investments that he made a alongside of Riverstone with an entity into Houston base called Sage. So it's a major, major equity commitment from which to expand and grow into some very strategic opportunities. So I think if the group, were to do some homework on Kaiser and look at his investments in the LNG infrastructure in major gathering opportunities and looking at the focus of Kaiser-Francis in the Rocky's, in the Mid-Continent arena and his bullish outlook on natural gas storage et cetera. This is a specific investment that the Kaiser organization look at for the long haul, as they see longer-term, how compression fits into feeding not just the domestic natural gas food chain, but the worldwide natural gas food chain with the advent and the adjunct expansion into the LNG market worldwide.

Your next question comes from the line of Matt Niblack with HITE.

So just wanted to better understand this ramp in profitability in the new assets, so is that driven by sort of your estimate of growth in the underlying production and your orders, what's driving that ramp?

Yes. It's basically predicated on what S&R has been seeing recently which is essentially not been able to keep the stuff on the shelf. These units have been fabricated and they are immediately going out and going into the field and put to use. So again, the areas that they are most active, and this is, kind of, as showed on the map, kind of, Western Oklahoma, and the Mississippi Lime, and Granite Wash areas and the activity there has just been truly relentless. And their orders, I think they've got costumers who would love to take more than they can make. And still I think that we're hopeful that S&R shop will continue to run, add capacity, and we will continue to take as many units as we can from them.

So the ramp is predicated on production running at capacity?

Yeah.

And how fast can you get the units out the door?

Absolutely.

And then at what level of oil prices do you start to see this trend change in the areas that the assets serve?

Keep in mind there is a combination of things that are going on here. There is a large backlog of wells that are being drilled in the liquids-rich components. There are hundreds of wells that currently are not flowing in the Utica, awaiting expansion and installation of some regional gathering systems, when you see some of the same phenomenon in the Eagle Ford, and you're starting to see some of the same phenomenon in that the scoop area of West-Central Oklahoma as well. So I think there is a combination of things, one would be looking at the growth projections on a go-forward basis. Our producer contractor telling us that they are locking in some forward hedges right now. It prices that, from an oil perspective or economic for the next three-to-four years down the road. So the swaps, the hedge opportunities allow these folks to lock-in some very substantial commodity prices. We're seeing very strong demand signals for next year, both in the S&R fleet, as well as on the large horsepower USA Compression fleet. We're finalizing what are Q1/Q2 build program as USA Compression is going to look like. And frankly, we think it will be substantially turbocharged from what we saw last year. We haven't pulled the trigger yet. We're closed to doing it. But honestly, I think we're looking at an initial order somewhere in 100-ish thousand horsepower range for the first six month or so of the year. So again, fairly substantial growth, turbocharged opportunities, not just from the S&R side, but from USA side as well.

And what's the timeframe around which you have a more firm sense of what that first half figure is going to be?

Well, I think Matt, we will know within the coming few short weeks. So lead-times are still roughly five-and-a-half to six months for new equipments. So it will be a longtime before we will be signing up the firm committed purchase orders for that new equipment.

And then last question just on the base business. It looks like your horsepower is running at the low end of what you had expected. Is that driven by the extent to which you participate in the small horsepower business and the traditional gas fields or what's driving that? And what's changing for next year?

That for this year was driven a little bit more by what we communicated on our last conference call, which was worthwhile we're signing up contracts, it was a very, very nice initial terms of another three-to-five years for the large horsepower that we're ordering. We have seen some timing in when we originally anticipated that those units will start and when they are actually starting. So it doesn't have any particular thing to do with a class of horsepower that we have and certainly not the smaller horsepower units that we run. So it's mainly that just timing of anticipating when we expected to have new unit starts and when they're actually starting. As Eric mentioned, we pretty much now have all of our new equipment that we take in possession of this year under customer contracts, so all of that equipment will get deployed throughout the year. And then finally, the pricing that we're seeing from the fleet is running ahead of what we had communicated while we were on our IPO roadshow. So we are getting a very a bit of a benefit there.

So you're not seeing a material impact from increased stop activity like Exterran has, for instance?

No. I mean, we certainly have seen the level of stops. There are some variability quarter-by-quarter. It's been a very manageable, but as you've seen our utilization rates have actually taken a little bit of an uptick this quarter. And so nothing materially in terms of the regular stop rates that we've seen.

Your next question comes from the line of Jeremy Tonet with JPMorgan.

I just wanted to recap on the transaction and what it would look like in 2014, make sure, I had that straight. So the total purchase price is $187 million and then there will be $65 million to $70 million committed for our new units to come online. And when we look at what the 2014 multiple could be for that was it 7 to 8 times on that number? Am I correct in understanding that?

Jeremy, I think if you load in that CapEx burden, you end up closer to around 9 times.

It's just pure price of our EBITDA.

And then I was wondering if you could give us a little bit more background on how the deal originated, who approached who or was this an auction process or any details like that that you could share?

Yes, Jeremy, it was not an auction process. It actually came about from the Kaiser organization looking at ways to position S&R for the long-term. So frankly, it was kind of a mutual opportunity where Kaiser had a very high-quality asset base in USA Compression's backyard with some costumers that we intended to aggressively go pursue. From Kaiser's perspective, it was an opportunity to diversify their portfolio from just the gas-lift regional opportunity into an equity investment that has a broad geographic footprint across all of the producing basins domestically with a complementary horsepower range. So clearly, it was one that the Kaiser Group was looking to either take S&R Compression to a completely different level or to join forces with somebody who already had a strategic platform that shared the similar focus for the growth prospects long-term as USA Compression. So it's not a process, frankly, it was an opportunity to marry the combined assets with the long-term strategic focus from George, and obviously, he like what he saw.

Last one from me. I'm just following-up on that. How do you see the M&A landscape out there and are there many other opportunities like this, so just any thoughts on that would be helpful?

This is obviously a fairly unique opportunity for us, as I kind of mention, you don't see stuff in industry very often, where you can put two entities together and at least in our view, we think it's a one plus one equals three type transaction. There is other stuff out there, big and small. We look at stuff all the time, but again, we're going to be very disciplined in looking at the stuff that we want to buy. I mean this is for the all the reasons I think we've talked about, we believe this makes a ton of sense for USA. Buying, just to buy, I don't think is going to get a whole lot of traction with us. So we do want to build the scale out there and we'll be in kind of a prudent way that I think makes sense for our organization. But there is stuff out there to be bought, varying quality, so we'll just continue to look at stuff like that.

And at this time, we have no further questions. So I would like to turn the call over to Mr. Greg Holloway, you may proceed.

Well, I'll proceed by saying, thank you all for getting on our call here. And we look forward to talking to you next time. Thanks.

Ladies and gentlemen, thank you for participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.