Please standby, we are about to begin. Good day. And welcome to the USA Compression Partners’ Second Quarter Earnings Conference Call. Today's conference is being recorded. There will be a question-and-answer session at the conclusion of the prepared remarks, and instructions will be given at that time. Now, I would like to turn the conference over to Mr. Greg Holloway, Vice President, General Counsel and Secretary. Please go ahead, sir.

Well, thanks, Sheena. Good morning, everyone and thanks for joining us. This morning as you know, we released our financial results for the quarter ended June 30, 2014. You can find our earnings release in the Investor Relations section of our website at usacpartners.com. During this call, our management will discuss certain non-GAAP measures. You will find definitions and a reconciliation of these measures to GAAP measures in the earnings release. As a reminder, our conference call will include certain forward-looking statements. These statements include projections and expectations of our performance and represent our current beliefs. Actual results may differ materially. Please review the statements of risk included in this morning's release and in our latest filings with the SEC. Please note that information provided on this call speaks only the management's views as of today, August 12th and may no longer be accurate at the time of a replay. I’ll now turn the call over to Eric Long, President and Chief Executive Officer of USA Compression.

Thank you, Greg, and good morning, everyone. Also with me is Jody Tusa, our CFO. We are very excited to report earnings this morning as the second quarter was another record quarter for USA Compression. The favorable market environment led to strong demand for our compression services, resulting record levels of revenue, adjusted EBITDA and adjusted distributable cash flow. We are executing our business plan ahead of our expectations and it’s noted in our press release this morning, expect to be at the high-end of our guidance range for the full year. The Partnerships high growth has been reflected in our ability to continually grow our distribution. For the quarter, we announced a distribution of $0.50 from limited partner unit, which reflects an increase of 13.6% over the last 12 months. We have increased the distribution in each of the five quarters since our IPO and this year-over-year growth rate puts us well above the average for the broader MLP sector and at the top of the Group of our direct peers in the compression sector. Including the distribution for the second quarter in the mere 18 months we have been public, we did have achieved a total return of about 52% for our initial unitholders. We believe our strong track record and performance since the IPO, as well as the 15-year since the founding of the company validate the asset class and demonstrate the story of stability and growth, we have been telling the investor community. While we came into 2014 expecting a better year operationally and financially, it is shaping up to be even stronger than we anticipate it. Now I have been doing this a long time and frankly, the demand for our compression services is the strongest it has ever been. Our customers continue to spend…

Thanks Eric and good morning everyone. USA Compression reported record levels of revenue, adjusted EBITDA and adjusted distributable cash flow for the second quarter of 2014. Turning to our second quarter operational highlights, as Eric mentioned we added approximately 73,000 horsepower of new midstream and gas lift compression units to our fleet in the second quarter of 2014 and ended the quarter with approximately 1.3 million of total fleet horsepower. Based on the current plans, reflecting customer demand, we have already placed orders for 352,000 horsepower for delivery of new compression units this year as compared to our initial expectations of 220,000 horsepower. Our order for new compression units will result in compression unit capital growth expenditures of approximately $354 million over the course of 2014. The new horsepower is expected to consist of 278,000 horsepower of midstream compression units and 74,000 horsepower of gas lift units. For the 180,000 horsepower that we initially ordered for 2014, we have customer contracts for 83% of these units and strong customer indications for another 8% of those orders. For the remaining 172,000 horsepower on order for 2014 and expected to be delivered in the last half of this year, we have customer contracts for 38% of the new horsepower and strong customer indications for another 24% of those deliveries. As we get closer to taking delivery at various times throughout 2014, we expect to have substantially all of the units contracted for service. We have at this time received -- excuse me, 150,000 horsepower of the 352,000 horsepower of new compression units ordered for delivery in 2014. Additionally, as Eric mentioned we have ordered about 200,000 horsepower for delivery in 2015, which will be delivered over the first three quarters of next year. Our revenue generating horsepower increased from 1.1 million at…

Thank you. (Operator instruction) We take our first question from Sharon Lui with Wells Fargo.

Hi there. Good morning.

Good morning Sharon.

Good morning, Sharon.

For the horsepower that ordered for 2015, does this acceleration of timing -- and when do you anticipate you’ll start contracting the horsepower?

Sharon, that in fact is an acceleration of timing with all demand for compression equipment. We are seeing lead times with our packagers extending as we want to make sure that we’re very well positioned to have the new orders for next year. And of course, as you probably have already gathered that, 200,000 horsepower for next year is only a partial order for what we expect for 2015. Customer contracts, we would expect as we saw this year to be signing those debt at about the time that we’re taking delivery of the equipments and as per drill bit, that equipment is scheduled to be delivered fairly evenly through the first three quarters of 2015.

Okay. And I guess you indicated that this is just partially potentially a larger order? How much I guess can demand for horsepower be?

Obviously, Sharon, we’re in the early stages of building out, we continue in the shale infrastructure. We look at it from a context of being opportunity lots. So toward these scenarios, we’re balancing our growth rate, with our capital structure, with people demands. Interestingly we have actually been turning some opportunities down right now just due to the long lead times associated with the equipment. So the answer to your question basically is much as we want is out there for us to go grab.

Yeah. Sharon, I may just add the -- I mean, we’ll be providing guidance for 2015. As we get --- customarily get into reporting the fourth quarter of this year. So we are clearly not stepping out to provide guidance at this time, but the demand is shaping up quite strongly because we see something that would resemble higher horsepower levels of what we added this year, we think the demand could be there. But we’re going to evaluate that as we get closer to end of this year in looking to supplement the orders that we’ve already placed for next year.

Okay. And then I guess, in terms of the split between midstream and gas lift, will it be similar to your 2014 spending?

We do expect that. So as we communicated on earlier calls, we see the gas lift to still remaining a relatively small portion of the fleet and all of the orders that we placed for next year, the 200,000 horsepower are being from the larger compression units.

Okay. And in terms of likely deployment, do you anticipate that will be two similar regions of growth for this year?

We do Sharon. Based on the demand signals coming from our core customers, we continue to see activity in the Northeast with the Marcellus and the Utica. We continue to see strong demand coming from the various basins of West Texas, the Permian and the Delaware, et cetera. The scoop play is continuing to have a lot of demand for the gas lift equipment. And then our other operating areas like the Fayetteville continues to have this basic normal growth that we see. So it’s not the Herculean growth we see in some of the other areas but when you look at the Barnett, when you look at East Texas, when you look at the Fayetteville continued growth, we are starting to make some inroads into the Eagle Ford and South Texas. So I think that’s an area that in 2015 will probably be an incremental growth opportunity for us.

Great. Thank you so much.

Thank you.

Thank you, Sharon.

We’ll go to our next question from TJ Schultz with RBC Capital Market.

Hey guys. Good morning.

Good morning, TJ.

So, Compressco obviously recently acquired CSI. The CSI business, is that something you looked at and if you could just comment in general how that combination alters kind of the competitive landscape if at all and just generally how active you guys want to be in M&A?

It’s a good question, TJ. I think as we’ve indicated with marketplace, our primary focus is of course, organic growth opportunities. Through the extent there is something that fits geographically from the type of assets, vintage of assets, size of assets, it would be accretive, it would be something we would consider. CSI is a good company. We know those folks for a long time but their business model is very different than ours. They’re predominantly a fabricator of equipment. They provide retail services and they do have a fleet, obviously. It tends to be kind of intermediate to smaller horsepower. It’s a little bit over fleet. And it’s one of those things that’s a little outside of our fairway. I think its something that is transformative for the Compressco folks, very different business model, Compressco with very small wellhead oriented equipment. CSI is a fabricator with intermediate sized equipment. Rather than being complementary business lines, I think frankly they’re very different business lines. So they’ve got a lot of work to do to reform contracts, build from a rental model into the services model. They’ve got integration issues to deal with. And frankly we don't see either one of those players that much in our marketplace. That’s just a very different dynamic in a different market sector than we have elected to plan.

(Operator Instructions) We’ll go next to Matt Niblack with HITE.

Thank you and congratulations on the great quarter.

Thank you, Matt.

Thank you, Matt.

I guess, the question I have is a bit of a strategic one here related to your decision to continue to push the distribution growth in light of the fact that it seems like your units are not really good in credit for that growth? I just wonder, given your passing on opportunities, your cost of capital is higher than honestly what it should be by any rational metric? How do you think about that trade-off of generating less, in fact negative internal cash to pursue those growth opportunities that can go more into equity markets at this high cost of capital versus restraining that growth a bit, so you can start to generate some internal cash? Its obviously would be much less expensive than the equity, the after issue with these depressed prices.

Obviously, Matt, that’s something we think about every single day. When we ride on the road talking about the IPO, we contemplated growth in the 100,000 to 150,000 horsepower per year range and here we are growing at equipment 300,000, 350,000 horsepower. So one of the things that the financial community signal to us really on was guys you need to get your leverage down, work on your balance sheet, you need to kind of grow in the things and we’d would like to where it was and where it is. So we actually have made a conscious decision to try to balance the high level of growth, balance coverage, balance leverage. You hit the nail right on the head with our cost of capital like it currently is. Frankly, it does constrain our ability a little bit. So, I think, Jody will chime in here. We’re doing everything communally possible to continue to grow our business, but yet balance the financial side of the shop. So as we talked about from the get go, were story of stability, were story of growth and I think, we’ve exhibited a high degree of growth already, sure we can even escalate more, but there comes a point when we look at it and go with our current capital structure like it is, we are not being rewarded for that.

Yeah. I think just echo Eric’s comment, Matt, we smiled when we heard your commentary about cost of capital. So we believe that the distribution growth with visibility that we have on our cash flow is sustainable and so we are again targeting growth rates that would not only reward the unitholders in terms of distribution growth, but also in being strategically place with our customers. So the only other element that we have there is, as Eric mentioned, was moderating our leverage and making sure that that’s within the kind of targets that we’ve been communicating to the market.

And then on the similar note, we’ve seen some other MLPs, particularly in the E&P space but also in the gathering and processing space at a high cost of equity capital compared to the professional preferred pocket? Is that something you considered?

Matt, can you clarify that a bit in terms of professional preferred market?

Issuing perpetual preferred equity.

Oh! Perpetual preferred.

Yeah. You are not actually chatted with Scott Smith about their drivers what they did that and frankly, it was to attract folks who have UBTI issues and not really interesting in dealing with K1s. So, I think, they were looking at that is kind of an alternative way to attract some incremental investor types rather than looking at as an alternative capital type of play.

Yeah. And in terms of our debt capital structure, you that our cost of funds under our revolver is less than 2% all in. Now we have several hundred million dollars of capacity there. So, we like the piece of that revolver for growth CapEx in the business.

All right. That makes sense. The thought of the perpetual preferred is given the experience of Atlas, it might be the case you can issue the perpetual preferred equity at a distribution rates that’s even in lower than what your common equity distributes and wouldn’t have the same growth and therefore, would be a real benefit to common equity holders, well, providing it different way for those with UBTI issues or other concerns to participate, I just thought but…

Yeah. And that maybe, I’ll tell you probably like a lot of MLPs are doing these days, our first look to be to an aftermarket type of program. So that’s something that we’re monitoring pretty closely as well.

Right. Thank you.

Welcome.

It appears there are no further questions at this time. Mr. Holloway, I like to turn the conference back to you for any additional or closing remarks.

Well, thanks, Sheena. As always we appreciate everyone being a part of these calls and we’ll look forward to the next one, but for now have a great day.

That does conclude today’s conference. Thank you for your participation.