A Master Limited Partnership, or MLP, is a limited partnership the interests in which (known as units) are traded on public stock exchanges. An MLP has one or more general partners that manage the partnership, and many limited partners, which provide capital to the partnership but have no role in its management. When an investor buys a unit in an MLP, he or she becomes a limited partner. USA Compression Partners, LP’s (USAC’s) general partner is USA Compression GP, LLC.
Back to top

A corporation is a legal entity, separate from its owners (“shareholders") and employees. The entity has liability for all obligations of the corporation. The shareholders contribute capital, but have no liability to creditors, taxing authorities, or other parties that may have a claim against the corporation. The corporation is also treated as a separate entity for tax purposes and must pay taxes on its income. If there is any income left after corporate taxes, capital investment and other uses, it may be passed on to the shareholders in the form of dividends. Shareholders then pay taxes on the dividends they receive. Since the dividends passed on to shareholders have been taxed once at the corporate level and once at the shareholder level, it is said that corporate income is "double taxed."

A partnership is not considered a separate entity, but rather is an aggregation of all of the partners. For tax purposes, a partnership is treated as a "pass through" entity, meaning that there is no federal income taxation at the partnership level. The partnership's income is treated as having been earned by all of the partners and is therefore allocated among all the partners in proportion to their ownership interests in the partnership. All other items that figure into the income calculation, such as gains and losses, depreciation, etc., are also allocated to the partners. Each partner is then responsible for paying tax on his or her share of the income. Thus, partnership income is said to be "single taxed."
Back to top

MLPs make cash distributions to their partners, usually on a quarterly basis. Each MLP is governed by its partnership agreement that specifies the manner in which cash distributions will be made to its general partner and limited partners. MLP partnership agreements often mandate that it distribute 100% of its available cash flow (defined in the partnership agreements, and often referred to as distributable cash flow) to its unitholders. Distributable cash flow generally means the amount of cash flow that is available to be distributed to partners after certain expenses, such as interest payments and maintenance capital expenditures, have been paid. The general partner typically has the discretion to retain a portion of the distributable cash flow in the partnership in order to meet its needs by making reserves for operating and capital investment requirements. USAC’s fiscal year ends in December and our cash distributions will typically be paid in mid-February, May, August and November.
Back to top

No, an MLP's cash distributions are not guaranteed and are contingent on its ability to generate distributable cash flow.
Back to top

The reason is rooted in the way that depreciation and other expenses are treated in the calculation of net income. Depreciation and other such expenses are a means of allocating the cost of a long-term asset, such as a compression unit, over its useful life. They are often referred to as "noncash" expenses because cash is not actually being paid out for the depreciation of the long-term asset. MLP assets, such as compression units, are generally long-lived; typically require very little maintenance; and are not subject to major technological changes or physical deterioration. As a result, the cash flow generated from the operation of the business is higher than the net income recognized by the business after recording the “noncash” depletion and depreciation expenses. MLPs with long-life assets can typically pay out a very high level of its cash flow to unitholders without hurting the long-term basic earnings power of the business.
Back to top

USA Compression Partners, LP is a Master Limited Partnership traded on the New York Stock Exchange under the symbol "USAC." As a publicly traded security, the units are available through retail brokerage services.
Back to top

We provide compression services in a number of shale plays throughout the U.S., including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara and Fayetteville shales. Demand for our services is driven by the domestic production of natural gas and crude oil. As such, we have focused our activities in areas of attractive natural gas and crude oil production, which are generally found in these shale and unconventional resource plays. According to studies promulgated by the EIA, the production and transportation volumes in these shale plays are expected to collectively increase over the long term. Furthermore, the changes in production volumes and pressures of shale plays over time require a wider range of compression than in conventional basins. We believe we are well-positioned to meet these changing operating conditions due to the operational design flexibility inherit in our compression units.

While our business focuses largely on compression services serving infrastructure applications, including centralized natural gas gathering systems and processing facilities, which utilize large horsepower compression units, typically in shale plays, we also provide compression services in more mature conventional basins, including gas lift applications on crude oil wells targeted by horizontal drilling techniques. Gas lift, a process by which natural gas is injected into the production tubing of an existing producing well, in order to reduce the hydrostatic pressure and allow the oil to flow at a higher rate, and other artificial lift technologies are critical to the enhancement of oil production from horizontal wells operating in tight shale plays.
Back to top

As a publicly traded partnership, USAC is required to file financial statements with the U.S. Securities and Exchange Commission. Past prospectuses are available for viewing by accessing the SEC Filings section of this website. Please be aware that any information contained in a prospectus is current only as of the date of its publication. For the most current information on USAC, access the Partnership's most recent filings in the SEC Filings section of this website. In addition, USAC holds quarterly conference calls with the investment community.

The calls coincide with USAC's quarterly earnings releases and will be accessible via webcast through this website. USAC may from time to time hold conference calls to discuss major corporate events.
Back to top

Upon approval by the Board of Directors of the General Partner, cash distributions are paid quarterly, no later than 45 days following the end of a calendar quarter. Distributions are typically paid mid-month (for the prior quarter) in February, May, August and November.
Back to top

Unrelated business taxable income, or "UBTI", is income that is taxable to an otherwise tax-exempt institution or account. UBTI is an important issue for individual investors when they consider holding MLP units in nontaxable or tax-deferred accounts such as Individual Retirement Accounts ("IRAs"). Virtually all of the income allocated by USAC to tax-exempt entities (including IRAs and tax-qualified retirement plans) will be unrelated business taxable income and may be taxable to them. Tax-exempt entities and individuals considering holding partnership units in an IRA or retirement plan should consult with their tax advisors before investing in our common units.
Back to top

Yes, MLP units may be held in an IRA. However, only the first $1,000 of UBTI from all sources is excluded from current taxation. In other words, to the extent that you are allocated more than $1,000 in aggregate UBTI, the excess would become currently taxable even though the units are held in a tax-deferred account. Prospective investors should consult with a tax advisor regarding the tax consequences of MLP ownership to their own particular circumstances.
Back to top

Questions and document requests can be handled in a variety of ways:

1. use our Information Request Form;
2. email us at ir@usacompression.com;
3. call Investor Relations at (512) 473-2662; and
4. by mail to USA Compression Partners, LP, Attn: Investor Relations Department, 111 Congress Ave., Suite 2400, Austin, TX 78701.

You may request annual reports, news releases, SEC-filed documents, or any public documents that the Partnership distributes in the same manner.
Back to top