USA Compression and Energy Transfer: A Strategic Partnership Fueling Midstream Growth

The midstream energy sector is undergoing a transformative phase, driven by surging demand for natural gas infrastructure and a wave of strategic consolidation. At the forefront of this evolution is USA Compression Partners' deepening collaboration with Energy Transfer, a partnership that has already delivered measurable operational and financial synergies while positioning both firms to capitalize on long-term industry tailwinds.

Operational Synergies: A Foundation for Efficiency

USA Compression's partnership with Energy Transfer has unlocked significant cost and operational efficiencies. In Q2 2025, the company reported record revenues of $250.1 million, with an average revenue per revenue-generating horsepower (rHHP) of $21.31-up 5% year-over-year, according to its Q2 2025 results. This performance was bolstered by a 94.4% average horsepower utilization rate, reflecting disciplined asset management. Crucially, the partnership's shared services model, set to expand in 2025, is projected to reduce back-office costs and enhance operational management, with savings expected to compound through 2026, per the company's fourth-quarter 2024 results.

The collaboration dates back to a landmark 2018 deal, where USA Compression acquired $1.8 billion in assets from Energy Transfer, including CDM Resource Management LLC, to double its horsepower and expand its onshore footprint. Building on this foundation, the 2025 strategic pivot emphasizes retiring older, less efficient units and prioritizing high-horsepower equipment. For instance, the conversion of 100,000 preferred units into common units in 2025 reduced distributions by $2.4 million sequentially, improving financial flexibility.

Industry Trends: Consolidation and Infrastructure Expansion

The midstream sector's growth trajectory is underpinned by a surge in M&A activity and infrastructure investments. According to a Mordor Intelligence report, the U.S. midstream market is projected to grow at a compound annual rate of 4.15% from 2025 to 2030, driven by demand for natural gas pipelines, liquefied natural gas (LNG) facilities, and optimized logistics networks. Energy Transfer's $5.3 billion Desert Southwest pipeline expansion-a project adding 516 miles of pipeline-exemplifies this trend, enhancing natural gas transport capacity to meet rising demand.

The sector's consolidation frenzy has also intensified, with midstream M&A surpassing $260 billion in deal value over the past 18 months, according to PwC's midyear outlook. Energy Transfer itself has been a key player, acquiring WTG Midstream for $3.25 billion in July 2024 to bolster its Permian Basin infrastructure. Similarly, Enterprise Products Partners and ONEOK have pursued strategic acquisitions to strengthen their midstream portfolios, reflecting a broader industry shift toward scale-driven growth.

USA Compression's partnership with Energy Transfer aligns seamlessly with these trends. By leveraging Energy Transfer's extensive infrastructure and operational expertise, USA Compression can focus capital on high-return projects. For 2025, the company plans expansion capital expenditures of $120–140 million, primarily directed toward contracted new horsepower additions, which are back-end loaded to maximize efficiency.

Long-Term Growth: Positioning for a Dynamic Energy Landscape

The strategic alignment between USA Compression and Energy Transfer is not just about cost savings-it's about future-proofing against evolving energy demands. As AI-driven data centers and industrial sectors increasingly rely on reliable energy infrastructure, midstream firms with robust networks in key basins like the Permian and Marcellus will gain a competitive edge.

Energy Transfer's recent acquisitions, such as WTG Midstream and Piñon Midstream, underscore its commitment to dominating the Permian's natural gas value chain. Meanwhile, USA Compression's focus on high-horsepower equipment and fleet optimization ensures it remains a critical enabler of production growth in these basins.

Conclusion: A Model for Midstream Resilience

USA Compression's partnership with Energy Transfer exemplifies how strategic alliances can drive operational excellence and long-term value creation in the midstream sector. By combining Energy Transfer's infrastructure scale with USA Compression's specialized compression services, the duo is well-positioned to navigate industry headwinds and capitalize on growth opportunities. As the sector continues to consolidate and invest in next-generation infrastructure, this partnership offers a blueprint for sustainable success.