USA Compression Poised for Multiyear Growth as Market Stays Tight, RBC Says

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USA Compression Partners (USAC) is positioned for growth and strong fleet utilization as the natural gas compression market remains tight, RBC Capital Markets said Monday in a report.

The strong market should provide "multiyear growth visibility" with the company entering a "transformative period driven by unprecedented natural gas compression demand," RBC said.

USA Compression estimates US natural gas production could reach 140 billion cubic feet per day by 2031, more than 30 Bcf/d above 2025 levels, with LNG exports accounting for a large share of that increase, the report said.

RBC said the company's investments in telemetry and remote monitoring should help improve margins as efficiency gains emerge in 2027.

Higher lube oil costs will likely pressure gross margins, RBC said. The company now expects incremental lube oil expenses of about $1 million a month in H2 due to higher crude oil prices, the report said.

RBC increased its price target on USA Compression stock to $31 from $30 and maintained its sector-perform rating.

Price: 26.99, Change: -0.07, Percent Change: -0.26

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