Good day, everyone, and welcome to the USA Compression Partners First Quarter Earnings Conference Call. Today's conference is being recorded and will be available for Web replay. At this, I'd like to turn the conference over to Mr. Greg Holloway, Vice President, General Counsel and Secretary. Please go ahead.

Appreciate it, Pricilla. Good morning, everybody and thanks for joining us. This morning as you know we released our financial results for the quarter ended March 31, 2014. You can find our earnings release in the Investor Relations section of our Web site 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, May 7 and may no longer be accurate at the time of a replay. I will 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 today is Jody Tusa, our Vice President, Chief Financial Officer and Treasurer and Matt Liuzzi, Senior Vice President of Strategic Development. I'm pleased to report that we are off to a strong start in 2014 with a solid first quarter of operating and financial performance driven by continued strong market demand for our compression services and made possible by the outstanding job our people do out in the field everyday. Let me take a minute to say that in this business, the compressors don't run and fix themselves. We truly believe that our people are perhaps the most important factor differentiating USA Compression from our competitors. USA has over 300 hardworking loyal men and women in the field and it is their dedication 24 hours a day, 7 days a week, 365 days a year through good weather and bad, serving the needs of our customers that has differentiated USA Compression over the last 15 years. That dedication manifest itself through our continued pragmatic growth, high utilization of our fleet, the return on our assets and the return on our unitholders capital. I would like to mention that a few days ago, we welcome back to the United States and the USA Compression a young lady. One of our field service technicians who just finished her third thorough duty in Afghanistan. We and her family are happy that Jessica is back safely. We value greatly the contributions our people making services to our country and are always pleased to support individuals like Jessica. It is the loyalty, integrity, hard work and dedication to their jobs and their customers, which our employees bring to the job everyday that drive the operating and financial performance, quarter-after-quarter for our investors. So on behalf…

Thanks Eric and good morning everyone. As Eric mentioned USA Compression reported higher revenue for the first quarter of 2014. Revenue in the first quarter of 2014 increased 54% compared to the first quarter of 2013 primarily driven by an increase in USACs contract operations revenues as a result of adding revenue generating horsepower. Contract operations revenue in the first quarter of 2014 increased 55% to $49.3 million as compared to $31.9 million for the first quarter of 2013. The Q1 2014 over Q1 2013 increase in our contract operations revenue was driven almost exclusively by the growth in our revenue generating horsepower including fleet growth due to the S&R acquisition. Average revenue generating horsepower increased 37% to 1,094,677 in the first quarter of 2014 compared to 801,574 for the same period of the prior year primarily due to growth in our midstream compression assets along with the acquisition of the gas lift compression assets. Average revenue for revenue generating horsepower per month increased 13% to $15.30 for the first quarter of 2014 as compared to $13.59 for the first quarter of 2013, due to higher revenue for horsepower per month from the gas lift compression assets. Adjusted EBITDA increased 44% to $25.2 million in the first quarter of 2014 as compared to $17.4 million for the first quarter of 2013. Adjusted distributable cash flow for the first quarter of 2014 was $16.8 million as compared to $11.6 million for the same period last year for an increase of 45%. Gross operating margin for the first quarter of 2014 increased 46% to $32.5 million as compared to $22.2 million for the same period last year. The gross operating margin percentage decreased from 68% in the first quarter of 2013 to 64.7% in the first quarter of 2014. This decrease in…

(Operator Instructions) We will take our first question from T.J. Schultz with RBC Capital Markets. Your line is open.

Good morning, guys. This is Vimal filling in for TJ. I have a few questions for you.

Good morning, Vimal.

Good morning. The first question was the 300,000 of horsepower you are adding this year, is that level somewhat above – you would normally add to just given, that you are seeing to get some good opportunities this year, or I guess more effectively how should we think about horsepower additions going into 2015 and 2016?

Very good questions. This is Eric. We will look at that a couple of different ways. We've been pleasantly surprised this year with a level of demand from our customer partners, as you know we are in the early innings of the build out of the shale infrastructure. We see that this as some sustainability into the future. The one thing that we have been extremely pleased about is the financial discipline that we have been able to bring to the table. This is not an opportunity where we are buying market share. We have actually been able to selectively high grade some of our opportunities. So I think if you go back to my commentary, demand for our goods and services is extremely high And we have been pleasantly surprised with what we have seen.

I will add to Eric's commentary that we are – obviously, we are not in a position to provide any type of guidance in the 2015 or 2016. But the demand that we are seeing this year, we would expect to continue strong demand as we get into 2015. We are looking at sizing up our purchase orders for new compression equipment for 2015 over the next two to four weeks. And so we are considering different alternatives in terms of the initial placement of new compression equipment for next year. But I can tell you that we are looking at a continuing strength in the demand for our services as we size up the order for next year.

That's helpful. Secondly, as far as the commitment from Riverstone and Argonaut deferred cash through 1Q 2015, can you provide some color on how those discussions went and specifically why that date was posted?

Well, we are consistent with what we have communicated in the past, the Riverstone and Argonaut parties like the growth prospects that they see in the business they certainly have enjoyed the appreciation of the unit price from the units that were adrift throughout 2013 and so far in 2014. The level of confidence and prospects of growth is strong on their part. So as you know they can look after this period through the first quarter of 2015 to either extent the continuation of the drip or begin to take cash on those distributions those decisions have not been made and would be evaluated throughout the course of this year. But, they like the again, funding the partially the growth capital that we are deploying and that we are deploying at record levels. So they see as the management does, that it gives us an opportunity to delever a bit against all the growth CapEx that we are spending. So we are very, very pleased to receive their support and report in connection with this release that they extended the continuation of taking units for their distributions.

Okay. The last one that we had was as far as station service application in the Mid-Con, you kind of highlighted that those are going to be – in terms of returns they are going to be a lot better than some of the other service that you provide. Can you extend on that opportunity and what portion of your 2014 CapEx is allocated to those types of applications.

When you look at the magnitude of our 2014 new unit CapEx $250 million, $265 million range. The station services will be a small component of that. We are talking something that's less than 10% or so. It could potentially be more and we have been awarded our second project we are looking at some additional opportunities. But again, I don't think its one you look at. And look at a seismic shift away from what our current mix of business has been. I think its again an opportunity that has some growth opportunities for us. But its not something that will have that seismic shift where it would drive to be half our revenues or something like that.

All right. Great. Thanks. Congrats on the quarter. That's all I had. Thank you.

Thank you very much.

Thank you.

(Operator instructions) We will go next to Ned Baramov with Wells Fargo. Your line is open.

Good morning guys.

Ned how are you today?

Good, good yourself.

Never had a bad as a boss.

Very good. So I had a quick question on gross margins. So if you could maybe talk about your expectations for the margin improvement through the end of the year? Or maybe just to ask this a different way, where do you see gross margins exiting 2014?

I would expect as we go through the year and we are adding primarily these really large horsepower units that we would continue to see some level of improvement in gross margins over the exit rate from 2013. And so we do get as, as we mentioned earlier a little bit of margin dilution from the gas lift assets. But the mix of new compression equipment that we are adding again is primarily oriented towards the large horsepower units where we get better operating leverage. And so along with the timing that we would expect to watch out from the incremental operating expenses in the first quarter. We would expect to see our margins trend more along the lines of the exit right out of 2013 and by the time we get to the end of 2014 perhaps some slight improvement over the exit rate out of 2013.

That's great. And I had another question on demand in dry gas regions, like the Haynesville. So given the improvement in the number of rigs that are going back to these regions based on improved gas prices, are you seeing any pickup in demand in dry gas regions?

Ned, good question. What we are seeing would be – let's go back maybe a year and a half to two years ago. We saw some retrenchment in the dry gas areas. We saw consolidation movement for larger central facilities. Some of our customers have a mix of company owned equipment and then an equipment where USA Compression provides a compression services. Because of the longer lead times involved, we are sourcing some of this big equipment when the slow down or the precipitous decline in gas commodity price back in spring two years ago, hit. We saw some slowdown on activity. To your point, you are starting to see a tick-up in the rig count. And I think we are starting to see folks that have been able to lock-in some hedges for the back half of 2014 into 2015 and 2016 at prices where the returns are acceptable to these folks. I saw one of the – some commentary on a producer the other day. One of our customers where they are backing off on their dry gas activities in the Marcellus and the expectation is that they will kind of be redeploying some of that capital or allocating some of that capital back into the Fayetteville shale. So I think its fair to say that with the record low storage levels that we are seeing some concerns about ability to replenish and refill storage this summer. That in certain select dry gas areas. There will be a pick up in activity our quote activity has started to increase in those areas. I think the rig count has started to increase in some of those areas. So I think its logical to assume that activity will probably follow.

That's great color. And then lastly from me, could you provide an update on the S&R operations, and whether these assets continue to track ahead of your initial expectations? Thanks.

Sure. And made the way we look at the business now is – if we look at business as a whole if you will so we -- where we fully integrated the business its running along side with all of our midstream assets as well. So the acquisition has been a very good for us. Very pleased that we move through the integration of very timely manner. The demand for the second half of this year for gas lift units they were adding are still aligned with expectations that we have for 2014, which did exceed our acquisition forecast if you will. So we are very pleased that the utilization rates and service rates continue to remain very high and for the full year 2014, again, we were anticipating buying about 50,000 horsepower move gas lift units. And that did run ahead of the initial expectations that we have for this year.

Great. That's all I had. Thank you very much.

Okay.

Thank you.

(Operator Instructions) We have no further questions at this time. I would like to turn the call back to Eric Long for closing remarks.

Great. Thank you very much. While we had a good quarter, the prospects for the balance of 2014 remains strong and we appreciate the continued support of our investor group and we look forward to continuing to be good stewards of your capital. Thank you.

And this does conclude today's conference. You may disconnect at any time.