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Natural Gas Services (NYSE: NGS) closes $120M Flatrock Compression acquisition

Filing Impact
(High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

Natural Gas Services Group, Inc. closed its acquisition of Flatrock Compression Holdings LLC for a total purchase price of $120 million. The consideration includes approximately $110 million in cash and $10 million of NGS common stock issued based on a 30-day volume-weighted average price.

Flatrock adds about 86,000 rented horsepower at roughly 95% utilization, bringing NGS’s combined rented fleet to approximately 661,000 horsepower and meaningfully increasing its electric compression mix. The deal was completed at about 6.2x annualized first-quarter 2026 EBITDA and is described as immediately accretive to adjusted EBITDA, earnings and cash flow.

NGS financed the acquisition through an amended credit facility that raised total commitments from $400 million to $500 million, retained a $100 million accordion feature and leaves more than $130 million of available borrowing capacity. Pro forma leverage is expected to be around three times adjusted EBITDA, and customer concentration from Occidental Petroleum and Devon Energy declines from about 64% to 54% of revenue.

Positive

  • Strategic, accretive acquisition at attractive multiple: NGS bought Flatrock Compression for $120 million at roughly 6.2x annualized Q1 2026 EBITDA, with management stating the deal is immediately accretive to adjusted EBITDA, earnings and cash flow while diversifying customers and strengthening key basin positions.
  • Scaled fleet and prudent leverage profile: The transaction adds about 86,000 rented horsepower, bringing the combined rented fleet to roughly 661,000 horsepower, and is financed via an expanded $500 million credit facility, leaving more than $130 million of available borrowing capacity and pro forma leverage of about three times adjusted EBITDA.

Negative

  • None.

Insights

NGS executes a sizeable, accretive compression acquisition while holding leverage near 3x.

Natural Gas Services Group is using the Flatrock deal to scale its rental compression platform in the Permian and Eagle Ford. The acquired fleet adds about 86,000 rented horsepower at roughly 95% utilization, lifting the combined rented base to around 661,000 horsepower and expanding the electric compression mix.

The company paid $120 million, or roughly 6.2x annualized Q1 EBITDA, which management notes is at a discount to NGS’s trading multiple. They expect immediate accretion to adjusted EBITDA, earnings and cash flow. Pro forma leverage of about three times adjusted EBITDA, supported by a $500 million revolver and over $130 million of remaining borrowing capacity, keeps balance-sheet risk contained.

Strategically, the acquisition diversifies revenue away from two large E&P customers, deepens NGS’s footprint in key basins and brings an experienced operating team. Integration execution and maintaining high utilization will be important, and management plans to incorporate the transaction into guidance during the Q2 2026 earnings update.

Item 7.01 Regulation FD Disclosure Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Purchase price $120 million Total consideration for Flatrock Compression acquisition
Cash portion $110 million Cash component of Flatrock purchase price
Stock consideration $10 million in NGS common stock Issued based on 30-day volume-weighted average share price
Acquisition EBITDA multiple 6.2x EBITDA Multiple of annualized Q1 2026 EBITDA for Flatrock, pre-synergies
Credit facility size $500 million Amended total commitments, up from $400 million
Available borrowing capacity More than $130 million Liquidity remaining after closing the acquisition
Pro forma leverage 3x adjusted EBITDA Expected leverage following Flatrock acquisition
Rented horsepower added 86,000 horsepower Flatrock rented fleet with about 95% utilization
Combined rented fleet 661,000 horsepower NGS total rented horsepower after including Flatrock
Customer concentration reduction 64% to 54% Revenue share from Occidental and Devon before vs. after deal
adjusted EBITDA financial
"our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA and related leverage metrics"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
volume-weighted average share price financial
"$10 million of NGS common stock issued at a price based on the 30-day volume-weighted average share price"
Volume-weighted average share price (VWAP) is the average price a stock trades at over a given period, where each trade’s price is weighted by how many shares changed hands; bigger trades count more than smaller ones. Investors use it as a benchmark to judge whether a trade executed at a good price and to spot short-term market direction—think of it like a weighted classroom average where students with more credits influence the final grade more.
pro forma leverage financial
"Following the transaction, we expect pro forma leverage of approximately three times adjusted EBITDA"
Pro forma leverage is an adjusted measure of a company’s debt level compared with its earnings or cash flow after accounting for planned or one‑time changes, such as acquisitions, asset sales, or debt repayment. It matters to investors because it shows the company’s likely financial burden and flexibility once those events occur, much like seeing your mortgage-to-income ratio after you factor in a projected raise or new loan. This helps assess default risk and capacity for future investments or dividends.
accordion feature financial
"we amended our credit facility and increased total commitments from $400 million to $500 million, while maintaining the existing $100 million accordion feature"
An accordion feature is a clause in a loan or financing agreement that allows a company to expand the size of a credit line or the amount of securities available under the same contract without drafting a completely new deal. Like a suitcase that can be extended to hold more items, it gives a company quick flexibility to raise extra money, which can help fund growth but may increase debt or dilute existing shareholders—so investors watch it for changes in risk and ownership.
utilization financial
"The company currently operates approximately 86,000 rented horsepower with utilization of approximately 95%"
Utilization measures how much a resource, service or capacity is actually used compared with how much is available, like tracking how often a car in a fleet is on the road versus sitting idle. For investors it signals demand, efficiency and future revenue potential—high utilization can mean strong sales and better returns but also risk of capacity strain or higher costs, while low utilization can indicate weak demand or excess capacity.
accretive financial
"The transaction is immediately accretive to adjusted EBITDA, earnings, cash flow, before considering any potential synergies"
"Accretive" describes a situation where a financial action, such as a purchase or investment, increases the value or earnings of a company. For investors, it signals that the move is likely to boost profitability and overall worth, much like adding a beneficial ingredient to a recipe that enhances the final taste. An accretive decision is generally seen as positive because it contributes to growth and financial health.
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Understanding 8-K Material Events →
false000108499100010849912022-11-142022-11-14

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): June 15, 2026
NATURAL GAS SERVICES GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
Colorado
1-31398
75-2811855
(State or Other Jurisdiction
of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
601 State Street, Suite 400
Southlake, TX 76092
(Address of Principal Executive Offices)
(432) 262-2700
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-14(c)).
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, Par Value $0.01NGSNYSE


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Item 7.01.Regulation FD Disclosure.
On June 15, 2026, Natural Gas Services Group, Inc. (the “Company”) hosted a previously announced conference call to announce the closing of its acquisition of Flatrock Compression Holdings LLC. A copy of the conference call transcript is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The information in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. By filing this Current Report on Form 8-K and furnishing this information pursuant to Item 7.01, the Company makes no admission as to the materiality of any information in this Current Report on Form 8-K, including Exhibit 99.1, that is required to be disclosed solely by Regulation FD.





About Natural Gas Services Group, Inc.
Natural Gas Services Group is a leading provider of natural gas and electric compression equipment, technology and services to the energy industry. The Company rents, designs, services and maintains compressors and related equipment and parts for our customers’ oil and gas production and processing facilities, generally using equipment from OEM suppliers along with limited in-house assembly. The Company is headquartered in Southlake, Texas, with administrative offices in Midland, Texas an assembly facility located in Tulsa, Oklahoma, and service facilities located in major oil and natural gas producing basins in the continental U.S. Additional information can be found at www.ngsgi.com.
Forward-Looking Statements
Certain statements herein (and oral statements made regarding the subjects of this release) constitute “forward-looking statements” within the meaning of the federal securities laws. Words such as “may,” “might,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,” “plan,” “intend” or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. These forward-looking statements are based upon current estimates and assumptions.
These forward–looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of the Company. Forward– looking information includes, but is not limited to statements regarding: guidance or estimates related to EBITDA growth, projected capital expenditures; returns on invested capital, fundamentals of the compression industry and related oil and gas industry, valuations, compressor demand assumptions and overall industry outlook, and the ability of the Company to capitalize on any potential opportunities.
While the Company believes that the assumptions concerning future events are reasonable, investors are cautioned that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Some of these factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to:
•conditions in the oil and gas industry, including the supply and demand for oil and gas and volatility in the prices of oil and gas;
•changes in general economic and financial conditions, inflationary pressures, the potential for economic recession in the U.S., tariffs and trade restrictions, including the imposition of new and higher tariffs on imported goods and retaliatory tariffs implemented by other countries on U.S. goods, and the potential effects on our financial condition, results of operations and cash flows;
•our reliance on major customers;
•failure of projected organic growth due to adverse changes in the oil and gas industry, including depressed oil and gas prices, oppressive environmental regulations and competition;
•our inability to achieve increased utilization of assets, including rental fleet utilization and monetizing other non-cash balance sheet assets;
•failure of our customers to continue to rent equipment after expiration of the primary rental term;
•our ability to economically develop and deploy new technologies and services, including technology to comply with health and environmental laws and regulations;
•failure to achieve accretive financial results in connection with any acquisitions we may make;
•fluctuations in interest rates;
•changes in regulation or prohibition of new or current well completion techniques;
•competition among the various providers of compression services and products;
•changes in safety, health and environmental regulations;
•changes in economic or political conditions in the markets in which we operate;
•the inherent risks associated with our operations, such as equipment defects, malfunctions, natural disasters and adverse changes in customer, employee and supplier relationships;
•our inability to comply with covenants in our debt agreements and the decreased financial flexibility associated with our debt;
•inability to finance our future capital requirements and availability of financing;
•cybersecurity threats, including increased use of artificial intelligence and other emerging technologies;
•capacity availability, costs and performance of our outsourced compressor fabrication providers and overall inflationary pressures;
•impacts of world events, such as acts of terrorism, the conflicts in Iran, Ukraine, Venezuela and in the greater Middle East, and significant economic disruptions and adverse consequences resulting from possible long-term effects of potential pandemics and other public health crises; and
•general economic conditions.


In addition, these forward-looking statements are subject to other various risks and uncertainties, including without limitation those set forth in the Company’s filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Thus, actual results could be materially different. The Company expressly disclaims any obligation to update or alter statements whether as a result of new information, future events or otherwise, except as required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are included with this Current Report on Form 8-K:

Exhibit No.Description
99.1
NGS - Flatrock Acquisition Conference Call Transcript held on June 15, 2026
104Cover Page Interactive Data File (embedded within the Inline XBRL document).



SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NATURAL GAS SERVICES GROUP, INC.
Dated: June 16, 2026By:/s/ Justin C. Jacobs
Name: Justin C. Jacobs
Title: Chief Executive Officer


Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 The only transcription company with ListenLinkTM! Rate this transcript (CTRL + click): poor excellent New Earnings Call Conference Call June 15, 2026 Operator: Good morning, ladies and gentlemen, and welcome to the conference call. Natural Gas Services Group to acquire Flatrock Compression Holdings. At this time, all participants are in listen-only mode. Operator assistance is available at any time during this conference by pressing 0#. I would now like to turn the call over to Ms. Anna Delgado. Please begin. Anna Delgado: Thank you, Luke, and good morning, everyone. Before we begin, I would like to remind you that, during the course of this conference call, the company will be making forward-looking statements within the meeting of federal security laws. These statements may include, among other things, the anticipated benefits of Flatrock acquisition, the expected financial and operational impact of the transaction, anticipated accretion, integration plans, future growth opportunities, and our expectations regarding leverage, liquidity, and shareholder value creation. Investors are cautioned that forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those projected. These statements are subject to risks and uncertainties including our ability to successfully integrate Flatrock and realize the anticipated benefits of the acquisition, as well as other risks described in today’s press release and investor presentation, and in our filings with the SEC, including our Form 10-K for the year ended December 31st, 2025, and our Form 10-Q for the quarter ended March 31st, 2026, and our Form 8-Ks. These documents can be found in the Investors Relations section of our website at www.ngsgi.com. Natural Gas Services Group undertakes no obligation to update or revise any forward-looking statements, except as required by law. Accordingly, you should not place undue reliance on these statements. Exhibit 99.1

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 2 of 13 In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA and related leverage metrics. For definitions of these measures to the most directly comparable measures under GAAP, please see today’s Form 8-K filing. I will now turn the call over to Justin Jacobs, Chief Executive Officer. Justin? Justin Jacobs: Thank you, Anna. Good morning, everyone. Thank you for joining us. Today is an exciting day for NGS, and an important milestone in our company’s evolution. This morning, we announced the acquisition of Flatrock Compression, a leading rental compression business operating across the Permian and Eagle Ford Basins. This transaction immediately strengthens NGS in several important ways and further solidifies our position as one of the leading compression companies in the industry. Most importantly, it aligns with a strategy we have been discussing with investors for the last several years. Over that time, we have focused on building a larger, stronger, and more capable company through disciplined organic growth, operational excellence, and thoughtful capital allocation. This acquisition builds directly upon that foundation and improves positioning for the opportunities we see ahead. Before discussing the transaction, I want to thank all the employees of NGS. We would not be in a position to pursue opportunities like this without their hard work, dedication, and commitment. Every day, our employees earn the trust of our customers through field safety, strong execution, and exceptional service. This acquisition reflects the strength of the platform they have helped build. I would also like to welcome the entire Flatrock team to NGS. Over the past several months, we have had the opportunity to spend significant time getting to know the company, its leadership team, and many of its employees. The reputation they have built throughout the industry is well-earned, and we are excited to have them join our organization. As we evaluated acquisition opportunities, we were fortunate to find a company that already shared our commitment to operational excellence, customer service,

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 3 of 13 and disciplined growth. We purchased Flatrock because they were already doing many of the things we value. Simply put, we believe Flatrock is a great business. Founded in 2001, Flatrock provides rental compression services to customers throughout the Permian Basin and Eagle Ford. The company currently operates approximately 86,000 rented horsepower with utilization of approximately 95%. Flatrock has grown organically at comparable rates to NGS over the last several years. The fleet is significantly weighted towards large horsepower compression and includes a meaningful electric compression platform. They have assembled an impressive roster of customers, built a highly experienced field organization, and established a reputation for execution that is widely respected throughout the industry. Now, let me spend a few minutes discussing why we believe this transaction is such a compelling fit for NGS. Many of you have heard me discuss our approach to acquisitions over the last two years. While every opportunity is unique, our acquisition framework has remained consistent. When we evaluate acquisitions, we focus on four things. Customer mix, basin position, fleet characteristics, and valuation. Put simply, we are looking for opportunities that strengthen our customer portfolio, improve our position in key operating basins, enhance our fleet, and can be acquired at an attractive valuation. That framework has not changed, and those same criteria have been outlined in our investor presentations for years. What makes this acquisition particularly exciting is that Flatrock checks every one of those boxes and does so at a very high level. It strengthens our customer portfolio, it improves our basin position, it enhances our fleet, and it was completed at an attractive valuation. Let me briefly discuss each.

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 4 of 13 First, customer mix. One of the most attractive aspects of this acquisition is the quality of the customer relationships that Flatrock has built over more than two decades. The company has assembled an impressive roster of customers throughout the Permian Basin and Eagle Ford, including several large publicly traded E&P operators. Prior to the acquisition, Occidental Petroleum and Devon Energy represented approximately 64% of our revenue. Following the transaction, that concentration declines to approximately 54%. At the same time, we have added two new large publicly traded E&P customers that have become our third and fourth largest customer relationships. Importantly, there is relatively modest overlap between the two customer bases. This is not simply a combination of existing relationships. It expands our reach, broadens our customer portfolio, and creates meaningful opportunities to grow with new customers in the years ahead, particularly considering our access to capital and demonstrated ability to deploy large horsepower. Second, basin position. The acquisition significantly strengthens our footprint in two of the most attractive compression markets in North America: the Permian Basin and the Eagle Ford. Approximately 80% of Flatrock’s horsepower is located in the Permian Basin, with a particularly strong position in the Midland Basin. This complements our existing footprint extremely well, creating a stronger position across the Permian and meaningful additional scale in the Eagle Ford. Operational density matters in our business. Greater concentration of equipment, personnel, and customer activity within a basin improves operational efficiency, enhances customer responsiveness, and strengthens competitive positioning. This transaction increases our density in two of our key growth areas and strengthens our ability to serve customers in those markets. Third, fleet characteristics. Flatrock has assembled a highly complementary fleet that adds approximately 86,000 rented horsepower and brings our combined fleet to approximately 661,000 rented horsepower. The fleet is significantly weighted towards large horsepower compression equipment. It is also primarily a Caterpillar engine and aerial compressor fleet. We have significant overlap in unit model types, which will provide leverage for parts and maintenance. The Flatrock fleet also meaningfully expands our electric compression platform as approximately 20% of Flatrock’s horsepower is electric motor driven compared to approximately 7% of NGS’s existing fleet. We continue to believe electric compression represents an

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 5 of 13 attractive long-term growth opportunity and this transaction meaningfully advances our position in that segment of the market. And finally, valuation. While this transaction is first and foremost about strategic fit, it is also a highly attractive financial acquisition. We acquired Flatrock at approximately 6.2 times annualized first quarter 2026 EBITDA which is pre- synergies. This represents a meaningful discount to NGS’s current trading multiple. The transaction is immediately accretive to earnings, cash flow, and EBITDA while maintaining a prudent leverage profile. As shareholders ourselves, we remain highly focused on disciplined capital allocation, and we believe this transaction reflects that discipline. When we step back and look at the transaction as a whole, we believe it represents exactly the type of acquisition opportunity we have discussed with investors for years. It strengthens our customer portfolio, it improves our Bayesian position, it enhances our fleet, and it was completed at an attractive valuation. Most importantly, it represents another step in executing the strategy we have consistently communicated to shareholders. With that, I’ll turn the call over to Ian to discuss the financial impact of the transaction. Ian Eckert: Thank you, Justin. We acquired Flatrock Compression for a total purchase price of $120 million, consisting of approximately $110 million in cash and $10 million of NGS common stock issued at a price based on the 30-day volume-weighted average share price. The transaction was financed through our expanded credit facility and available liquidity. In conjunction with the acquisition, we amended our credit facility and increased total commitments from $400 million to $500 million, while maintaining the existing $100 million accordion feature.

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 6 of 13 Following the transaction, we expect pro forma leverage of approximately three times adjusted EBITDA which we view as a comfortable and prudent level. Importantly, we continue to maintain substantial liquidity with more than $130 million of available borrowing capacity following closing. This provides ample flexibility to fund future growth, invest in our fleet, pursue additional strategic opportunities when appropriate, and continue executing our capital allocation priorities. From a financial perspective, the acquisition is immediately accretive to adjusted EBITDA, earnings, cash flow, before considering any potential synergies. We are not providing a separate synergy target. The transaction is compelling on a standalone basis before synergies. The principal opportunities for synergies are operating density, route efficiency, procurement, parts and inventory utilization, insurance and administrative overlap, technology deployment, and commercial growth with a broader customer base. We expect these benefits to build as integration progresses and to meaningfully enhance the earnings contribution of the acquired business while remaining modest relative to the scale of the combined company. While we are not providing updated guidance today, you can expect the impact of the transaction to be reflected in guidance provided during our second quarter earnings call in August. Overall, we believe the transaction enhances our earnings power while maintaining financial flexibility and balance sheet strength. With that, I’ll turn the call back to Justin. Justin Jacobs: Thank you, Ian. Before opening the call for questions, I would encourage everyone to look at the final slide in the investor presentation we released this morning. Many of you have seen that slide before. It has remained the same for several years. We’ve consistently discussed four primary drivers of value creation at NGS, fleet optimization, asset utilization, fleet expansion, accretive M&A. Today, we are able to put a checkmark next to each of those drivers.

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 7 of 13 Under accretive M&A, we have always discussed four key factors that matter most to us when evaluating opportunities: customer mix, basin position, fleet characteristics, and valuation. As I discussed earlier, Flatrock checks every one of those boxes and does so at a very high level. It is exactly the type of acquisition we’ve been discussing with investors for years. It strengthens our customer portfolio, improves our position in key operating basins, enhances our fleet, and was completed at an attractive valuation. We believe this transaction enhances our ability to create long-term value for shareholders. This is an exciting time for NGS. The compression market remains healthy. Demand for large horsepower compression continues to be strong, and we remain optimistic about the opportunities ahead of us. Today’s announcement reinforces that outlook. With that, Luke, please open the line for questions. Operator: Ladies and gentlemen, at this time, we will conduct a question-and-answer session. If you would like to state a question, please press 7# on your phone. Again, that’s 7# on your phone, and you’ll be placed in the queue in the order received. Our first question comes from Rob Brown with Lake Street Capital. Go ahead, please. Rob Brown: Good morning. Congratulations on the acquisition. Justin Jacobs: Thanks, Rob. Rob Brown: Just wanted to get a sense of kind of the fleet makeup. You talked a little bit about some of the characteristics, but maybe further color in terms of fleet age and kind of their kind of growth plans and where they were seeing growth relative to NGS.

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 8 of 13 Justin Jacobs: Sure. If you look in the investor presentation, Slide 7, we’ve broken out the mix, at least from a size perspective, and you see it’s very similar to NGS with a significant weighting towards the large horsepower. What I will say is, similar to NGS, Flatrock has seen their growth in large horsepower over the last several years, and as noted in the release and the call they have. They have grown at rates that are comparable to how we’ve grown organically over the last several years. In terms of the quality of the equipment and – or maybe just go to makeup first, very similar model types as we look through really all of the different sizes aligns quite well with where our fleet is in terms of model types, engine types, compressors. And then when it comes to the quality of the equipment itself, we did extensive diligence in looking at the equipment out in the field, and this is a fleet that has been well-maintained, and it is operating at a very high level from a performance perspective for their customers. Once again, a very attractive characteristic from our perspective. We don’t expect any amount of maintenance or catch-up maintenance capital on this equipment. It’s running very well on the field. Rob Brown: Okay, great. You mentioned some of the categories of synergy opportunities, but I think one of them was new customer growth areas. Could you elaborate further on the opportunities you see in the new customer base to maybe accelerate growth or can it grow? Justin Jacobs: Sure. We mentioned specifically there are two large publicly traded E&P customers of Flatrock. We do not, or NGS did not have any business with those customers prior to the acquisition. As a smaller private company, Flatrock did not have the access to capital that we are fortunate to have. So, as we look at the opportunities going forward with those customers in particular, and then the broader Flatrock customer base, we think there are some exciting opportunities for continued greats of high organic growth for us as we’re looking to expand with some of those new customers. Rob Brown: Okay. Great. Thank you. I’ll turn it over. Justin Jacobs: Appreciate it, Rob.

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 9 of 13 Operator: Thank you very much. Our next question comes from Selman Akyol with Stifel. Go ahead, please. Selman Akyol: Thank you. Good morning. Congratulations. Just a couple quick ones. First of all, could you discuss contract tenor? Justin Jacobs: Sure. As we looked at the percentage that is of their fleet - by horsepower basis, percentage of the fleet, that is, under term, it’s a very similar percentage, and we’re not going to see a material movement on the pro forma side. So, really pretty similar amount of horsepower that’s under contract with generally similar rates of tenor, so not material changes there on a pro forma basis. Selman Akyol: Got it, thank you. As you think about sort of 27 and they were in the sale process, do they have any orders out there for new equipment coming in? Justin Jacobs: Meaning looking at Flatrock? Selman Akyol: Yes. Justin Jacobs: The quick answer is they do. We’ll give more color on forward as we get to our second or quarter goal. Selman Akyol: Got it. Just kind of going back to the synergies and I’m not asking for a number or anything like that, but are you keeping anyone that’s at Flatrock, or are you going to keep all the senior management, etcetera? Justin Jacobs: We are, certainly, keeping all of the team that has generated a really quite impressive growth over the last several years. It was really one of the attractive characteristics of the acquisitions. This is business that is running quite well, and we want to integrate in all of that operational talent so that, as a combined entity, we can continue growing at high rates. So, we repeated a couple times in the call, this really isn’t a – this is not an acquisition driven by cost synergies, this is an acquisition driven by capabilities, and enhancing our competitive position. So, we’re excited to integrate the Flatrock members into the team. Selman Akyol: Got it. I’ll leave it there. Thanks so much.

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 10 of 13 Justin Jacobs: Appreciate it, Selman. Thank you. Operator: Our next question comes from Connor Jensen with Raymond James. Go ahead, please. Connor Jensen: Hey guys! Congrats on the deal. Thanks for taking my call today. Justin Jacobs: Appreciate it, Connor. Connor Jensen: I was just wondering how Flatrock’s margin profile compared to NGS is, and if there’s more to do there in pricing, or if that should be accretive going forward? Justin Jacobs: Thanks. Connor Jensen: Sure. Justin Jacobs: So, I would say that this goes really in conjunction with the quality of the fleet. We see attractive pricing on a unit basis, and when looking at margins, they are at least down to the – we’ll give specifics, but they are generally similar margin characteristics to NGS. Connor Jensen: Got it, and then post transaction, you noted three times, leveraged expectations. How are you thinking about the right leverage target for the business, and how should this trend over time? Justin Jacobs: In terms of a target, we haven’t really talked about a public target for leverage with two specific of a granularity, but I would say that we’re very comfortable with that leverage and expect as we’re proceeding toward through the course of the year, there’s obviously a significant cashflow coming off of the business, we’ll have more than ample liquidity and capital availability to continue our growth plans. Connor Jensen: Got it. Thanks, guys. I’ll turn it back. Justin Jacobs: Appreciate it, Connor. Operator: Thank you. Our next question comes from Kyle Krueger with Apollo Capital.

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 11 of 13 Kyle Krueger: I echo everybody else’s congratulations. Quick question for you, Justin. Why was Flatrock for sale? Was it an auction process or a negotiated transaction? And in broad strokes, can you tell us what the ownership profile is/was, and if the business had traded hands in the recent past? Justin Jacobs: Sure. Appreciate the introscopics we’re doing in the call. You know, we’re not going to go into the background of the transaction process itself. What I will say is that I’ve known the Flatrock team, actually, since prior to becoming CEO of the company, and so there’s been a longstanding relationship there between the kind of senior management of the teams, and I would say that it is a very attractive acquisition for NGS, and I think it’s a good result for the shareholders of Flatrock who are going to now become, or are now shareholders in NGS as well. In terms of the ownership, it is a private company, and what I would say is that it is there a reasonable number of shareholders there, so there’s no concentration in terms of the receipt of the $10 million – no, material concentration is a better way to put it – in terms of the $10 million of NGS common stock. Kyle Krueger: Thank you. Justin Jacobs: Appreciate it, Kyle. Operator: Again, if you have any questions, please go ahead and press 7#. Our next question comes from Nate Pendleton with Texas Capital. Go ahead, please. Nate Pendleton: Good morning, and congrats on the acquisition. Justin Jacobs: Thanks, Nate. Nate Pendleton: One of the – of course. I wanted to build on a prior question. You leverage remains quite modest, and on Slide 8, you highlighted the potential for growth opportunities and the ability to return capital to shareholders. I know it’s early but can you talk about how you view those competing uses of capital based on what you’re seeing in the market, following the acquisition? Justin Jacobs: Sure. You know, we talked on prior calls as we, you know, had a material increase in our dividend this past quarter, and increased it several times since we have

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 12 of 13 initiated that. We’ve been able to start off at a modest level in terms of return of capital, and that that would be steadily increasing over time without giving specific guidance, and I would reiterate that message to a reasonable degree, and said still not giving specific guidance in terms of how that will increase over time, but I would note that it is still a small percentage, certainly relative to our larger public competitors in terms of the percentage available cashflow that we can deploy into growth areas. As we look at the leverage pro forma, we still have great ability to grow organically. We still have a great ability to look at kind of non-organic opportunities, which we will continue to do, and so we think this acquisition actually strengthens our ability to continue to grow both organically, inorganically while, over time, increasing that return of capital to shareholder kind of portion of the capital allocation. Nate Pendleton: Got it. Thanks for that detail, Justin. And then, in the past, we’ve talked about the difficulty in finding and retail skilled laborer in the field. Can you talk for a moment about the Flatrock team, and what adding their expertise provides a confined company, more on a forward-looking basis with a potential for growth and compression? Justin Jacobs: Sure. So, when it comes to the field team, you’ve hit it, Nate. I mean, it’s a – one of the most challenging parts of the business is attracting and retaining talented field service professionals, and the Flatrock team has done a great job there in building up great capabilities in their field service, and in providing great service to their customers, and obviously, we want to keep all of that. All of those people and integrate them in, and we think one of the attractive parts of the Flatrock team joining NGS is, is I think it’s going to open up the opportunities they have, both personally and professionally, in terms of growth. So, we are excited to have them join into the NGS team, and look forward to working with them for years to come. Nate Pendleton: That’s great. Thanks for taking my questions. Justin Jacobs: Appreciate it, Nate. Operator: Thank you, and we don’t have any other questions. Justin Jacobs: Well, thank you, everyone, for joining this morning on short notice. Once again, it’s truly an exciting day for us. We’re thrilled to be able to make this

 

Transcripts@civi.com | www.TranscriptionWing.com | 888-223-9488 Page 13 of 13 announcement, and look forward to providing more details and a forward look as we get into the second quarter earnings call. With that, we are finished with our prepared remarks, and I appreciate your time today. Operator: Thank you, everyone. This concludes today’s conference call. Thank you for attending. - End of Recording -

 

Source: View Original Filing on SEC EDGAR

FAQ

What did Natural Gas Services Group (NGS) pay to acquire Flatrock Compression?

Natural Gas Services Group agreed to acquire Flatrock Compression for a total purchase price of $120 million. The consideration includes approximately $110 million in cash and $10 million of NGS common stock, issued using a 30-day volume-weighted average share price.

How does the Flatrock acquisition change NGS’s compression fleet size and mix?

Flatrock adds approximately 86,000 rented horsepower with about 95% utilization, taking NGS’s combined rented fleet to roughly 661,000 horsepower. The deal also increases the share of electric motor-driven compression within the fleet, a segment NGS views as an attractive long-term growth area.

How was the Flatrock deal financed and what is NGS’s pro forma leverage?

NGS financed the Flatrock acquisition through its expanded credit facility, increasing total commitments from $400 million to $500 million while keeping a $100 million accordion. Management expects pro forma leverage of about three times adjusted EBITDA after the transaction closes.

Is the Flatrock acquisition financially accretive to Natural Gas Services Group (NGS)?

Management indicates the Flatrock acquisition is immediately accretive to adjusted EBITDA, earnings and cash flow, before considering any synergies. The purchase multiple of about 6.2x annualized Q1 2026 EBITDA is described as a meaningful discount to NGS’s current trading multiple.

How does the Flatrock deal affect NGS’s customer concentration risk?

Before the acquisition, Occidental Petroleum and Devon Energy accounted for about 64% of NGS’s revenue. Following the Flatrock transaction, their combined share falls to roughly 54%, while NGS adds two new large publicly traded E&P customers as its third- and fourth-largest relationships.

What changes did NGS make to its credit facility in connection with the Flatrock acquisition?

In conjunction with the acquisition, NGS amended its credit facility to increase total commitments from $400 million to $500 million and retained a $100 million accordion feature. After closing, the company reports more than $130 million of available borrowing capacity.

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