HOUSTON and TRAVERSE CITY, Mich., March 10, 2025 (GLOBE NEWSWIRE) — Archrock, Inc. (NYSE: AROC) and Natural Gas Compression Systems, Inc., a high-quality provider of contract gas compression services, today announced that they have entered into definitive agreements under which Archrock will acquire NGCSI and NGCSE, Inc., in a cash and stock transaction valued at approximately $357 million.
“We’re excited to announce our agreement to acquire NGCS, which further enhances our position as a premier provider of natural gas compression services in the United States,” said Brad Childers, President and Chief Executive Officer of Archrock. “With the addition of NGCS’s portfolio of high-quality, large horsepower and electric compression assets, we are increasing our scale and expanding customer relationships as demand for natural gas and compression remains robust. Additionally, by deepening our operational footprint in the premier Permian Basin and other key regions, we will continue to align our resources with profitable, high-demand market segments. We have been disciplined about transforming our portfolio by investing in attractive, high-return opportunities, and believe that this transaction will enable us to build on these efforts and drive durable, profitable growth for Archrock shareholders.”
Childers continued, “As with Archrock, we recognize that NGCS’s success starts with its dedicated, highly-talented employees. We have a successful integration track record, and are enthusiastic about welcoming the NGCS team into the Archrock family as we work together to maximize uptime for our customers and to power a cleaner America.”
“Archrock shares our commitments to safety, operational excellence and putting the customer first,” said A.J. Yuncker, President and Chief Executive Officer of NGCSI. “NGCS and Archrock have highly complementary operations and capabilities, and we believe our customers and employees will benefit from Archrock’s scale, experience and financial strength.”
Compelling Strategic and Financial Benefits
- Increases total operating horsepower: Together, Archrock and NGCS will have pro forma operating horsepower of over 4.5 million.
- Expands presence in Permian Basin and other key oil and gas regions: 71% of NGCS’s compression horsepower is operating in the Permian Basin; the combination is expected to increase Archrock’s Permian Basin compression capacity by 10%, to approximately 2.5 million horsepower.
- Enhances capacity to serve growing demand for lower carbon solutions: NGCS’s operating electric motor drive compression equipment totaling approximately 78,000 horsepower are complementary to Archrock’s growing electric motor drive compression operations and increases Archrock’s electric motor drive compression horsepower to approximately 815,000.
- Immediate accretion: The transaction is expected to be immediately accretive to Archrock’s earnings per share and cash available for dividend per share by the end of 2025.
- Compelling multiple: The purchase price represents a transaction multiple of less than 7.0x expected run-rate of annualized July 2025 adjusted EBITDA, exclusive of any anticipated synergies.
Transaction, Leadership and Closing Details
Under the terms of the agreement, Archrock intends to fund the $298 million cash portion of the total consideration with available capacity under its ABL credit facility. Archrock will issue up to 2.312 million new Archrock common shares to the sellers to fund the remaining transaction value. The transaction funding approach is consistent with Archrock’s stated target leverage ratio range of between 3.0 times and 3.5 times.
The transaction has been unanimously approved by the Board of Directors of Archrock and is expected to close in the second quarter of 2025, subject to customary closing conditions.
Advisors
Citi is serving as financial advisor and Latham & Watkins LLP is acting as legal advisor to Archrock. Intrepid Partners, LLC is serving as financial advisor and Honigman LLP is acting as legal advisor to NGCS.
About Archrock
Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is a premier provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how the Company embodies its purpose, WE POWER A CLEANER AMERICA™, visit www.archrock.com.
About NGCS
NGCS is a high-quality provider of natural gas compression equipment and services used in the production and transportation of natural gas, with a culture based on preventative maintenance and customer run-time. NGCS specializes in large horsepower compression for both gas lift and midstream applications. NGCS’s homogenous fleet of gas-fired and electric motor drive compressors are deployed with blue-chip customers, primarily in the Permian Basin.
NGCS consists of privately held companies, and NGCSI was started by six founders via a private placement in 2001. Four of the six founders started their careers as compressor mechanics.
