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 CEO of Archrock. “With the addition of NGCS’s portfolio of high-quality, large horsepower, and electric compression assets, we are not only increasing our scale but also aligning our resources with profitable, high-demand market segments. As demand for natural gas and compression remains strong, this transaction allows us to deepen our operational footprint in key regions like the Permian Basin. We believe this acquisition will provide durable, profitable growth for Archrock shareholders.”
Childers also highlighted the importance of the people behind both companies, recognizing that success starts with their talented employees. “We have a successful track record of integration and are enthusiastic about welcoming the NGCS team into the Archrock family. Together, we will work to maximize uptime for our customers and continue to power a cleaner America.”
A.J. Yuncker, President and CEO of NGCS, also expressed optimism about the merger, stating, “Archrock shares our commitments to safety, operational excellence, and customer focus. NGCS and Archrock’s operations are highly complementary, and we are confident that our customers and employees will benefit from Archrock’s scale, experience, and financial strength.”
Strategic and Financial Impact of the Acquisition
The acquisition is expected to bring numerous strategic benefits to Archrock, beginning with a significant increase in its operational horsepower. Combined, Archrock and NGCS will have over 4.5 million horsepower in operating capacity, enhancing their leadership in the gas compression market. Furthermore, the acquisition will expand Archrock’s presence in the Permian Basin, where NGCS currently operates 71% of its compression horsepower. This deal is expected to increase Archrock’s compression capacity in the Permian Basin by 10%, bringing its total capacity in the region to approximately 2.5 million horsepower.
The acquisition also bolsters Archrock’s ability to meet growing demand for lower-carbon solutions. NGCS’s electric motor drive compression equipment, totaling about 78,000 horsepower, complements Archrock’s existing electric motor drive operations, pushing the company’s electric motor drive compression horsepower to approximately 815,000. This is a significant move as the energy industry increasingly turns to sustainable solutions.
Natural Gas Compression Systems’ operating area.
In addition to the operational advantages, the transaction is expected to be immediately accretive to Archrock’s earnings per share and cash available for dividends by the end of 2025. The purchase price represents an attractive transaction multiple of less than 7.0x the expected run-rate of annualized adjusted EBITDA by July 2025, exclusive of any anticipated synergies, making it a strategically sound move for Archrock’s financial future.
Funding and Closing Details
To fund the $298 million cash portion of the transaction, Archrock will utilize available capacity under its ABL credit facility. The remainder of the transaction value will be covered by issuing up to 2.312 million new Archrock common shares to NGCS’s sellers. This approach aligns with Archrock’s target leverage ratio range of between 3.0 and 3.5 times, maintaining the company’s strong financial position.
The deal has received unanimous approval from Archrock’s Board of Directors and is expected to close in the second quarter of 2025, pending customary closing conditions.
Natural Gas Compression Systems (NGCS) is known for its high-quality compression equipment and services, primarily used in the production and transportation of natural gas. With a focus on preventative maintenance and customer uptime, NGCS specializes in large horsepower compression for both gas lift and midstream applications. The company operates a fleet of gas-fired and electric motor drive compressors, which serve blue-chip customers, particularly in the Permian Basin. Founded in 2001 by six compressor mechanics, NGCS has established itself as a trusted leader in the industry.
