Archrock Q3 revenue, profits climb

Archrock technicians are available in multiple producing basins throughout the U.S. (map: Archrcock.)

Archrock reported its 3Q22 revenue and net income saw significant gains from those posted in the same period one year ago.

Revenue for Q3 was $213.7 million, up from $195.2 million in 3Q21. Net income reached $15.4 million, compared with $9.3 million last year. The percentage of the company’s fleet utilized in the industry rose to 89%, up from 82% one year ago.

“The improvement in our compression business accelerated in the third quarter, supported by the resilient demand for abundant, affordable and cleaner natural gas,” said Brad Childers, Archrock’s president and CEO. “For the second quarter in a row, we drove sequential operating horsepower growth of 100,000, excluding non-strategic asset sales.”

The company’s horsepower utilization increased to 90% at the end of October and is expected to climb higher, he said.

“We believe record utilization and robust backlog levels set us up to perform exceptionally well in 2023. We expect to generate higher financial returns as we continue to reprice our installed base of horsepower and work aggressively to drive cost optimization in our operations,” Childers said.

In Q3, the company sold small, non-strategic compressors totaling 124,000 hp. Since 2019, the company’s proceeds from selling non-strategic assets to nearly $250 million.

“We now have the opportunity to redeploy these proceeds for investment in large horsepower units against the backdrop of an undersupplied midstream compression market just as we are also beginning to reap the benefits of a multi-year strategic transformation to standardize and digitize our platform,” Childers said.

The company is optimistic about the progress its new ventures division has made. The recent passage of the Inflation Reduction Act of 2022 gives many of its customers additional incentives to reduce methane emissions. Reently, the company completed the successful pilot of and filed for a patent for a methane capture technology designed by its new ventures team.

The device is a solution for fugitive emissions reductions from compressor operations, including unit blowdowns and compressor packings. “This technology is complementary and value enhancing to our core contract compression services and I am excited for the team to commence our marketing efforts during the fourth quarter,” Childers said.

For Q3, revenue for the company’s contract operations segment totaled $170.5 million, up from $158.9 million one year earlier. Total operating horsepower at the end of Q3 was 3.4 million, compared with 3.2 million at the end of the 3Q21, and reflected the sale of 134,000 active horsepower as part of our ongoing fleet high–grading initiative.

For Q3, revenue for the company’s aftermarket services division totaled $43.2 million, up from $36.3 million in the third quarter of 2021, driven by higher customer demand for both parts and maintenance services.