NGSG Continues Shift To Large Rental Packages

A shift toward making large-horsepower rental compressor packages led to a loss for Natural Gas Services Group Inc. (NGSG) in the fourth quarter of 2018.

The loss was US$282,000 compared to net income of US$18.7 million for the same period in 2017. For all of 2018, income was US$426,000 compared to US$19.8 million in 2017.

NGSG said fourth quarter sales dropped 19.5% while rental revenues (mostly from its core mid-horsepower fleet) rose 3.7%. Rental income was 79% of total revenue compared to 69% during the same period in 2017.

A year ago, NGSG announced it would focus its future growth on medium and large horsepower systems. It introduced a 400 hp (300 kW) package in 2015, units of 600 hp (450 kW) in 2016, and 1300 hp (970 kW) packages in 2017.

President and CEO Stephen Taylor said management was pleased with the company’s fourth quarter performance.

“Sales revenue declined by about $1 million sequentially, primarily as the result of our decision to reallocate production plant resources to higher-margin rental fabrication, reducing opportunities for sales revenue,” Taylor said. “However, our sales backlog at the end of the fourth quarter was at its highest level since the third quarter of 2017.”

The Midland, Texas-based company makes, rents, sells and maintains gas compressors and flare systems. It has fabrication plants in Midland and in Tulsa, Okla.