NGS acquires Flatrock Compression for $120M, expands credit facility to $500M

The company also filed this under Item 2.03, which means it is reporting the arrangement as a direct financial obligation. The Item 2.03 text refers back to the Item 1.01 entry for the terms rather than restating them.

NGS acquired 100% of Flatrock Compression Holdings LLC for total consideration comprising $110 million in cash (subject to customary adjustments), 241,803 shares of NGS common stock, and contingent future royalty payments based on revenues from certain Flatrock products and services. The transaction closed on June 12, 2026. $2.25 million of the cash consideration was placed in escrow to secure post-closing purchase price adjustments.

NGS obtained representation and warranty insurance to cover potential breaches of seller representations in the purchase agreement. The sellers' representations and warranties do not survive closing, so except for actual fraud, NGS's only recourse for breaches is through this insurance policy rather than claims against the sellers directly.

The company disclosed completion of an acquisition or disposition of assets under Item 2.01. However, the filing provides no substantive details in this section, instead incorporating information by reference from Item 1.01, which is not included in the provided text. Without access to Item 1.01, the nature, size, counterparty, and financial terms of the transaction cannot be determined.

Natural Gas Services Group acquired Flatrock Compression Holdings for $120 million total consideration, consisting of $110 million in cash and $10 million in NGS common stock. The acquisition was priced at approximately 6.2x Flatrock's last quarter annualized Adjusted EBITDA (pre-synergies), adding approximately 60,000 horsepower of compression units, with roughly 80% of the horsepower located in the Permian Basin and approximately 20% of the fleet consisting of electric units.

The acquisition adds 52,000 horsepower of rented large-horsepower units to NGS's existing 440,000 HP, creating a combined 492,000 HP large-horsepower fleet representing 75% of total rented horsepower. Flatrock's fleet is approximately 20% electric units compared to NGS's 7%, accelerating NGS's positioning in the electric compression segment. The transaction increases horsepower density in the Midland Basin and creates critical mass in the Eagle Ford Basin.

The acquisition was completed at approximately 6.2x Flatrock's last quarter annualized Adjusted EBITDA (pre-synergies) compared to NGS trading at approximately 7.8x, representing immediate multiple arbitrage of approximately 20%. Management expects the transaction to be meaningfully accretive to earnings per share and cash flow.

The acquisition deepens NGS's presence in the Permian Basin and Eagle Ford, diversifies its customer base by adding multiple new large customers, and significantly expands its large horsepower and electric motor driven compression capabilities. Flatrock's fleet consists of a significant majority of large horsepower units and electric motor driven units, complementing NGS's existing fleet.

The company issued equity securities to certain sellers without registering them with the SEC, using the private placement exemption under Section 4(a)(2) of the Securities Act. This exemption applies to transactions not involving a public offering. The filing references Item 1.01 for additional details about the transaction, but those details are not included in the provided text.

Natural Gas Services Group completed its previously announced acquisition of Flatrock on June 15, 2026. The company issued a press release and investor presentation materials to disclose the transaction closing. The filing does not provide financial terms or operational details of the acquisition.