Archrock Enhances Capabilities with Strategic NGCS Acquisition
Archrock's Acquisition of Natural Gas Compression Systems
Archrock, Inc. (NASDAQ: AROC) has announced a strategic move to acquire Natural Gas Compression Systems, Inc. (NGCS) in a significant cash and stock transaction valued at approximately $357 million. This acquisition represents a pivotal moment for Archrock as it seeks to bolster its position as a leading provider of natural gas compression services in the energy sector.
Expanding Operational Capacity
The acquisition includes around 351,000 horsepower, which encompasses 316,000 operating horsepower and a backlog of 35,000 horsepower in contracted new equipment. This expansion aligns with Archrock’s mission to enhance its service capabilities and meet the growing demand from a diverse client base.
Focus on High Horsepower Compression
Archrock aims to strengthen its operations by focusing on large horsepower compression tools, which are essential for high-demand markets, especially for blue-chip customers. The addition of NGCS's significant portfolio supports this objective and deepens Archrock's reach within the Permian Basin and other critical regions.
Enhancing Environmental Responsibility
In today's market, the demand for sustainable energy solutions is rising. Archrock's acquisition is set to expand its electric motor drive compression capabilities, responding to customer needs for low carbon solutions. This move will not only augment the company's operational capacity but position it as an environmentally responsible player in the industry.
Immediate Financial Benefits
The financial implications of the transaction are promising. It is expected to contribute positively to Archrock's earnings per share and increase cash available for dividends per share by the end of 2025. This immediate accretion reflects Archrock’s commitment to delivering value to its shareholders.
Operational Integration and Future Outlook
According to Brad Childers, Archrock's CEO, integrating NGCS’s portfolio will enhance customer relationships and strengthen its operational footprint in key market segments. Archrock is known for its discipline in portfolio management and is optimistic about fostering durable growth following this acquisition.
Strategic Benefits Analysis
With the acquisition, Archrock anticipates several strategic advantages: an increase in total operating horsepower to over 4.5 million, enhanced capacity in the Permian Basin, and a growing presence in other oil and gas regions. Moreover, the combination will significantly strengthen Archrock's operational capabilities in electric motor drive compression equipment.
Funding and Closing Details
To finance the acquisition, Archrock plans to utilize its existing cash resources and will issue up to 2.312 million new common shares to complete the transaction. The Board of Directors has unanimously approved this acquisition, and closure is anticipated in the second quarter of 2025, subject to standard regulatory conditions.
Commitment to Safety and Excellence
Both companies emphasize safety and operational excellence as core commitments. A.J. Yuncker, CEO of NGCS, expressed confidence that the union will lead to enhanced service delivery and mutual benefits for customers and employees alike.
About Archrock and NGCS
Archrock is a premier energy infrastructure company focused on midstream natural gas compression and is committed to producing, compressing, and transporting natural gas sustainably. The acquisition of NGCS, a reputable provider known for its large horsepower compression and exemplary customer service, complements Archrock's offerings and strengthens its presence in the energy market.
Contact Information
For details about the acquisition or inquiries, please reach out to Archrock's Investor Relations Team. You can contact Megan Repine at 281-836-8360 or invest@archrock.com for more information. Media inquiries can be directed to Andrew Siegel at Joele Frank, which can be reached at 212-355-4449.
Frequently Asked Questions
What is the significance of Archrock's acquisition of NGCS?
This acquisition enhances Archrock's capacity in the natural gas compression sector and is expected to provide immediate financial benefits while expanding their operational footprint.
How will the acquisition impact Archrock's operations?
The acquisition will increase its operating horsepower and reinforce its commitment to providing environmentally responsible energy solutions through electric motor drive systems.
What are the financial expectations post-acquisition?
Archrock anticipates the transaction will be accretive to earnings per share and cash available for dividends by the end of 2025.
What strategic benefits does Archrock expect from this acquisition?
The company expects to enhance its presence in key oil and gas regions, particularly the Permian Basin, and improve its service capacity for existing customers.
When is the expected closing date for the acquisition?
The transaction is anticipated to close in the second quarter of 2025, pending customary regulatory approvals and conditions.
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