Headquartered in Midland, Texas, Natural Gas Services Group, Inc. sells and leases compressors used in the production of natural gas. We are a leading provider of small to medium horsepower compression equipment. We focus primarily on the non-conventional natural gas production business in the United States (such as coalbed methane, gas shales and tight gas), which, according to data from the Energy Information Administration, is the single largest and fastest growing segment of U.S. gas production.
NGS currently operates under three business segments: Gas Compressor Rental, Engineered Equipment Sales, and Service & Maintenance. We manufacture, fabricate and rent natural gas compressors that enhance the production of natural gas wells and provide maintenance services for those compressors. In addition, we sell custom fabricated natural gas compressors to meet customer specifications dictated by well pressures, production characteristics and particular applications. We also manufacture and sell flare systems for oil and gas plant and production facilities.
The vast majority of our rental operations are in non-conventional natural gas regions, which typically have lower initial reservoir pressures and faster well decline rates. These areas usually require compression to be installed sooner and with greater frequency.
We were incorporated in Colorado on December 17, 1998. Since incorporation, NGS has rapidly expanded their rental fleet with 1,771 compressors at the end of 2Q:09 double the 885 compressors the company had in the fleet at the end of 2005.
Historically, the majority of our revenue has been derived from our compressor rental business. Smaller sources of revenue include performing maintenance on compressors owned by third parties, providing third party rebuild or repair assistance to customers from one of our service facilities in Texas, Oklahoma, New Mexico or Michigan. NGS also maintains compressor parts inventory at each of our service facilities and manufactures and sells flare tip and ignition systems.
In January 2005, we acquired Screw Compression Systems, Inc., or “SCS,” which predominantly focused on the custom fabrication sales business. By acquiring SCS, we increased our fabrication facilities by over 91,000 square feet. We have primarily used this additional space for SCS’ core business of custom fabrication but have from time to time fabricated a minimal number of rental units. On June 30, 2007, we merged SCS into Natural Gas Services Group, Inc.
Natural gas compressors are used in a number of applications for the production and enhancement of gas wells and in gas transportation lines and processing plants. Compression equipment is often required to boost a well’s production to economically viable levels and enable gas to continue to flow in the pipeline to its destination.
We increased our revenue to $85.3 million in 2008 from $10.3 million in 2002, the year we completed our initial public offering. During the same period, income from operations increased to $24.6 million from $1.8 million. Our compressor rental fleet has grown from 302 compressors at the end of 2002 to 1,730 compressors at December 31, 2008.
Net income for the year ended December 31, 2008 increased 27.0% to $15.6 million ($1.28 per diluted share), as compared to $12.3 million ($1.01 per diluted share) for the year ended December 31, 2007.
At December 31, 2008, current assets were $47.0 million, which included $1.1 million of cash and $2.3 million in short-term investments. Current liabilities were $15.9 million, and long-term debt, net of current portion, was $6.2 million. Our stockholders' equity as of December 31, 2008 was $130.5 million.
We maintain our principal offices at 404 Veterans Airpark Lane, Suite 300, Midland, Texas 79705 and our telephone number is (432) 262-2700. Our website is located at http://www.ngsgi.com.
