Chairman, will discuss the status of the industry and the role of the Company within the industry and offer an outlook on the balance of fiscal year 2005.

About Natural Gas Services Group, Inc. (NGS)
NGS manufactures, fabricates, sells, leases and services natural gas compressors that enhance the production of oil and gas wells. The Company also manufactures and sells flare systems and flare ignition systems for plant and production facilities.

For More Information, Contact:		Wallace Sparkman, Investor Relations
		800-580-1828
		Jim Drewitz, Investor Relations
		972-355-6070
		jdrewitz@comcast.net

Or visit the Company’s website at www.ngsgi.com

“EBITDA” reflects net income or loss before interest, taxes, depreciation and amortization. EBITDA is a measure used by analysts and investors as an indicator of operating cash flow since it excludes the impact of movements in working capital items, non-cash charges and financing costs. Therefore, EBITDA gives the investor information as to the cash generated from the operations of a business. However, EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America (“GAAP”), and should not be considered a substitute for other financial measures of performance. EBITDA as calculated by NGS may not be comparable to EBITDA as calculated and reported by other companies. The most comparable GAAP measure to EBITDA is net income. The reconciliation of EBITDA to net income is as follows:

		Three months ended June 30,								Six months ended June 30,
		2005				2004				2005				2004
EBITDA		$	3,206,961			$	1,375,890			$	6,005,516			$	2,728,620
Adjustments to reconcile EBITDA to net income:
Amortization and depreciation			(999,102	)			(582,349	)			(1,949,917	)			(1,109,034	)
Interest expense			(509,067	)			(193,943	)			(930,840	)			(374,551	)
Provision for income tax			(628,553	)			(233,843	)			(1,156,160	)			(485,541	)
Net income		$	1,070,239			$	365,755			$	1,968,599			$	759,494

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause NGS’s actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; a prolonged, substantial reduction in oil and gas prices which could cause a decline in the demand for NGS’s products and services; and new governmental safety, health and environmental regulations which could require NGS to make significant capital expenditures. The forward-looking statements included in this press release are only made as of the date of this press release, and NGS undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. A discussion of these factors is included in the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission.

Natural Gas Services Group, Inc.
Consolidated Balance Sheet
(unaudited)
June 30, 2005

ASSETS

Current Assets:
Cash and cash equivalents		$	827,612
Accounts receivable — trade, net of allowance			5,029,886
Inventory			11,564,510
Prepaid expenses			339,302
Total current assets			17,761,310
Lease equipment, net of accumulated depreciation			34,323,293
Other property, plant and equipment, net of depreciation			6,747,549
Goodwill, net of accumulated amortization			8,136,310
Intangible, net of accumulated amortization			4,141,013
Restricted cash			2,000,000
Other assets			139,225
Total Assets		$	73,248,700
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long term debt		$	7,604,883
Bank line of credit			—
Accounts payable and accrued liabilities			6,028,766
Unearned Income			567,333
Total current liabilities			14,200,982
Long term debt, less current portion			19,507,182
Subordinated notes, net of discount			4,456,777
Deferred income tax payable			4,051,660
Total liabilities			42,216,601
Common Stock			68,994
Paid in Capital			22,507,717
Retained Earnings			8,455,388
Shareholders’ Equity			31,032,099
Total Liabilities and Shareholders’ Equity		$	73,248,700

Natural Gas Services Group, Inc.
Consolidated Income Statements
(unaudited)

		Three months ended June 30,								Six months ended June 30,
		2005				2004				2005				2004
Revenue:
Sales		$	7,440,360			$	852,255			$	14,586,497			$	1,742,220
Service and maintenance income			696,133				510,120				1,159,914				933,722
Leasing income			3,894,546				2,419,690				7,325,863				4,674,474
			12,031,039				3,782,065				23,072,274				7,350,416
Cost of revenue:
Cost of sales			5,577,018				601,275				11,199,185				1,247,669
Cost of service and maintenance			513,334				355,605				803,433				691,855
Cost of leasing			1,549,352				762,051				2,757,110				1,330,460
Total Cost of Revenue			7,639,704				1,718,931				14,759,728				3,269,984
Gross Margin			4,391,335				2,063,134				8,312,546				4,080,432
Operating Cost:
Selling expense			252,230				225,221				481,921				402,610
General and administrative expense			939,708				454,966				1,843,508				943,225
Depreciation and amortization			999,102				582,349				1,949,917				1,109,034
			2,191,040				1,262,536				4,275,346				2,454,869
Operating income			2,200,295				800,598				4,037,200				1,625,563
Interest expense			(509,067	)			(193,943	)			(930,840	)			(374,551	)
Other income (expense)			7,564				(7,057	)			18,399				1,494,023
Income before income taxes			1,698,792				599,598				3,124,759				2,745,035
Provision for income tax			628,553				233,843				1,156,160				485,541
Net income			1,070,239				365,755				1,968,599				2,259,494
Preferred dividends			—				25,355				—				53,277
Net income available to common shareholders		$	1,070,239			$	340,400			$	1,968,599			$	2,206,217
Earnings per share:
Basic		$	0.16			$	0.06			$	0.29			$	0.42
Diluted		$	0.13			$	0.06			$	0.25			$	0.39
Weighted average Shares:
Basic			6,899,664				5,396,527				6,807,466				5,230,927
Diluted			8,049,091				5,611,115				7,931,735				5,598,747

Natural Gas Services Group, Inc.
Consolidated Statements of Cash Flows
(unaudited)

		Six Months				Six Months
		Ended				Ended
		June 30, 2005				June 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	1,968,598			$	2,259,495
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			1,949,917				1,109,034
Deferred taxes			1,093,660				481,116
Amortization of debt issuance costs			32,478				32,478
Gain on disposal of assets			(44,619	)			8,137
Changes in current assets and liabilities:
Trade and other receivables			(192,101	)			(494,029	)
Inventory and work in progress			(2,540,695	)			(949,688	)
Prepaid expenses and other			(151,019	)			(47,878	)
Accounts payable and accrued liabilities			1,429,223				951,771
Deferred income			(390,980	)			(194,111	)
Other assets			267,914				(19,746	)
NET CASH PROVIDED BY OPERATING ACTIVITIES			3,422,376				3,136,599
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(9,109,926	)			(5,651,754	)
Assets acquired, net of cash			(7,566,059	)			—
Proceeds from sale of property and equipment			211,034				28,000
NET CASH USED IN INVESTING ACTIVITIES			(16,464,951	)			(5,623,754	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank loans			17,285,517				3,995,177
Repayments of long term debt			(5,140,257	)			(1,533,092	)
Dividends paid on preferred stock			—				129,450
Proceeds from exercise of warrants and stock options			1,039,740				(53,277	)
NET CASH PROVIDED BY FINANCING ACTIVITIES			13,185,000				2,538,258
NET INCREASE IN CASH			142,425				51,103
CASH AT BEGINNING OF PERIOD			685,187				176,202
CASH AT END OF PERIOD		$	827,612			$	227,305
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid		$	887,094			$	374,551
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired for issuance of subordinated debt		$	3,000,000
Assets acquired for issuance of common stock		$	5,120,438