Natural Gas Services Group (NGS) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of Flatrock Compression strengthens presence and operational scale in the Permian Basin and Eagle Ford, aligning with a disciplined growth strategy and operational excellence.

• Diversifies customer base, reducing concentration and adding multiple large public E&P customers, expanding growth opportunities.

• Expands large horsepower and electric compression fleet, accelerating growth in electric compression and enhancing service capabilities.

• Adds experienced management and field operators, supporting operational talent and seamless integration.

• Acquisition driven by capabilities and competitive positioning, not primarily by cost synergies.

Financial terms and conditions

• Total purchase price of $120 million: $110 million in cash and $10 million in common stock.

• Acquisition completed at 6.2x annualized Adjusted EBITDA (pre-synergies), below current trading multiples.

• Financed through an expanded credit facility, increasing commitments from $400 million to $500 million, with a $100 million accordion feature.

• Pro forma leverage expected at approximately 3x adjusted EBITDA, maintaining substantial liquidity and balance sheet flexibility.

Synergies and expected cost savings

• Principal synergy opportunities include operating density, route efficiency, procurement, inventory utilization, insurance, administrative overlap, technology, and commercial growth.

• Operational synergies expected from common equipment types, distributor discounts, and complementary fleet components.

• Immediate and material accretion to key financial metrics and shareholder value, with multiple arbitrage of +20% for shareholders.

• No specific synergy target provided; transaction is compelling on a standalone basis.