Natural Gas Services Group recently adjusted the company’s compressor fleet strategy. Currently, the modified structure of the strategy aims to enhance the fleet strength, with the large horsepower pumps gaining popularity as the company’s preferred choice. With the growing stability of the natural gas prices and production settling on a firm foundation for the remaining year, the scenario is more promising and assuring than the outlook a couple of quarters back.
However, the concerns circling the pricing pose a persisting challenge, which is anticipated to leave no choice for the management than to keep the pricing low. It will propose a potential growth for the higher horsepower fleet. Natural Gas Services also has an affirmative balance sheet sustaining its position among its peers. The company has had no debt for a long time now and has recently extended its liquidity profile.
For the past few years, Natural Gas Services Group has been lucky to witness an optimistic surge in demand in the 400-600 HP segment. The company added 45 new fleet units just last year, with 74% of them classified as large horsepower.
Altogether, the company’s 43% of the total utilized horsepower was classified as large horsepower types of equipment on March 31, 2021. Due to the systematic and significant recovery of crude oil and natural gas prices in 2021, associated pricing issues are now more minor of a concern for Natural Gas Services considering the current dynamics. After the company initiated rapid retirement of nearly 10% of its rental fleet from FY2019 to FY2020, Natural Gas Services integrated the fleet size in Q1.