About Archrock

Archrock, Inc. operates as an energy infrastructure company. The company primarily focuses on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. The company is the leading provider of natural gas compression services to customers in the energy industry throughout the U.S., in terms of total compression fleet horsepower, and a leading supplier of aftermarket services to customers that own compression equipment in the U.S. The company’s business supports a must–run service that is essential to the production, processing, transportation and storage of natural gas. The company operates in two business segments: Contract Operations – The company’s contract operations business is consisted of its owned fleet of natural gas compression equipment that the company uses to provide operations services to its customers. Aftermarket Services – The company’s aftermarket services business provides a full range of services to support the compression needs of the company’s customers that own compression equipment, including operations, maintenance, overhaul and reconfiguration services and sales of parts and components. The company’s service offerings focus primarily on midstream applications, with 75% of the company’s operating fleet being used in the gathering and processing cycle stages. The remaining 25% of the company’s operating fleet is used in gas lift applications. Contract Operations segment Compression Services The company provides comprehensive contract operations services including the personnel, equipment, tools, materials and supplies to meet the company’s customers’ natural gas compression needs. Based on the operating specifications at the customer location and each customer’s unique needs, these services include designing, sourcing, owning, installing, operating, servicing, repairing and maintaining the equipment. The company works closely with the company’s customers’ field service personnel so that compression services can be adjusted to efficiently match changing characteristics of the reservoir and the natural gas produced and may repackage or reconfigure the company’s existing fleet to adapt to its customers’ compression needs. Compression Fleet The compressors that the company owns and uses to provide contract operations services are predominantly large horsepower, which the company defines as greater than 1,000 horsepower per unit, and primarily consists of reciprocating compressors driven by natural gas–powered engines. Additionally, the company provides a small but growing number of electric motor–driven compressors. The company’s fleet is largely standardized around major components and key suppliers, which minimizes the company’s fleet operating costs and maintenance capital requirements, reduces inventory costs, facilitates low–cost compressor resizing and improves technical proficiency in the company’s maintenance and overhaul operations, which in turn allows the company to achieve higher uptime while maintaining lower operating costs. All of the company’s compressors are designed to automatically shut down if operating conditions deviate from a pre–determined range and substantially all are also equipped with telematic devices that enable the company to remotely monitor the units. The company maintains field service locations from which the company services and overhauls its fleet. The company’s equipment undergoes routine and preventive maintenance in accordance with the company’s established maintenance schedules, standards and procedures, which the company updates as technology changes and as the company’s operations group develops new techniques and procedures to better service the company’s equipment. In the company’s experience, these maintenance practices maximize equipment life and unit availability, minimize emissions and avoidable downtime while reducing the overall maintenance expenditures over the equipment life. As of December 31, 2023, the average age of the company’s operating fleet was 11 years. General Terms of the company’s Contract Operations Service Agreements The company typically enters into a master service agreement with each customer that sets forth the general terms and conditions of the company’s services, and then enter into a separate supplemental service agreement for each distinct site at which the company provides contract operations services. The following describes select material terms common to the company’s standard contract operations service agreements. Term and Termination. The company’s customers typically contract for its contract operations services on a site–by–site basis that is generally reduced if the company fails to operate in accordance with the contract requirements. Following the initial minimum term, which generally ranges from 12 to 48 months, contract operations services generally continue on a month–to–month basis until terminated by either party with 30 days’ advance notice. Service Standards and Specifications. The company provides contract operations services according to the particular specifications of each job, as set forth in the applicable contract. These are typically turn–key service contracts under which the company supplies all services and support and use the company’s compression equipment to provide the contract operations services necessary for a particular application. In certain circumstances, if the availability of the company’s services does not meet certain percentages specified in the company’s contracts, its customers are generally entitled, upon request, to specified credits against the company’s service fees. Title and Risk of Loss. The company owns and retains title to or have an exclusive possessory interest in all compression equipment used to provide contract operations services and the company generally bears risk of loss for such equipment to the extent the loss is not caused by gas conditions, the company’s customers’ acts or omissions or the failure or collapse of the customer’s over–water job site upon which the company provides the contract operations services. Insurance. Typically, both the company and its customers are required to carry general liability, workers’ compensation, employer’s liability, automobile and excess liability insurance. The company’s insurance coverage includes property damage, general liability and commercial automobile liability and other coverage is appropriate. Additionally, the company is substantially self-insured for workers’ compensation and employee group health claims in view of the relatively high per-incident deductibles the company absorbs under its insurance arrangements for these risks. The company is also self-insured for property damage to the company’s offshore assets. Aftermarket Services segment The company’s aftermarket services business sells parts and components and provides operations, major and routine maintenance, overhaul and reconfiguration services to customers who own compression equipment. The company is particularly well–qualified to provide these services because its highly experienced operating personnel have access to the full range of the company’s compression services and facilities. In addition, the company’s aftermarket services business provides opportunities to cross–sell the company’s contract operations services. The company has strong relationships with a deep base of midstream companies and natural gas and crude oil producers. The company’s contract operations revenue base is sourced from approximately 290 customers operating throughout all major U.S. natural gas and crude oil producing regions. The company operates in substantially all major natural gas and crude oil producing regions in the U.S. The company has a meaningful presence in associated gas plays, including the Permian and Eagle Ford shales which, combined, account for approximately two-thirds of the company’s operating horsepower. Business Strategies The company’s key strategies are to capitalize on the long–term fundamentals for the U.S. natural gas compression industry; focus on increasing productivity and optimizing the company’s processes; and continue to invest in strategically growing the company’s business both organically and through third–party acquisitions. Sales and Marketing The company’s marketing and client service functions are coordinated and performed by the company’s sales and field service personnel. Salespeople, application engineers and field service personnel qualify, analyze and scope new compression applications as well as regularly visit the company’s customers to ensure customer satisfaction, determine customer needs as to services being provided and ascertain potential future compression services requirements. This ongoing communication allows the company to respond swiftly to customer requests. Customers The company’s customer base primarily consists of companies engaged in all aspects of the oil and natural gas industry, including large integrated and independent oil and natural gas processors, gatherers and transporters. Governmental Regulation Environmental Regulation The primary U.S. federal environmental laws to which the company’s operations are subject include the CAA and regulations thereunder, which regulate air emissions; the CWA and regulations thereunder, which regulate the discharge of pollutants in industrial wastewater and storm water runoff; the RCRA and regulations thereunder, which regulate the management and disposal of hazardous and non–hazardous solid wastes; and the CERCLA and regulations thereunder, known more commonly as ‘Superfund,’ which impose liability for the remediation of releases of hazardous substances in the environment. The company is also subject to regulation under the OSHA and regulations thereunder, which regulate the protection of the safety and health of workers. During the course of the company’s operations, the company generates wastes (including, but not limited to, used oil, antifreeze, used oil filters, sludges, paints, solvents and abrasive blasting materials) in quantities regulated under RCRA. The company is subject to the requirements of the OSHA and comparable state statutes. These laws and the implementing regulations strictly govern the protection of the safety and health of employees. The OSHA’s hazard communication standard, the EPA’s community right–to–know regulations under Title III of CERCLA and similar state statutes require that the company organizes and/or discloses information about hazardous materials used or produced in the company’s operations. History The company was founded in 1990. It was incorporated in 2007. The company was formerly known as Exterran Holdings, Inc. and changed its name to Archrock, Inc. in 2015.