Midstream gas compression company Archrock Inc. (AROC) will acquire privately held Natural Gas Compression Systems Inc. (NGCS) in a $357 million cash-and-stock deal that deepens Archrock’s operations in the Permian Basin.

NGCS’ business includes approximately 351,000 hp, including 316,000 operating horsepower and a 35,000 hp backlog of contracted new equipment. About 71% of NGCS' compression horsepower operates in the Permian, which will increase Archrock’s compression capacity by 10% to approximately 2.5 million hp.

Pro forma, Archrock and NGCS will operate more than 4.5 million hp, Archrock said in a March 10 press release. The deal follows Archrock’s acquisition of compression firm Total Operations and Productions Services for $983 million, which closed in August.

The NGCS acquisition represents a transaction multiple of less than 7.0x expected run-rate of annualized July 2025 adjusted EBITDA, exclusive of any anticipated synergies, Archrock said.

"We're excited to announce our agreement to acquire NGCS, which further enhances our position as a premier provider of natural gas compression services in the United States," said Brad Childers, Archrock’s president and CEO. "With the addition of NGCS's portfolio of high-quality, large horsepower and electric compression assets, we are increasing our scale and expanding customer relationships as demand for natural gas and compression remains robust.”

Archrock said the NGCS deal also enhances its capacity to serve growing demand for lower carbon solutions. NGCS' operating electric motor drive compression equipment totals approximately 78,000 hp and is complementary to Archrock's electric motor drive compression operations. The deal will increase Archrock's electric motor drive compression horsepower to approximately 815,000 hp.

Archrock intends to fund the acquisition with $298 million in cash under its asset-based lending credit facility and issue up to 2.312 million new Archrock common shares to the sellers. The transaction’s funding approach is “consistent with Archrock's stated target leverage ratio range of between 3.0 times and 3.5 times,” the company  said.

The transaction has been unanimously approved by Archrock’s board and is expected to close in second-quarter 2025, subject to customary closing conditions.

Citi is serving as financial adviser and Latham & Watkins LLP as legal adviser to Archrock. Intrepid Partners LLC is serving as financial adviser and Honigman LLP as legal adviser to NGCS.

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