We are a leading operator of contract compression infrastructure in the United States (“U.S.”). Our compression operations are critical to our customers’ ability to reliably produce natural gas and oil to support growing global energy demand. We are a market leader in the Permian Basin, which is the largest producing natural gas and oil basin in the U.S. We operate our large horsepower compression units under stable, fixed-revenue contracts with blue-chip upstream and midstream customers. Our compression assets have long useful lives consistent with the expected production lives of the key regions where we operate. We believe our partnership-focused business model positions us as the preferred contract compression operator for our customers and creates long-standing relationships. We strategically invest in the training, development, and retention of our highly skilled and dedicated employees and believe their expertise and commitment to excellence enhances and differentiates our business model. Furthermore, we maintain an intense focus on being one of the most sustainable and responsible operators of contract compression infrastructure. Eighty-four percent of our compression assets are strategically deployed in the Permian Basin and Eagle Ford Shale, which the EIA expects to maintain significant production volumes through at least 2050. We believe these two regions have the largest and lowest-cost unconventional resources in the U.S. Additionally, there are significant liquefied natural gas (“LNG”) export projects in development, and overall LNG capacity is expected to meaningfully grow over the next decade. We expect this to translate into Permian Basin and Eagle Ford Shale natural gas production growth, requiring substantial additional compression horsepower. We believe these regions will play an increasingly important role in global energy security as the world continues to require reliable and growing natural gas and oil production to support increasing global energy demand. We are a leader in large horsepower compression, with approximately 81% of our approximately 3.2 million horsepower fleet comprised of compression units larger than 1,000 horsepower. Due to lower initial reservoir pressures, production from unconventional resources, such as the Permian Basin and Eagle Ford Shale, requires significantly more compression horsepower than from conventional production, which supports our large horsepower strategy. Additionally, increased demand for large horsepower infrastructure is driven by multi-well pad drilling, overall well density, and large-scale gathering systems. We believe large horsepower compression units serve more stable applications, receive longer initial contracts, are more likely to be renewed, and produce higher margins, ultimately generating recurring cash flow and return on invested capital. We believe the quality of our relationships with blue-chip customers, the reliability of our compression operations and the structure of our contracts produce stable, recurring cash flow. We derive substantially all of our revenues from fixed-revenue contracts. Approximately 38% and 39% of our total revenues come from our four largest customers for the three months ended March 31, 2023 and the year ended December 31, 2022, respectively, which customers are all S&P 500 constituents and investment grade rated upstream and midstream companies in the Permian Basin. Our partnership-focused business model provides best-in-class reliability, which we believe is critical to securing and maintaining long-term relationships with our customers. Our assets and supporting operations have an industry-leading historical average mechanical availability (which measures the percentage of time in a given period that compression operations are being provided or are capable of being provided) of over 99.5% since inception. The strength of our customer relationships and contract structures, combined with the reliability and critical nature of our assets, have resulted in a five-year 99% average fleet utilization (which measures the revenue-generating horsepower divided by our total fleet horsepower). --- Countries around the world are moving toward a lower carbon future while providing secure low-cost sources of energy for their citizens. Recent world events have resulted in renewed attention on environmentally responsible and secure energy production provided by the U.S., and we are committed to continuing to play a meaningful role in our industry. We are focused on being the most resilient and sustainable enterprise, and we have ambitious sustainability goals. We will continue to innovate processes and technologies to assist our customers in meeting their emission reduction goals, while striving to provide a safe, inclusive and supportive environment for our employees and the communities where we operate. Finally, we intend to do business with integrity and ethics and maintain a corporate governance structure that includes appropriate oversight and transparency in all aspects of our operations. Our principal executive offices are located at 15320 Highway 105 W, Suite 210, Montgomery, Texas.
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Analogies for Kodiak Gas Services (KGS):
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- Contract Natural Gas Compression Services: Kodiak Gas Services provides and operates natural gas compression equipment under long-term contracts for energy producers and midstream customers.
- Compression Equipment Sales: Kodiak Gas Services manufactures and sells natural gas compression units to customers who prefer to own and operate their own equipment.
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Kodiak Gas Services (KGS) primarily sells its natural gas compression services and technology to other companies within the energy industry, rather than directly to individuals.
According to Kodiak Gas Services' Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission, no single customer accounted for 10% or more of the company's consolidated revenues for the years ended December 31, 2023, 2022, and 2021. This indicates a diversified customer base, and as such, no individually "major customers" (defined as accounting for 10% or more of revenue) are disclosed by name.
Kodiak Gas Services' customer base generally consists of the following categories of companies:
- Oil and gas exploration and production (E&P) companies
- Midstream companies (involved in the gathering, processing, and transportation of oil and gas)
- Other natural gas infrastructure companies
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The major suppliers for Kodiak Gas Services are:
- Caterpillar Inc. (CAT)
- Ariel Corporation
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Robert "Mickey" McKee, President and Chief Executive Officer
Robert "Mickey" McKee formed the Kodiak group of companies in 2010 and has served as President since formation and Chief Executive Officer since 2019. He has 22 years of experience in natural gas compression operations. Prior to founding Kodiak, Mr. McKee was the Senior Vice President of Sales and Engineering for CDM Resource Management, LLC from 2003 to 2010.
John B. Griggs, Executive Vice President and Chief Financial Officer
John B. Griggs joined Kodiak in 2023. He previously held CFO roles at Circulus Holdings (2021-2023), Conquest Completion Services (2018-2021), and Rubicon Oilfield International (2015-2018). From 2011 through 2014, Mr. Griggs was a Managing Director at CSL Capital Management, an energy private equity firm.
Chad Lenamon, Executive Vice President and Chief Operations Officer
Chad Lenamon joined Kodiak in 2019. His 25-year career includes various operations, engineering, fleet management, and supply chain roles, such as President of CDM Resource Management, LLC and Pegasus Optimization Managers, LLC.
Steven L. Green, Executive Vice President and Chief Commercial Officer
Steven L. Green joined Kodiak in 2025. He has over 18 years of experience in midstream oil and gas operations. Prior to Kodiak, he founded and served as the Chief Executive Officer of Piñon Midstream, LLC, a private equity-backed company, from 2020 to 2024.
Jason Stewart, Executive Vice President, Corporate Development and Treasurer
Jason Stewart has served as Executive Vice President of Corporate Development since 2016 and was appointed Treasurer in 2023. He previously held senior origination and underwriting roles at PNC Business Credit, SunTrust Robinson Humphrey, and CIT Energy, and served as the Chief Financial Officer of Enerven Compression.
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The key risks to Kodiak Gas Services (KGS) include:
- EQT Corp's Ownership and Potential Share Unloading: KGS's largest shareholder, EQT Corp., has been steadily liquidating its position over the past 18 months, which places significant downward pressure on the stock as the public float expands. EQT's remaining 35% ownership stake poses a potential risk for further share unloading, which could continue to pressure the stock in the near term.
- High Debt Levels and Financial Health: Kodiak Gas Services carries a substantial amount of debt, with its total debt outstanding at $2.6 billion as of June 30, 2025. The company's debt-to-equity ratio of 2.14 suggests a high level of leverage. An Altman Z-Score of 1.12 places the company in a distress zone, implying a possibility of financial distress. Furthermore, the dividend payout ratio of 1.16 suggests that the dividend may not be sustainable.
- Market Volatility and Regulatory/Climate-related Risks: KGS operates in an industry sensitive to economic fluctuations, commodity price volatility for natural gas and oil, and geopolitical tensions. A long-term reduction in demand for, or production of, natural gas or oil could lead to a decrease in KGS's revenues. The company also faces a complex regulatory landscape, including compliance with environmental laws, tax legislation, and potential new regulations related to greenhouse gas (GHG) emissions. Changes in these regulations could result in increased operating expenses and capital costs, additional operating restrictions, or reduced demand for its services.
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Accelerating Energy Transition and Decarbonization Efforts: The global push towards reducing reliance on fossil fuels, driven by climate change concerns, government policies (e.g., methane regulations, carbon pricing), and increasing investment in renewable energy sources, poses a clear emerging threat. As natural gas demand potentially flattens or declines in the long term, or as the regulatory burden on gas production/transportation increases, the need for Kodiak Gas Services' compression services could diminish. This represents a fundamental long-term challenge to the growth and sustainability of their core market, despite natural gas often being viewed as a "bridge fuel."
Electrification of Natural Gas Compression and Emergence of Alternative Technologies: There is a growing trend within the oil and gas industry towards electrifying operational equipment, including compressors, to reduce emissions, improve operational efficiency, and lower fuel costs. Kodiak Gas Services' current fleet predominantly consists of natural gas-powered compression units. A rapid shift in customer preference or regulatory requirements towards electric-driven compression or other alternative technologies could render parts of their existing asset base less competitive or obsolete, requiring significant capital expenditure for fleet modernization or conversion. This directly threatens their market share if competitors are faster to adopt or offer these solutions.
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Kodiak Gas Services (KGS) primarily operates within the natural gas contract compression services market, providing critical infrastructure for the production, gathering, processing, and transportation of natural gas and oil. The company's main offerings include contract compression services, equipment leasing and sales, and maintenance and support services. KGS is a significant player in the United States, particularly in major producing basins like the Permian Basin.
The addressable market for Kodiak Gas Services can be understood through the broader natural gas compressor market and the more specific contract compression services market.
Natural Gas Compressor Market
The global natural gas compressor market was valued at approximately USD 5.2 billion in 2024 and is projected to reach USD 7.8 billion by 2034, growing at a CAGR of 2.3% from 2025 to 2033. Other reports indicate the global market size was USD 7.8 billion in 2025, with a forecast to reach USD 11.2 billion by 2034, expanding at a CAGR of about 4.1% during that period. Another source stated the global market size for natural gas compressors was USD 5.5218 billion in 2025, expanding at a CAGR of 5% from 2025 to 2033.
North America is a leading region in the natural gas compressor market, accounting for approximately 40% of the market share, and is expected to dominate due to extensive shale gas production and significant investments in natural gas infrastructure. In 2025, North America's natural gas compressor market size was estimated at USD 2.0431 billion, representing over 37% of the global revenue, and is projected to grow at a CAGR of 2.8% from 2025 to 2033. The United States is expected to be the largest market for compressors in North America due to increasing energy demand and growth in natural gas for power generation.
Contract Compression Services Market
The broader compression services market, which includes contract compression, is projected to grow at a CAGR of 5.2% from 2023 to 2030, reaching an estimated value of $6 billion by 2030. This market growth is driven by sustained demand for compression services, the expansion of LNG exports, and strategic contracts.
In summary, the addressable markets for Kodiak Gas Services' main products and services are substantial and show continued growth, particularly in North America.
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Kodiak Gas Services (KGS) is expected to experience several key drivers of future revenue growth over the next two to three years:
- Increased Demand for Large Horsepower Compression in the U.S.: The company anticipates sustained strong demand for its large horsepower compression services, particularly in the Permian Basin. This is attributed to the ongoing growth in natural gas production, increasing gas-to-oil ratios in the region, and the development of new natural gas takeaway pipeline capacity expected to come online by 2026.
- Repricing and New Units at Favorable Market Rates: Kodiak Gas Services is actively recontracting its existing compression fleet at higher rates and deploying new large horsepower units at leading-edge market prices. This strategy is contributing to both revenue expansion and improved margins within its Contract Services segment.
- Fleet Expansion and Enhanced Utilization: The company is focused on strategically expanding its fleet by adding new large horsepower units and optimizing the deployment of existing equipment, including putting idle assets back to work. These efforts are leading to higher fleet utilization rates, especially for core large horsepower assets, which are operating near full capacity.
- Strategic Focus on the U.S. Market: Kodiak has strategically exited its international operations to concentrate solely on the U.S. market. This move aims to achieve higher returns and reduce operational risks by focusing on what the company considers a more stable and lucrative environment for contract compression services.
- Operational Efficiency and Technology Investments: Investments in technology, such as the successful implementation of a new ERP system, are expected to streamline operations, improve efficiency, and enhance fleet uptime and reliability. While not a direct revenue driver, these improvements can indirectly support revenue growth by enabling Kodiak to provide superior service, maintain high operational availability, and potentially take on more contracts.
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Kodiak Gas Services (KGS) has made several capital allocation decisions over the last 3-5 years, focusing on share repurchases, share issuances, and capital expenditures.
Share Repurchases
- In November 2024, Kodiak Gas Services' Board of Directors approved a share repurchase program authorizing the purchase of up to $50 million of the company's common stock, set to expire on December 31, 2025.
- In May 2025, concurrently with a sale by EQT, the company repurchased approximately 278,000 shares of its common stock from EQT in a private transaction for approximately $10 million.
- In August 2025, Kodiak repurchased 1,508,750 shares of its common stock for $50 million from Frontier TopCo Partnership, L.P., an affiliate of EQT. Following this repurchase, approximately $65 million remained available under the share repurchase program.
- In the second quarter of 2025, the Board of Directors approved a $100 million increase to its share repurchase program, extending its expiration date to December 31, 2026. This brought the total amount available for repurchases to $115 million, with approximately 2.0 million shares repurchased for an aggregate of $60.0 million by that time.
Share Issuance
- In July 2023, Kodiak Gas Services completed its Initial Public Offering (IPO), selling 16,000,000 shares of common stock.
- As of October 30, 2025, Kodiak Gas Services had 86,683,860 shares of common stock outstanding.
Outbound Investments
- In the third quarter of 2025, Kodiak Gas Services strategically exited its international operations, including the divestment of its Mexico business, resulting in a $33.3 million loss on disposal.
- The company also divested approximately 26,000 operating horsepower of non-strategic units during the third quarter of 2025.
Capital Expenditures
- Kodiak Gas Services reported capital expenditures of $259.35 million in 2021, $219.80 million in 2022, $336.96 million in 2023, and $319.94 million in 2024.
- In the third quarter of 2025, growth capital expenditures were fully funded by discretionary cash flow. Maintenance capital expenditures for the same quarter were approximately $20 million and are trending towards the lower end of the full-year guidance.
- The primary focus of capital expenditures includes the deployment of new, large horsepower compression units, with 59,550 horsepower deployed in Q3 2025 and 31,800 horsepower in Q2 2025, along with investments in technology to enhance fleet uptime and reliability. Capital spending for 2026 is effectively fully contracted.
