Mr. Taylor: Natural Gas Services Group will be 11 years old in December, and we have been public since 2002, although we just moved to the NYSE a year ago. Our main business is fabricating, renting and selling gas compression equipment. We have steadily been moving the company more towards the rental model, i.e., renting compression equipment versus building and selling it because that is the more profitable and resilient piece of the business. NGS has the fourth largest compressor rental fleet in the U.S. by unit count, with almost 1,800 compressors. And we own the largest fleet that concentrates on the small to medium horsepower range, that being 50 to 500 horsepower per unit. Our product is primarily used right at the wellhead - when an operator drills a well and they need pressure-assist to get that gas moving from the well to the pipeline. Essentially, we're right at the well where very few consumers or retail buyers of natural gas know about. But we're actually the first link between the well and "civilization." Additionally and for the fifth year in a row, we were named to the Forbes list of the best 200 small companies in the U.S.
TWST: What's occurring in the gas industry today that may have an impact on your business?
Mr. Taylor: Currently, it's a difficult time in the industry. There's an oversupply of gas in the market right now and concomitantly, lower demand brought on by the current recession. Our excess supply has actually been the fruits of the labor of oil and gas operators who have learned how to drill and develop unconventional gas reservoirs. They have figured out the technology and geology, and have started to identify a number of these unconventional gas reservoirs, and have been very successful in extracting large quantities of gas from them. We focus on providing gas compression equipment for unconventional gas plays, which are now the largest sources of gas supply in the U.S. and drives most of the industry activity. With our emphasis on wellhead-type compression equipment, the fastest-growing piece of the market, we have been at the forefront of exploiting these unconventional markets.
Tickers included in this excerpt: NGS
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