Justin Jacobs, CEO, Natural Gas Services Group

In an interview with Invest:, Justin Jacobs, CEO of Natural Gas Services Group, discussed growth in natural gas compression, the company’s acquisition of Flatrock Compression, and rising demand tied to LNG, power generation, and AI. “It has been a period of significant growth for our industry, not just over the past year but really over the past five years,” Jacobs said.

What have been the biggest changes in the natural gas compression market over the past year, and how have they shaped the company’s strategy?

It has been a period of significant growth for our industry, not just over the past year but really over the past five years. We’ve been fortunate enough to grow faster than the industry overall.

Our business is a rental fleet of natural gas compression units, and we have more than doubled the size of that fleet over the past three years. That has created many opportunities to improve operationally while supporting that growth, and we see those opportunities continuing. Demand for our equipment is coming from both the upstream, largely driven by oil wells, and the midstream, driven by natural gas. Particularly in Texas and surrounding oil and gas basins, we expect that demand to remain strong going forward.

NGS acquired Flatrock Compression. What makes this deal important, and how does it position the company for future growth?

When I joined as CEO a little over two years ago, I laid out a strategic growth and value creation plan with four components: optimizing our existing fleet, utilizing our assets more efficiently, organic growth, and accretive M&A. The Flatrock acquisition allows us to demonstrate progress across all four.

Strategically, the transaction strengthens our business in several ways. It expands and diversifies our customer base by adding two large U.S. publicly traded companies that we previously did not serve. It also strengthens our geographic position in the Permian Basin, our largest operating area, and nearly doubles the size of our South Texas Gulf Coast business. Greater operating density allows our field service technicians to work more efficiently.

The acquisition also brings a fleet that closely matches our own, creating operational efficiencies in maintenance and fleet management. Just as importantly, Flat Rock shares our philosophy of delivering outstanding customer service and attracting the best field service technicians. Since this is ultimately a people business, that cultural alignment is extremely important.

From a financial perspective, it was a highly accretive transaction for our shareholders. To be able to accomplish all of those strategic objectives with our first acquisition is one of the many reasons I’m excited about it.

Natural gas demand is being driven by LNG exports, power generation, and AI data centers. How are these trends changing the opportunities for your business?

They are materially increasing them. Historically, our business has been primarily in the upstream segment, driven largely by shale oil wells in the Permian Basin, and we expect to continue growing there.

A relatively small portion of our business today serves the midstream, where natural gas is gathered and moved into pipelines, but that represents a significant opportunity. Growth in LNG exports, power generation, and AI is expected to require substantial additional compression equipment over the next five years. Expanding our presence in that market is a natural extension of what we already do successfully today.

How are digital tools, automation, and newer compression technologies helping NGS improve efficiency and better serve customers?

I look at technology in two ways: the technology on the units themselves and the data that comes off those units.

One of the reasons I was interested in becoming CEO was the level of proprietary technology NGS already had. We are viewed as an industry leader in technology on the units, particularly through proprietary software that automatically adjusts operating conditions to keep equipment running even when well pressures or gas composition change. On a conventional unit, those conditions could trigger a shutdown that requires a technician to travel to the site. Our technology helps prevent that.

Our customers want equipment running 24 hours a day, seven days a week. Every time a unit goes down, they lose money, so maximizing uptime is critical. Our proprietary technology has helped us achieve some of the highest run times in the industry.

The second piece is data. Our units generate a tremendous amount of operating data through dozens of sensors. We collect that information and are increasingly using AI to analyze it across the fleet, identify patterns, and detect potential problems before they occur. While the compression process itself has changed little over the decades, the technology surrounding operations and data analysis is advancing rapidly, and we are investing heavily to maintain our leadership in that area.

Looking ahead to the next five years, what are your top priorities for the company, and what will success look like for NGS?

Our top priority has been, and will remain, recruiting, training, investing in, and retaining our people, particularly our field service technicians. They are the most important people in the business and the key factor in supporting future growth.

We are focused on becoming the place where everybody in the industry wants to work. That starts with recruiting, onboarding, and providing career development opportunities. My role is to help make their jobs, which are performed in demanding and potentially dangerous conditions, as manageable as possible by giving them the support they need.

Looking ahead, we believe our industry will require a material amount of additional equipment, and we want to keep taking market share and growing faster than our competitors. We have a great team, we have achieved significant success over the past several years, and I believe we are well positioned to continue that success.

We also recently had our shareholders vote overwhelmingly to change our state of incorporation from Colorado to Texas. We are on the front end of a wave of companies making the same move. It reflects the business climate in Texas, and as a company with most of its operations in the state, we are proud to become a Texas corporation.