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What changed in Archrock, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Archrock, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+333 added−290 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-25)

Top changes in Archrock, Inc.'s 2025 10-K

333 paragraphs added · 290 removed · 246 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

69 edited+16 added−12 removed101 unchanged
Biggest changeThe executive order also established an Interagency Working Group on the Social Cost of Greenhouse Gases, which is called on to, among other things, capture the full costs of GHG emissions, including the “social cost of carbon,” “social cost of nitrous oxide” and “social cost of methane,” which are “the monetized damages associated with incremental increases in greenhouse gas emissions,” including “changes in net agricultural productivity, human health, property damage from increased flood risk, and the value of ecosystem services.” The former administration adopted an interim social cost of carbon of $51 per ton in February 2021, but in recent reports the EPA has referenced a figure as high as $2,400 per ton of methane effective in 2030.
Biggest changeThe executive order also established an Interagency Working Group on the Social Cost of Greenhouse Gases, which is called on to, among other things, capture the full costs of GHG emissions, including the “social cost of carbon,” 16 Table of Contents ​ “social cost of nitrous oxide” and “social cost of methane,” which are “the monetized damages associated with incremental increases in greenhouse gas emissions,” including “changes in net agricultural productivity, human health, property damage from increased flood risk, and the value of ecosystem services.” In early 2025, however, the new administration disbanded the Working Group and withdrew all of its published guidance, ordering EPA to review whether and how to use the social cost of carbon in federal permitting and regulatory decisions and directing the agencies in the meantime to follow OMB regulatory analysis guidance from 2003 that is virtually silent on climate.
Following the initial minimum term, which generally ranges from 12 to 36 months, or up to 60 months for the largest horsepower units in our fleet, contract operations services generally continue on a month–to–month basis until terminated by either party with 30 days’ advance notice. Fees and Expenses.
Following the initial minimum term, which generally ranges from 12 to 36 months, or generally up to 60 months for the largest horsepower units in our fleet, contract operations services generally continue on a month–to–month basis until terminated by either party with 30 days’ advance notice. Fees and Expenses.
On April 10, 2024, BoLM published a separate final rule, known as the “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule, to address methane emissions from oil and gas activities on public lands, which became effective on June 10, 2024. The rule is currently stayed pending litigation in North Dakota, Texas, Montana, Wyoming, and Utah.
In April 2024, BoLM published a separate final rule, known as the “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule, to address methane emissions from oil and gas activities on public lands, which became effective on June 10, 2024. The rule is currently stayed pending litigation in North Dakota, Texas, Montana, Wyoming, and Utah.
Fluctuations in energy prices can affect the levels of expenditures by our customers, production volumes and ultimately, demand for our products and services, however, we believe our contract operations business is typically less impacted by commodity prices for the following reasons: • fee–based contracts minimize our direct commodity price exposure; • the natural gas we use as fuel for our compression packages is supplied by our customers, further reducing our direct exposure to commodity price risk; • compression services are a necessary part of midstream energy infrastructure that facilitate the transportation of natural gas through gathering systems; • our contract operations business is tied primarily to oil and natural gas production, transportation and consumption, which are generally less cyclical in nature than exploration and new well drilling and completion activities; • the need for compression services and equipment has grown over time due to the increased production of natural gas, the natural pressure decline of natural gas–producing basins and the increased percentage of natural gas production from unconventional sources; and • our compression packages operate at a customer location for an average of approximately four years, during which time our customers are generally required to pay a fixed monthly fee for our contract operations services or a reduced monthly fee during periods of limited or disrupted natural gas flows.
Fluctuations in energy prices can affect the levels of expenditures by our customers, production volumes and ultimately, demand for our products and services; however, we believe our contract operations business is typically less impacted by commodity prices for the following reasons: • fee–based contracts minimize our direct commodity price exposure; • the natural gas we use as fuel for our compression packages is supplied by our customers, further reducing our direct exposure to commodity price risk; • compression services are a necessary part of midstream energy infrastructure that facilitate the transportation of natural gas through gathering systems; • our contract operations business is tied primarily to oil and natural gas production, transportation and consumption, which are generally less cyclical in nature than exploration and new well drilling and completion activities; • the need for compression services and equipment has grown over time due to the increased production of natural gas, the natural pressure decline of natural gas–producing basins and the increased percentage of natural gas production from unconventional sources; and • our compression packages operate at a customer location for an average of approximately six years, during which time our customers are generally required to pay a fixed monthly fee for our contract operations services or a reduced monthly fee during periods of limited or disrupted natural gas flows.
Just as we cannot fully anticipate the impact of the methane rules discussed above, we also cannot predict whether potential future re-entry into, or pending withdrawal from, the Paris Agreement or other international pledges will result in any particular new federal regulatory requirements or whether such requirements will cause us to incur material costs.
Just as we cannot fully anticipate the impact of the methane rules discussed above, we also cannot predict whether the withdrawal from or potential future re-entry into the Paris Agreement or other international pledges will result in any particular new federal regulatory requirements or whether such requirements will cause us to incur material costs.
However, the trend in environmental regulation has been to place more restrictions on activities that may affect the environment, and thus, any changes in these laws and regulations that result in more stringent and costly waste handling, storage, transport, disposal, emission or remediation requirements could have a material adverse effect on our results of operations and financial position. 12 Table of Contents ​ The primary U.S. federal environmental laws to which our 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.
However, the trend in environmental regulation has been to place more restrictions on activities that may affect the environment, and thus, any changes in these laws and regulations that result in more stringent and costly waste handling, storage, transport, disposal, emission or remediation requirements could have a material adverse effect on our results of operations and financial position. 13 Table of Contents ​ The primary U.S. federal environmental laws to which our 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.
Our fleet is largely standardized around major components and key suppliers, which minimizes our fleet operating costs and maintenance capital requirements, reduces inventory costs, facilitates low–cost compressor resizing and improves technical proficiency in our maintenance and overhaul operations, which in turn allows us to achieve higher uptime while maintaining lower operating costs. 7 Table of Contents ​ All of our 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 us to remotely monitor the units.
Our fleet is largely standardized around major components and key suppliers, which minimizes our fleet operating costs and maintenance capital requirements, reduces inventory costs, facilitates low–cost compressor resizing and improves technical proficiency in our maintenance and overhaul operations, which in turn allows us to achieve higher uptime while maintaining lower operating costs. 8 Table of Contents ​ All of our 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 us to remotely monitor the units.
Nevertheless, several states and geographic regions in the U.S. have adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and commitments to contribute to meeting the goals of the Paris Agreement.
Nevertheless, several states and geographic regions in the U.S. have adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and commitments that contribute to meeting the goals of the Paris Agreement.
In an executive order issued on January 20, 2021, the former administration asked the heads of all executive departments and agencies to review and take action to address any federal regulations, orders, guidance documents, policies and any similar agency actions promulgated during the prior administration that may be inconsistent with or present obstacles to the administration’s stated goals of protecting public health and the environment, and conserving national monuments and refuges.
In an executive order issued in January 2021, the former administration asked the heads of all executive departments and agencies to review and take action to address any federal regulations, orders, guidance documents, policies and any similar agency actions promulgated during the prior administration that may be inconsistent with or present obstacles to the administration’s stated goals of protecting public health and the environment, and conserving national monuments and refuges.
We expect this will increase the number of units a field service technician can oversee and reduce vehicle miles traveled and fuel consumption, thereby also reducing emissions. 10 Table of Contents ​ In addition, our primary focus is on large horsepower equipment as we aim to continue to capitalize on the trends that have been driving, and that we believe will continue to drive the demand for these units.
We expect this will increase the number of units a field service technician can oversee and reduce vehicle miles traveled and fuel consumption, thereby also reducing emissions. 11 Table of Contents ​ In addition, our primary focus is on large horsepower equipment as we aim to continue to capitalize on the trends that have been driving, and that we believe will continue to drive the demand for these units.
We own and retain title to or have an exclusive possessory interest in all compression equipment used to provide contract operations services and we generally bear risk of loss for such equipment to the extent the loss is not caused by gas conditions, our customers’ acts or omissions or the failure or collapse of the customer’s over–water job site upon which we provide the contract operations services. 8 Table of Contents ​ Insurance.
We own and retain title to or have an exclusive possessory interest in all compression equipment used to provide contract operations services and we generally bear risk of loss for such equipment to the extent the loss is not caused by gas conditions, our customers’ acts or omissions or the failure or collapse of the customer’s over–water job site upon which we provide the contract operations services. 9 Table of Contents ​ Insurance.
Any such litigation targeting our customers could negatively impact their operation and, in turn, decrease demand for our operations, which could have an adverse impact on our financial condition.
Any such litigation targeting our customers could negatively impact their operations and, in turn, decrease demand for our operations, which could have an adverse impact on our financial condition.
Significant additional legislative action by Congress also occurred in August 2022 with the Inflation Reduction Act, signed into law by the former administration, which provides $391 billion in funding for research and development and incentives for low-carbon energy production methods, carbon capture, and other programs directed at encouraging de-carbonization and addressing climate change.
Significant additional legislative action by Congress also occurred in August 2022 with the Inflation Reduction Act, signed into law by the former administration, which provided $391 billion in funding for research and development and incentives for low-carbon energy production methods, carbon capture, and other programs directed at encouraging de-carbonization and addressing climate change.
Compression is typically required throughout the natural gas production and transportation cycle, including at the wellhead, throughout gathering and distribution systems, into and out of processing and storage facilities and along intrastate and interstate pipelines. Our service offerings focus primarily on midstream applications, with 64% of our operating fleet being used in the gathering and processing cycle stages.
Compression is typically required throughout the natural gas production and transportation cycle, including at the wellhead, throughout gathering and distribution systems, into and out of processing and storage facilities and along intrastate and interstate pipelines. Our service offerings focus primarily on midstream applications, with 60% of our operating fleet being used in the gathering and processing cycle stages.
We believe the U.S. natural gas compression services industry continues to have growth potential over time due to, among other things, increased natural gas production in the U.S. from unconventional sources, the aging of producing natural gas fields that will require more compression to continue producing the same volume of natural gas due to lower pressures and the rise in gas-to-oil ratios for maturing wells and expected increased demand for natural gas in the U.S. for power generation, industrial uses and exports, including liquefied natural gas exports and exports of natural gas via pipeline to Mexico.
We believe the U.S. natural gas compression services industry continues to have growth potential over time due to, among other things, increased natural gas production in the U.S. from unconventional sources, the aging of producing natural gas fields that will require more compression to continue producing the same volume of natural gas due to lower pressures and the rise in gas-to-oil ratios for maturing wells and expected increased demand for natural gas in the U.S. for power generation of AI data centers, industrial uses and exports, including liquefied natural gas exports and exports of natural gas via pipeline to Mexico.
We have strong relationships with a deep base of midstream companies and natural gas and crude oil producers. Our contract operations revenue base is sourced from approximately 280 customers operating throughout all major U.S. natural gas and crude oil producing regions. Fee–based cash flows .
We have strong relationships with a deep base of midstream companies and natural gas and crude oil producers. Our contract operations revenue base is sourced from approximately 300 customers operating throughout all major U.S. natural gas and crude oil producing regions. Fee–based cash flows .
On March 8, 2024, the EPA published even more stringent rules with respect to methane and VOC for new and existing sources, via NSPS Subparts OOOOb and OOOOc, with the OOOOb rules for sources constructed, modified, or reconstructed after December 6, 2022, which became effective on May 7, 2024.
In March 2024, the EPA published even more stringent rules with respect to methane and VOC for new and existing sources, via NSPS Subparts OOOOb and OOOOc, with the OOOOb rules for sources constructed, modified, or reconstructed after December 6, 2022, which became effective on May 7, 2024.
We believe this fee structure and the longevity of our operations reduces volatility and enhances the stability and predictability of our cash flows. 9 Table of Contents ​ Diversified geographic footprint. We operate in substantially all major natural gas and crude oil producing regions in the U.S.
We believe this fee structure and the longevity of our operations reduces volatility and enhances the stability and predictability of our cash flows. 10 Table of Contents ​ Diversified geographic footprint. We operate in substantially all major natural gas and crude oil producing regions in the U.S.
This ongoing communication allows us to respond swiftly to customer requests. 11 Table of Contents ​ Customers Our customer base consists primarily 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.
This ongoing communication allows us to respond swiftly to customer requests. 12 Table of Contents ​ Customers Our customer base consists primarily 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.
On January 20, 2025, the current administration issued a series of executive orders and memoranda signaling a shift in environmental and energy policy in the U.S., including the revocation of approximately 80 former administration-era executive orders related to public health, the environment, climate change and climate-related financial risks.
In January 2025, the current administration issued a series of executive orders and memoranda signaling a shift in environmental and energy policy in the U.S., including the revocation of approximately 80 former administration-era executive orders related to public health, the environment, climate change and climate-related financial risks.
The $1 trillion legislative infrastructure package passed by Congress in November 2021 includes a number of climate-focused spending initiatives targeted at climate resilience, enhanced response and preparation for extreme weather events, and clean energy and transportation investments.
The $1 trillion legislative infrastructure package passed by Congress in November 2021 included a number of climate-focused spending initiatives targeted at climate resilience, enhanced response and preparation for extreme weather events, and clean energy and transportation investments.
In our 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, 2024, the average age of our operating fleet was 10 years.
In our 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, 2025, the average age of our operating fleet was 10 years.
We charge a fixed monthly fee for our contract operations services and a reduced monthly fee during periods of limited or disrupted natural gas flows. Our compression packages, on average, operate at a customer location for approximately four years.
We charge a fixed monthly fee for our contract operations services and a reduced monthly fee during periods of limited or disrupted natural gas flows. Our compression packages, on average, operate at a customer location for approximately six years.
Almost half of the states, either individually or through multi–state regional initiatives, have begun to address GHG emissions, primarily through the planned development of emission inventories or regional GHG cap and trade programs. Various states, such as California, Colorado and New York have passed or proposed similar climate change disclosure laws.
Almost half of the states, either individually or through multi–state regional initiatives, have begun to address GHG emissions, primarily through the planned development of emission inventories or regional GHG cap and trade programs. Various states, such as California, Colorado and New York have passed or proposed similar climate change disclosure 15 Table of Contents ​ laws.
In addition, our aftermarket services business provides opportunities to cross–sell our contract operations services. During the years ended December 31, 2024, 2023 and 2022, we generated 15%, 18% and 20%, respectively, of our total revenue from aftermarket services. Competitive Strengths We believe we have the following key competitive strengths: Superior safety performance.
In addition, our aftermarket services business provides opportunities to cross–sell our contract operations services. During the years ended December 31, 2025, 2024 and 2023, we generated 15%, 15% and 18%, respectively, of our total revenue from aftermarket services. Competitive Strengths We believe we have the following key competitive strengths: Superior safety performance.
The definition of “waters of the U.S.” and, relatedly, the scope of CWA jurisdiction, have been the subject of notable rulemaking efforts and judicial challenges over several decades. In May 2023, the U.S.
The definition of “waters of the U.S.” and, relatedly, the scope of CWA jurisdiction, have been the subject of notable rulemaking efforts and judicial challenges over several decades, which may continue. In May 2023, the U.S.
The remaining 36% of our operating fleet is used in gas lift applications. Wellhead and Gathering Systems . Natural gas compression is used to transport natural gas from the wellhead through the gathering system.
The remaining 40% of our operating fleet is used in gas lift applications. Wellhead and Gathering Systems . Natural gas compression is used to transport natural gas from the wellhead through the gathering system.
In addition, we may take voluntary steps to mitigate any impact our operations might have on climate change. 14 Table of Contents ​ As a result, we may experience increases in energy, transportation and raw material costs, capital expenditures or insurance premiums; however, there is no guarantee that such efforts will have the desired effects.
In addition, we may take voluntary steps to mitigate any impact our operations might have on climate change. As a result, we may experience increases in energy, transportation and raw material costs, capital expenditures or insurance premiums; however, there is no guarantee that such efforts will have the desired effects.
Learning and Talent Development We invest significant resources to develop the talent needed to provide our industry–leading natural gas compression services. We work closely with suppliers to develop training programs for our field service technicians. Our field service technicians are supported by a dedicated training team and collectively completed over 41,000 hours of operational and technical training during 2024.
Learning and Talent Development We invest significant resources to develop the talent needed to provide our industry–leading natural gas compression services. We work closely with suppliers to develop training programs for our field service technicians. Our field service technicians are supported by a dedicated training team and collectively completed over 44,000 hours of operational and technical training during 2025.
Additionally, we make available free of charge on our website: • our Code of Business Conduct; • our Corporate Governance Principles; and • the charters of our audit, compensation and nominating and corporate governance committees. ​
Additionally, we make available free of charge on our website: • our Code of Business Conduct; • our Corporate Governance Principles; and • the charters of our audit, compensation and governance and sustainability committees. ​
Safety is a core value of our company, and safety performance is a key measure of success that has been included in our short–term incentive program for over 18 years. We actively promote the highest standards of safety behavior and environmental awareness and strive to meet or exceed all applicable local and national regulations.
Safety is a core value of our company, and safety performance is a key measure of success that has been included in our short–term incentive program for approximately 20 years. We actively promote the highest standards of safety behavior and environmental awareness and strive to meet or exceed all applicable local and national regulations.
Our safety–centric culture has consistently produced industry–leading safety performance for many years, including a 2024 total recordable incident rate of 0.17. Large horsepower. As of December 31, 2024, we have the largest fleet of large horsepower equipment among all outsourced compression service providers in the U.S.
Our safety–centric culture has consistently produced industry–leading safety performance for many years, including a 2025 total recordable incident rate of 0.22. Large horsepower. As of December 31, 2025, we have the largest fleet of large horsepower equipment among all outsourced compression service providers in the U.S.
To this end, we created the TARGET ZERO program that includes over 90 safety and environmental procedures, and their necessary tools, equipment and training, which are designed to foster a mindset that integrates safety into every work process. Through this program, we achieved excellent safety performance, with a total recordable incident rate of 0.17 in 2024.
To this end, we created the TARGET ZERO program that includes over 90 safety and environmental procedures, and their necessary tools, equipment and training, which are designed to foster a mindset that integrates safety into every work process. Through this program, we have achieved excellent safety performance, with a total recordable incident rate of 0.22 in 2025.
Compressors may be used in combination with natural gas production and processing equipment to process natural gas into other marketable energy sources. In addition, compression services are used for compression applications in refineries and petrochemical plants. Processing applications typically utilize multiple large horsepower compressors. 6 Table of Contents ​ Gas Lift Applications .
Compressors may be used in combination with natural gas production and processing equipment to process natural gas into other marketable energy sources. In addition, compression services are used for compression applications in refineries and petrochemical plants. Processing applications typically utilize multiple large horsepower compressors. Gas Lift Applications .
During the years ended December 31, 2024, 2023 and 2022, our five most significant customers collectively accounted for 35%, 33% and 32%, respectively, of our contract operations and aftermarket services revenue.
During the years ended December 31, 2025, 2024 and 2023, our five most significant customers collectively accounted for 35%, 35% and 33%, respectively, of our contract operations and aftermarket services revenue.
These fundamentals include significant natural gas resources in the U.S., increased unconventional oil and natural gas production, decreasing natural reservoir pressures, rising gas-to-oil ratios for maturing wells and expected increased natural gas demand in the U.S. from the growth of liquefied natural gas exports, exports of natural gas via pipeline to Mexico, power generation and industrial uses. Improve profitability .
These fundamentals include significant natural gas resources in the U.S., increased unconventional oil and natural gas production, decreasing natural reservoir pressures, rising gas-to-oil ratios for maturing wells and expected increased natural gas demand in the U.S. from the growth of liquefied natural gas exports, exports of natural gas via pipeline to Mexico, power generation of AI data centers and industrial uses.
The IRA also amends the Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems. This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s GHG Reporting Program.
The IRA also amended the Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems. This program required the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that were already required to report under EPA’s GHG Reporting Program.
During the years ended December 31, 2024, 2023 and 2022, we generated 85%, 82% and 80%, respectively, of our total revenue from contract operations.
During the years ended December 31, 2025, 2024 and 2023, we generated 85%, 85% and 82%, respectively, of our total revenue from contract operations.
As noted above, the EPA has undertaken efforts to regulate emissions of methane, considered a GHG, in the oil and gas sector, and could develop additional, more stringent rules in the future.
As noted above, the EPA has previously undertaken efforts to regulate emissions of methane, considered a GHG, in the oil and gas sector, and could develop additional, more stringent rules at some point in the future.
National Ambient Air Quality Standards. On October 1, 2015, the EPA issued a new NAAQS ozone standard of 70 ppb, which is a tightening from the 75-ppb standard set in 2008. This new standard became effective on December 28, 2015, and the EPA completed designating attainment/non–attainment regions under the revised ozone standard in 2018.
In October 2015, the EPA issued a new NAAQS ozone standard of 70 ppb, which is a tightening from the 75-ppb standard set in 2008. This new standard became effective on December 28, 2015, and the EPA completed designating attainment/non–attainment regions under the revised ozone standard in 2018.
As part of this strategy, we sold approximately 175,000 and 199,000 of horsepower units during the years ended December 31, 2024 and 2023, respectively. Of the units sold during the years ended December 31, 2024 and 2023, approximately 75% and 80%, respectively, were small horsepower units. Optimize our business to generate attractive returns.
As part of this strategy, we sold approximately 325,000 and 175,000 of horsepower units during the years ended December 31, 2025 and 2024, respectively. Of the units sold during the years ended December 31, 2025 and 2024, approximately 85% and 75%, respectively, were small horsepower units. Optimize our business to generate attractive returns.
For example, the SEC adopted rules in March 2024 that would, if the rules survive legal challenge, mandate extensive disclosure for certain public companies of climate-related data, risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions.
For example, the SEC adopted rules in March 2024 that would have mandated extensive disclosure for certain public companies of climate-related data, risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions.
Among the newly adopted methane requirements that may impact our operations are broader applicability to compression equipment relative to the existing rules, increased work practices and inspection requirements and mandates for certain new zero–emissions equipment. Both the EPA rules and the BoLM rules are subject to ongoing judicial challenges.
Among the newly adopted methane requirements that may impact our operations are broader applicability to compression equipment relative to the existing rules, increased work practices and inspection requirements and mandates for certain new zero–emissions equipment.
The requirement for large sources of GHG emissions to obtain and comply with permits will affect some of our and our customers’ largest new or modified facilities going forward but is not expected to cause us to incur material costs.
In addition, the EPA rules provide air permitting requirements for certain large sources of GHG emissions. The requirement for large sources of GHG emissions to obtain and comply with permits will affect some of our and our customers’ largest new or modified facilities going forward but is not expected to cause us to incur material costs.
We operate in two business segments: • Contract Operations – Our contract operations business is comprised of our owned fleet of natural gas compression equipment that we use to provide compression services to our customers. • Aftermarket Services – Our aftermarket services business provides a full range of services to support the compression needs of our customers that own compression equipment, including operations, maintenance, overhaul and reconfiguration services and sales of parts and components.
We operate in two business segments: • Contract Operations – Our contract operations business primarily includes designing, sourcing, owning, installing, operating, servicing, repairing and maintaining our owned fleet of natural gas compression equipment to provide natural gas compression services to our customers. • Aftermarket Services – Our aftermarket services business provides a full range of services to support the compression needs of our customers that own compression equipment, including operations, maintenance, overhaul and reconfiguration services and sales of parts and components.
Meanwhile, several states — including, most notably, New Mexico and Colorado — have continued to develop their own more stringent methane rules that will or are anticipated to impose additional requirements on the industry.
Both the EPA rules and the BoLM rules are subject to ongoing judicial challenges. 14 Table of Contents ​ Meanwhile, several states — including, most notably, New Mexico and Colorado — have continued to develop their own more stringent methane rules that will or are anticipated to impose additional requirements on the industry.
The following table summarizes the size of our natural gas compression fleet as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ Number ​ Horsepower ​ % of ​ ​ ​ of Units ​ (in thousands) ​ Horsepower ​ 0 — 1,000 horsepower per unit 2,994 1,146 26 % 1,001 — 1,500 horsepower per unit 1,241 1,683 38 % Over 1,500 horsepower per unit 729 1,572 36 % Total 4,964 4,401 100 % ​ General Terms of our Contract Operations Service Agreements We typically enter into a master service agreement with each customer that sets forth the general terms and conditions of our services, and then enter into a separate supplemental service agreement for each distinct site at which we provide contract operations services.
The following table summarizes the size of our natural gas compression fleet as of December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ ​ ​ ​ Number ​ Horsepower ​ % of ​ ​ ​ of Units ​ (in thousands) ​ Horsepower ​ 0 — 1,000 horsepower per unit 3,216 1,233 26 % 1,001 — 1,500 horsepower per unit 1,303 1,771 37 % Over 1,500 horsepower per unit 800 1,784 37 % Total 5,319 4,788 100 % ​ General Terms of our Contract Operations Service Agreements We typically enter into a master service agreement with each customer that sets forth the general terms and conditions of our services, and then enter into a separate supplemental service agreement for each distinct site at which we provide contract operations services.
We also provide our employees and their families with access to a variety of flexible and convenient health and wellness programs that support the maintenance or improvement of our employees’ physical and mental health and encourage engagement in healthy behaviors, including our employee–led RockFIT program that develops and sponsors corporate health and fitness challenges throughout the year. 18 Table of Contents ​ Building Employee and Community Connections We consider ourselves a member of every community in which we operate and believe that building connections between our employees, their families and our communities creates a more meaningful and enjoyable workplace.
We also provide our employees and their families with access to a variety of flexible and convenient health and wellness programs that support the maintenance or improvement of our employees’ physical and mental health and encourage engagement in healthy behaviors, including our employee–led RockFIT program that develops and sponsors corporate health and fitness challenges throughout the year.
Ranging from declaring a national emergency due to the U.S.’s inadequate energy supply, infrastructure, and prices, to halting wind energy leasing and promoting fossil fuel exploration. These executive orders are already reshaping the current direction of the U.S. climate agenda.
The current administration also released a series of executive orders impacting the energy sector, ranging from declaring a national emergency due to the U.S.’s inadequate energy supply, infrastructure, and prices, to halting wind energy leasing and promoting fossil fuel exploration.
Many oil and natural gas producers, transporters and processors outsource their compression services due to the benefits and flexibility of contract compression. Changing well and pipeline pressures and conditions over the life of a well often require producers to reconfigure or replace their compression packages to optimize the well production or gathering system efficiency.
Changing well and pipeline pressures and conditions over the life of a well often require producers to reconfigure or replace their compression packages to optimize the well production or gathering system efficiency.
Current, as well as potential future, laws and regulations that limit GHG emissions or that otherwise promote the use of renewable energy over fossil fuel energy sources could increase the cost of our services and, thereby, further reduce demand and adversely affect our sales volumes, revenues and margins.
Current, as well as potential future, laws and regulations that limit GHG emissions or that otherwise promote the use of renewable energy over fossil fuel energy sources could increase the cost of our services and, thereby, further reduce demand and adversely affect our sales volumes, revenues and margins. 17 Table of Contents ​ Water Discharges The CWA and analogous state laws and their implementing regulations impose restrictions and strict controls with respect to the discharge of pollutants into state waters or waters of the U.S.
The EPA has adopted rules requiring many facilities, including petroleum and natural gas systems, to inventory and report their GHG emissions. In 2024, we did not operate any facilities that were subject to these reporting obligations. In addition, the EPA rules provide air permitting requirements for certain large sources of GHG emissions.
The EPA has adopted rules requiring many facilities, including petroleum and natural gas systems, to inventory and report their GHG emissions. As noted above, in September 2025, EPA proposed to suspend those requirements until 2034. In 2025, we did not operate any facilities that were subject to these reporting obligations.
We are a premier provider of natural gas compression services to customers in the energy industry throughout the U.S., and a leading supplier of aftermarket services to customers that own compression equipment in the U.S. Our business supports a must–run service that is essential to the production, processing, transportation and storage of natural gas.
We are a premier provider of natural gas compression services, in terms of total compression fleet horsepower, to customers in the energy industry throughout the U.S., and a leading supplier of aftermarket services to customers that own compression equipment in the U.S.
In addition, we offer a number of non–technical, targeted skills–based and career–enhancing training programs, including technical orientation for non–technical employees, supervisor coaching, performance management and conflict resolution. Our talent development programs provide employees with the resources they need to help achieve their career goals, build management skills and lead their organizations.
In addition, we offer a number of non–technical, targeted skills–based and career–enhancing training programs, including technical orientation for non–technical employees, supervisor coaching, performance management and conflict resolution.
During the year ended December 31, 2024, one customer accounted for $121.4 million, or more than 10% of our consolidated revenue, and another customer accounted for more than 13% of our consolidated trade accounts receivable, both primarily related to our contract operations segment.
During the year ended December 31, 2025, no customers accounted for more than 10% of our consolidated revenue and as of December 31, 2025, two customers accounted for approximately 30% of our consolidated trade accounts receivable, primarily related to our contract operations segment.
None of our employees are subject to a collective bargaining agreement. 17 Table of Contents ​ We consider our employees to be our greatest asset and believe that our success depends on our ability to attract, develop and retain our employees.
Human Capital As of December 31, 2025, we employed approximately 1,350 employees in 12 states and conducted business in 41 states. None of our employees are subject to a collective bargaining agreement. We consider our employees to be our greatest asset and believe that our success depends on our ability to attract, develop and retain our employees.
Under the Midstream Rule, midstream facilities must begin taking steps to reduce GHG emissions from combustion fuel equipment by February 14, 2025. 13 Table of Contents ​ We do not believe that these rules will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet definitively predict the impact of any revision of the current rules or issuance of new rules, which impact could be material.
We do not believe that these rules will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet definitively predict the impact of any revision of the current rules or issuance of new rules, which impact could be material. National Ambient Air Quality Standards.
During the course of our operations, we generate 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 EPA and various state agencies have limited the approved methods of disposal for these types of wastes.
Waste Management and Disposal RCRA and analogous state laws and their implementing regulations govern the generation, transportation, treatment, storage and disposal of hazardous and non–hazardous solid wastes. During the course of our operations, we generate wastes (including, but not limited to, used oil, antifreeze, used oil filters, sludges, paints, solvents and abrasive blasting materials) in quantities regulated under RCRA.
Compression is used to reinject natural gas into producing oil wells to help lift liquids to the surface, which is known as natural gas lift. These applications utilize low– to mid–range horsepower compression equipment located at or near the wellhead or large horsepower compression equipment of over 1,000 horsepower for a centralized gas lift system servicing multiple wells.
These applications utilize low– to mid–range horsepower compression equipment located at or near the wellhead or large horsepower compression equipment of over 1,000 horsepower for a centralized gas lift system servicing multiple wells. 7 Table of Contents ​ Many oil and natural gas producers, transporters and processors outsource their compression services due to the benefits and flexibility of contract compression.
Water Discharges The CWA and analogous state laws and their implementing regulations impose restrictions and strict controls with respect to the discharge of pollutants into state waters or waters of the U.S. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency.
The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. In addition, the CWA regulates storm water discharges associated with industrial activities depending on a facility’s primary standard industrial classification.
In November 2015, we completed the spin–off of our international contract operations, international aftermarket services and global fabrication business into a standalone public company operating as Exterran Corporation, and we were renamed “Archrock, Inc.” We are an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping our customers produce, compress and transport natural gas in a safe and environmentally responsible way.
Item 1. Business We are an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping our customers produce, compress and transport natural gas in a safe and environmentally responsible way.
In addition, the CWA regulates storm water discharges associated with industrial activities depending on a facility’s primary standard industrial classification. Four of our facilities have applied for and obtained industrial wastewater discharge permits and/or have sought coverage under local wastewater ordinances.
Four of our facilities have applied for and obtained industrial wastewater discharge permits and/or have sought coverage under local wastewater ordinances.
The EPA and the Army Corps of Engineers issued a final rule effective September 8, 2023 to implement the terms of that decision.
The EPA and the Army Corps of Engineers issued a final rule effective September 8, 2023 to implement the terms of that decision. As a result of prior litigation, that amended rule has gone into effect in only part of the country, and new legislation with respect to the amended rule is ongoing.
The OOOOc rules for existing sources gives the States a two-year deadline to develop and submit to EPA plans for addressing emissions from those sources.
The OOOOc rules for existing sources give the States a two-year deadline to develop and submit to EPA plans for addressing emissions from those sources. However, EPA issued a direct interim final rule in July 2025 and a final rule in December 2025 that pushed the substantive deadlines in OOOOb and OOOOc back to January 2027.
At this time, we cannot determine how the current administration will continue to proceed and cannot accurately predict the ensuing impact on social cost or other interagency climate efforts, which may give rise to a material adverse effect on our business, financial condition, results of operations and cash flows. 15 Table of Contents ​ At the international level, the U.S. joined the international community at the 21st COP of the UNFCCC in Paris, France, which resulted in the “Paris Agreement,” which intended for signatory countries to nationally determine their contributions and set GHG emission reduction goals every five years beginning in 2020.
At the international level, the U.S. joined the international community at the 21st COP of the UNFCCC in Paris, France, which resulted in the “Paris Agreement,” which intended for signatory countries to nationally determine their contributions and set GHG emission reduction goals every five years beginning in 2020.
Other emerging contaminants could also become subject to regulation under CERCLA, Toxic Substances Control Act or comparable state laws. We cannot provide any assurance that the costs and liabilities associated with the future imposition of such remedial or regulatory compliance obligations upon us would not have a material adverse effect on our operations or financial position.
We cannot provide any assurance that the costs and liabilities associated with the future imposition of such remedial or regulatory compliance obligations upon us would not have a material adverse effect on our operations or financial position. 18 Table of Contents ​ We currently own or lease, and in the past have owned or leased, a number of properties that have been used in support of our operations for a number of years.
Safety, Health and Wellness The success of our business is fundamentally connected to the well–being of our people and so we are committed to the safety, health and wellness of our employees.
Our talent development programs provide employees with the resources they need to help achieve their career goals, build management skills and lead their organizations. 19 Table of Contents ​ Safety, Health and Wellness The success of our business is fundamentally connected to the well–being of our people and so we are committed to the safety, health and wellness of our employees.
Given that the current administration has issued an executive order that initiated the process to withdraw the U.S. from the Paris Agreement and from any commitments made under the UNFCCC, however, it remains to be seen which of these aforementioned U.S. commitments will survive in 2025 and beyond.
However, the current administration issued an executive order in January 2025 that initiated the process to withdraw the U.S. from the Paris Agreement and from any commitments made under the UNFCCC. COP30 took place in Brazil in November 2025 with no official participation or representatives attending from the U.S. In January 2026, the U.S. officially withdrew from the Paris Agreement.
While the current administration has issued an executive order pausing the disbursement of funds appropriated through the IRA and roll back these environmental policies implemented during the former administration, U.S. climate leaders have vowed to continue protecting and building on climate progress.
While the current administration issued an executive order pausing the disbursement of funds appropriated through the IRA and rolling back these environmental policies implemented during the former administration, with legislative action culminating in the One Big Beautiful Bill Act, which eliminated most of the Inflation Reduction Act’s incentives and delayed the commencement of the methane waste emissions charge on oil and gas sources by a decade to 2034.
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Item 1. Business We were incorporated in February 2007 as a wholly owned subsidiary of Universal Compression Holdings, Inc. In August 2007, Universal Compression Holdings, Inc. and Hanover Compressor Company merged into our wholly owned subsidiaries and we became Exterran Holdings, Inc., the parent entity of Universal Compression Holdings, Inc. and Hanover Compressor Company.
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Our business supports a must–run service that is essential to the production, processing, transportation and storage of natural gas.
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Our mission to help our customers deliver natural gas in an affordable and responsible manner, to a variety of critical industries is more critical now than ever.
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Compression is used to reinject natural gas into producing oil wells to help lift liquids to the surface, which is known as natural gas lift.
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We are focused on increasing productivity and optimizing our processes. Between 2019 and 2021, we invested in a process and technology transformation project that replaced our existing ERP, supply chain and inventory management systems and expanded the remote monitoring capabilities of our compression fleet. Beginning in 2023, our focus shifted to fully harnessing these technologies across our business.
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Improve profitability . We utilize technology in all aspects of our business to drive operational efficiencies and enhance our value proposition to our customers. Our investments have focused on implementing cloud-based solutions to replace legacy systems, the automation of workflows, integration of digital and mobile tools for our field service technicians and expanded remote monitoring capabilities of our compression fleet.
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We expect the technological transformations to lower our internal costs and improve our profitability over time.
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EPA has also been working on a proposed rule to roll back significant portions of the OOOOb and OOOOc, which rule proposal is in interagency review at the White House Office of Management and Budget and is expected for publication soon.
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The EPA published a final report in December 2023 with the social cost of carbon at $190 per metric ton of carbon dioxide emitted in 2020 at a 2% discount rate.
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Notably, however, in November 2025, BoLM announced that it will not enforce requirements of the rule that carried a December 10, 2025 deadline until December 10, 2026.
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This figure is intended to be used to guide federal decisions on the costs and benefits of various policies and approvals; such efforts have been the subject of a series of judicial challenges, which have been largely unsuccessful to date.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlmost half of the states, either individually or through multi–state regional initiatives, have begun to address GHG emissions, primarily through the planned development of emission inventories or regional GHG cap and trade programs. Various states, such as California, Colorado and New York have passed or proposed similar climate change disclosure laws.
Biggest changeThose legal challenges remain in abeyance pending an SEC decision on whether to rescind, repeal, or modify the rules but, in the meantime, the SEC climate rules remain suspended and without effect. 33 Table of Contents ​ Almost half of the states, either individually or through multi–state regional initiatives, have begun to address GHG emissions, primarily through the planned development of emission inventories or regional GHG cap and trade programs.
Uncertainty on future inflation trends and fluctuations on interest rates have created further uncertainty for the economy and for our customers. Elevated inflation will increase our labor costs and the costs of parts, lube oil and other materials used in our operations.
Uncertainty on future inflation trends and fluctuations in interest rates have created further uncertainty for the economy and for our customers. Elevated inflation will increase our labor costs and the costs of parts, lube oil and other materials used in our operations.
Our services are provided to these customers pursuant to contract operations service agreements, which generally have an initial term of 12 to 36 months, or up to 60 months for the largest horsepower units in our fleet, and continue thereafter until terminated by either party with 30 days’ advance notice.
Our services are provided to these customers pursuant to contract operations service agreements, which generally have an initial term of 12 to 36 months, or generally up to 60 months for the largest horsepower units in our fleet, and continue thereafter until terminated by either party with 30 days’ advance notice.
On April 10, 2024, BoLM published a separate final rule, known as the “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule, to address methane emissions from oil and gas activities on public lands, which became effective on June 10, 2024. The rule is currently stayed pending litigation in North Dakota, Texas, Montana, Wyoming, and Utah.
In April 2024, BoLM published a separate final rule, known as the “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule, to address methane emissions from oil and gas activities on public lands, which became effective on June 10, 2024. The rule is currently stayed pending litigation in North Dakota, Texas, Montana, Wyoming, and Utah.
Just as we cannot fully anticipate the impact of the methane rules discussed above, we also cannot predict whether potential future re-entry, or pending withdrawal from, into the Paris Agreement or other international pledges will result in any particular new federal regulatory requirements or whether such requirements will cause us to incur material costs.
Just as we cannot fully anticipate the impact of the methane rules discussed above, we also cannot predict whether the withdrawal from or potential future re-entry into the Paris Agreement or other international pledges will result in any particular new federal regulatory requirements or whether such requirements will cause us to incur material costs.
In addition, inflation may adversely affect customers’ financing costs, cash flows, and profitability, which could adversely impact their operations and our ability to collect receivables. Additionally, trade tensions or restrictions on free trade, including the tariffs that have been proposed by the current administration, could exacerbate these effects.
In addition, inflation may adversely affect customers’ financing costs, cash flows, and profitability, which could adversely impact their operations and our ability to collect receivables. Additionally, trade tensions or restrictions on free trade, including the tariffs that have been imposed and proposed by the current administration, could exacerbate these effects.
Some equipment, materials and services used in our business are obtained from a limited group of suppliers. Our reliance on these suppliers involves several risks, including price increases (as a result of inflation or otherwise), inferior quality and a potential inability to obtain an adequate supply of such equipment, materials and services in a timely manner.
Some equipment, materials and services used in our business are obtained from a limited group of suppliers. Our reliance on these suppliers involves several risks, including price increases (as a result of inflation, tariffs or otherwise), inferior quality and a potential inability to obtain an adequate supply of such equipment, materials and services in a timely manner.
Legal and Regulatory Risks From time to time, we are subject to various claims, tax audits, litigation and other proceedings that could ultimately be resolved against us and require material future cash payments or charges, which could impair our financial condition or results of operations.
Legal and Regulatory Risks From time to time, we are subject to various claims, tax audits, litigation and other proceedings that could ultimately be resolved against us and require material future cash payments or charges, which could impair our financial condition, results of operations or cash flows.
We may face pressures from stakeholders, many of whom may be concerned by on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability while at the same time remaining a successfully operating public company.
We may face pressures from stakeholders, many of whom may be concerned by climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability while at the same time remaining a successfully operating public company.
Ongoing International Conflicts and Tensions The conflict in Ukraine, the Israel-Hamas war and related price volatility and geopolitical instability could negatively impact our business. In late February 2022, Russia launched significant military action against Ukraine, and in October 2023, Israel launched a military response against Hamas in Gaza.
Ongoing International Conflicts and Tensions The conflict in Ukraine, the Israel-Hamas war, other geopolitical conflicts, and related price volatility and geopolitical instability could negatively impact our business. In late February 2022, Russia launched significant military action against Ukraine, and in October 2023, Israel launched a military response against Hamas in Gaza.
Nevertheless, several states and geographic regions in the U.S. have adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and commitments to contribute to meeting the goals of the Paris Agreement.
Nevertheless, several states and geographic regions in the U.S. have adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and commitments that contribute to meeting the goals of the Paris Agreement.
See Part I, Item 3 “Legal Proceedings” of this form 10-K and Note 16 27 Table of Contents ​ (“Commitments and Contingencies”) to our Financial Statements for additional information regarding certain legal proceedings to which we are a party. New regulations, proposed regulations and proposed modifications to existing regulations under the CAA, if implemented, could result in increased compliance costs.
See Part I, Item 3 “Legal Proceedings” of this Form 10-K and Note 16 (“Commitments and Contingencies”) to our Financial Statements for additional information regarding certain legal proceedings to which we are a party. 30 Table of Contents ​ New regulations, proposed regulations and proposed modifications to existing regulations under the CAA, if implemented, could result in increased compliance costs.
Any widespread imposition of new or increased tariffs could increase the cost of imported materials and products, such as steel, which accordingly could increase costs of our products, disrupt our supply chain, cause adverse financial impacts due to volatility in foreign exchange rates and interest rates, increase inflationary pressures on raw materials and energy, and negatively impact our profit margins.
Any widespread imposition of new or increased tariffs and trade restrictions could increase the cost of imported materials and products, such as steel, which accordingly could increase costs of our products, disrupt our supply chain, cause adverse financial impacts due to volatility in foreign exchange rates and interest rates, increase inflationary pressures on raw materials and energy, and negatively impact our profit margins.
Significant additional legislative action by Congress also occurred in August 2022 with the Inflation Reduction Act, signed into law by the former administration, which provides $391 billion in funding for research and development and incentives for low-carbon energy production methods, carbon capture, and other programs directed at encouraging de-carbonization and addressing climate change.
Significant additional legislative action by Congress also occurred in August 2022 with the Inflation Reduction Act, signed into law by the former administration, which provided $391 billion in funding for research and development and incentives for low-carbon energy production methods, carbon capture, and other programs directed at encouraging de-carbonization and addressing climate change.
If we are unable to purchase compression equipment or other integral equipment, materials and services from third-party suppliers, we may be unable to retain existing customers or compete for new customers, which could have a material adverse effect on our business, results of operations and financial condition.
If we are unable to purchase compression equipment or other integral equipment, materials and services from third-party suppliers, we may be unable to retain existing customers or compete for new customers, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Moreover, we have limited ability to increase prices during our initial contract terms. As a result, we are unable to pass increases in the prices of the equipment, materials and services we utilize to provide contract operations services, as a result of inflation of otherwise, onto our customers, which could result in a reduction in net income.
Moreover, we have limited ability to increase prices during our initial contract terms. As a result, we are unable to pass increases in the prices of the equipment, materials and services we utilize to provide contract operations services, as a result of inflation, tariffs, or otherwise, onto our customers, which could result in a reduction in net income.
Such actions could adversely impact our business by distracting management and other personnel from their primary responsibilities, require us to incur increased costs, and/or result in reputational harm. Moreover, any such litigation targeting our customers could negatively impact their operation and, in turn, decrease demand for our services.
Such actions could adversely impact our business by distracting management and other personnel from their primary responsibilities, require us to incur increased costs, and/or result in reputational harm. Moreover, any such litigation targeting our customers could negatively impact their operations and, in turn, decrease demand for our services.
We also may not be able to take advantage of certain opportunities or make certain investments because of our debt levels and our other obligations. Any of these competitive pressures could have a material adverse effect on our business, results of operations and financial condition.
We also may not be able to take advantage of certain opportunities or make certain investments because of our debt levels and our other obligations. Any of these competitive pressures could have a material adverse effect on our business, results of operations, financial condition and cash flows.
On March 8, 2024, the EPA published even more stringent rules with respect to methane and VOC for new and existing sources, via NSPS Subparts OOOOb and OOOOc, with the OOOOb rules for sources constructed, modified, or reconstructed after December 6, 2022, which became effective on May 7, 2024.
In March 2024, the EPA published even more stringent rules with respect to methane and VOC for new and existing sources, via NSPS Subparts OOOOb and OOOOc, with the OOOOb rules for sources constructed, modified, or reconstructed after December 6, 2022, which became effective on May 7, 2024.
The $1 trillion legislative infrastructure package passed by Congress in November 2021 includes a number of climate-focused spending initiatives targeted at climate resilience, enhanced response and preparation for extreme weather events, and clean energy and transportation investments.
The $1 trillion legislative infrastructure package passed by Congress in November 2021 included a number of climate-focused spending initiatives targeted at climate resilience, enhanced response and preparation for extreme weather events, and clean energy and transportation investments.
Any such volatility and disruptions may also magnify the impact of other risks described in this “Risk Factors” section. Business and Operational Risks Our operations entail inherent risks that may result in substantial liability. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities.
Any such volatility and disruptions may also magnify the impact of other risks described in this “Risk Factors” section. 21 Table of Contents ​ Business and Operational Risks Our operations entail inherent risks that may result in substantial liability. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities.
As of December 31, 2024, we had $2.2 billion in outstanding debt obligations, net of unamortized debt premiums and unamortized deferred financing costs, outstanding under our Credit Facility and Senior Notes. Many factors, including factors beyond our control, may affect our ability to make payments on our outstanding indebtedness. These factors include those discussed elsewhere in these Risk Factors.
As of December 31, 2025, we had $2.4 billion in outstanding debt obligations, net of unamortized debt premiums and unamortized deferred financing costs, outstanding under our Credit Facility and senior notes. Many factors, including factors beyond our control, may affect our ability to make payments on our outstanding indebtedness. These factors include those discussed elsewhere in these Risk Factors.
A decrease in energy use due to weather changes may negatively affect our financial condition through decreased revenues. Despite the use of the term “global warming” as a shorthand for climate change, some studies indicate that climate change could cause some areas to 32 Table of Contents ​ experience temperatures substantially colder than their historical averages.
A decrease in energy use due to weather changes may negatively affect our financial condition through decreased revenues. Despite the use of the term “global warming” as a shorthand for climate change, some studies indicate that climate change could cause some areas to experience temperatures substantially colder than their historical averages.
Any integration of artificial intelligence in our or relevant third parties’ operations, products or services is expected to pose new and/or unknown cybersecurity risks and challenges. In addition, we have acquired and may continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to significant cybersecurity, operational, and financial risks.
Any integration of AI in our or relevant third parties’ operations, products or services is expected to pose new and/or unknown cybersecurity risks and challenges. In addition, we have acquired and may continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to significant cybersecurity, operational, and financial risks.
New or increased tariffs could also negatively affect U.S. national or regional economies, which could affect the demand for our products. 19 Table of Contents ​ Pandemics and other public health crises may negatively affect demand for our services, and may have a material adverse impact on our financial condition, results of operations and cash flows.
New or increased tariffs could also negatively affect U.S. national or regional economies, which could affect the demand for our products. Pandemics and other public health crises may negatively affect demand for our services, and may have a material adverse impact on our financial condition, results of operations and cash flows.
Our ability to achieve any objective is subject to numerous factors and conditions, many of which are outside of our control, including the availability of alternative energy sources in the jurisdictions in which we operate, the capacity of electrical grids to support traditional 21 Table of Contents ​ and alternative energy sources, and the broader economic and legal circumstances affecting energy and electricity locally.
Our ability to achieve any objective is subject to numerous factors and conditions, many of which are outside of our control, including the availability of alternative energy sources in the jurisdictions in which we operate, the capacity of electrical grids to support traditional and alternative energy sources, and the broader economic and legal circumstances affecting energy and electricity locally.
Such 30 Table of Contents ​ legislation, regulations, and initiatives, as well as uncertainty regarding the future success of such regulations and initiatives in reducing demand for oil and gas, could indirectly affect our business and our results of operations by reducing demand for our services. Separately, the EPA has promulgated regulations controlling GHG emissions under its existing CAA authority.
Such legislation, regulations, and initiatives, as well as uncertainty regarding the future success of such regulations and initiatives in reducing demand for oil and gas, could indirectly affect our business and our results of operations by reducing demand for our services. Separately, the EPA has promulgated regulations controlling GHG emissions under its existing CAA authority.
This could have a material adverse effect upon our business, results of operations, financial condition and cash flows. Labor and Supply Chain Risks Our ability to manage and grow our business effectively may be adversely affected if we lose management or operational personnel.
This could have a material adverse effect upon our business, results of operations, financial condition and cash flows. 27 Table of Contents ​ Labor and Supply Chain Risks Our ability to manage and grow our business effectively may be adversely affected if we lose management or operational personnel.
If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could be negatively impacted. Industry and General Economic Risks Macroeconomic conditions, including an increase in inflation and trade tensions, could have adverse effects on our results of operations.
If any of the following risks actually occur, our business, financial condition, results of operations and cash flows could be negatively impacted. 20 Table of Contents ​ Industry and General Economic Risks Macroeconomic conditions, including an increase in inflation and trade tensions, could have adverse effects on our results of operations.
The loss of any of our most significant customers would result in a decline in our revenue and cash available to pay dividends to our common stockholders. Our five most significant customers collectively accounted for 35%, 33% and 32% of our revenues during the years ended December 31, 2024, 2023 and 2022, respectively.
The loss of any of our most significant customers would result in a decline in our revenue and cash available to pay dividends to our common stockholders. Our five most significant customers collectively accounted for 35%, 35% and 33% of our revenues during the years ended December 31, 2025, 2024 and 2023, respectively.
As a result, it is difficult to predict how the market for our services could be affected by increased temperature volatility. Environmental, social and governance scrutiny and changing expectations from stakeholders may impose additional costs or additional risks. In recent years, attention has been given to corporate activities related to ESG matters.
As a result, it is difficult to predict how the market for our services could be affected by increased temperature volatility. 36 Table of Contents ​ Environmental, social and governance scrutiny and changing expectations from stakeholders may impose additional costs or additional risks. In recent years, attention has been given to corporate activities related to ESG matters.
In addition, these types of events could require significant management attention and resources and could adversely affect our reputation among customers and the public. Tax–related Risks Tax legislation and administrative initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.
In addition, these types of events could require significant management attention and resources and could adversely affect our reputation among customers and the public. 29 Table of Contents ​ Tax-related Risks Tax legislation and administrative initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.
Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are increasingly sophisticated in using techniques and tools, including generative and other artificial intelligence, that circumvent security controls, evade detection and remove forensic evidence.
Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are increasingly sophisticated in using techniques and tools, including generative and other AI, that circumvent security controls, evade detection and remove forensic evidence.
For example, these commitments could: • make it more difficult for us to satisfy contractual obligations; • increase our vulnerability to general adverse economic and industry conditions; • limit our ability to fund future working capital, capital expenditures, acquisitions or other corporate requirements; • increase our vulnerability to interest rate fluctuations because the interest payments on a portion of our debt are based upon variable interest rates, and a portion can adjust based on our credit statistics; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors that have less debt or less restrictive covenants in such debt; and • limit our ability to incur indebtedness in the future. 22 Table of Contents ​ Covenants in our Debt Agreements may impair our ability to operate our business.
For example, these commitments could: • make it more difficult for us to satisfy contractual obligations; • increase our vulnerability to general adverse economic and industry conditions; • limit our ability to fund future working capital, capital expenditures, acquisitions or other corporate requirements; • increase our vulnerability to interest rate fluctuations because the interest payments on a portion of our debt are based upon variable interest rates, and a portion can adjust based on our credit statistics; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors that have less debt or less restrictive covenants in such debt; and • limit our ability to incur indebtedness in the future.
Even if we do make acquisitions that we believe will increase the amount of cash available for distribution to our common stockholders, these acquisitions may nevertheless result in a decrease in the amount of cash available for distribution to our common stockholders.
Even if we do make acquisitions that we believe will increase the amount of cash available for distribution to our common stockholders, these acquisitions, including the NGCS Acquisition, may nevertheless result in a decrease in the amount of cash available for distribution to our common stockholders.
Statements related to these objectives are made using various underlying assumptions and reflect our current intentions, and do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these objectives expose us to numerous operational, reputational, financial, legal and other risks.
Statements related to these objectives are made using various underlying assumptions and reflect our current intentions, and do not constitute a guarantee that they will be achieved or achieved within the projected timeframe. Our efforts to research, establish, accomplish, and accurately report on these objectives expose us to numerous operational, reputational, financial, legal and other risks.
The IRA also amends the Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems. This program requires the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that are already required to report under EPA’s GHG Reporting Program.
The IRA also amended the Clean Air Act to include a Methane Emissions and Waste Reduction Incentive Program for petroleum and natural gas systems. This program required the EPA to impose a “waste emissions charge” on certain natural gas and oil sources that were already required to report under EPA’s GHG Reporting Program.
These ongoing conflicts have caused, and could intensify, volatility in oil and natural gas prices, and the extent and duration of these military actions, sanctions and resulting market disruptions could be significant and could potentially have a substantial negative impact on the global economy and/or our business for an unknown period of time.
These ongoing conflicts and other geopolitical conflicts, such as the developments in Venezuela, have caused, and could intensify, volatility in oil and natural gas prices, and the extent and duration of these military actions, sanctions and resulting market disruptions could be significant and could potentially have a substantial negative impact on the global economy and/or our business for an unknown period of time.
Any such non renewals, or renewals at reduced rates or the loss of contracts with any significant customer could adversely impact our results of operations. The length of our contract operations service agreements with customers varies based on operating conditions and customer needs.
Any such non-renewals, or renewals at reduced rates or the loss of contracts with any significant customer could adversely impact our business, results of operations, financial condition and cash flows. The length of our contract operations service agreements with customers varies based on operating conditions and customer needs.
Any such difficulties could have an adverse effect on our business, results of operations and financial condition. Threats of cyber-attacks or terrorism could affect our business. We rely on our information technology systems and data for critical operations.
Any such difficulties could have an adverse effect on our business, results of operations and financial condition. 28 Table of Contents ​ Cyber-attacks or terrorism could affect our business, results of operations and our reputation. We rely on our information technology systems and data for critical operations.
At this time, there can be no assurance as to whether any alternative benchmark or resulting interest rates may be more or less favorable than SOFR. Customer and Contract Risks The erosion of the financial condition of our customers could adversely affect our business.
At this time, there can be no assurance as to whether any alternative benchmark or resulting interest rates may be more or less favorable than SOFR. 26 Table of Contents ​ Customer and Contract Risks The erosion of the financial condition of our customers could adversely affect our business, results of operations, financial condition and cash flows.
For example, the SEC adopted rules in March 2024 that would, if the rules survive legal challenge, mandate extensive disclosure for certain public companies of climate-related data, risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions.
For example, the SEC adopted rules in March 2024 that would have mandated extensive disclosure for certain public companies of climate-related data, risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and greenhouse gas emissions.
As of September 2024, 86 climate lawsuits have been filed against the world’s largest oil, gas, and coal producing corporations, with the number of cases filed against fossil fuel companies each year nearly tripling since the Paris Agreement was reached in 2025.
Numerous climate lawsuits have been filed against the world’s largest oil, gas, and coal producing corporations, with the number of cases filed against fossil fuel companies each year nearly tripling since the Paris Agreement was reached in 2015.
Any acquisitions we complete are subject to substantial risks that could reduce our ability to make distributions to our common stockholders.
Any acquisitions we complete, including the NGCS Acquisition, are subject to substantial risks that could reduce our ability to make distributions to our common stockholders.
Among the newly adopted methane requirements that may impact our operations are broader applicability to compression equipment relative to the existing rules, increased work practices and inspection requirements and mandates for certain new zero–emissions equipment. Both the EPA rules and the BoLM rules are subject to ongoing judicial challenges.
Among the newly adopted methane requirements that may impact our operations are broader applicability to compression equipment relative to the existing rules, increased work practices and inspection requirements and mandates for certain new zero-emissions equipment.
Future dividends may be affected by, among other factors: • the availability of surplus or net profits, which in turn depend on the performance of our business and operating subsidiaries; • our debt service requirements and other liabilities; • our ability to refinance our debt in the future or borrow funds and access capital markets; • restrictions contained in our Debt Agreements; • our future capital requirements, including to fund our operating expenses and other working capital needs; • the rates we charge for our services; • the level of demand for our services; • the creditworthiness of our customers; • our level of operating expenses; and • changes in U.S. federal, state and local income tax laws or corporate laws.
Future dividends may be affected by, among other factors: • the availability of surplus or net profits, which in turn depend on the performance of our business and operating subsidiaries; • our debt service requirements and other liabilities; • our ability to refinance our debt in the future or borrow funds and access capital markets; • restrictions contained in our Debt Agreements; • our future capital requirements, including to fund our operating expenses and other working capital needs; • the rates we charge for our services; • the level of demand for our services; • the creditworthiness of our customers; • our level of operating expenses; and • changes in U.S. federal, state and local income tax laws or corporate laws. 24 Table of Contents ​ We cannot provide assurance that we will declare or pay dividends in any particular amount or at all in the future.
If we are unable to access the capital and credit markets on favorable terms, or if we are not successful in raising capital within the time period required or at all, we may not be able to grow or maintain our business, which could have a material adverse effect on our business, results of operations and financial condition. 23 Table of Contents ​ Our inability to fund purchases of additional compression equipment could adversely impact our financial results.
If we are unable to access the capital and credit markets on favorable terms, or if we are not successful in raising capital within the time period required or at all, we may not be able to grow or maintain our business, which could have a material adverse effect on our business, results of operations and financial condition.
The requirement for large sources of GHG emissions to obtain and comply with permits will affect some of our and our customers’ largest new or modified facilities going forward but is not expected to cause us to incur material costs.
In addition, the EPA rules provide air permitting requirements for certain large sources of GHG emissions. The requirement for large sources of GHG emissions to obtain and comply with permits will affect some of our and our customers’ largest new or modified facilities going forward but is not expected to cause us to incur material costs.
Any acquisition involves potential risks, including, among other things: ● the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate; ● our inability to obtain satisfactory title to the assets we acquire; and ● the occurrence of other significant changes, such as impairment of long-lived assets, asset devaluation or restructuring charges.
Any acquisition, including the NGCS Acquisition, involves potential risks, including, among other things: • the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate; • our inability to obtain satisfactory title to the assets we acquire; and • the occurrence of other significant changes, such as impairment of long-lived assets, asset devaluation or restructuring charges. 22 Table of Contents ​ If we do not make acquisitions on economically acceptable terms, our future growth could be limited.
Current, as well as potential future, laws and regulations that limit GHG emissions or that otherwise promote the use of renewable energy over fossil fuel energy sources could increase the cost of our services and, thereby, further reduce demand and adversely affect our sales volumes, revenues and margins.
Current, as well as potential future, laws and regulations that limit GHG emissions or that otherwise promote the use of renewable energy over fossil fuel energy sources could increase the cost of our services and, thereby, further reduce demand and adversely affect our sales volumes, revenues and margins. 35 Table of Contents ​ A climate–related decrease in demand for oil and natural gas could negatively affect our business.
Although most of the state–level initiatives have to date been focused on large sources of GHG emissions, such as electric power plants, it is possible that smaller sources such as our natural gas–powered compressors could become subject to GHG–related regulation.
Various states, such as California, Colorado and New York have passed or proposed similar climate change disclosure laws. Although most of the state–level initiatives have to date been focused on large sources of GHG emissions, such as electric power plants, it is possible that smaller sources such as our natural gas–powered compressors could become subject to GHG–related regulation.
A broader transition to alternative fuels or energy sources, whether resulting from potential new government regulation, carbon taxes or consumer preferences could result in decreased demand for crude oil, natural gas and NGLs. Any decrease in demand for these products could consequently reduce demand for our services and could have a negative effect on our business.
A broader transition to alternative fuels or energy sources, whether resulting from potential new government regulation, carbon taxes or consumer preferences could result in decreased demand for crude oil, natural gas and NGLs.
We face significant competitive pressures that may cause us to lose market share and harm our financial performance. Our business is highly competitive, and there are low barriers to entry.
We face significant competitive pressures that may cause us to lose market share and negatively affect our business, results of operations, financial condition and cash flows. Our business is highly competitive, and there are low barriers to entry.
We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. These types of events could materially adversely affect our business and results of operations.
We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident, such as lost business, penalties or damages, will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.
Ranging from declaring a national emergency due to the U.S.’s inadequate energy supply, infrastructure, and prices, to halting wind energy leasing and promoting fossil fuel exploration, these executive orders are already reshaping the current direction of the U.S. climate agenda.
The current administration also released a series of executive orders impacting the energy sector, ranging from declaring a national emergency due to the U.S.’s inadequate energy supply, infrastructure, and prices, to halting wind energy leasing and promoting fossil fuel exploration.
Further, a default under one or more of the Debt Agreements would trigger cross–default provisions under the other Debt Agreements, which would accelerate our obligation to repay the indebtedness under those agreements. As of December 31, 2024, we were in compliance with all covenants under the Debt Agreements.
Further, a default under one or more of the Debt Agreements would trigger cross-default provisions under the other Debt Agreements, which would accelerate our obligation to repay the indebtedness under those agreements.
If our competitors substantially increase the resources they devote to the development and marketing of competitive products, equipment or services or substantially decrease the price at which they offer their products, equipment or services, we may not be able to compete effectively. 20 Table of Contents ​ In addition, we could face significant competition from new entrants into the compression services business.
If our competitors substantially increase the resources they devote to the development and marketing of competitive products, equipment or services or substantially decrease the price at which they offer their products, equipment or services, we may not be able to compete effectively.
We expect the technological transformations to lower our internal costs and improve our profitability over time. However, the implementation of the process and technology transformation project has required significant capital and other resources from which we may not realize the benefits we expect to realize.
The implementation of the process and technology transformation project has required significant capital and other resources from which we may not realize the benefits we expect to realize.
We do not believe that these rules will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet definitively predict the impact of any revision of the current rules or issuance of new rules, which impact could be material.
We do not believe that these rules will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet definitively predict the impact of any revision of the current rules or issuance of new rules, the impact of which could be material. 31 Table of Contents ​ In October 2015, the EPA issued a new NAAQS ozone standard of 70 ppb, which is a tightening from the 75-ppb standard set in 2008.
We have not been subject to any penalties to date that have materially and adversely impacted or are expected to materially and adversely impact our operations or business. 29 Table of Contents ​ We routinely deal with oil, natural gas and other petroleum products.
Occasionally, we have been assessed penalties for non–compliance, and we could be subject to such penalties in the future. We have not been subject to any penalties to date that have materially and adversely impacted or are expected to materially and adversely impact our operations or business. We routinely deal with oil, natural gas and other petroleum products.
For example, Colorado’s Air Quality Control Commission adopted the “Midstream Rule” on December 20, 2024, to address GHG emissions from midstream oil and gas operations, including from natural gas compressor stations. Under the Midstream Rule, midstream facilities must begin taking steps to reduce GHG emissions from combustion fuel equipment by February 14, 2025.
For example, Colorado’s Air Quality Control Commission adopted the “Midstream Rule” on December 20, 2024, to address GHG emissions from midstream oil and gas operations, including from natural gas compressor stations.
If our information technology systems were to fail and we were unable to recover in a timely way, we may be unable to fulfill critical business functions, which could have a material adverse effect on our business, results of operations and financial condition. 26 Table of Contents ​ The nature of our industry and assets makes us a target for terrorist activities designed to disrupt our ability to service our customers.
If our information technology systems were to fail and we were unable to recover in a timely way, we may be unable to fulfill critical business functions, which could have a material adverse effect on our business, results of operations and financial condition.
We may not be able to maintain or increase our asset and customer base unless we have access to sufficient capital to purchase additional compression equipment. Cash flow from our operations and availability under our Credit Facility may not provide us with sufficient cash to fund our capital expenditure requirements, including any funding requirements related to acquisitions.
Cash flow from our operations and availability under our Credit Facility may not provide us with sufficient cash to fund our capital expenditure requirements, including any funding requirements related to acquisitions. Our ability to grow our asset and customer base could be impacted by limits on our ability to access additional capital.
We do not believe continued implementation of the NAAQS ozone standard will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet predict the impact, if any, of any new Federal Implementation Plan involving new NAAQS standards. 28 Table of Contents ​ New environmental regulations and proposals similar to these, when finalized, and any other new regulations requiring the installation of more sophisticated pollution control equipment or the adoption of other environmental protection measures, could have a material adverse impact on our business, financial condition, results of operations and cash flows.
New environmental regulations and proposals similar to these, when finalized, and any other new regulations requiring the installation of more sophisticated pollution control equipment or the adoption of other environmental protection measures, could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Financial Risks We have a substantial amount of debt that could limit our ability to fund future growth and operations and increase our exposure to risk during adverse economic conditions.
A decision not to pay dividends or a reduction in our dividend payments in the future could have a negative effect on our stock price. Financial Risks We have a substantial amount of debt that could limit our ability to fund future growth and operations and increase our exposure to risk during adverse economic conditions.
At this time, we cannot determine how the current administration will continue to proceed and cannot accurately predict the ensuing impact on social cost or other interagency climate efforts, which may give rise to a material adverse effect on our business, financial condition, results of operations and cash flows.
At this time, we cannot determine how the current administration will continue to proceed and cannot accurately predict the ensuing impact of climate-related policy shifts on our business, financial condition, results of operations and cash flows.
We may need to apply for or amend facility permits or licenses from time to time with respect to storm water or wastewater discharges, waste handling, or air emissions relating to manufacturing activities or equipment operations, which subjects us to new or revised permitting conditions that may be onerous or costly to comply with.
Moreover, failure to comply with these environmental laws and regulations may result in the imposition of administrative, civil and criminal penalties and the issuance of injunctions delaying or prohibiting operations. 32 Table of Contents ​ We may need to apply for or amend facility permits or licenses from time to time with respect to storm water or wastewater discharges, waste handling, or air emissions relating to manufacturing activities or equipment operations, which subjects us to new or revised permitting conditions that may be onerous or costly to comply with.
Any of these measures may reduce the amount of cash available for payment of dividends and the funding of our business requirements, which could have an adverse effect on our business, operations, cash flows or the price of our common stock.
Any of these measures may reduce the amount of cash available for payment of dividends and the funding of our business requirements, which could have an adverse effect on our business, operations, cash flows or the price of our common stock. 25 Table of Contents ​ The breach of any of the covenants under the Debt Agreements could result in a default under the Debt Agreements, which could cause indebtedness under the Debt Agreements to become due and payable.
These factors include, among others, the potential adoption of new government regulations, including those related to fuel conservation measures and climate change regulations, technological advances in fuel economy and energy generation devices.
Supply and demand for oil and natural gas is dependent upon a variety of factors, many of which are beyond our control. These factors include, among others, the potential adoption of new government regulations, including those related to fuel conservation measures and climate change regulations, technological advances in fuel economy and energy generation devices.
The EPA has adopted rules requiring many facilities, including petroleum and natural gas systems, to inventory and report their GHG emissions. In 2024, we did not operate any facilities that were subject to these reporting obligations. In addition, the EPA rules provide air permitting requirements for certain large sources of GHG emissions.
The EPA has adopted rules requiring many facilities, including petroleum and natural gas systems, to inventory and report their GHG emissions. As noted above, in September 2025, EPA proposed to suspend those requirements until 2034. In 2025, we did not operate any facilities that were subject to these reporting obligations.
Some of our existing competitors or new entrants may expand or fabricate new compressors that would create additional competition for the services we provide to our customers. In addition, our customers may purchase and operate their own compression fleets in lieu of using our natural gas compression services.
In addition, we could face significant competition from new entrants into the compression services business and heightened competition from consolidation of our competitors. Some of our existing competitors or new entrants may expand or fabricate new compressors that would create additional competition for the services we provide to our customers.
Our ability to grow our asset and customer base could be impacted by limits on our ability to access additional capital. We may be vulnerable to fluctuations in interest rates due to our variable rate debt obligations. Borrowings under our Credit Facility are subject to variable interest rates.
We may be vulnerable to fluctuations in interest rates due to our variable rate debt obligations. Borrowings under our Credit Facility are subject to variable interest rates.
A significant increase in the price of such equipment, materials and services, as a result of inflation, or other factors, could have a negative impact on our business, results of operations, financial condition and cash flows. 25 Table of Contents ​ Information Technology and Cybersecurity Risks We may not realize the intended benefits of our process and technology transformation project, which could have an adverse effect on our business.
A significant increase in the price of such equipment, materials and services, as a result of inflation, tariffs or other factors, could have a negative impact on our business, results of operations, financial condition and cash flows.
Any such litigation targeting our customers could negatively impact their operation and, in turn, decrease demand for our operations, which could have an adverse impact on our financial condition. 31 Table of Contents ​ In sum, any legislation, regulatory programs or social pressures related to climate change could increase our costs and require substantial capital, compliance, operating and maintenance costs, reduce demand for our services and reduce our access to financial markets.
In sum, any legislation, regulatory programs or social pressures related to climate change could increase our costs and require substantial capital, compliance, operating and maintenance costs, reduce demand for our services and reduce our access to financial markets.
In addition, competition from other buyers could reduce our acquisition opportunities or cause us to pay a higher price than we might otherwise pay. Our sustainability initiatives, including emissions reduction and our public statements and disclosures regarding the same, expose us to numerous risks. ​ We have developed, and we will continue to develop objectives related to sustainability matters.
Our sustainability initiatives, including emissions reduction and our public statements and disclosures regarding the same, expose us to numerous risks. ​ We have developed, and we will continue to develop objectives related to sustainability matters.
In November 2016, the EPA proposed an implementation rule for the 2015 NAAQS ozone standard, but the agency has yet to issue a final implementation rule.
This new standard became effective on December 28, 2015, and the EPA completed designating attainment/non–attainment regions under the revised ozone standard in 2018. In November 2016, the EPA proposed an implementation rule for the 2015 NAAQS ozone standard, but the agency has yet to issue a final implementation rule.
The loss of all or even a portion of the services we provide to these customers, as a result of competition or otherwise, could have a material adverse effect on our business, results of operations and financial condition. 24 Table of Contents ​ Many of our contract operations service agreements have short initial terms and are cancelable on short notice after the initial term, and we cannot be sure that such contracts will be extended or renewed after the end of the initial contractual term.
Many of our contract operations service agreements have short initial terms and are cancelable on short notice after the initial term, and we cannot be sure that such contracts will be extended or renewed after the end of the initial contractual term.
In November 2024, the EPA released its final rule to implement the methane emissions fee with an effective date in January 2025, which is expected to apply to reporting year 2024 emissions.
In November 2024, the EPA released its final rule to implement the methane emissions fee with an effective date in January 2025, which was expected to apply to reporting year 2024 emissions. Twenty-three states have filed a lawsuit challenging the rule, and the change in U.S. presidential administration provides additional uncertainty as to the rule’s future.
The OOOOc rules for existing sources gives the States a two-year deadline to develop and submit to EPA plans for addressing emissions from those sources.
The OOOOc rules for existing sources give the States a two-year deadline to develop and submit to EPA plans for addressing emissions from those sources. However, EPA issued a direct interim final rule in July 2025 and a final rule in December 2025 that pushed the substantive deadlines in OOOOb and OOOOc back to January 2027.
Increased cybersecurity regulations and an escalating cyber terrorist threat environment are expected to require additional investments in security that we cannot currently predict. The implementation of security guidelines and measures and maintenance of insurance, to the extent available, addressing such activities could increase costs.
The nature of our industry and assets makes us a target for terrorist activities designed to disrupt our ability to service our customers. Increased cybersecurity regulations and an escalating cyber terrorist threat environment are expected to require additional investments in security that we cannot currently predict.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, we maintain a Business Continuity and Incident Response Plan, which is validated through tabletop exercises to support our readiness to respond to cybersecurity events. ​ Third-Party Risk Oversight We utilize a third-party risk management solution to monitor key vendors.
Biggest changeIn addition, we maintain a Business Continuity and Incident Response Plan, which is validated through tabletop exercises to support our readiness to respond to cybersecurity events. ​ 38 Table of Contents ​ Third-Party Risk Oversight Based on our analysis of each third-party provider’s criticality to our operations and respective risk profile, our oversight processes may include, among other things, pre-engagement risk assessments through security questionnaire responses and open-source intelligence gathering, negotiated contractual provisions where possible and post-engagement monitoring of external security indicators, through a third-party solution that tracks changes to vendor cybersecurity risk scores and identifies new cybersecurity risks.
See Part I, Item 1A “Risk Factors – Information Technology and Cybersecurity Risks” of this Form 10-K. 33 Table of Contents ​ Cybersecurity Incidents ​ We have not experienced a material cybersecurity incident and although we are subject to ongoing and evolving cybersecurity threats, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
See Part I, Item 1A “Risk Factors – Information Technology and Cybersecurity Risks” of this Form 10-K. 37 Table of Contents ​ Cybersecurity Incidents ​ We have not experienced a material cybersecurity incident and although we are subject to ongoing and evolving cybersecurity threats, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the CIS CSC as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the National Standards as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Our senior manager in charge of IT security has more than a decade of experience in cybersecurity risk management, including CISSP certification. Our IT management team utilizes various processes and technologies to identify, protect, detect, respond, and recover from cybersecurity events and incidents.
Our senior manager in charge of IT security has more than a decade of experience in cybersecurity risk management, including CISSP and C|CISO certifications. Our IT management team utilizes various processes and technologies to identify, protect, detect, respond, and recover from cybersecurity events and incidents.
Other Areas of Risk Management See our 2023 Sustainability Report at www.archrock.com for information associated with additional areas of risk management addressed by our management team and reviewed by our Board of Directors and committees of our Board of Directors. ​ 35 Table of Contents ​
Other Areas of Risk Management See our 2024 Sustainability Report at www.archrock.com for information associated with additional areas of risk management addressed by our management team and reviewed by our Board of Directors and committees of our Board of Directors. ​ 39 Table of Contents ​
These visibility, insights, and processes help us to manage vendor risks. 34 Table of Contents ​ Risk Management with Respect to Information Technology and Cybersecurity Our Board of Directors has an active role, as a whole and through its subcommittees, in oversight of our risks and is assisted by management in the exercise of these responsibilities.
Risk Management with Respect to Information Technology and Cybersecurity Our Board of Directors has an active role, as a whole and through its subcommittees, in oversight of our risks and is assisted by management in the exercise of these responsibilities. Our Board of Directors delegates oversight to specific subcommittees and is informed quarterly through committee reports.
There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. We utilize the CIS CSC to promote best practices and reduce the risk of a successful cybersecurity attack.
There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
To create awareness in our first line of defense, training is also provided to employees to help them identify security risks, which includes routine phishing exercises and appraisal of and assistance with security-related performance.
In addition, the IT management team is subject to specific key performance indicators and performance against such key performance indicators is reviewed by our Audit Committee. To create awareness in our first line of defense, training is also provided to employees to help them identify security risks, which includes routine phishing exercises and appraisal of and assistance with security-related performance.
Our Board of Directors delegates oversight to specific subcommittees and is informed quarterly through committee reports. The Audit Committee is responsible for overseeing our cybersecurity risk management program.
The Audit Committee reports to the Board of Directors regarding its activities, including those related to cybersecurity, as the Audit Committee is responsible for overseeing our cybersecurity risk management program.
Removed
Prior to engagement, we conduct initial risk assessments of our vendors based on security questionnaire responses and open-source intelligence gathering. After engagement, our third-party management solution provides a repeatable measure of security performance based on external security indicators, including monitoring changes to vendor cybersecurity risk scores and identification of new cybersecurity risks.
Added
In executing and assessing our program, we reference National Standards that emphasize identifying and managing risks, protecting critical assets, detecting potential threats, and responding to and recovering from incidents. This helps guide our ongoing efforts to safeguard information systems, maintain business continuity, and reduce cyber risk across the enterprise.
Removed
Key vendor cybersecurity risk scores are included in our cybersecurity risk report provided to executive leadership when there is a noticeable change in the vendor’s cybersecurity risk score.
Added
Executive leadership is kept updated on significant changes to a critical vendor’s cybersecurity risk score. These visibility, insights, and processes help us to manage vendor risks.
Removed
During 2024, our IT management team initiated an independent evaluation of our cybersecurity framework and implemented certain company-wide security enhancements. In addition, the IT management team is subject to specific key performance indicators and performance against such key performance indicators is reviewed by our Audit Committee.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table describes the material facilities, all of which are used by both of our business segments, that we owned or leased at December 31, 2024: ​ ​ ​ ​ ​ Location Status Square Feet Houston, Texas - Corporate office Leased 75,000 Greeley, Colorado ​ Leased ​ 10,000 Houma, Louisiana ​ Owned ​ 60,000 Carlsbad, New Mexico ​ Leased ​ 11,200 Yukon, Oklahoma Owned 85,000 West Alexander, Pennsylvania Leased 15,000 Asherton, Texas Leased 9,000 Midland, Texas Owned 51,000 Midland, Texas ​ Leased ​ 17,000 Midland, Texas ​ Leased ​ 28,375 Pecos, Texas Leased 10,000 Victoria, Texas ​ Owned ​ 23,000 Victoria, Texas Owned 53,700 ​ Our executive office is located at 9807 Katy Freeway, Suite 100, Houston, Texas 77024 and our telephone number is 281–836–8000.
Biggest changeProperties The following table describes the material facilities, all of which are used by both of our business segments, that we owned or leased at December 31, 2025: ​ ​ ​ ​ ​ Location ​ ​ Status ​ ​ Square Feet Houston, Texas - Corporate office Leased 75,000 Greeley, Colorado ​ Leased ​ 10,000 Houma, Louisiana ​ Owned ​ 60,000 Carlsbad, New Mexico ​ Leased ​ 11,200 Yukon, Oklahoma Owned 85,000 West Alexander, Pennsylvania Leased 15,000 Asherton, Texas Leased 9,000 Kennedy, Texas ​ Leased ​ 10,500 Midland, Texas Owned 51,000 Midland, Texas ​ Leased ​ 17,000 Midland, Texas ​ Leased ​ 28,375 Pecos, Texas Leased 10,000 Victoria, Texas ​ Owned ​ 23,000 Victoria, Texas Owned 53,700 ​ Our executive office is located at 9807 Katy Freeway, Suite 100, Houston, Texas 77024 and our telephone number is 281–836–8000.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 17 (“Commitments and Contingencies”) to our Financial Statements for additional information regarding litigation, claims and other legal proceedings. Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeSee Note 16 (“Commitments and Contingencies”) for further details. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by Issuer and Affiliated Purchasers The following table summarizes our purchases of equity securities during the three months ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ ​ ​ Value of Shares ​ ​ ​ ​ ​ ​ ​ Total Number of ​ That May Yet be ​ ​ ​ ​ Average ​ Shares Purchased ​ Purchased Under ​ ​ Total Number ​ Price ​ as Part of Publicly ​ the Publicly ​ ​ of Shares ​ Paid per ​ Announced Plans ​ Announced Plans (dollars in thousands, except per share amounts) Purchased (1) Share (2) or Programs (3) or Programs (3) October 1, 2024 — October 31, 2024 ​ — ​ $ — ​ — ​ $ 37,893 November 1, 2024 — November 30, 2024 309 ​ 19.86 — 37,893 December 1, 2024 — December 31, 2024 — ​ — — 37,893 Total 309 ​ $ 19.86 — ​ ​ (1) Represents shares of common stock purchased from employees to satisfy tax withholding obligations in connection with the vesting of restricted stock awards.
Biggest changePurchases of Equity Securities by Issuer and Affiliated Purchasers The following table summarizes our purchases of equity securities during the three months ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number of ​ Approximate dollar ​ ​ ​ ​ Average ​ shares repurchased ​ value of shares ​ ​ ​ ​ price ​ as part of publicly ​ that may yet be ​ ​ Total number ​ paid per ​ announced plans ​ purchased under the (dollars in thousands, except per share amounts) ​ ​ ​ of shares purchased (1) ​ ​ ​ share (2) ​ ​ ​ or programs (3) ​ ​ ​ plans or programs (3) October 1, 2025 — October 31, 2025 ​ 128,330 ​ $ 23.96 ​ 128,330 ​ $ 130,403 November 1, 2025 — November 30, 2025 294,458 ​ 23.58 294,150 123,467 December 1, 2025 — December 31, 2025 225,000 ​ 25.83 225,000 117,655 Total 647,788 ​ $ 24.44 647,480 ​ ​ (1) Represents shares of common stock purchased from employees to satisfy tax withholding obligations in connection with the vesting of restricted stock awards and shares repurchased under the Share Repurchase Program during the period.
Any future determinations to pay cash dividends to our stockholders will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, and credit and loan agreements in effect at that time and other factors deemed relevant by our Board of Directors.
Any future determinations to pay cash dividends to our stockholders will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, credit and loan agreements in effect at that time and other factors deemed relevant by our Board of Directors.
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Form 10–K. 37 Table of Contents ​ Unregistered Sales of Equity Securities and Use of Proceeds None.
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Form 10–K. 41 Table of Contents ​ Unregistered Sales of Equity Securities and Use of Proceeds None.
Holders As of February 18, 2025, there were approximately 1,200 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by banks, brokers and other nominees.
Holders As of February 18, 2026, there were approximately 1,100 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by banks, brokers and other nominees.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is traded on the New York Stock Exchange under the symbol “AROC.” On February 18, 2025, the closing price of our common stock was $27.96 per share. 36 Table of Contents ​ Comparison of Five Year Cumulative Total Return The performance graph below shows the cumulative total stockholder return on our common stock compared with the S&P 500, AMNAX and AMZ indices over the five–year period beginning on December 31, 2019.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock Our common stock is traded on the New York Stock Exchange under the symbol “AROC.” On February 18, 2026, the closing price of our common stock on the New York Stock Exchange was $32.90 per share. 40 Table of Contents ​ Comparison of Five Year Cumulative Total Return The performance graph below shows the cumulative total stockholder return on our common stock compared with the S&P 500, AMNAX and AMZ indices over the five–year period beginning on December 31, 2020.
The performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10–K into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under those Acts.
The graph assumes reinvestment of dividends and adjusts all closing prices and dividends for stock splits. ​ The performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10–K into any filing under the Securities Act or the Securities Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under those Acts.
Dividends On January 30, 2025, our Board of Directors declared a quarterly dividend of $0.19 per share of common stock, or approximately $33.5 million, which was paid on February 19, 2025 to stockholders of record at the close of business on February 12, 2025.
Dividends On January 29, 2026, our Board of Directors declared a quarterly dividend of $0.22 per share of common stock, or approximately $38.7 million, which was paid on February 18, 2026 to stockholders of record at the close of business on February 10, 2026.
The results are based on an investment of $100 in each of our common stock, the S&P 500, the AMNAX and the AMZ. The graph assumes reinvestment of dividends and adjusts all closing prices and dividends for stock splits.
The results are based on an investment of $100 in each of our common stock, the S&P 500, the AMNAX and the AMZ.
(2) Average price paid per share includes costs associated with the repurchase, as applicable. (3) See Note 18 (“Stockholders’ Equity”) for further details on the Share Repurchase Program. ​ Item 6. [Reserved] ​ Item 7.
See Note 17 (“Stockholders’ Equity”) for further details. (2) Average price paid per share includes costs associated with the repurchase, as applicable. (3) Our Board of Directors authorized the Share Repurchase Program in April 2023, which allowed us to repurchase and retire up to $50.0 million of outstanding common stock.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Financial Statements, the notes thereto, and the other financial information appearing elsewhere in this Form 10–K. The following discussion includes forward–looking statements that involve certain risks and uncertainties.
Added
Between April 2024 and October 2025, extensions of the Share Repurchase Program were approved by our Board of Directors, authorizing an additional $200.0 million, or a total of $250.0 million, to repurchase and retire outstanding common stock through D ecember 31, 2026 . See Note 17 (“Stockholders’ Equity”) for further details . ​ Item 6. [Reserved] ​
Removed
See “Forward–Looking Statements” and Part I, Item 1A. “Risk Factors” in this Form 10–K. This section primarily discusses 2024 and 2023 items and comparisons between these years. For a discussion of changes from 2022 to 2023 and other financial information related to 2023, refer to Part II,

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

71 edited+35 added−18 removed37 unchanged
Biggest changeWe had a liability of $2.7 million recorded for potential penalties and interest (including discontinued operations) related to these unrecognized tax benefits at December 31, 2024, which we are uncertain as to if or when such amounts may be settled.
Biggest changeWe had a liability of $2.8 million recorded for potential penalties and interest (including discontinued operations) related to these unrecognized tax benefits at December 31, 2025, which we are uncertain as to if or when such amounts may be settled. 51 Table of Contents ​ Sources of Cash Credit Facility On December 12, 2025, we amended our Amended and Restated Credit Agreement to, among other things, remove the 0.10% per annum credit spread adjustment that was previously included in the calculation of the interest rate applicable to the loans made under the Credit Facility, decrease the applicable margin for all borrowings by 0.25% per annum such that the applicable margin for borrowings varies and decrease the commitment fee payable on the daily unused amount of the Credit Facility from 0.375% per annum to 0.25% per annum when less than 50% of the Credit Facility is utilized.
As an indicator of our operating performance, adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin, net income (loss) or any other measure presented in accordance with GAAP.
As an indicator of our operating performance, adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin, net income or any other measure presented in accordance with GAAP.
Impairment Assessments of Property, Plant and Equipment and Identifiable Intangible Assets We review long–lived assets, which include property, plant and equipment and intangibles assets that are being amortized, for impairment whenever events or changes in circumstances, including the removal of compressors from our active fleet, indicate that the carrying amount of an asset may not be recoverable.
Impairment Assessments of Property, Plant and Equipment, Goodwill and Identifiable Intangible Assets We review long–lived assets, which include property, plant and equipment, goodwill and intangible assets that are being amortized, for impairment whenever events or changes in circumstances, including the removal of compressors from our active fleet, indicate that the carrying amount of an asset may not be recoverable.
In addition, increased focus of our customers on reducing emissions from, or the use of, combustion engines in compression could increase demand for electric motor-driven compressors or require us to make modifications to our existing natural gas-powered units.
In addition, increased focus of our customers on reducing emissions from, or the use of, combustion engines in compression could increase demand for electric compressors or require us to make modifications to our existing natural gas-powered units.
While we anticipate that the combination of commodity prices and demand may likely have a positive impact on activity levels in both the upstream and midstream sectors, we cannot predict the ultimate magnitude of that impact on our business and expect it to be varied across our operations, depending on the region, customer, nature of our services, contract term and other factors.
While we anticipate that the combination of natural gas prices and demand may likely have a positive impact on activity levels in both the upstream and midstream sectors, we cannot predict the ultimate magnitude of that impact on our business and expect it to be varied across our operations, depending on the region, customer, nature of our services, contract term and other factors.
Such repurchases or exchanges, if any, may be material, will be upon terms and prices as we may determine and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. 45 Table of Contents ​ Cash Requirements Our contract operations business is capital intensive, requiring significant investment to maintain and upgrade existing operations.
Such repurchases or exchanges, if any, may be material, will be upon terms and prices as we may determine and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. Cash Requirements Our contract operations business is capital intensive, requiring significant investment to maintain and upgrade existing operations.
Our Amended and Restated Credit Agreement requires that we meet certain financial ratios (see Note 16 (“Long-Term Debt”)) and contains various additional covenants including, but not limited to, mandatory prepayments from the net cash proceeds of certain asset transfers, restrictions on the use of proceeds from borrowings and limitations on our ability to incur additional indebtedness, engage in transactions with affiliates, merge or consolidate, sell assets, make certain investments and acquisitions, make loans, grant liens, repurchase equity and pay distributions.
Our Amended and Restated Credit Agreement requires that we meet certain financial ratios and contains various additional covenants including, but not limited to, mandatory prepayments from the net cash proceeds of certain asset transfers, restrictions on the use of proceeds from borrowings and limitations on our ability to incur additional indebtedness, engage in transactions with affiliates, merge or consolidate, sell assets, make certain investments and acquisitions, make loans, grant liens, repurchase equity and pay distributions.
We are a premier provider of natural gas compression services to customers in the energy industry throughout the U.S., and a leading supplier of aftermarket services to customers that own compression equipment in the U.S. We operate in two business segments: contract operations and aftermarket services.
We are a premier provider of natural gas compression services, in terms of total compression fleet horsepower, to customers in the energy industry throughout the U.S., and a leading supplier of aftermarket services to customers that own compression equipment in the U.S. We operate in two business segments: contract operations and aftermarket services.
Our contract operations services primarily include designing, sourcing, owning, installing, operating, servicing, repairing and maintaining our owned fleet of natural gas compression equipment to provide natural gas compression services to our customers.
Our contract operations business primarily includes designing, sourcing, owning, installing, operating, servicing, repairing and maintaining our owned fleet of natural gas compression equipment to provide natural gas compression services to our customers.
In addition, we had $19.5 million of unrecognized tax benefits (including discontinued operations) recorded as liabilities related to uncertain tax positions at December 31, 2024, which are uncertain as to if or when such amounts may be settled.
In addition, we had $31.3 million of unrecognized tax benefits (including discontinued operations) recorded as liabilities related to uncertain tax positions at December 31, 2025, which are uncertain as to if or when such amounts may be settled.
The $10.0 million of issuance costs were recorded as deferred financing costs within long-term debt in our consolidated balance sheets and are being amortized to interest expense in our consolidated statement of operations over the term of the notes.
In January 2026, the approximately $10.6 million of issuance costs were recorded as deferred financing costs within long-term debt in our consolidated balance sheets and are being amortized to interest expense in our consolidated statement of operations over the term of the notes.
These limitations are primarily due to the exclusion of SG&A, depreciation and amortization, long-lived and other asset impairments, restructuring charges, debt extinguishment loss, interest expense, transaction-related costs, gain on sale of assets, net, other expense (income), net and provision for income taxes.
These limitations are primarily due to the exclusion of SG&A, depreciation and amortization, long-lived and other asset impairment, restructuring charges, debt extinguishment loss, interest expense, transaction-related costs, gain on sale of assets, net, other expense, net, provision for income taxes and equity in net loss of unconsolidated affiliate.
Likewise, if the estimated useful life is increased, the adjustment to the useful life would decrease depreciation expense per year on a prospective basis. Impairment of Assets During the year ended December 31, 2024, we recorded long–lived and other asset impairments of $10.7 million.
Likewise, if the estimated useful life is increased, the adjustment to the useful life would decrease depreciation expense per year on a prospective basis. Impairment of Assets During the year ended December 31, 2025, we recorded long–lived and other asset impairments of $18.3 million.
Such differences are reflected as increases or decreases to income tax expense in the period in which the new information becomes available. Recent Accounting Developments See Note 3 (“Recent Accounting Developments”) to our Financial Statements.
Such differences are reflected as increases or decreases to income tax expense in the period in which the new information becomes available. Recent Accounting Developments See Note 3 (“Recent Accounting Developments”) for further details.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Aside from the budget reconciliation process currently occurring in Congress, management is not aware of any such changes that would have a material effect on our financial position, results of operations or cash flows.
Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on our financial position, results of operations or cash flows.
In order to improve our operations and further reduce operating expenses, we invested and continue to invest significant resources into a process and technology transformation project that has, among other things, replaced our former ERP, supply chain and inventory management systems and expanded the remote monitoring capabilities of our compression fleet.
In order to improve our operations and further reduce operating expenses, we continue to invest significant resources into process and technology transformation that has, among other things, enhanced certain technology, supply chain and inventory management systems, replaced network infrastructure and expanded the remote monitoring capabilities of our compression fleet.
Our Credit Facility matures on May 16, 2028 (or December 2, 2026 or December 3, 2027, as applicable, if any portion of our 2027 Senior Notes and 2028 Senior Notes, respectively, remain outstanding at such date) and has an aggregate revolving commitment of $1.1 billion.
Our Credit Facility matures on May 16, 2028 (or December 3, 2027 if any portion of our 2028 Notes remain outstanding at such date) and has an aggregate revolving commitment of $1.5 billion.
Outlook The EIA Outlook forecasts the following year–over–year changes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ 2026 ​ U.S. dry natural gas production 2 % ​ 2 % U.S. oil production 3 % ​ 1 % U.S. natural gas domestic consumption ​ 1 % ​ (1) % Liquefied natural gas exports 17 % ​ 16 % The EIA Outlook expects natural gas production to continue to increase to all-time highs in 2025 and 2026.
Outlook The EIA Outlook forecasts the following year–over–year changes: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2026 ​ 2027 ​ U.S. dry natural gas production 1 % ​ 1 % U.S. oil production 0 % ​ (3) % U.S. natural gas domestic consumption ​ (1) % ​ 1 % Liquefied natural gas exports 9 % ​ 10 % The EIA Outlook expects natural gas production to continue to increase to all-time highs in 2026 and 2027.
The following table presents the results of our compression fleet impairment review, as recorded in our contract operations segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2024 2023 Idle compressors retired from the active fleet ​ ​ 95 ​ 105 Horsepower of idle compressors retired from the active fleet ​ ​ 66,000 ​ 53,000 Impairment recorded on idle compressors retired from the active fleet ​ $ 10,681 ​ $ 12,034 ​ Restructuring charges .
The following table presents the results of our compression fleet impairment review, as recorded in our contract operations segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (dollars in thousands) ​ 2025 ​ ​ ​ 2024 Idle compressors retired from the active fleet ​ ​ 90 ​ 95 Horsepower of idle compressors retired from the active fleet ​ ​ 38,000 ​ 66,000 Impairment recorded on idle compressors retired from the active fleet ​ $ 8,671 ​ $ 10,681 ​ Restructuring charges .
The increase in depreciation and amortization was primarily due to fixed assets additions, including $15.8 million depreciation and amortization associated with the compression units and intangible assets acquired in the TOPS Acquisition, and accelerated depreciation associated with certain assets.
The increase in depreciation and amortization was primarily due to fixed assets additions, including depreciation and amortization associated with the compression units and intangible assets acquired in the TOPS Acquisition and the NGCS Acquisition.
Sources of Cash Revolving Credit Facility During the years ended December 31, 2024 and 2023, our Credit Facility had an average daily balance of $315.0 million and $298.8 million, respectively. The weighted average annual interest rate on the outstanding balance under the Credit Facility was 6.8% and 7.7% at December 31, 2024 and 2023, respectively.
During the years ended December 31, 2025 and 2024, our Credit Facility had an average daily balance of $713.8 million and $315.0 million, respectively. The weighted average annual interest rate on the outstanding balance under the Credit Facility was 5.8% and 6.8% at December 31, 2025 and 2024, respectively.
Operating Highlights ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (horsepower in thousands) 2024 ​ 2023 ​ 2022 ​ Total available horsepower (at period end) (1) 4,401 3,759 3,726 Total operating horsepower (at period end) (2) 4,227 3,607 3,448 Average operating horsepower (3) 3,794 3,554 3,328 Horsepower utilization: Spot (at period end) 96 % 96 % 93 % Average 95 % 95 % 87 % (1) Defined as idle and operating horsepower.
Operating Highlights ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ (horsepower in thousands) 2025 ​ 2024 ​ 2023 ​ Total available horsepower (at period end) (1) 4,788 ​ ​ ​ 4,401 ​ ​ ​ 3,759 ​ ​ ​ Total operating horsepower (at period end) (2) 4,571 4,227 3,607 Average operating horsepower (3) 4,494 3,794 3,554 Horsepower utilization: ​ ​ ​ Spot (at period end) 95 % 96 % 96 % Average 96 % 95 % 95 % (1) Defined as idle and operating horsepower.
Revenue in our contract operations business increased approximately $105.6 million due to higher rates and an increase in average operating horsepower, as well as an increase of $65.5 million due to the compression units acquired in the TOPS Acquisition. ​ The increase in cost of sales, exclusive of depreciation and amortization, was primarily due to a $17.9 million increase in employee compensation, including the addition of headcount from the TOPS Acquisition, a $4.1 million increase in parts expense, a $1.4 million increase in auto expense and a $1.3 million increase in local and miscellaneous taxes.
Revenue in our contract operations business increased approximately $291.7 million, due primarily to the compression units acquired in the TOPS Acquisition and in the NGCS Acquisition, higher rates and an increase in average operating horsepower. ​ The increase in cost of sales, exclusive of depreciation and amortization, was primarily due to a $37.3 million increase in employee compensation, including the addition of headcount from the TOPS Acquisition and the NGCS Acquisition, and a $17.1 million increase in parts expense due to compression units acquired in the TOPS Acquisition and the NGCS Acquisition, as well as an increase in operating horsepower.
Natural gas consumption is expected to be largely consistent with 2024, reflecting consistent usage of natural gas in the electric power generation and residential sectors, as well as increased LNG exports and exports of natural gas via pipeline to Mexico. We believe the outlook for the energy industry in the U.S. is positive.
Natural gas consumption is expected to be largely consistent with 2025, reflecting consistent usage of natural gas in the electric power sector, as well as increased LNG exports and exports of natural gas via pipeline to Mexico, offset by lower industrial, residential, and commercial demand. We believe the outlook for the energy industry in the U.S. is positive.
Non–GAAP Financial Measures Management uses a variety of financial and operating metrics to analyze our performance. These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measure of adjusted gross margin. 41 Table of Contents ​ We define adjusted gross margin as total revenue less cost of sales, exclusive of depreciation and amortization.
These metrics are significant factors in assessing our operating results and profitability and include the non-GAAP financial measure of adjusted gross margin. We define adjusted gross margin as total revenue less cost of sales, exclusive of depreciation and amortization.
The increase in revenue was primarily due to increased revenue from our contract operations business. See “Contract Operations” below for further details. Net income was $172.2 million and $105.0 million during the years ended December 31, 2024 and 2023, respectively.
The increase in revenue was due to increased revenue from our contract operations business and aftermarket services business. See “Contract Operations” and “Aftermarket Services” below for further details. Net income was $322.3 million and $172.2 million during the years ended December 31, 2025 and 2024, respectively.
We incurred $3.2 million of debt extinguishment loss during the year ended December 31, 2024 as a result of the 2027 Notes Tender Offer. 44 Table of Contents ​ Interest expense.
We incurred $0.9 million of debt extinguishment loss during the year ended December 31, 2025 as a result of the 2027 Notes Redemption compared to $3.2 million during the year ended December 31, 2024 as a result of the 2027 Notes Tender Offer. Interest expense.
The increase in other expense, net was primarily due to a $0.5 million increase in unrealized change in the fair value of our investment in an unconsolidated affiliate recognized during the year ended December 31, 2024, compared to the year ended December 31, 2023.
Other expense, net. The decrease in other expense, net was primarily due to an increase in proceeds from insurance and other settlements and a decrease in unrealized change in the fair value of our investment in an unconsolidated affiliate recognized during the year ended December 31, 2025, compared to the year ended December 31, 2024.
These expenditures substantially modify the operating parameters of the compression package such that it can be used in applications for which it previously was not suited. Growth capital expenditures for the year ended December 31, 2024 were $250.9 million, including TOPS’ specific growth capital expenditures of $69.4 million.
These expenditures substantially modify the operating parameters of the compression package such that it can be used in applications for which it previously was not suited. Growth capital expenditures were $347.7 million and $250.9 million for the years ended December 31, 2025 and 2024, respectively. Maintenance Capital Expenditures.
The reconciliation of net income to adjusted gross margin is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2024 2023 2022 Net income ​ $ 172,231 ​ $ 104,998 ​ $ 44,296 Selling, general and administrative ​ 139,121 ​ 116,639 ​ 117,184 Depreciation and amortization ​ 193,194 ​ 166,241 ​ 164,259 Long-lived and other asset impairment ​ 10,681 ​ 12,041 ​ 21,442 Restructuring charges ​ ​ — ​ ​ 1,775 ​ ​ — Debt extinguishment loss ​ ​ 3,181 ​ ​ — ​ ​ — Interest expense ​ 123,610 ​ 111,488 ​ 101,259 Transaction-related costs ​ ​ 13,249 ​ ​ — ​ ​ — Gain on sale of assets, net ​ ​ (17,887) ​ ​ (10,199) ​ ​ (40,494) Other expenses, net ​ 1,561 ​ 1,086 ​ 1,845 Provision for income taxes ​ 60,149 ​ 37,249 ​ 16,293 Adjusted gross margin ​ $ 699,090 ​ $ 541,318 ​ $ 426,084 ​ The following table reconciles adjusted gross margin to gross margin, its most directly comparable to GAAP measure: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2024 2023 2022 Total revenues ​ $ 1,157,591 ​ $ 990,337 ​ $ 845,568 Cost of sales, exclusive of depreciation and amortization ​ (458,501) ​ (449,019) ​ (419,484) Depreciation and amortization ​ (193,194) ​ (166,241) ​ (164,259) Gross margin ​ 505,896 ​ 375,077 ​ 261,825 Depreciation and amortization ​ ​ 193,194 ​ ​ 166,241 ​ ​ 164,259 Adjusted gross margin ​ $ 699,090 ​ $ 541,318 ​ $ 426,084 ​ 42 Table of Contents ​ RESULTS OF OPERATIONS Summary of Results Revenue was $1,157.6 million and $990.3 million during the years ended December 31, 2024 and 2023, respectively.
The reconciliation of net income to adjusted gross margin is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Net income ​ $ 322,290 ​ $ 172,231 ​ $ 104,998 Selling, general and administrative ​ 147,806 ​ 139,121 ​ 116,639 Depreciation and amortization ​ 256,761 ​ 193,194 ​ 166,241 Long-lived and other asset impairment ​ 18,290 ​ 10,681 ​ 12,041 Restructuring charges ​ ​ 1,605 ​ ​ — ​ ​ 1,775 Debt extinguishment loss ​ ​ 890 ​ ​ 3,181 ​ ​ — Interest expense ​ 165,340 ​ 123,610 ​ 111,488 Transaction-related costs ​ ​ 12,705 ​ ​ 13,249 ​ ​ — Gain on sale of assets, net ​ ​ (47,081) ​ ​ (17,887) ​ ​ (10,199) Other expense, net ​ 439 ​ 1,561 ​ 1,086 Provision for income taxes ​ 100,845 ​ 60,149 ​ 37,249 Equity in net loss of unconsolidated affiliate ​ ​ 503 ​ ​ — ​ ​ — Adjusted gross margin ​ $ 980,393 ​ $ 699,090 ​ $ 541,318 ​ 46 Table of Contents ​ The following table reconciles gross margin to adjusted gross margin, its most directly comparable to GAAP measure: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Total revenues ​ $ 1,489,818 ​ $ 1,157,591 ​ $ 990,337 Cost of sales, exclusive of depreciation and amortization ​ (509,425) ​ (458,501) ​ (449,019) Depreciation and amortization ​ (256,761) ​ (193,194) ​ (166,241) Gross margin ​ 723,632 ​ 505,896 ​ 375,077 Depreciation and amortization ​ ​ 256,761 ​ ​ 193,194 ​ ​ 166,241 Adjusted gross margin ​ $ 980,393 ​ $ 699,090 ​ $ 541,318 ​ RESULTS OF OPERATIONS Summary of Results Revenue was $1,489.8 million and $1,157.6 million during the years ended December 31, 2025 and 2024, respectively.
In response, we increased our investment in new large horsepower fleet units and expanded our fleet through the TOPS Acquisition. Our contract operations revenue and total operating horsepower increased 21% and 17%, respectively in 2024.
In response, we increased our investment in new large horsepower fleet units and expanded our fleet through the NGCS Acquisition. Our contract operations revenue and period-end total operating horsepower increased 30% and 8%, respectively, in 2025.
Further, we depend on suppliers for the materials, parts, equipment and lube oil necessary to our operations, which exposes us to volatility in prices. Significant price increases for these inputs could adversely affect our operating profits. Supply chain disruptions could also adversely affect our ability to obtain, or increase the cost of, such items.
Further, we depend on suppliers for the materials, parts, equipment and lube oil necessary to our operations, which exposes us to volatility in prices. Significant price increases for these inputs, as a result of inflation, tariffs, or otherwise, could adversely affect our operating profits.
Cash Flows Cash flows provided by (used in) each type of activity were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2024 2023 Net cash provided by (used in): ​ ​ ​ Operating activities ​ $ 429,591 ​ $ 310,187 Investing activities ​ (1,160,063) ​ (232,491) Financing activities ​ ​ 733,554 ​ (77,924) Net increase (decrease) in cash and cash equivalents ​ $ 3,082 ​ $ (228) ​ Operating Activities.
Cash Flows Cash flows provided by (used in) each type of activity were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2025 ​ ​ ​ 2024 Net cash provided by (used in): ​ ​ ​ ​ ​ Operating activities ​ $ 622,107 ​ $ 429,591 Investing activities ​ (606,899) ​ (1,160,063) Financing activities ​ ​ (18,075) ​ 733,554 Net (decrease) increase in cash and cash equivalents ​ $ (2,867) ​ $ 3,082 ​ Operating Activities.
Maintenance capital expenditures are related to major overhauls of significant components of a compression package, such as the engine, electric motor, compressor and cooler, which return the components to a like–new condition, but do not modify the application for which the compression package was designed.
Maintenance capital expenditures are related to major overhauls of significant components of a compression package, such as the engine, electric motor, compressor and cooler, which return the components to a like–new condition, but do not modify the application for which the compression package was designed. 50 Table of Contents ​ Maintenance capital expenditures were $110.7 million and $87.8 million during the years ended December 31, 2025 and 2024, respectively.
Costs and Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2024 2023 Selling, general and administrative $ 139,121 ​ $ 116,639 Depreciation and amortization 193,194 ​ 166,241 Long-lived and other asset impairment 10,681 ​ 12,041 Restructuring charges ​ ​ — ​ ​ 1,775 Debt extinguishment loss ​ ​ 3,181 ​ ​ — Interest expense 123,610 ​ 111,488 Transaction-related costs ​ ​ 13,249 ​ ​ — Gain on sale of assets, net ​ ​ (17,887) ​ ​ (10,199) Other expense, net ​ ​ 1,561 ​ ​ 1,086 ​ Selling, general and administrative.
Costs and Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Selling, general and administrative $ 147,806 ​ $ 139,121 Depreciation and amortization 256,761 ​ 193,194 Long-lived and other asset impairment 18,290 ​ 10,681 Restructuring charges ​ ​ 1,605 ​ ​ — Debt extinguishment loss ​ ​ 890 ​ ​ 3,181 Interest expense 165,340 ​ 123,610 Transaction-related costs ​ ​ 12,705 ​ ​ 13,249 Gain on sale of assets, net ​ ​ (47,081) ​ ​ (17,887) Other expense, net ​ ​ 439 ​ ​ 1,561 ​ Selling, general and administrative.
The increase was partially offset by a decrease in depreciation associated with assets reaching the end of their depreciable lives, the impact of compression and other asset sales, and long-lived asset impairments. Long–lived and other asset impairment.
The increase was partially offset by a decrease in depreciation associated with assets reaching the end of their depreciable lives as well as compression and other asset sales. Long–lived and other asset impairment. The increase in long-lived and other asset impairment was primarily due to remeasurement of assets in connection with the Flowco Disposition of $9.6 million.
Provision for Income Taxes The increase in provision for income taxes was primarily due to the tax effect of the increase in book income and the limitation on executive compensation offset by the benefit from equity-settled long-term incentive compensation during the year ended December 31, 2024, compared to the year ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase ​ (dollars in thousands) ​ 2024 2023 (Decrease) ​ Provision for income taxes ​ $ 60,149 ​ $ 37,249 61 % Effective tax rate ​ 26 % 26 % - % LIQUIDITY AND CAPITAL RESOURCES Overview Our ability to fund operations, finance capital expenditures and pay dividends depends on the levels of our operating cash flows and access to the capital and credit markets.
Provision for Income Taxes The increase in provision for income taxes was primarily due to the tax effect of the increase in book income during the year ended December 31, 2025, compared to the year ended December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase ​ (dollars in thousands) ​ 2025 ​ ​ ​ 2024 ​ ​ ​ (Decrease) ​ Provision for income taxes ​ $ 100,845 ​ $ 60,149 68 % Effective tax rate ​ 24 % 26 % (2) % 49 Table of Contents ​ LIQUIDITY AND CAPITAL RESOURCES Overview Our ability to fund operations, finance capital expenditures, fund share repurchases and pay dividends depends on the levels of our operating cash flows and access to the capital and credit markets.
Capital Requirements and the Availability of External Sources of Capital. We funded a significant portion of our capital expenditures and the TOPS Acquisition with proceeds from the July 2024 Equity Offering and the 2032 Notes offering and borrowings under the Credit Facility.
Capital Requirements, Availability of Capital Equipment and the Availability of External Sources of Capital. We funded a significant portion of our capital expenditures, the NGCS Acquisition and the 2027 Notes Redemption with borrowings under the Credit Facility.
The increase in gain on sale of assets, net was primarily due to gains of $17.6 million on compression asset sales during the year ended December 31, 2024 compared to gains of $7.6 million on compression asset sales during the year ended December 31, 2023. Other expense, net.
See Note 4 (“Business Transactions”) for further details . Gain on sale of assets, net. The increase in gain on sale of assets, net was primarily due to gains of $45.3 million on compression asset sales during the year ended December 31, 2025, compared to gains of $17.6 million on compression asset sales during the year ended December 31, 2024.
The increase in interest expense was primarily due to a higher average outstanding balance of long-term debt due to the 2032 Notes offering, an increase in the outstanding balance on the Credit Facility and higher interest rates.
The increase in interest expense was primarily due to a higher average outstanding balance of long-term debt primarily due to the 2032 Notes and borrowings under our Credit Facility to fund cash consideration of the TOPS Acquisition and the NGCS Acquisition.
Dividends On January 30, 2025, our Board of Directors declared a quarterly dividend of $0.19 per share of common stock, or approximately $33.5 million, which was paid on February 19, 2025 to stockholders of record at the close of business on February 12, 2025.
On January 29, 2026, our Board of Directors declared a quarterly dividend of $0.22 per share of common stock, which was paid on February 18, 2026 to stockholders of record at the close of business on February 10, 2026.
Key Challenges and Uncertainties In addition to general market conditions in the oil and natural gas industry and competition in the natural gas compression industry, we believe the following represent the key challenges and uncertainties we will face in the future. Labor. We believe that our ability to hire, train and retain qualified personnel will continue to be important.
Key Challenges and Uncertainties In addition to general market conditions in the oil and natural gas industry and competition in the natural gas compression industry, we believe the following represent the key challenges and uncertainties we will face in the future. 44 Table of Contents ​ Labor.
(3) Defined as average of period end horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue, including operating horsepower as of September 30, 2024 through December 31, 2024 for compressors acquired in the TOPS Acquisition.
(3) Defined as average of period end horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue, including operating horsepower for the compressors acquired in the NGCS Acquisition beginning May 1, 2025 through December 31, 2025 and for the compressors acquired in the TOPS Acquisition beginning September 30, 2024 through December 31, 2025. 45 Table of Contents ​ Non–GAAP Financial Measures Management uses a variety of financial and operating metrics to analyze our performance.
The increase was primarily driven by higher adjusted gross margin from our contract operations business and higher gain on sale of assets, net.
The increase was primarily driven by higher adjusted gross margin from both our contract operations business and aftermarket services business, as well as an increase in gain on sale of assets and a reduction in debt extinguishment loss.
See Note 4 (“Business Transactions”) for further details. 2032 Notes On August 26, 2024, we completed a private offering of $700.0 million aggregate principal amount of 6.625% senior notes due September 2032 and received net proceeds of $690.0 million after deducting issuance costs.
See Note 15 (“Long-Term Debt”) for further details. ​ 2034 Notes ​ On January 21, 2026, we completed a private offering of $800.0 million aggregate principal amount of 6.0% senior notes due 2034 and received net proceeds of $789.4 million after deducting issuance costs.
Approximately 64% of our operating fleet is deployed for midstream natural gas gathering applications, with the remaining fleet being used in gas lift applications to enhance oil production.
See Note 4 (“Business Transactions”) for further details. Trends and Outlook The key driver of our business is the production of U.S. oil and natural gas. Approximately 60% of our operating fleet is deployed for midstream natural gas gathering applications, with the remaining fleet being used in gas lift applications to enhance oil production.
Further, the cost of labor has increased and may continue to increase in the future with increases in demand, which will require us to incur additional costs. 40 Table of Contents ​ Cost Management .
Our ability to grow and to continue our current level of service to our customers will depend in part on our success in hiring, training and retaining our employees. Further, the cost of labor has increased and may continue to increase in the future with increases in demand, which will require us to incur additional costs. Cost Management .
Property, plant and equipment are carried at cost and depreciated using the straight–line basis over the estimated useful life of the asset.
Depreciation Property, plant and equipment, net, at December 31, 2025 was $3.7 billion and depreciation expense was $242.3 million for the year ended December 31, 2025. Property, plant and equipment are carried at cost and depreciated using the straight–line basis over the estimated useful life of the asset.
The development of these basins producing both commodities has created additional incremental demand for natural gas compression over the recent past as it is a critical method to transport associated gas volumes or enhance oil production through gas lift. 39 Table of Contents ​ Current Trends According to the EIA Outlook, average U.S. oil and dry natural gas and production were as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 2022 Average dry natural gas production (Bcf/d) 103.0 103.8 98.0 Average oil production (MMb/d) 13.2 12.9 11.9 ​ During 2024, U.S. natural gas and oil production grew to record levels, resulting in strong demand for our compression services.
Current Trends According to the EIA Outlook, average U.S. oil and dry natural gas and production were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Average dry natural gas production (Bcf/d) 107.4 103.0 103.8 Average oil production (MMb/d) 13.6 13.2 12.9 ​ During 2025, U.S. natural gas and oil production grew to record levels, resulting in strong demand for our compression services.
We have no near-term maturities and believe that our operating cash flows and borrowings under the Credit Facility will be sufficient to meet our future liquidity needs. We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt securities in open market purchases, privately negotiated transactions or otherwise.
We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity or debt securities in open market purchases, privately negotiated transactions or otherwise.
Although we have been able to historically satisfy our personnel needs, retaining employees in our industry continues to be a challenge. Our ability to grow and to continue our current level of service to our customers will depend in part on our success in hiring, training and retaining our employees.
We believe that our ability to hire, train and retain qualified personnel will continue to be important. Although we have been able to historically satisfy our personnel needs, retaining employees in our industry continues to be a challenge.
This decrease was partially offset by an increase in scheduled and unscheduled maintenance activities due to maintenance cycle requirements. Projected Capital Expenditures.
The increase in maintenance capital expenditures was primarily due to an increase in scheduled and unscheduled maintenance activities due to maintenance cycle requirements and the addition of the compression units acquired in the NGCS Acquisition and the TOPS Acquisition, partially offset by lower make–ready investment. Projected Capital Expenditures.
As our business is so closely aligned with production and is typically less directly impacted by commodity prices, we are not as exposed to the volatility often faced in shorter–cycle oil field service businesses.
As our business is so closely aligned with production and is typically less directly impacted by commodity prices, we are not as exposed to the volatility often faced in shorter–cycle oil field service businesses. 43 Table of Contents ​ Domestic natural gas production generally occurs either in basins where natural gas is produced alongside oil, also known as “associated” gas, such as the Permian and Delaware Basins, the Eagle Ford and the Mid–Continent or in natural gas basins, such as the Marcellus, Utica and Haynesville Shales.
The increase in SG&A was primarily driven by a $17.2 million increase in employee incentive and other compensation expense, a $2.4 million increase in professional and consulting fees, a $0.8 million increase in network and computer-related costs and a $0.7 million increase in insurance expense. Depreciation and amortization.
The increase in SG&A was primarily driven by a $8.0 million increase in employee compensation and benefits expense, a $2.0 million increase in professional fees, a $1.7 million increase in information technology expense and a $1.4 million increase in insurance expense. These increases were partially offset by a $4.9 million decrease in long-term performance-based incentive compensation expense. Depreciation and amortization.
Restructuring charges of $1.8 million during the year ended December 31, 2023 consisted of severance and consulting costs related to our restructuring activities. See Note 23 (“Restructuring Charges”) for further details on these restructuring charges. Debt extinguishment loss.
Restructuring charges of $1.6 million during the year ended December 31, 2025 consisted of s everance and property disposal as well as consolidation and closure costs . See Note 22 (“Restructuring Charges”) for further details. Debt extinguishment loss.
Overview We are an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping our customers produce, compress and transport natural gas in a safe and environmentally responsible way.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10–K for the year ended December 31, 2024 filed with the SEC on February 25, 2025. 42 Table of Contents ​ Overview We are an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping our customers produce, compress and transport natural gas in a safe and environmentally responsible way.
See Note 22 (“Long-Lived and Other Asset Impairment”) and Note 27 (“Fair Value Measurements”) to our Financial Statements for further details of our fleet asset impairments. 49 Table of Contents ​ Income Taxes Our income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid.
See Note 2 (“Basis of Presentation and Significant Accounting Policies”) and Note 9 (“Goodwill and Intangibles Assets, net”) for further details. Income Taxes Our income tax expense, deferred tax assets and liabilities and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid.
We periodically review the future deployment of our idle compressors for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. We also evaluate for impairment our idle units that have been culled from our compression fleet in prior years and are available for sale.
See Note 4 (“Business Transactions”) for further details. This increase was partially offset by a decrease of $2.0 million in compression fleet impairment. 48 Table of Contents ​ We periodically review the future deployment of our idle compressors for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate.
We incurred $13.2 million of professional fees, compensation-related and other costs during the year ended December 31, 2024 related to the TOPS Acquisition. See Note 4 (“Business Transactions”) for further details on these transaction-related costs. Gain on sale of assets, net.
We incurred $9.1 million of professional fees, compensation and other costs related to the NGCS Acquisition during the year ended December 31, 2025, and we incurred $3.6 million and $13.2 million of professional fees, compensation and other costs related to the TOPS Acquisition during the years ended December 31, 2025 and 2024, respectively.
Any future determinations to pay cash dividends to our stockholders will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, and credit and loan agreements in effect at that time and other factors deemed relevant by our Board of Directors. 46 Table of Contents ​ Contractual Obligations Our material contractual obligations as of December 31, 2024 consisted of the following: • Long–term debt of $2.2 billion, all of which is due in 2027, 2028 and 2032; • Estimated interest on our long–term debt of $666.1 million, consisting of annual payments of approximately $147.1 million in 2025 and 2026, approximately $131.7 million in 2027, approximately $70.1 million in 2028, approximately $46.4 million in 2029, and approximately $123.7 million thereafter; • Purchase commitments of $341.1 million, of which $337.5 million is due in 2025, that primarily consist of commitments to purchase fleet assets; and • Operating lease payments of $18.9 million, consisting of annual payments of approximately $4.6 million in 2025, approximately $4.0 million in 2026, approximately $3.0 million in 2027, approximately $2.5 million in 2028 and 2029, and approximately $2.3 million thereafter.
Contractual Obligations Our material contractual obligations as of December 31, 2025 consisted of the following: • Long–term debt of $2.4 billion, all of which is due in 2028 and 2032; • Estimated interest on our long–term debt of $551.8 million, consisting of annual payments of approximately $151.2 million in 2026 and 2027, approximately $79.3 million in 2028, annual payments of approximately $46.4 million in 2029 and 2030, and approximately $77.3 million thereafter; • Purchase commitments of $251.4 million, of which $244.6 million is due in 2026, and primarily consists of commitments to purchase fleet assets; and • Operating lease payments of $16.4 million, consisting of annual payments of approximately $4.7 million in 2026, approximately $3.7 million in 2027, approximately $2.9 million in 2028, approximately $2.8 million in 2029, approximately $1.9 million in 2030, and approximately $0.4 million thereafter.
As of December 31, 2024, there were $4.0 million of letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 2.2%. We amended and restated our Credit Facility on May 16, 2023; see Note 16 (“Long-Term Debt”) to our Financial Statements for details on the Amended and Restated Credit Agreement. Credit Facility Terms.
As of December 31, 2025, there were $3.0 million of letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 2.0%. Credit Facility Terms.
These increases were partially offset by increases in depreciation and amortization, provision for income taxes, SG&A, transaction-related costs, interest expense and debt extinguishment loss. ​ Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Contract Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase ​ (dollars in thousands) ​ 2024 2023 (Decrease) ​ Revenue ​ $ 980,405 ​ $ 809,439 ​ 21 % Cost of sales, exclusive of depreciation and amortization ​ 323,052 ​ 306,748 ​ 5 % Adjusted gross margin ​ $ 657,353 ​ $ 502,691 ​ 31 % Adjusted gross margin percentage (1) ​ 67 % 62 % 5 % (1) Defined as adjusted gross margin divided by revenue.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Contract Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase ​ (dollars in thousands) ​ 2025 ​ ​ ​ 2024 ​ ​ ​ (Decrease) ​ Revenue ​ $ 1,272,081 ​ $ 980,405 ​ 30 % Cost of sales, exclusive of depreciation and amortization ​ 343,136 ​ 323,052 ​ 6 % Adjusted gross margin ​ $ 928,945 ​ $ 657,353 ​ 41 % Adjusted gross margin percentage (1) ​ 73 % 67 % 6 % (1) Defined as adjusted gross margin divided by revenue.
The increase in net cash used in investing activities was primarily due to $868.7 million of cash paid in the TOPS Acquisition and a $60.4 million increase in capital expenditures, partially offset by a decrease of $4.8 million in investment in non-consolidated affiliates and a $4.6 million decrease in proceeds from the sale of property, plant and equipment. Financing Activities.
The decrease in net cash used in investing activities was primarily due to cash paid in the TOPS Acquisition of $868.7 million in 2024 compared to cash paid in the NGCS Acquisition of $296.5 million in 2025, an increase of $71.0 million in proceeds from the sale of a business and an increase of $53.2 million in proceeds from the sale of property, equipment and other assets.
This increase was partially offset by a decrease of $6.6 million in startup expenses resulting from average horsepower utilization for the fleet at record levels as well as fewer unit stops and a decrease of $2.9 million in lube oil expenses mainly due to lower prices. ​ The increases in adjusted gross margin and adjusted gross margin percentage were mainly driven by revenue growth that outpaced the increase in cost of sales, exclusive of depreciation and amortization. ​ Aftermarket Services ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase ​ (dollars in thousands) ​ 2024 2023 (Decrease) ​ Revenue ​ $ 177,186 ​ $ 180,898 (2) % Cost of sales, exclusive of depreciation and amortization ​ 135,449 ​ 142,271 (5) % Adjusted gross margin ​ $ 41,737 ​ $ 38,627 8 % Adjusted gross margin percentage (1) ​ 24 % 21 % 3 % (1) Defined as adjusted gross margin divided by revenue.
The increases in adjusted gross margin and adjusted gross margin percentage were mainly driven by revenue growth that outpaced the increase in cost of sales, exclusive of depreciation and amortization. ​ 47 Table of Contents ​ Aftermarket Services ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Increase ​ (dollars in thousands) ​ 2025 ​ ​ ​ 2024 ​ ​ ​ (Decrease) ​ Revenue ​ $ 217,737 ​ $ 177,186 23 % Cost of sales, exclusive of depreciation and amortization ​ 166,289 ​ 135,449 23 % Adjusted gross margin ​ $ 51,448 ​ $ 41,737 23 % Adjusted gross margin percentage (1) ​ 24 % 24 % — % (1) Defined as adjusted gross margin divided by revenue.
We currently plan to spend approximately $470 million to $535 million on capital expenditures during 2025, primarily consisting of approximately $330 million to $370 million for growth capital expenditures and approximately $105 million to $115 million for maintenance capital expenditures.
We currently plan to spend approximately $400 million to $445 million on capital expenditures during 2026, primarily consisting of approximately $250 million to $275 million for growth capital expenditures and approximately $125 million to $135 million for maintenance capital expenditures. Returning Capital to Stockholders We continue to return capital to stockholders through quarterly dividends and share repurchases.
Revenue in our aftermarket services business decreased primarily due to lower parts sales, which was partially offset by increased service activity driven by higher customer demand, and an increase in maintenance service contracts. 43 Table of Contents ​ The increases in adjusted gross margin and adjusted gross margin percentage were mainly due to a reduction in cost of sales, exclusive of depreciation and amortization, due to a difference in the scope, timing and type of services performed, including additional work associated with maintenance service contracts, which outpaced the decline in overall revenue.
Revenue in our aftermarket services business increased primarily due to increased service activity driven by higher customer demand, an increase in maintenance service contracts and higher parts sales, including the non-recurring sale of overhauled engines.
Current conditions could limit our ability to access the debt and equity markets to raise capital on affordable terms in 2025 and beyond.
While we have successfully raised capital historically, and most recently in January 2026 with the issuance of the 2034 Notes, there is no guarantee in our ability to access the debt and equity markets to raise capital on affordable terms in 2026 and beyond.
Actual results may differ from these estimates under different assumptions or conditions and these differences can be material to our financial condition, results of operations and cash flows. Depreciation Property, plant and equipment, net, at December 31, 2024 was $3.3 billion and depreciation expense was $185.1 million for the year ended December 31, 2024.
Actual results may differ from these estimates under different assumptions or conditions and these differences can be material to our financial condition, results of operations and cash flows. 53 Table of Contents ​ Business Combinations We account for acquisitions using the acquisition method of accounting, which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair value on the date of acquisition.
The change from net cash used in financing activities in 2023 to net cash provided by financing activities in 2024 was primarily due to $700.0 million of proceeds from the issuance of the 2032 Notes, $255.7 million of proceeds from the July 2024 Equity Offering and a $85.5 million increase in net borrowings of long-term debt, partially offset by $202.0 million for the 2027 Notes Tender Offer, a $14.6 million increase in dividends to Archrock shareholders, a $6.3 million increase in debt issuance costs paid, a $4.5 million increase in shares repurchased under the Share Repurchase Program and a $2.7 million increase in taxes paid related to net share settlement of equity awards. 48 Table of Contents ​ Critical Accounting Estimates We describe our significant accounting policies more fully in Note 2 (“Basis of Presentation and Significant Accounting Policies”) to our Financial Statements.
The change to net cash used in financing activities from net cash provided by financing activities was primarily due to a decrease of $409.2 million in net borrowings of long-term debt, a decrease of $255.7 million in net proceeds for the issuance of common stock, an increase of $56.9 million of common stock purchased under the Share Repurchase Program and an increase of $31.2 million for dividends paid to stockholders.
These increases were partially offset by the 2027 Notes Tender Offer and the write-off of $1.0 million of unamortized deferred financing costs as a result of the Amended and Restated Credit Agreement during the year ended December 31, 2023. Transaction-related costs.
These increases were partially offset by the 2027 Notes Redemption, the 2027 Notes Tender Offer and a decrease in the weighted average effective interest rate. Transaction-related costs.
As of December 31, 2024, we were in compliance with all covenants under our Amended and Restated Credit Agreement. ​ 2032 Notes and 2027 Notes Tender Offer On August 26, 2024, we completed a private offering of $700.0 million aggregate principal amount of 6.625% senior notes due September 2032 and received net proceeds of $690.0 million after deducting issuance costs.
As of December 31, 2025, we were in compliance with all covenants under our Amended and Restated Credit Agreement.
Removed
Item 7. “Manag Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10–K for the year ended December 31, 2023 filed with the SEC on February 21, 2024.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Financial Statements, the notes thereto, and the other financial information appearing elsewhere in this Form 10–K.
Removed
In our aftermarket services business, we sell parts and components and provide operations, maintenance, overhaul and reconfiguration services to customers who own compression equipment. 38 Table of Contents ​ Significant 2024 Transactions TOPS Acquisition On August 30, 2024, we completed the TOPS Acquisition whereby we acquired all of the issued and outstanding equity interests in TOPS, including a fleet of approximately 580,000 horsepower for aggregate consideration consisting of $868.7 million in cash and approximately 6.9 million shares of common stock with an acquisition date fair value of $139.1 million.
Added
The following discussion includes forward–looking statements that involve certain risks and uncertainties. See “Forward–Looking Statements” and Part I, Item 1A. “Risk Factors” in this Form 10–K. This section primarily discusses 2025 and 2024 items and comparisons between these years.
Removed
The cash portion of the purchase price was funded with proceeds from the July 2024 Equity Offering, the 2032 Notes offering and borrowings under the Credit Facility.
Added
For a discussion of changes from 2023 to 2024 and other financial information related to 2024, refer to Part II, Item 7.
Removed
A portion of the net proceeds was used to fund a portion of the cash consideration for the TOPS Acquisition, the 2027 Notes Tender Offer and to repay borrowings outstanding under our Credit Facility.
Added
Our aftermarket services business provides a full range of services to support the compression needs of our customers that own compression equipment, including operations, maintenance, overhaul and reconfiguration services and sales of parts and components. Significant 2025 Transactions Third Amendment to the Amended and Restated Credit Agreement On December 12, 2025, we amended our Amended and Restated Credit.
Removed
See Note 16 (“Long-Term Debt”) for further details. 2027 Notes Tender Offer In connection with the TOPS Acquisition and offering of the 2032 Notes, we completed a concurrent cash tender offer of $202.0 million, which reflects approximately 101% of the aggregate principal amount of the tendered 2027 Notes and $0.2 million of agent and legal fees.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFinancial Statements and Supplementary Data The information specified by this Item is presented in Part IV, Item 15 of this Form 10–K.
Biggest changeFinancial Statements and Supplementary Data The information specified by this Item is presented in Part IV, Item 15 of this Form 10–K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk associated with changes in the variable interest rate of our Credit Facility. As of December 31, 2024, we had $408.3 million of variable interest rate indebtedness outstanding at a weighted average interest rate of 6.8%.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk associated with changes in the variable interest rate of our Credit Facility. As of December 31, 2025, we had $918.5 million of variable interest rate indebtedness outstanding at a weighted average interest rate of 5.8%.
A 1% increase or decrease in the effective interest rate on the outstanding balance under our Credit Facility at December 31, 2024 would have resulted in an annual increase or decrease in our interest expense of approximately $4.1 million. Item 8.
A 1% increase or decrease in the effective interest rate on the outstanding balance under our Credit Facility at December 31, 2025 would have resulted in an annual increase or decrease in our interest expense of approximately $9.2 million. 55 Table of Contents ​ Item 8.

Other AROC 10-K year-over-year comparisons