We are a leading provider of small to medium horsepower compression equipment
to the natural gas industry, with an emerging position in the large horsepower
market. We focus primarily on the non-conventional natural gas and oil production
business in the United States (such as coal bed methane, gas shale, tight gas
and oil shales), which, according to data from the Energy Information Administration
("EIA"), is the single largest and fastest growing segment of U.S.
hydrocarbon production. We manufacture, fabricate and rent natural gas compressors
that enhance the production of natural gas wells and provide maintenance services
for those compressors. In addition, we sell custom fabricated natural gas compressors
to meet customer specifications dictated by well pressures, production characteristics
and particular applications. We also manufacture and sell flare systems for
oil and gas plant and production facilities.
The vast majority of our rental operations are in non-conventional natural
gas and oil regions, which typically have lower initial reservoir pressures,
lower production pressures and/or faster well decline rates. These areas usually
require compression to be installed sooner and with greater frequency.
Natural gas compressors are used in a number of applications for the production
and enhancement of gas wells and in gas transportation lines and processing
plants. Compression equipment is often required to boost a well’s production
to economically viable levels and to enable gas to continue to flow in the pipeline
to its destination.
The market for compression equipment and services is substantially dependent
on the condition of the natural gas and oil industry. In particular, the willingness
of natural gas and oil companies to make capital expenditures on exploration,
drilling and production of natural gas and oil in the U.S. The level of activity
and capital expenditures has generally been dependent upon the prevailing view
of future gas and oil prices, which are influenced by numerous factors, including
the level of supply or demand for natural gas and oil and the impact on price
of natural gas and oil, worldwide economic activity, interest rates and the
cost of capital, environmental regulation, seasonal fluctuations and weather
patterns. Natural gas and oil prices and the level of production activity have
historically been characterized by significant volatility.
Expand rental fleet. We intend to prudently increase the size of our rental
fleet by fabricating compressor units in numbers that correspond to the growth
of the market and in relation to market share gains we may experience. We believe
our growth will continue to be primarily driven through our placement of small
to medium horsepower wellhead natural gas compressors for non-conventional natural
gas and oil production, with an emerging position in the large horsepower market.
Geographic expansion. We will continue to consolidate our operations in existing
areas, as well as pursue focused expansion into new geographic regions as opportunities
are identified. We presently provide our products and services to a customer
base of oil and natural gas exploration and production companies operating in
Colorado, Kansas, Michigan, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania,
Texas, Utah, West Virginia and Wyoming.
Expand our ‘secondary’ product lines. In addition to our primary
rental and engineered product business lines, we will emphasize the growth of
our other products, e.g., flares, CiP compressor products and general compressor
maintenance and repair services.
Selectively pursue acquisitions. We will continue to evaluate potential acquisitions,
joint ventures and other opportunities that could provide us with access to
new markets or enhance our current market position.
Compressor fabrication. Fabrication involves the assembly of compressor components
manufactured by us or other vendors into compressor units that are ready for
rental or sale. In addition to fabricating compressors for our rental fleet,
we engineer and fabricate natural gas compressors for sale to customers to meet
their specifications based on well pressure, production characteristics and
the particular applications for which compression is sought.
Compressor manufacturing. We design and manufacture our own proprietary line
of reciprocating compressor frames, cylinders and parts known as our “CiP”,
or Cylinder-in-Plane, product line. We use the finished components to fabricate
compressor units for our rental fleet or for sale to customers. We also sell
finished components to other fabricators.
Flare fabrication. We design, fabricate, sell, install and service flare stacks
and related ignition and control devices for the onshore and offshore incineration
of gas compounds such as hydrogen sulfide, carbon dioxide, natural gas and liquefied
petroleum gases. Applications for this equipment are often environmentally and
regulatory driven, and we believe we are a leading supplier to this market.
Parts sales and compressor rebuilds. To provide customer support for our compressor
and flare sales businesses, we stock varying levels of replacement parts at
our Midland, Texas facility and at field service locations. We also provide
an exchange and rebuild program for screw compressors and maintain an inventory
of new and used compressors to facilitate this part of our business.
Service and Maintenance. We service and maintain compressors owned by our customers
on an “as needed” basis. Natural gas compressors require routine
maintenance and periodic refurbishing to prolong their useful life. Routine
maintenance includes physical and visual inspections and other parametric checks
that indicate a change in the condition of the compressors. We perform wear-particle
analysis on all packages and perform overhauls on a condition-based interval
or a time-based schedule. Based on our past experience, these maintenance procedures
maximize component life and unit availability and minimize downtime.
