Archrock Reports Synergies From Elite Purchase
30 October 2019
Archrock Inc., the nation’s largest contract-compression provider, expects US$5 million per year in synergies from its US$410 million acquisition of Elite Compression Services in August.
The Elite deal increased Archrock’s fleet of 3.6 million hp (2685 MW) by 430,000 hp (320 MW). It then sold 80,000 hp (60 MW) of nonconforming equipment to Harvest Midstream and 47,000 (35MW) hp to other customers.
The company’s operating horsepower was 3.9 million (2908 MW) as of Oct. 1, up 451,000 hp (336 MW) from the same point a year ago. Utilization was 88%.
Archrock’s net income for the third quarter was US$20.4 million compared to US$11.4 million in the previous period and US$10 million in the third quarter of 2018.
Contract operations revenue was US$198.3 million, up 17% from US $169.5 million in the third period of last year. Aftermarket services revenue fell 26% to US$46.6 million vs. US$62.9 million in the third quarter of 2018. The company explained that low dry gas prices have caused some customers to delay their maintenance spending.
President and CEO Brad Childers said long term, low gas prices and ample supplies will continue to support increases in gas demand. Although growth will fall to the lower-single-digit range in 2020-2021, he said the “more normalized market” would support continued demand for Archrock’s services.
Archrock’s 2020 growth capital budget will be under US$125 million, less than half of 2019 levels.