Archrock to acquire HiVolt Energy in $450 million deal

A HiVolt Energy installation. Archrock to acquire HiVolt Energy in $450M deal. (Image: HiVolte Energy)

Archrock Inc. has agreed to acquire HiVolt Energy Holdings LLC in an all-cash transaction valued at up to $450 million, expanding the Houston-based natural gas compression company’s operations into distributed power generation and microgrid infrastructure.

The agreement, announced Nov. 10, calls for Archrock to pay $415 million in cash at closing, with an additional $35 million in potential earnout payments tied to commercial milestones. The transaction is expected to close in early 2027, subject to regulatory approval and customary closing conditions.

Midland, Texas-based HiVolt develops, owns and operates behind-the-meter prime power systems, including natural gas-fired generation, battery energy storage systems, fuel gas pipelines and private-line electrical infrastructure. The acquisition will extend Archrock’s business beyond natural gas compression into power generation, initially serving many of the same oil and gas customers.

“Combining HiVolt’s proven prime power microgrid platform with Archrock’s natural gas compression offerings will transform our company into a broader provider of energy infrastructure,” said Brad Childers, Archrock president and CEO.

“HiVolt has built a proven, differentiated platform in the energy microgrid market that complements our core compression business and will enable us to provide additional essential services to customers across the energy value chain, particularly in power-constrained geographies.”

Expansion into prime power

HiVolt currently has more than 80 MW of contracted prime power capacity, with additional contracting opportunities under development. Its systems provide continuous power for industrial and commercial customers that need long-term electricity supplies but face delays or limitations in obtaining utility service.

The company’s contracted capacity is supported by long-term, capacity-based power purchase agreements structured similarly to take-or-pay contracts, with initial terms ranging from five to eight years.

HiVolt also has secured access to more than 500 MW of near-term power generation equipment using Caterpillar engines. According to Archrock, the equipment procurement arrangements exceed HiVolt’s anticipated requirements through 2028 and provide capacity for additional growth.

For Archrock, the acquisition creates opportunities to combine natural gas compression services with the infrastructure needed to supply fuel and electricity to industrial facilities. The company said the businesses share customers and have similar capital investment and operating characteristics.

Archrock also cited its established position in electric motor-driven compression as a complementary capability, potentially allowing it to offer customers more integrated natural gas and power infrastructure solutions.

The acquisition comes amid growing demand for distributed power systems from oil and gas operations and other industrial customers, particularly in locations where electrical grid capacity or interconnection timelines constrain development.

Although HiVolt’s existing business is primarily focused on oil and gas customers, Archrock said it sees opportunities to expand into other industrial markets.

Financial outlook and integration

Archrock expects the transaction to be immediately accretive to earnings per share and cash available for dividend per share.

HiVolt is projected to generate adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $70 million to $75 million in 2028. Archrock said approximately 70% of that projected earnings contribution is supported by operating assets and contracted or awarded opportunities.

Based on the upfront purchase price and the portion of potential earnout payments expected through 2028, the transaction represents a multiple of approximately 6.1 times the midpoint of HiVolt’s projected 2028 adjusted EBITDA.

Archrock plans to finance the $415 million upfront payment through available borrowing capacity under its asset-based lending credit facility. The company expects its pro forma leverage following the acquisition to remain within its targeted range of 3.0 to 3.5 times.

Following completion of the acquisition, HiVolt will operate as a separate business segment within Archrock, with HiVolt CEO Josh Evans continuing to lead the business.

Archrock said it intends to retain HiVolt’s existing organization, employees and Midland operations while supporting expansion into additional U.S. markets.

“A key part of what makes HiVolt such an exciting addition to Archrock is its talent,” Childers said. “HiVolt’s highly experienced people bring deep expertise and a proven track record in developing, operating and scaling distributed power infrastructure using high-quality Caterpillar equipment.”

Founded in 2019, HiVolt specializes in long-term prime power solutions for customers requiring continuous electricity generation rather than temporary rental power.

Archrock provides natural gas contract compression and aftermarket services throughout the United States. The company has expanded its compression fleet and service capabilities in recent years as demand for natural gas transportation and processing infrastructure has increased.

The transaction marks a significant diversification of Archrock’s operations, adding power generation assets and long-term electricity supply contracts alongside its established natural gas compression business.