2024-05-28 01:10:08 ET
Summary
- Natural Gas Services Group has shifted its strategy to maximize rental fleet utilization and strengthen its operating profit margin.
- Investments in new assets caused a cash flow drain in Q1 2024, and inflationary pressure may keep the operating margin under pressure in the short term.
- NGS's focus on crude oil-centric shale plays has paid off, and it expects more contracts for high-horsepower units under long-term contracts.
Margins Drive NGS
I discussed Natural Gas Services Group ( NGS ) in the past, and you can read the latest article here , published on July 6, 2023. Over the past year, it shifted its strategy to maximizing rental fleet utilization, strengthening its operating profit margin. Even though it reduced its rented units and horsepower following lower natural gas prices, its focus on crude oil-centric shale plays has paid dividends. I think it will have more contracts for high-horsepower units under long-term contracts that will stabilize its cash flows in the medium-to-long term. As it reviews its unutilized fleet, it estimates that many such assets can be upgraded to smart systems....
Read the full article on Seeking Alpha
For further details see:
Natural Gas Services Makes A Difference With Utilization And Margin