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Kodiak Gas Services Expands Industry Lead with CSI Compressco Acquisition

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Lauren Miller

April 1, 2024 - 12:55 pm

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Kodiak Gas Services Announces Successful Acquisition of CSI Compressco

THE WOODLANDS, Texas, April 1, 2024 /PRNewswire/ -- In a significant move that reshapes the landscape of the industry, Kodiak Gas Services, Inc. (NYSE: KGS) divulged the successful completion of its acquisition of CSI Compressco LP, positioning itself as the proprietor of the largest contract compression fleet within the industry.

Mickey McKee, the tenacious innovator and Chief Executive Officer of Kodiak, expressed his enthusiasm about the strategic move. "With great pleasure, we confirm the finalization of this pivotal transaction and the integration of CSI Compressco's distinguished team into the Kodiak family," McKee announced. He explained that the merger is instrumental for Kodiak to escalate the extent of its service repertoire, particularly fortifying its pre-eminent status in integral operational sectors like the Permian Basin and Eagle Ford Shale.

An unwavering commitment was articulated by McKee towards engineering a seamless transition which aims to unlock the myriad advantages of this fusion for the Company’s clientele, workforce, and investors. "The overwhelming endorsement from our shareholders emboldens us, and we stand confident in our capability to harness the substantial synergies this union offers, thereby augmenting value for our enlarged shareholder community," he further added.

A New Era for Shareholders and Unit Holders

In the financial mechanics of the deal, CSI Compressco unitholders are slated to receive 0.086 shares of Kodiak common stock for every unit of CSI Compressco common stock they hold. Those unitholders who met certain conditions opted for 0.086 limited liability company units that replicate economic interests in Kodiak's operational subsidiary. This is in unison with an equivalent quantity of non-economic voting preferred Kodiak stock. They are poised with the choice to exchange each of these corporate units for a Kodiak common stock share, coupled with the annulment of the corresponding preferred stock share. This redemption right comes into play after a six-month post-closure period and is subject to compliance with stipulated prerequisites.

Transition in Trading Platforms

With the advent of this monumental acquisition, trading of CSI Compressco units on the NASDAQ came to a halt, as of the close of business on April 1, 2024. However, investors and market participants can look forward to continued trade of Kodiak shares on the esteemed New York Stock Exchange (NYSE).

Kodiak Gas Services at a Glance

Kodiak Gas Services has etched its name as the titan of contract compression services across the contiguous United States. The Company prides itself on a formidable, revenue-generating fleet which boasts roughly 4.3 million horsepower. Kodiak’s services are integral and multifaceted, extending from contract compression to ancillary services that support gas producers and midstream clients engaged in prolific natural gas gathering systems, processing facilities, applications necessitating gas lift at multiple wells, and pervasive natural gas transmission networks. For more detailed insights, interested parties can delve into the information available at Kodiak Gas Services’ official website.

Forward-Looking Statements Disclosure

This press release is imbued with forward-looking statements, as defined within the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, reflecting projections and anticipations contingent on current conceptions, prospects, presumed future happenings, and trends. These forward-looking assertions are discernible by terminologies like "anticipate," "intend," "goal," "seek," "believe," "estimate," "expect," "plan," "strategy," "may," "should," "will," and similar expressions which allude to future timeframes.

Among the forward-looking pronouncements expressed are the expectations of operational synergies and cost efficiencies post-transaction, assessment of the repercussions on our financial conditions arising from claims, litigation, environmental costs, contingent liabilities, and the scrutiny of government and regulatory bodies, as well as the outlook on production and capacity for the natural gas and oil industry, strategies to cultivate customer loyalty, the preservation and enhancement of market share, and ambitions related to fleet maintenance and financial outcomes.

Potential Risks and Uncertainties

It is imperative to underscore that these forward-looking statements are speculative, laden with uncertainties and contingencies that are inherently unpredictable, with a multitude of factors resting beyond our purview. The disparity between these anticipations and the actual outcomes could be substantial, altering our fiscal position and operational results significantly.

Comprehensive consideration should be given to the myriad risk factors that could skew our anticipated results, including but not limited to potential declines in natural gas and oil demand; adverse changes affecting key customer relationships; default risks by clients, suppliers, and vendors; competitive dynamics that might erode our market share; the nature of our contract terms for Compression Operations and customer retention post-primary term expiry; the challenges of assimilating acquired entities like CSI Compressco and realizing the desired objectives; capital allocation for acquiring more compression equipment; and the volatility of economic, geopolitical, and industry-specific conditions, particularly considering the Russia-Ukraine conflict and the Israel-Hamas war, not to mention prevailing inflation and tepid economic growth within the United States.

Added to these considerations are scenarios of economic downturns, inflationary pressures, legislative and tax administration alterations, organizational headwinds, including the departure of critical management, technical staff, reliance on a delimited group of suppliers, regulatory compliance costs including those related to climate change, stakeholder pressures inclusive of ESG scrutiny, the inherent operational hazards linked to equipment failure, reliance on third-party IT system components, concerns regarding data privacy and security, threats from cyber-terrorism, restrictive debt covenants which could limit operational flexibility, interest rate volatility, access to capital and credit markets, disclosure controls efficacy, and other factors thoroughly discussed in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections within our Annual Report on Form 10-K for the year concluding December 31, 2023, filed with the U.S. Securities and Exchange Commission.

It is incumbent on us to demonstrate prudence when placing reliance on forward-looking statements contained in this release, as such assertions speak only from the perspective of the date they were articulated. We concede that we are not obliged to revise or publicly update any forward-looking statements in light of new information, future events, or otherwise, except as necessitated by law.

Investor Relations and Contact Information

Inquiries regarding this announcement and Kodiak Gas Services' strategic endeavors can be directed to:

The completion of this acquisition is a milestone not only for Kodiak Gas Services but also for the industry at large, enabling the Company to solidify its leadership and herald a new epoch that promises innovation, expansion, and heightened value for stakeholders.

SOURCE: Kodiak Gas Services, Inc.

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Kodiak Gas Services, Inc. has embarked on a transformative journey through its acquisition of CSI Compressco, and it is primed to leverage its enhanced capabilities to drive forward the future of compression services. The confidence that stems from its strong shareholder support and the strategic vision articulated by its leadership team suggests that Kodiak is well-positioned for sustained growth and success in the evolving energy sector. As the world continues to rely on the extraction and transportation of natural gas, Kodiak’s expanded footprint and service offerings are a testament to its commitment to addressing the needs of its customers and achieving its commercial objectives.