As of December 4, 2022, Archrock $AROC stock is trading in an uptrend channel pattern with a confirmed break above the 200 day moving average. The stock is in a technical uptrend.
Archrock announces successful pilot of methane capture technology
The field trial of Archrock’s patent-pending methane capture technology on a United Production Partners gathering facility in the Barnett Shale was completed successfully, Archrock and EnerVest reported on November 1, 2022. The UPP contract operator is EnerVest. The technology has undergone extensive testing in a lab setting before the field pilot. The methane capture device from Archrock offers a way to reduce fugitive emissions from compressor operations, including compressor packings and unit blowdowns. The system is a skid-mounted option for natural gas-powered and electric motor-driven compressor packages for both greenfield and existing compression facilities.
“We are excited to advance our strategy of assisting the oil and gas industry to reduce its methane intensity with the development and commercialization of a state-of-the-art methane capture technology for the compression industry,” said Brad Childers, Archrock’s President and Chief Executive Officer. “In particular, methane leak mitigation will be critical in solidifying the important role natural gas will continue to play in meeting the growing need for cleaner energy. The potential value of this technology is further enhanced in light of the recent passage of the Inflation Reduction Act of 2022.
“This is an important milestone for our company and I am extremely proud of our new ventures team for their dedication to designing, engineering and successfully testing a technology that has the potential to be a game-changer for methane capture in the industry. This technology is complementary and value enhancing to our core contract compression services as many of our customers commit to emission reduction strategies and seek responsibly sourced gas certifications. We believe this is a unique technology, with the ability to cost-effectively capture methane on existing infrastructure as well as new facilities while allowing us to maintain our commitment to maximize customer uptime. As a long-term customer, EnerVest was an ideal partner for a pilot. In addition, we have already engaged with multiple customers across all basins on the technology, have received positive reception and look forward to commencing full marketing efforts during the fourth quarter,” Childers concluded.
Archrock Reports Third Quarter 2022 Results
On November 2, 2022, Archrock reported results for the third quarter of 2022.
Third Quarter 2022 Highlights
- Revenue for the third quarter of 2022 was $213.7 million compared with $195.2 million in the third quarter of 2021.
- Net income for the third quarter of 2022 was $15.4 million compared with $9.3 million in the third quarter of 2021.
- Gross margin (a non–GAAP measure defined below) for the third quarter of 2022 was $106.1 million compared with $103.2 million in the third quarter of 2021.
- Adjusted EBITDA (a non–GAAP measure defined below) for the third quarter of 2022 was $91.9 million compared with $92.4 million in the third quarter of 2021.
- Previously–declared quarterly dividend of $0.145 per common share for the third quarter of 2022 resulted in dividend coverage of 1.8x.
- Achieved record period-end utilization of 89% for the third quarter of 2022 compared with 82% in the third quarter of 2021.
- New ventures team completed successful field test for a proprietary methane capture technology.
- Expect to exceed previously issued 2022 Adjusted EBITDA guidance due to solid underlying business performance and the benefit of net gains related to the sale of compression and other assets realized during the third quarter of 2022.
“The improvement in our compression business accelerated in the third quarter, supported by the resilient demand for abundant, affordable and cleaner natural gas,” said Brad Childers, Archrock’s President and Chief Executive Officer. “For the second quarter in a row, we drove sequential operating horsepower growth of 100,000, excluding non-strategic asset sales. Our horsepower utilization improved meaningfully to 89% at the end of September, increased to 90% at the end of October and should continue to trend higher, underpinning additional rate increases during the quarter as well as our expectation for future pricing leverage. We believe record utilization and robust backlog levels set us up to perform exceptionally well in 2023. We expect to generate higher financial returns as we continue to reprice our installed base of horsepower and work aggressively to drive cost optimization in our operations.
“During the third quarter, we also closed the sale of small, non-strategic compressors totaling 124,000 horsepower, bringing cumulative proceeds from fleet high-grading efforts since the end of 2019 to nearly $250 million. We now have the opportunity to redeploy these proceeds for investment in large horsepower units against the backdrop of an undersupplied midstream compression market just as we are also beginning to reap the benefits of a multi-year strategic transformation to standardize and digitize our platform. We believe the profitable growth we see ahead gives us line of sight to leverage of below 4.0 times, which will provide enhanced financial flexibility and the opportunity to increase shareholder returns in 2023. Our future as the leading provider of U.S. natural gas compression is robust and sustainable, and I’m excited about what lies ahead of this inflection point for our company.
“Lastly, I’m optimistic about the progress we’ve made on new ventures. The recent passage of the Inflation Reduction Act of 2022 further incentivizes emissions management for many of our customers while we are coming to market with solutions for methane emissions. Most recently, Archrock completed the successful pilot of and filed for a patent for a methane capture technology designed by our new ventures team. The device is a solution for fugitive emissions reductions from compressor operations, including unit blowdowns and compressor packings. This technology is complementary and value enhancing to our core contract compression services and I am excited for the team to commence our marketing efforts during the fourth quarter,” concluded Childers.