Archrock, Inc. (AROC) Q1 2026 Earnings Call

Investor webinar replay

Replay transcript excerpt

In the Permian, we expect mid single digit gas growth supported by rising gas to oil ratios and new takeaway later this year. Geopolitical risk in The Middle East, including Iran related volatility, reinforces the strategic value of U. S. Supply and supports tighter global LNG fundamentals. Longer term, the outlook is improving. The EIA's annual energy outlook 2026 raised its view of U. S. Gas production and demand versus last year, driven in part by LNG growth and AI data center power needs, with production projected to rise from 107 Bcf a day in 2025 to approximately 133 Bcf to 151 Bcf a day by 2050. That would represent an increase in natural gas production of between 2441%, reinforcing our view of a longer term growth trajectory for both natural gas production and for compression. Moving to our segments. Contract operations delivered outstanding performance, supported by excellent execution and continued high demand for our compression fleet, particularly our large horsepower and electric motor drive units, extending our track record of strong results. Our fleet remained highly utilized during the quarter, exiting at 95% utilization, reflecting continued high demand and the high quality of our fleet and sustaining strong utilization in our contract operations business over a multiyear period. That durability is also evident in the time on location, with the blended fleet averaging approximately six years and units of 1,500 horsepower or greater averaging approximately eight years in largely midstream applications. At quarter end, we had 4,500,000 operating horsepower. Operating horsepower declined by approximately 43,000 as newbuild deliveries during the quarter were more than offset by the sale of approximately 40,000 non strategic horsepower, including 21,000 a...