Archrock to buy gas compression firm TOPS for $983mn

New York-listed energy infrastructure company Archrock announced on July 22 that it will acquire gas compression services provider Total Operations and Production Services (TOPS) for $983mn.

This acquisition enhances Archrock’s position in contract compression in the US, bringing its operating horsepower to approximately 4.1mn and increasing its enterprise value to over $6bn. The deal also boosts Archrock’s Permian basin compression capacity by 30% to approximately 2.2mn operating horsepower, with assets in the Permian now representing about 52% of the company’s total operating horsepower.

“The transaction is expected to be more than 10% accretive to earnings per share and more than 20% accretive to cash available for dividends per share in 2025. It will enable us to continue investing in our business while increasing shareholder returns and maintaining a strong balance sheet,” said Brad Childers, CEO of Archrock.

Under the terms of the agreement, Archrock will issue approximately 6.87mn new Archrock shares to TOPS. Additionally, Archrock plans to fund the $826mn cash portion of the total consideration with a combination of equity and debt.

The transaction has been approved by the board of directors of Archrock and is expected to close by the end of 2024, subject to customary regulatory approvals and other closing conditions.