Natural Gas Services (NGS) 8-K Natural Gas Services Group Announces Third Quarter and Nine Months Financial Results; and Conference Call

Exhibit 99.1

[LOGO]

FOR IMMEDIATE RELEASE
November 10, 2005 NEWS
Amex — NGS

NATURAL GAS SERVICES GROUP ANNOUNCES THIRD QUARTER AND NINE
MONTHS FINANCIAL RESULTS; AND CONFERENCE CALL

222% Increase In Revenue For The Three Months to $12.5 Million
217% Increase In Revenue For The Nine Months to $35.5 Million

MIDLAND, Texas, November 10, 2005— Natural Gas Services Group, Inc. (AMEX:NGS), a leading provider of equipment and services to the natural gas industry, announces its financial results for the third quarter and nine months ended September 30, 2005.

Natural Gas Services Group, Inc.

(in thousands of dollars,	Third		Third					Nine		Nine
except per share amounts)	Quarter		Quarter		Change			Months		Months			Change
	2005		2004					2005		2004
Revenues	$	12,460	$	3,870		222	%	$	35,532	$	11,220			217	%
Net Income	$	1,091	$	451		142	%	$	3,060	$	1,210	*		153	%
EPS (Basic)	$	0.14	$	0.08		75	%	$	0.43	$	0.21	*		95	%
EPS (Diluted)	$	0.12	$	0.07		71	%	$	0.37	$	.19	*		95	%
Net cash provided by operations								$	4,134	$	3,189	*		30	%
EBITDA	$	3,316	$	1,587		109	%	$	9,322	$	4,315	*		116	%
Weighted avg. shares outstanding:
Basic		7,606		5,626					7,078		5,428
Diluted		8,771		6,492					8,213		6,217

* Excludes non-recurring proceeds attributable to life insurance payment in the amount of $1,500,000 in the first quarter of 2004.

Revenue:Revenue for the third quarter ended September 30, 2005, increased 222% to $12.5 million, as compared to $3.9 million for the same period in 2004. Revenues for the nine months ended September 30, 2005 increased 217% to $35.5 million, as compared to $11.2 million for the same period in 2004. The increase in revenue during the third quarter and first nine months of 2005 reflects an increase in revenue primarily as a result of the acquisition of SCS in January 2005 plus the continued addition of compressor units to our rental fleet.

Income:Net income for the three months ended September 30, 2005 increased 142% to $1.1

million or $.12 per share (diluted), as compared to net income of $451 thousand or $.07 per share (diluted) for the same period in 2004. Net income for the nine months ended September 30, 2005 increased 153% to $3.1 million or $.37 per share (diluted), as compared to $1.2 million or $.19 per share (diluted) for the same period in 2004. This is mainly due to the increase in our rental activity and compressor unit sales from our SCS subsidiary.

EBITDA (see discussion of EBITDA at the end of this release) increased 109% to approximately $3.3 million for the three months ended September 30, 2005, versus $1.6 million for the same period in 2004. EBITDA increased 116% to approximately $9.3 million for the nine months ended September 30, 2005, versus $4.3 million for the same period in 2004.

Rental Fleet:NGS’s rental fleet grew by 37%, or 220 units, during the nine months ended September 30, 2005. The Company ended the period with 805 compressor units in its rental fleet, up from 585 units at December 31, 2004 and 533 units at September 30, 2004. The Company added 70 natural gas compressors to its rental fleet in the quarter ended September 30, 2005.

Steve Taylor, President and CEO of Natural Gas Services Group, Inc. said, “Our activity continues in a vigorous manner in all segments of our business, including compressor rentals, compressor sales and flare sales. We have added 220 compressor units to our rental fleet this year through September 30, 2005 which is on track to meet our projected fleet size of 850-900 by year-end. Our utilization and backlogs continue to be strong and our expansion into the Rocky Mountains and Appalachian regions is proceeding at the expected rate.”

The Company has scheduled a conference call Thursday, November 10, 2005 at 3:00 PM Central Standard Time to discuss 2005 Third Quarter and Nine Months Financial Results.

What: Natural Gas Services Group, Inc. 2005 Third Quarter and Nine Months Financial Results Conference Call

When:November 10, 2005 at 3:00 PM Central Standard Time

How: Live via phone by dialing 800-936-4602. Code: Natural Gas Services. Participants to the Conference call should call in at least 5 minutes prior to the start time.

Steve Taylor, President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing third quarter and nine months financial results. Mr. Taylor and Wallace Sparkman, Chairman, will discuss the status of the industry and the role of the Company within the industry.

About Natural Gas Services Group, Inc. (NGS)
NGS is a leading provider of small to medium horsepower compression equipment to the natural gas industry. The Company focuses primarily on the non-conventional gas industry (such as coalbed methane, gas shales and tight gas). The Company manufactures, fabricates and rents natural gas compressors that enhance the production of natural gas wells and provide maintenance services for those compressors. In addition, the Company sells custom fabricated natural gas compressors to meet customer specifications dictated by well pressures, production characteristics and particular applications. The Company also manufactures and sells flare systems for gas plant and production facilities.

For More Information, Contact:




Wallace Sparkman, Investor Relations
800-580-1828
Jim Drewitz, Investor Relations
972-355-6070
jdrewitz@comcast.net

Or visit the Company’s website at www.ngsgi.com

“EBITDA” reflects net income or loss before interest, taxes, depreciation and amortization. EBITDA is a measure used by analysts and investors as an indicator of operating cash flow since it excludes the impact of movements in working capital items, non-cash charges and financing costs. Therefore, EBITDA gives the investor information as to the cash generated from the operations of a business. However, EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America (“GAAP”), and should not be considered a substitute for other financial measures of performance. EBITDA as calculated by NGS may not be comparable to EBITDA as calculated and reported by other companies. The most comparable GAAP measure to EBITDA is net income. The reconciliation of EBITDA to net income is as follows:

(in thousands of dollars, exceptper share amounts)	Three months ended						Nine months ended
	September 30,						September 30,
	2005			2004			2005			2004
EBITDA	$	3,316		$	1,587		$	9,322		$	4,315
Adjustments to reconcile EBITDA to net income:
Amortization and depreciation		(1,076	)		(642	)		(3,026	)		(1,751	)
Interest expense		(508	)		(206	)		(1,439	)		(580	)
Provision for income tax		(641	)		(288	)		(1,797	)		(774	)
Net income	$	1,091		$	451		$	3,060		$	1,210

* Excludes non-recurring proceeds attributable to life insurance payment in the amount of $1,500,000 in the first quarter of 2004.

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause NGS’s actual results in future periods to differ materially from forecasted results. Those risks include, among other things, the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; a prolonged, substantial reduction in oil and gas prices which could cause a decline in the demand for NGS’s products and services; and new governmental safety, health and environmental regulations which could require NGS to make significant capital expenditures. The forward-looking statements included in this press release are only made as of the date of this press release, and NGS undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. A discussion of these factors is included in the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission.

Natural Gas Services Group, Inc.
Condensed Consolidated Balance Sheet
(in thousands of dollars)

	September 30, 2005		December 31, 2004
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	5,729	$	685
Accounts receivable — trade, net of allowance		6,894		1,999
Inventory		14,369		4,470
Prepaid expenses		238		141
Total current assets		27,230		7,295
Lease equipment, net of accumulated depreciation		37,357		27,734
Other property, plant and equipment, net of depreciation		6,691		3,134
Goodwill, net of accumulated amortization		8,154		2,590
Intangibles, net of accumulated amortization		4,059		86
Restricted cash		2,000		2,000
Other assets		92		416
Total Assets	$	85,583	$	43,255
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long term debt	$	4,103		3,728
Bank line of credit		300		550
Accounts payable and accrued liabilities		8,780		2,355
Unearned Income		235		22
Total current liabilities		13,418		6,655
Long term debt, less current portion		21,610		9,290
Subordinated notes, less current portion		2,000		1,449
Deferred income tax payable		4,658		2,958
Total liabilities		41,686		20,352
Common stock		90		61
Paid in capital		34,260		16,355
Retained earnings		9,547		6,487
Shareholders’ Equity		43,897		22,903
Total Liabilities and Shareholders’ Equity	$	85,583	$	43,255

Natural Gas Services Group, Inc.
Condensed Consolidated Income Statements
(unaudited)
(in thousands of dollars, except per share amounts)

	Three months ended September 30,						Nine months ended September 30,
	2005			2004			2005			2004
Revenue:
Sales	$	7,479		$	703		$	22,066		$	2,445
Service and maintenance income		610			436			1,770			1,370
Rental income		4,371			2,731			11,696			7,405
		12,460			3,870			35,532			11,220
Cost of revenue:
Cost of sales		5,778			451			16,977			1,699
Cost of service and maintenance		341			338			1,145			1,030
Cost of rentals		1,782			844			4,539			2,174
Total cost of revenue		7,901			1,633			22,661			4,903
Gross Margin		4,559			2,237			12,871			6,317
Operating Cost:
Selling expense		269			227			750			630
General and administrative expense		1,007			425			2,850			1,368
Depreciation and amortization		1,076			642			3,026			1,751
		2,352			1,294			6,626			3,749
Operating income		2,207			943			6,245			2,568
Interest expense		(508	)		(206	)		(1,439	)		(580	)
Other income (expense)		33			2			51			1,496
Income before income taxes		1,732			739			4,857			3,484
Provision for income tax		641			288			1,797			774
Net Income		1,091			451			3,060			2,710
Preferred dividends		—			—			—			53
Income available to common shareholders	$	1,091		$	451		$	3,060		$	2,657
Earnings per share:
Basic	$	0.14		$	0.08		$	0.43		$	0.49
Diluted	$	0.12		$	0.07		$	0.37		$	0.43
Weighted average Shares:
Basic		7,606			5,626			7,078			5,428
Diluted		8,771			6,492			8,213			6,217

Natural Gas Services Group, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)

(in thousands of dollars)

	Nine Months			Nine Months
	Ended			Ended
	September 30, 2005			September 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,060		$	2,710
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,026			1,751
Deferred taxes		1,700			770
Amortization of debt issuance costs		49			49
Gain on disposal of assets		(47	)		7
Changes in current assets and liabilities:
Trade and other receivables		(2,057	)		(371	)
Inventory and work in progress		(5,345	)		(625	)
Prepaid expenses and other		(32	)		(72	)
Accounts payable and accrued liabilities		4,180			575
Deferred income		(723	)		(89	)
Other assets		323			(16	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		4,134			4,689
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(13,107	)		(8,937	)
Assets acquired, net of cash		(7,584	)		—
Proceeds from sale of property and equipment		239			50
NET CASH USED IN INVESTING ACTIVITIES		(20,452	)		(8,887	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from bank loans		20,517			5,031
Net proceeds from line of credit		300			521
Repayments of long term debt		(12,268	)		(1,821	)
Repayments of line of credit		—			(300	)
Dividends paid on preferred stock		—			(53	)
Proceeds from exercise of warrants and stock options		12,813			5,052
NET CASH PROVIDED BY FINANCING ACTIVITIES		21,362			8,430
NET INCREASE IN CASH		5,044			4,232
CASH AT BEGINNING OF PERIOD		685			176
CASH AT END OF PERIOD	$	5,729		$	4,408
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	1,396		$	580
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired for issuance of subordinated debt	$	3,000			—
Assets acquired for issuance of common stock	$	5,120			—