Natural Gas Services (NGS) 10-Q 9 Aug 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 03, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	NATURAL GAS SERVICES GROUP INC
Entity Central Index Key	1,084,991
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		13,086,506

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets:
Cash and cash equivalents	$ 62,490	$ 69,208
Trade accounts receivable, net of allowance for doubtful accounts of $443 and $569, respectively	9,375	8,534
Inventory	23,042	26,224
Prepaid income taxes	3,177	3,443
Prepaid expenses and other	762	817
Total current assets	98,846	108,226
Long-term inventory, net of allowance for obsolescence of $21 and $15, respectively	3,467	2,829
Rental equipment, net of accumulated depreciation of $155,989 and $145,851, respectively	169,702	167,099
Property and equipment, net of accumulated depreciation of $11,176 and $11,274, respectively	11,076	7,652
Goodwill	10,039	10,039
Intangibles, net of accumulated amortization of $1,695 and $1,632, respectively	1,464	1,526
Other assets	1,118	939
Total assets	295,712	298,310
Current Liabilities:
Accounts payable	801	4,162
Accrued liabilities	2,140	3,106
Deferred income	487	185
Total current liabilities	3,428	7,453
Line of credit, non-current portion	417	417
Deferred income tax liability	32,333	32,163
Other long-term liabilities	1,139	958
Total liabilities	37,317	40,991
Commitments and contingencies (Note 8)
Stockholders’ Equity:
Preferred stock, 5,000 shares authorized, no shares issued or outstanding	0	0
Common stock, 30,000 shares authorized, par value $0.01; 12,968 and 12,880 shares issued and outstanding, respectively	130	129
Additional paid-in capital	105,928	105,325
Retained earnings	152,337	151,865
Total stockholders' equity	258,395	257,319
Total liabilities and stockholders' equity	$ 295,712	$ 298,310

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current Assets:
Allowance for doubtful accounts	$ 443,000	$ 569,000
Allowance for inventory obsolescence	20,785	15,000
Noncurrent Assets:
Accumulated depreciation, rental equipment	155,989,000	145,851,000
Accumulated depreciation, property and equipment	11,176,000	11,274,000
Accumulated amortization, intangibles	$ 1,695,000	$ 1,632,000
Stockholders’ Equity:
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	12,968,000	12,880,000
Common stock, shares outstanding	12,968,000	12,880,000

Condensed Consolidated Income S

Condensed Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue:
Revenue	$ 18,204	$ 16,218	$ 32,922	$ 35,120
Operating costs and expenses:
Cost of rentals, exclusive of depreciation stated separately below	5,195	4,255	9,899	8,923
Cost of sales, exclusive of depreciation stated separately below	4,924	3,745	7,115	9,168
Cost of service and maintenance	101	104	166	198
Selling, general and administrative expense	2,309	2,390	4,330	5,436
Depreciation and amortization	5,449	5,310	10,836	10,638
Total operating costs and expenses	17,978	15,804	32,346	34,363
Operating income	226	414	576	757
Other income (expense):
Interest expense	(3)	(2)	(6)	(4)
Other income, net	78	3	5	6
Total other income (expense), net	75	1	(1)	2
Income before provision for income taxes	301	415	575	759
Provision for income taxes	54	40	103	132
Net income	$ 247	$ 375	$ 472	$ 627
Earnings per share:
Basic (in USD per share)	$ 0.02	$ 0.03	$ 0.04	$ 0.05
Diluted (in USD per share)	$ 0.02	$ 0.03	$ 0.04	$ 0.05
Weighted average shares outstanding:
Basic (in shares)	12,963	12,831	12,941	12,818
Diluted (in shares)	13,261	13,130	13,215	13,093
Rental
Revenue:
Revenue	$ 11,427	$ 11,420	$ 22,898	$ 23,342
Operating costs and expenses:
Total operating costs and expenses	5,195	4,255	9,899	8,923
Other income (expense):
Total other income (expense), net	0	0	0	0
Income before provision for income taxes	6,232	7,165	12,999	14,419
Sales
Revenue:
Revenue	6,383	4,407	9,381	11,044
Service and maintenance
Revenue:
Revenue	394	391	643	734
Operating costs and expenses:
Total operating costs and expenses	101	104	166	198
Other income (expense):
Total other income (expense), net	0	0	0	0
Income before provision for income taxes	$ 293	$ 287	$ 477	$ 536

Condensed Consolidated Statemen

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 472	$ 627
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,836	10,638
Deferred income taxes	170	(2,609)
Stock-based compensation	1,076	2,416
Bad debt allowance	(102)	60
Gain on sale of assets	(49)	(49)
Loss (gain) on company owned life insurance	55	(17)
Changes in operating assets and liabilities:
Trade accounts receivables	(739)	1,147
Inventory	2,673	1,383
Prepaid expenses and prepaid income taxes	321	(1,411)
Accounts payable and accrued liabilities	(4,327)	297
Deferred income	302	(1,849)
Other	172	512
NET CASH PROVIDED BY OPERATING ACTIVITIES	10,860	11,145
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of rental equipment and property and equipment	(16,945)	(1,587)
Purchase of company owned life insurance	(191)	(529)
Proceeds from sale of property and equipment	49	49
NET CASH USED IN INVESTING ACTIVITIES	(17,087)	(2,067)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments from other long-term liabilities, net	(19)	(7)
Proceeds from exercise of stock options	157	517
Taxes paid related to net share settlement of equity awards	(629)	(644)
NET CASH USED IN FINANCING ACTIVITIES	(491)	(134)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(6,718)	8,944
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	69,208	64,094
CASH AND CASH EQUIVALENTS AT END OF PERIOD	62,490	73,038
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	6	4
Income taxes paid	66	3,203
NON-CASH TRANSACTIONS
Transfer of rental equipment components to inventory	$ 144	$ 48

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	Basis of Presentation and Summary of Significant Accounting Policies These notes apply to the unaudited condensed consolidated financial statements of Natural Gas Services Group, Inc. a Colorado corporation (the "Company", “NGSG”, "Natural Gas Services Group", "we" or "our"). The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its subsidiary, NGSG Properties, LLC and the rabbi trust associated with the Company's deferred compensations plan, see Note 4. All significant intercompany accounts and transactions for the periods presented have been eliminated in consolidation. These financial statements include all adjustments, consisting of only normal recurring adjustments, which are necessary to make our financial position at June 30, 2018 and the results of our operations for the three and six months ended June 30, 2018 and 2017 not misleading. As permitted by the rules and regulations of the Securities and Exchange Commission (SEC), the accompanying condensed consolidated financial statements do not include all disclosures normally required by generally accepted accounting principles in the United States of America (GAAP). These financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 on file with the SEC. In our opinion, the condensed consolidated financial statements are a fair presentation of the financial position, results of operations and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2018. Revenue Recognition Policy The Company adopted ASC 606, Revenue from Contracts with Customers ("ASC 606") on January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company applied ASC 606 using the cumulative effect method. We had no significant changes in our recognition of revenue at adoption and our review of all open revenue from contracts with customers on January 1, 2018 indicated we had no adjustment to be made. If an adjustment had been needed, we would have recognized the cumulative effect of initially applying ASC 606 with an adjustment to the opening balance of equity at January 1, 2018. Therefore, our consolidated financial statements for 2017 reported under ASC 605 are comparable to the consolidated financial statements for 2018 reported under ASC 606, since an adjustment was not needed, except for the respective additional disclosures as detailed below. Revenue is measured based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties (i.e. sales and property taxes). We recognize revenue once a performance obligation has been satisfied and control over a product or service has transferred to the customer. Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in our condensed consolidated income statement. Nature of goods and Services The following is a description of principal activities from which the Company generates its revenue: Rental Revenue. The Company generates revenue from renting compressors and flare systems to our customers. These contracts may also include a fee for servicing the compressor or flare during the rental contract. Our rental contracts range from six to twenty-four months, with revenue being recognized over time, in equal payments over the term of the contract. After the terms of the contract have expired, a customer may renew their contract or continue renting on a monthly basis thereafter. In accordance with generally accepted accounting principles, the revenue earned from servicing rental equipment is recognized in accordance with ASC 606 , while the revenue earned from the rental of the equipment is recognized in accordance with ASC 840 - Leases . Sales Revenue. The Company generates revenue by the sale of custom/fabricated compressors, flare systems and parts, as well as, exchange/rebuilding customer owned compressors and sale of used rental equipment. Custom/fabricated compressors and flare systems - The Company designs and fabricates compressors and flares based on the customer’s specifications outlined in their contract. Though the equipment being built is customized by the customer, control under these contracts does not pass to the customer until the compressor or flare package is complete and shipped, or in accordance with a bill and hold arrangements the customer accepts title and assumes the risk and rewards of ownership. We request some of our customers to make progressive payments as the product is being built; these payments are recorded as a contract liability on the Deferred Income line on the condensed consolidated balance sheet until control has been transferred. These contracts also may include an assurance warranty clause to guarantee the product is free from defects in material and workmanship for a set duration of time; this is a standard industry practice and is not considered a performance obligation. From time to time, upon the customer’s written request, we recognize revenue when manufacturing is complete and the equipment is ready for shipment. At the customer’s request, we will bill the customer upon completing all performance obligations, but before shipment. The customer will formally request we ship the equipment per their direction from our manufacturing facility at a later specified date and that we segregate the equipment from our finished goods, such that they are not available to fill other orders. Per the customer’s agreement change of control is passed to the customer once the equipment is complete and ready for shipment. We have operated using bill and hold agreements with certain customers for many years, with consistent satisfactory results for both the customer and us. The credit terms on these agreements are consistent with the credit terms on all other sales. All control shouldered by the customer, and there are no exceptions to the customer’s commitment to accept and pay for the manufactured equipment. Revenues recognized at the completion of manufacturing for the six months ended June 30, 2018 was approximately $6.3 million. Parts - Revenue is recognized after the customer obtains control of the parts. Control is passed either by the customer taking physical possession or the parts being shipped. The amount of revenue recognized is not adjusted for expected returns, as our historical part returns have been de minimis. Exchange or rebuilding customer owned compressors - Based on the contract, the Company will either exchange a new/rebuilt compressor for the customer’s malfunctioning compressor or rebuild the customer’s compressor. Revenue is recognized after control of the replacement compressor has transferred to the customer by physical delivery, delivery and installment or shipment of the compressor. Used compressors or flares - From time to time, a customer may request to purchase a used compressor or flare out of our rental fleet. Revenue from the sale of rental equipment is recognized when the control has passed to the customer, when the customer has taken physical possession or the equipment has been shipped. Service and Maintenance Revenue . The Company provides routine or call-out services on customer owned equipment. Revenue is recognized after services in the contract are rendered. Payment terms for sales revenue and service and maintenance revenue discussed above are generally 30 to 60 days although terms for specific customers can vary. Also, the transaction prices are not subject to variable consideration constraints. Disaggregation of Revenue The following table shows the Company's revenue disaggregated by product or service type for the three and six months ended June 30, 2018 and 2017: Three months ended June 30, Six months ended June 30, (in thousands) (in thousands) 2018 2017 2018 2017 Compressors - sales $ 4,735 $ 2,980 $ 6,564 $ 8,620 Flares - sales 969 562 1,491 831 Other (Parts/Rebuilds) - sales 679 866 1,326 1,593 Service and maintenance 1 4,964 4,959 9,801 10,075 Total revenue from contracts with customers 11,347 9,367 19,182 21,119 Add: non-ASC 606 rental revenue 6,857 6,851 13,740 14,001 Total revenue $ 18,204 $ 16,218 $ 32,922 $ 35,120 1 Service and maintenance includes revenue from servicing our own rental equipment contracted to customers and third party equipment. Contract Balances As of June 30, 2018 and December 31, 2017, we had the following receivables and deferred income from contracts with customers: June 30, 2018 December 31, 2017 (in thousands) Accounts Receivable Accounts receivable - contracts with customers $ 7,001 $ 5,454 Accounts receivable - non-ASC 606 2,817 3,649 Total Accounts Receivable $ 9,818 $ 9,103 Less:Allowance for doubtful accounts $ (443) $ (569) Total Accounts Receivable, net $ 9,375 $ 8,534 Deferred income $ 487 $ 185 The Company did not recognize any revenue for the period ended June 30, 2018 that were included in deferred income at the beginning of 2018. For the period ended December 31, 2017, the Company recognized revenue of $1.9 million from amounts related to sales that were included in deferred income at the beginning of 2017. The increases (decreases) of accounts receivable and deferred income were primarily due to normal timing differences between our performance and the customers’ payments. Transaction Price Allocated to the Remaining Performance Obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: (in thousands) 2019 (1) 2020 2021 2022 2023 Total Service and Maintenance $ 750 $ 1,173 $ 1,085 $ 1,085 $ 145 $ 4,238 (1) For the six months starting July 2019. All consideration from contracts with customers is included in the amounts presented above. The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Company applies the transition practical expedient in ASC 606-10-65-1(f)(3) and does not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount as revenue for 2018. Contract Costs The Company applies the practical expedient in ASC 340-40-25-4 and recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general and administrative expense on our consolidated income statement. Fair Value of Financial Instruments Our financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, deferred compensation plan (cash portion) and our line of credit. Pursuant to ASC 820 (Accounting Standards Codification), the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their fair values because of their nature and relatively short maturity dates or durations. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, and operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. ASC Topic 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In order to record any financial statement benefit, we are required to determine, based on technical merits of the position, whether it is more likely than not (a likelihood of more than 50 percent) that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. If that step is satisfied, then we must measure the tax position to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of the benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We have no uncertain tax positions as of June 30, 2018. Our policy regarding income tax interest and penalties is to expense those items as other expense. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “2017 Tax Act”), which makes broad and complex changes to the U.S. tax code. Certain income tax effects of the 2017 Tax Act are reflected in the Company’s financial results in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”), which provides SEC staff guidance regarding the application of Accounting Standards Codification Topic 740 Income Taxes (“ASC 740”). As we do not have all of the necessary information to analyze all income tax effects of the 2017 Tax Act, we will continue to evaluate tax reform and adjust the provisional amounts as additional information is obtained. We expect to complete our detailed analysis no later than the fourth quarter of 2018. Recently Issued Accounting Pronouncements On February 25, 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for finance and operating leases with lease terms of more than 12 months. Additionally, this ASU will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The ASU initially required a modified retrospective transition method where a company applies the new leases standard at the beginning of the earliest period presented in the financial statements, but in July 2018 the FASB issued ASU 2018-11. ASU 2018-11 added an optional transition method where a company applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new standard will be effective during our first quarter ending March 31, 2019. We are in the process of reviewing our leases and evaluating what impact the new standard will have on our accounting policies, internal controls and condensed consolidated balance sheet. We expect there will be an increase in assets and liabilities on the condensed consolidated balance sheets at adoption due to recording the right-of-use assets and corresponding lease liabilities, but do not believe this to be a significant impact at this time. We also expect an increase in our disclosures revolving around leases. We anticipate our review to be completed in the latter half of 2018. Reclassification of Prior Period Balances Certain reclassifications have been made to prior period amounts to conform to the current-year presentation. These reclassifications had no effect on the reported results of operations.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	Stock-Based Compensation Stock Options: A summary of option activity under our 1998 Stock Option Plan as of December 31, 2017, and changes during the six months ended June 30, 2018 is presented below. Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding, December 31, 2017 327,270 $ 20.21 4.28 $ 2,255 Exercised (8,500) 18.51 — 86 Canceled/Forfeited (500) 28.15 — — Outstanding, June 30, 2018 318,270 $ 20.24 3.82 $ 1,579 Exercisable, June 30, 2018 296,738 $ 19.67 3.47 $ 1,579 The following table summarizes information about our stock options outstanding at June 30, 2018: Range of Exercise Prices Options Outstanding Options Exercisable Shares Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $0.01-15.70 65,852 1.06 $ 9.82 65,852 $ 9.82 $15.71-17.81 67,750 1.37 17.53 67,750 17.53 $17.82-20.48 54,250 2.97 19.39 54,250 19.39 $20.49-33.36 130,418 6.83 27.26 108,886 27.09 318,270 3.82 $ 20.24 296,738 $ 19.67 The summary of the status of our unvested stock options as of December 31, 2017 and changes during the six months ended June 30, 2018 is presented below. Unvested stock options: Shares Weighted Average Grant Date Fair Value Per Share Unvested at December 31, 2017 48,581 $ 11.41 Vested (26,549) 10.97 Canceled/Forfeited (500) 11.93 Unvested at June 30, 2018 21,532 $ 11.93 As of June 30, 2018, there was $192,000 of unrecognized compensation cost related to unvested options. Such cost is expected to be recognized over a weighted-average period of two years. Total compensation expense for stock options was $97,140 and $207,560 for the six months ended June 30, 2018 and 2017, respectively. three three three

Inventory

Inventory	6 Months Ended
	Jun. 30, 2018
Inventory Disclosure [Abstract]
Inventory	Inventory Our inventory, net of allowance for obsolescence of $20,785 and $15,000 at June 30, 2018 and December 31, 2017, respectively, consisted of the following amounts: June 30, 2018 December 31, 2017 (in thousands) Raw materials - current $ 19,565 $ 22,813 Raw materials - long term 3,467 2,829 Finished Goods 1,022 1,022 Work in process 2,455 2,389 $ 26,509 $ 29,053 Our long-term inventory consists of raw materials that remain viable but that the Company does not expect to sell within the year. During the six months ended June 30, 2018 and 2017, there were no write-offs of obsolete inventory against the allowance for obsolescence.

Deferred Compensation Plans

Deferred Compensation Plans	6 Months Ended
	Jun. 30, 2018
Postemployment Benefits [Abstract]
Deferred Compensation Plans	Deferred Compensation Plans The Company has a non-qualified deferred compensation plan for executive officers, directors and certain eligible employees. The assets of the deferred compensation plan are held in a rabbi trust and are subject to additional risk of loss in the event of bankruptcy or insolvency of the Company. The plan allows for deferral of up to 90% of a participant’s base salary, bonus, commissions, director fees and restricted stock unit awards. A Company owned life insurance policy held in a rabbi trust is utilized as a source of funding for the plan. The cash surrender value of the life insurance policy is $1.0 million and $754,000 as of June 30, 2018 and 2017, respectively. For the six months ending June 30, 2018, we reported in other (expense) income in the consolidated income statement a loss related to the policy of approximately $55,000 and for the same period in 2017, a gain of approximately $17,000. For deferrals of base salary, bonus, commissions and director fees, settlement payments are made to participants in cash, either in a lump sum or in periodic installments. The obligation to pay the deferred compensation and the deferred director fees is adjusted to reflect the positive or negative performance of investment measurement options selected by each participant and was $1.1 million and $713,000 as of June 30, 2018 and 2017, respectively. The deferred obligation is included in other long-term liabilities in the condensed consolidated balance sheet. For deferrals of restricted stock units, the plan does not allow for diversification, therefore, distributions are paid in shares of common stock and the obligation is carried at grant value. As of June 30, 2018, 103,691 unvested restricted stock

Credit Facility

Credit Facility	6 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Credit Facility	Credit Facility We have a senior secured revolving credit agreement the ("Amended Credit Agreement") with JP Morgan Chase Bank, N.A (the "Lender") with an aggregate commitment of $30 million, subject to collateral availability. We also have a right to request from the Lender, on an uncommitted basis, an increase of up to $20 million on the aggregate commitment (which could potentially increase the commitment amount to $50 million). On August 31, 2017, we amended and renewed the Amended Credit Agreement, which was set to expire on December 31, 2017. The Credit Agreement Amendment extended the maturity date to December 31, 2020. No other material revisions were made to the credit facility. Borrowing Base . At any time before the maturity of the Amended Credit Agreement, we may draw, repay and re-borrow amounts available under the borrowing base up to the maximum aggregate availability discussed above. Generally, the borrowing base equals the sum of (a) 80% of our eligible accounts receivable plus (b) 50% of the book value of our eligible general inventory (not to exceed 50% of the commitment amount at the time) plus (c) 75% of the book value of our eligible equipment inventory. The Lender may adjust the borrowing base components if material deviations in the collateral are discovered in future audits of the collateral. We had $29.5 million borrowing base availability at June 30, 2018 under the terms of our Amended Credit Agreement. Interest and Fees . Under the terms of the Amended Credit Agreement, we have the option of selecting the applicable variable rate for each revolving loan, or portion thereof, of either (a) LIBOR multiplied by the Statutory Reserve Rate (as defined in the Amended Credit Agreement), with respect to this rate, for Eurocurrency funding, plus the Applicable Margin (“LIBOR-based”), or (b) CB Floating Rate, which is the Lender's Prime Rate less the Applicable Margin; provided, however, that no more than three LIBOR-based borrowings under the agreement may be outstanding at any one time. For purposes of the LIBOR-based interest rate, the Applicable Margin is 1.50%. For purposes of the CB Floating Rate, the Applicable Margin is 1.50%. For the six month period ended June 30, 2018, our weighted average interest rate was 3.37%. Accrued interest is payable monthly on outstanding principal amounts, provided that accrued interest on LIBOR-based loans is payable at the end of each interest period, but in no event less frequently than quarterly. In addition, fees and expenses are payable in connection with our requests for letters of credit (generally equal to the Applicable Margin for LIBOR-related borrowings multiplied by the face amount of the requested letter of credit) and administrative and legal costs. Maturity . The maturity date of the Amended Credit Agreement is December 31, 2020, at which time all amounts borrowed under the agreement will be due and outstanding letters of credit must be cash collateralized. The agreement may be terminated early upon our request or the occurrence of an event of default. Security . The obligations under the Amended Credit Agreement are secured by a first priority lien on all of our inventory and accounts and leases receivables, along with a first priority lien on a variable number of our leased compressor equipment the book value of which must be maintained at a minimum of 2.00 to 1.00 commitment coverage ratio (such ratio being equal to (i) the amount of the borrowing base as of such date to (ii) the amount of the commitment as of such date.) Covenants. The Amended Credit Agreement contains customary representations and warranties, as well as covenants which, among other things, limit our ability to incur additional indebtedness and liens; enter into transactions with affiliates; make acquisitions in excess of certain amounts; pay dividends; redeem or repurchase capital stock or senior notes; make investments or loans; make negative pledges; consolidate, merge or effect asset sales; or change the nature of our business. In addition, we also have certain financial covenants that require us to maintain on a consolidated basis a leverage ratio less than or equal to 2.50 to 1.00 as of the last day of each fiscal quarter. Events of Default and Acceleration. The Amended Credit Agreement contains customary events of default for credit facilities of this size and type, and includes, without limitation, payment defaults; defaults in performance of covenants or other agreements contained in the loan documents; inaccuracies in representations and warranties; certain defaults, termination events or similar events; certain defaults with respect to any other Company indebtedness in excess of $50,000; certain bankruptcy or insolvency events; the rendering of certain judgments in excess of $150,000; certain ERISA events; certain change in control events and the defectiveness of any liens under the secured revolving credit facility. Obligations under the Amended Credit Agreement may be accelerated upon the occurrence of an event of default.

Earnings per Share

Earnings per Share	6 Months Ended
	Jun. 30, 2018
Earnings Per Share [Abstract]
Earnings per Share	Earnings per Share The following table reconciles the numerators and denominators of the basic and diluted earnings per share computation (in thousands, except per share data) : Three months ended Six months ended June 30, June 30, 2018 2017 2018 2017 Numerator: Net income $ 247 $ 375 $ 472 $ 627 Denominator for basic net income per common share: Weighted average common shares outstanding 12,963 12,831 12,941 12,818 Denominator for diluted net income per share: Weighted average common shares outstanding 12,963 12,831 12,941 12,818 Dilutive effect of stock options and restricted stock 298 299 274 275 Diluted weighted average shares 13,261 13,130 13,215 13,093 Earnings per common share: Basic $ 0.02 $ 0.03 $ 0.04 $ 0.05 Diluted $ 0.02 $ 0.03 $ 0.04 $ 0.05 In the three and six months ended June 30, 2018, options to purchase 83,417 shares of common stock with exercise prices ranging from $28.15 to $33.36 were not included in the computation of dilutive income per share, due to their antidilutive effect.

Segment Information

Segment Information	6 Months Ended
	Jun. 30, 2018
Segment Reporting [Abstract]
Segment Information	Segment Information ASC 280-10-50, “Operating Segments", defines the characteristics of an operating segment as: a) being engaged in business activity from which it may earn revenue and incur expenses, b) being reviewed by the Company's chief operating decision maker (CODM) for decisions about resources to be allocated and assess its performance and c) having discrete financial information. Although we look at our products to analyze the nature of our revenue, other financial information, such as certain costs and expenses, net income and EBITDA are not captured or analyzed by these categories. Our CODM does not make resource allocation decisions or access the performance of the business based on these categories, but rather in the aggregate. Based on this, management believes that it operates in one business segment. In their analysis of product lines as potential operating segments, management also considered ASC 280-10-50-11, “Aggregation Criteria”, which allows for the aggregation of operating segments if the segments have similar economic characteristics and if the segments are similar in each of the following areas: • The nature of the products and services; • The nature of the production processes; • The type or class of customer for their products and services; • The methods used to distribute their products or provide their services; and • The nature of the regulatory environment, if applicable. We are engaged in the business of designing and manufacturing compressors and flares. Our compressors and flares are sold and rented to our customers. In addition, we provide service and maintenance on compressors in our fleet and to third parties. These business activities are similar in all geographic areas. Our manufacturing process is essentially the same for the entire Company and is performed in-house at our facilities in Midland, Texas and Tulsa, Oklahoma. Our customers primarily consist of entities in the business of producing natural gas and crude oil. The maintenance and service of our products is consistent across the entire Company and is performed via an internal fleet of vehicles. The regulatory environment is similar in every jurisdiction in that the most impacting regulations and practices are the result of federal energy policy. In addition, the economic characteristics of each customer arrangement are similar in that we maintain policies at the corporate level. For the three months ended June 30, 2018 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 11,427 $ 6,383 $ 394 $ — $ 18,204 Operating costs and corporate expenses 5,195 4,924 101 7,758 17,978 Total other income, net — — — 75 75 Income before provision for income taxes $ 6,232 $ 1,459 $ 293 $ (7,683) $ 301 For the three months ended June 30, 2017 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 11,420 $ 4,407 $ 391 $ — $ 16,218 Operating costs and corporate expenses 4,255 3,745 104 7,700 15,804 Total other income, net — — — 1 1 Income before provision for income taxes $ 7,165 $ 662 $ 287 $ (7,699) $ 415 For the six months ended June 30, 2018 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 22,898 $ 9,381 $ 643 $ — $32,922 Operating costs and corporate expenses 9,899 7,115 166 15,166 32,346 Total other income, net — — — (1) (1) Income before provision for income taxes $ 12,999 $ 2,266 $ 477 $ (15,167) $ 575 For the six months ended June 30, 2017 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 23,342 $ 11,044 $ 734 $ — $35,120 Operating costs and corporate expenses 8,923 9,168 198 16,074 34,363 Total other income, net — — — 2 2 Income before provision for income taxes $ 14,419 $ — $ 1,876 $ — $ 536 $ — $ (16,072) $ — $ 759

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies From time to time, we are a party to various legal proceedings in the ordinary course of our business. While management is unable to predict the ultimate outcome of these actions, it believes that any ultimate liability arising from these actions will not have a material adverse effect on our financial position, results of operations or cash flow. We are not currently a party to any material legal proceedings, and we are not aware of any threatened material litigation. The Company also has a contractual obligation related to the construction of a new corporate office of approximately $8.9 million, financed by cash on hand. Construction of a new office began in late 2017 and is expected to be completed in early 2019.

Basis of Presentation and Sum14

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
Basis of Accounting	These notes apply to the unaudited condensed consolidated financial statements of Natural Gas Services Group, Inc. a Colorado corporation (the "Company", “NGSG”, "Natural Gas Services Group", "we" or "our"). The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its subsidiary, NGSG Properties, LLC and the rabbi trust associated with the Company's deferred compensations plan, see Note 4. All significant intercompany accounts and transactions for the periods presented have been eliminated in consolidation. These financial statements include all adjustments, consisting of only normal recurring adjustments, which are necessary to make our financial position at June 30, 2018 and the results of our operations for the three and six months ended June 30, 2018 and 2017 not misleading. As permitted by the rules and regulations of the Securities and Exchange Commission (SEC), the accompanying condensed consolidated financial statements do not include all disclosures normally required by generally accepted accounting principles in the United States of America (GAAP). These financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 on file with the SEC. In our opinion, the condensed consolidated financial statements are a fair presentation of the financial position, results of operations and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2018.
Revenue Recogntion	Revenue Recognition Policy The Company adopted ASC 606, Revenue from Contracts with Customers ("ASC 606") on January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The Company applied ASC 606 using the cumulative effect method. We had no significant changes in our recognition of revenue at adoption and our review of all open revenue from contracts with customers on January 1, 2018 indicated we had no adjustment to be made. If an adjustment had been needed, we would have recognized the cumulative effect of initially applying ASC 606 with an adjustment to the opening balance of equity at January 1, 2018. Therefore, our consolidated financial statements for 2017 reported under ASC 605 are comparable to the consolidated financial statements for 2018 reported under ASC 606, since an adjustment was not needed, except for the respective additional disclosures as detailed below. Revenue is measured based on a consideration specified in a customer’s contract, excluding any sale incentives and taxes collected on behalf of third parties (i.e. sales and property taxes). We recognize revenue once a performance obligation has been satisfied and control over a product or service has transferred to the customer. Shipping and handling costs incurred are accounted for as fulfillment costs and are included in cost of revenues in our condensed consolidated income statement. Nature of goods and Services The following is a description of principal activities from which the Company generates its revenue: Rental Revenue. The Company generates revenue from renting compressors and flare systems to our customers. These contracts may also include a fee for servicing the compressor or flare during the rental contract. Our rental contracts range from six to twenty-four months, with revenue being recognized over time, in equal payments over the term of the contract. After the terms of the contract have expired, a customer may renew their contract or continue renting on a monthly basis thereafter. In accordance with generally accepted accounting principles, the revenue earned from servicing rental equipment is recognized in accordance with ASC 606 , while the revenue earned from the rental of the equipment is recognized in accordance with ASC 840 - Leases . Sales Revenue. The Company generates revenue by the sale of custom/fabricated compressors, flare systems and parts, as well as, exchange/rebuilding customer owned compressors and sale of used rental equipment. Custom/fabricated compressors and flare systems - The Company designs and fabricates compressors and flares based on the customer’s specifications outlined in their contract. Though the equipment being built is customized by the customer, control under these contracts does not pass to the customer until the compressor or flare package is complete and shipped, or in accordance with a bill and hold arrangements the customer accepts title and assumes the risk and rewards of ownership. We request some of our customers to make progressive payments as the product is being built; these payments are recorded as a contract liability on the Deferred Income line on the condensed consolidated balance sheet until control has been transferred. These contracts also may include an assurance warranty clause to guarantee the product is free from defects in material and workmanship for a set duration of time; this is a standard industry practice and is not considered a performance obligation. From time to time, upon the customer’s written request, we recognize revenue when manufacturing is complete and the equipment is ready for shipment. At the customer’s request, we will bill the customer upon completing all performance obligations, but before shipment. The customer will formally request we ship the equipment per their direction from our manufacturing facility at a later specified date and that we segregate the equipment from our finished goods, such that they are not available to fill other orders. Per the customer’s agreement change of control is passed to the customer once the equipment is complete and ready for shipment. We have operated using bill and hold agreements with certain customers for many years, with consistent satisfactory results for both the customer and us. The credit terms on these agreements are consistent with the credit terms on all other sales. All control shouldered by the customer, and there are no exceptions to the customer’s commitment to accept and pay for the manufactured equipment. Revenues recognized at the completion of manufacturing for the six months ended June 30, 2018 was approximately $6.3 million. Parts - Revenue is recognized after the customer obtains control of the parts. Control is passed either by the customer taking physical possession or the parts being shipped. The amount of revenue recognized is not adjusted for expected returns, as our historical part returns have been de minimis. Exchange or rebuilding customer owned compressors - Based on the contract, the Company will either exchange a new/rebuilt compressor for the customer’s malfunctioning compressor or rebuild the customer’s compressor. Revenue is recognized after control of the replacement compressor has transferred to the customer by physical delivery, delivery and installment or shipment of the compressor. Used compressors or flares - From time to time, a customer may request to purchase a used compressor or flare out of our rental fleet. Revenue from the sale of rental equipment is recognized when the control has passed to the customer, when the customer has taken physical possession or the equipment has been shipped. Service and Maintenance Revenue . The Company provides routine or call-out services on customer owned equipment. Revenue is recognized after services in the contract are rendered. Payment terms for sales revenue and service and maintenance revenue discussed above are generally 30 to 60 days although terms for specific customers can vary. Also, the transaction prices are not subject to variable consideration constraints.
Contract Costs	Contract Costs
Fair Value of Financial Instruments	Fair Value of Financial Instruments Our financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, deferred compensation plan (cash portion) and our line of credit. Pursuant to ASC 820 (Accounting Standards Codification), the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their fair values because of their nature and relatively short maturity dates or durations.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements On February 25, 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for finance and operating leases with lease terms of more than 12 months. Additionally, this ASU will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The ASU initially required a modified retrospective transition method where a company applies the new leases standard at the beginning of the earliest period presented in the financial statements, but in July 2018 the FASB issued ASU 2018-11. ASU 2018-11 added an optional transition method where a company applies the new leases standard at the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new standard will be effective during our first quarter ending March 31, 2019. We are in the process of reviewing our leases and evaluating what impact the new standard will have on our accounting policies, internal controls and condensed consolidated balance sheet. We expect there will be an increase in assets and liabilities on the condensed consolidated balance sheets at adoption due to recording the right-of-use assets and corresponding lease liabilities, but do not believe this to be a significant impact at this time. We also expect an increase in our disclosures revolving around leases. We anticipate our review to be completed in the latter half of 2018.
Reclassification of Prior Period Balances	Reclassification of Prior Period Balances Certain reclassifications have been made to prior period amounts to conform to the current-year presentation. These reclassifications had no effect on the reported results of operations.
Segment Information	ASC 280-10-50, “Operating Segments", defines the characteristics of an operating segment as: a) being engaged in business activity from which it may earn revenue and incur expenses, b) being reviewed by the Company's chief operating decision maker (CODM) for decisions about resources to be allocated and assess its performance and c) having discrete financial information. Although we look at our products to analyze the nature of our revenue, other financial information, such as certain costs and expenses, net income and EBITDA are not captured or analyzed by these categories. Our CODM does not make resource allocation decisions or access the performance of the business based on these categories, but rather in the aggregate. Based on this, management believes that it operates in one business segment. In their analysis of product lines as potential operating segments, management also considered ASC 280-10-50-11, “Aggregation Criteria”, which allows for the aggregation of operating segments if the segments have similar economic characteristics and if the segments are similar in each of the following areas: • The nature of the products and services; • The nature of the production processes; • The type or class of customer for their products and services; • The methods used to distribute their products or provide their services; and • The nature of the regulatory environment, if applicable. We are engaged in the business of designing and manufacturing compressors and flares. Our compressors and flares are sold and rented to our customers. In addition, we provide service and maintenance on compressors in our fleet and to third parties. These business activities are similar in all geographic areas. Our manufacturing process is essentially the same for the entire Company and is performed in-house at our facilities in Midland, Texas and Tulsa, Oklahoma. Our customers primarily consist of entities in the business of producing natural gas and crude oil. The maintenance and service of our products is consistent across the entire Company and is performed via an internal fleet of vehicles. The regulatory environment is similar in every jurisdiction in that the most impacting regulations and practices are the result of federal energy policy. In addition, the economic characteristics of each customer arrangement are similar in that we maintain policies at the corporate level. For the three months ended June 30, 2018 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 11,427 $ 6,383 $ 394 $ — $ 18,204 Operating costs and corporate expenses 5,195 4,924 101 7,758 17,978 Total other income, net — — — 75 75 Income before provision for income taxes $ 6,232 $ 1,459 $ 293 $ (7,683) $ 301 For the three months ended June 30, 2017 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 11,420 $ 4,407 $ 391 $ — $ 16,218 Operating costs and corporate expenses 4,255 3,745 104 7,700 15,804 Total other income, net — — — 1 1 Income before provision for income taxes $ 7,165 $ 662 $ 287 $ (7,699) $ 415 For the six months ended June 30, 2018 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 22,898 $ 9,381 $ 643 $ — $32,922 Operating costs and corporate expenses 9,899 7,115 166 15,166 32,346 Total other income, net — — — (1) (1) Income before provision for income taxes $ 12,999 $ 2,266 $ 477 $ (15,167) $ 575 For the six months ended June 30, 2017 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 23,342 $ 11,044 $ 734 $ — $35,120 Operating costs and corporate expenses 8,923 9,168 198 16,074 34,363 Total other income, net — — — 2 2 Income before provision for income taxes $ 14,419 $ — $ 1,876 $ — $ 536 $ — $ (16,072) $ — $ 759

Basis of Presentation and Sum15

Basis of Presentation and Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
Disaggregation of Revenue	The following table shows the Company's revenue disaggregated by product or service type for the three and six months ended June 30, 2018 and 2017: Three months ended June 30, Six months ended June 30, (in thousands) (in thousands) 2018 2017 2018 2017 Compressors - sales $ 4,735 $ 2,980 $ 6,564 $ 8,620 Flares - sales 969 562 1,491 831 Other (Parts/Rebuilds) - sales 679 866 1,326 1,593 Service and maintenance 1 4,964 4,959 9,801 10,075 Total revenue from contracts with customers 11,347 9,367 19,182 21,119 Add: non-ASC 606 rental revenue 6,857 6,851 13,740 14,001 Total revenue $ 18,204 $ 16,218 $ 32,922 $ 35,120 1 Service and maintenance includes revenue from servicing our own rental equipment contracted to customers and third party equipment.
Schedule of Contract with Customer, Asset and Liability	As of June 30, 2018 and December 31, 2017, we had the following receivables and deferred income from contracts with customers: June 30, 2018 December 31, 2017 (in thousands) Accounts Receivable Accounts receivable - contracts with customers $ 7,001 $ 5,454 Accounts receivable - non-ASC 606 2,817 3,649 Total Accounts Receivable $ 9,818 $ 9,103 Less:Allowance for doubtful accounts $ (443) $ (569) Total Accounts Receivable, net $ 9,375 $ 8,534 Deferred income $ 487 $ 185
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction	The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period: (in thousands) 2019 (1) 2020 2021 2022 2023 Total Service and Maintenance $ 750 $ 1,173 $ 1,085 $ 1,085 $ 145 $ 4,238

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Option Activity	A summary of option activity under our 1998 Stock Option Plan as of December 31, 2017, and changes during the six months ended June 30, 2018 is presented below. Number of Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding, December 31, 2017 327,270 $ 20.21 4.28 $ 2,255 Exercised (8,500) 18.51 — 86 Canceled/Forfeited (500) 28.15 — — Outstanding, June 30, 2018 318,270 $ 20.24 3.82 $ 1,579 Exercisable, June 30, 2018 296,738 $ 19.67 3.47 $ 1,579
Summary of Stock Options Outstanding	The following table summarizes information about our stock options outstanding at June 30, 2018: Range of Exercise Prices Options Outstanding Options Exercisable Shares Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $0.01-15.70 65,852 1.06 $ 9.82 65,852 $ 9.82 $15.71-17.81 67,750 1.37 17.53 67,750 17.53 $17.82-20.48 54,250 2.97 19.39 54,250 19.39 $20.49-33.36 130,418 6.83 27.26 108,886 27.09 318,270 3.82 $ 20.24 296,738 $ 19.67
Status of Unvested Stock Options	The summary of the status of our unvested stock options as of December 31, 2017 and changes during the six months ended June 30, 2018 is presented below. Unvested stock options: Shares Weighted Average Grant Date Fair Value Per Share Unvested at December 31, 2017 48,581 $ 11.41 Vested (26,549) 10.97 Canceled/Forfeited (500) 11.93 Unvested at June 30, 2018 21,532 $ 11.93

Inventory (Tables)

Inventory (Tables)	6 Months Ended
	Jun. 30, 2018
Inventory Disclosure [Abstract]
Schedule of Inventory	Our inventory, net of allowance for obsolescence of $20,785 and $15,000 at June 30, 2018 and December 31, 2017, respectively, consisted of the following amounts: June 30, 2018 December 31, 2017 (in thousands) Raw materials - current $ 19,565 $ 22,813 Raw materials - long term 3,467 2,829 Finished Goods 1,022 1,022 Work in process 2,455 2,389 $ 26,509 $ 29,053

Earnings per Share (Tables)

Earnings per Share (Tables)	6 Months Ended
	Jun. 30, 2018
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	The following table reconciles the numerators and denominators of the basic and diluted earnings per share computation (in thousands, except per share data) : Three months ended Six months ended June 30, June 30, 2018 2017 2018 2017 Numerator: Net income $ 247 $ 375 $ 472 $ 627 Denominator for basic net income per common share: Weighted average common shares outstanding 12,963 12,831 12,941 12,818 Denominator for diluted net income per share: Weighted average common shares outstanding 12,963 12,831 12,941 12,818 Dilutive effect of stock options and restricted stock 298 299 274 275 Diluted weighted average shares 13,261 13,130 13,215 13,093 Earnings per common share: Basic $ 0.02 $ 0.03 $ 0.04 $ 0.05 Diluted $ 0.02 $ 0.03 $ 0.04 $ 0.05

Segment Information (Tables)

Segment Information (Tables)	6 Months Ended
	Jun. 30, 2018
Segment Reporting [Abstract]
Schedule of Segment Reporting Information	We are engaged in the business of designing and manufacturing compressors and flares. Our compressors and flares are sold and rented to our customers. In addition, we provide service and maintenance on compressors in our fleet and to third parties. These business activities are similar in all geographic areas. Our manufacturing process is essentially the same for the entire Company and is performed in-house at our facilities in Midland, Texas and Tulsa, Oklahoma. Our customers primarily consist of entities in the business of producing natural gas and crude oil. The maintenance and service of our products is consistent across the entire Company and is performed via an internal fleet of vehicles. The regulatory environment is similar in every jurisdiction in that the most impacting regulations and practices are the result of federal energy policy. In addition, the economic characteristics of each customer arrangement are similar in that we maintain policies at the corporate level. For the three months ended June 30, 2018 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 11,427 $ 6,383 $ 394 $ — $ 18,204 Operating costs and corporate expenses 5,195 4,924 101 7,758 17,978 Total other income, net — — — 75 75 Income before provision for income taxes $ 6,232 $ 1,459 $ 293 $ (7,683) $ 301 For the three months ended June 30, 2017 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 11,420 $ 4,407 $ 391 $ — $ 16,218 Operating costs and corporate expenses 4,255 3,745 104 7,700 15,804 Total other income, net — — — 1 1 Income before provision for income taxes $ 7,165 $ 662 $ 287 $ (7,699) $ 415 For the six months ended June 30, 2018 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 22,898 $ 9,381 $ 643 $ — $32,922 Operating costs and corporate expenses 9,899 7,115 166 15,166 32,346 Total other income, net — — — (1) (1) Income before provision for income taxes $ 12,999 $ 2,266 $ 477 $ (15,167) $ 575 For the six months ended June 30, 2017 (in thousands): Rental Sales Service & Maintenance Corporate Total Revenue $ 23,342 $ 11,044 $ 734 $ — $35,120 Operating costs and corporate expenses 8,923 9,168 198 16,074 34,363 Total other income, net — — — 2 2 Income before provision for income taxes $ 14,419 $ — $ 1,876 $ — $ 536 $ — $ (16,072) $ — $ 759

Basis of Presentation and Sum20

Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue from External Customer [Line Items]
Revenue	$ 18,204	$ 16,218	$ 32,922	$ 35,120
Bill and Hold Arrangement
Revenue from External Customer [Line Items]
Revenue			$ 6,300

Basis of Presentation and Sum21

Basis of Presentation and Summary of Significant Accounting Policies Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	$ 11,347	$ 9,367	$ 19,182	$ 21,119
Rental revenue	6,857	6,851	13,740	14,001
Revenue	18,204	16,218	32,922	35,120
Compressors - sales
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	4,735	2,980	6,564	8,620
Flares - sales
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	969	562	1,491	831
Other (Parts/Rebuilds) - sales
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	679	866	1,326	1,593
Service and maintenance
Disaggregation of Revenue [Line Items]
Revenue from contract with customer, excluding assessed tax	4,964	4,959	9,801	10,075
Revenue	$ 394	$ 391	$ 643	$ 734

Basis of Presentation and Sum22

Basis of Presentation and Summary of Significant Accounting Policies Contract Balances (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Accounts Receivable
Accounts receivable - contracts with customers	$ 7,001,000	$ 5,454,000
Accounts receivable - non-ASC 606	2,817,000	3,649,000
Total Accounts Receivable	9,818,000	9,103,000
Less:Allowance for doubtful accounts	(443,000)	(569,000)
Total Accounts Receivable, net	9,375,000	8,534,000
Deferred income	487,000	185,000
Revenue recognized	$ 0	$ 1,900,000

Basis of Presentation and Sum23

Basis of Presentation and Summary of Significant Accounting Policies Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Thousands	Jun. 30, 2018USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Service and Maintenance	$ 750
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Service and Maintenance	1,173
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Service and Maintenance	1,085
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Service and Maintenance	1,085
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Service and Maintenance	145
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Service and Maintenance	$ 4,238

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Number ofStock Options
Outstanding, beginning of period (in shares)	327,270
Exercised (in shares)	(8,500)
Canceled/Forfeited (in shares)	500
Outstanding, end of period (in shares)	318,270	327,270
Exercisable (in shares)	296,738
Weighted AverageExercise Price
Outstanding, beginning of period (in USD per share)	$ 20.21
Exercised (in USD per share)	18.51
Canceled/Forfeited (in USD per share)	28.15
Outstanding, end of period (in USD per share)	20.24	$ 20.21
Exercisable (in USD per share)	$ 19.67
Weighted Average Remaining Contractual Life (years)
Outstanding	3 years 9 months 25 days	4 years 3 months 10 days
Exercisable	3 years 5 months 19 days
Aggregate Intrinsic Value (in thousands)
Outstanding, beginning of period	$ 2,255
Exercised	86
Outstanding, end of period	1,579	$ 2,255
Exercisable	$ 1,579

Stock-Based Compensation - St25

Stock-Based Compensation - Stock Options Outstanding (Details)	6 Months Ended
	Jun. 30, 2018$ / sharesshares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options outstanding, shares | shares	318,270
Options outstanding, weighted average remaining contractual life (years)	3 years 9 months 25 days
Options outstanding, weighted average exercise price (in USD per share)	$ 20.24
Options exercisable, shares | shares	296,738
Options exercisable, weighted average exercise price (in USD per share)	$ 19.67
$0.01-15.70
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower limit (in USD per share)	0.01
Range of exercise prices, upper limit (in USD per share)	$ 15.70
Options outstanding, shares | shares	65,852
Options outstanding, weighted average remaining contractual life (years)	1 year 21 days
Options outstanding, weighted average exercise price (in USD per share)	$ 9.82
Options exercisable, shares | shares	65,852
Options exercisable, weighted average exercise price (in USD per share)	$ 9.82
$15.71-17.81
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower limit (in USD per share)	15.71
Range of exercise prices, upper limit (in USD per share)	$ 17.81
Options outstanding, shares | shares	67,750
Options outstanding, weighted average remaining contractual life (years)	1 year 4 months 13 days
Options outstanding, weighted average exercise price (in USD per share)	$ 17.53
Options exercisable, shares | shares	67,750
Options exercisable, weighted average exercise price (in USD per share)	$ 17.53
$17.82-20.48
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower limit (in USD per share)	17.82
Range of exercise prices, upper limit (in USD per share)	$ 20.48
Options outstanding, shares | shares	54,250
Options outstanding, weighted average remaining contractual life (years)	2 years 11 months 19 days
Options outstanding, weighted average exercise price (in USD per share)	$ 19.39
Options exercisable, shares | shares	54,250
Options exercisable, weighted average exercise price (in USD per share)	$ 19.39
$20.49-33.36
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, lower limit (in USD per share)	20.49
Range of exercise prices, upper limit (in USD per share)	$ 33.36
Options outstanding, shares | shares	130,418
Options outstanding, weighted average remaining contractual life (years)	6 years 9 months 29 days
Options outstanding, weighted average exercise price (in USD per share)	$ 27.26
Options exercisable, shares | shares	108,886
Options exercisable, weighted average exercise price (in USD per share)	$ 27.09

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Unvested Stock Options (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Shares
Unvested, beginning of period (in shares)			48,581
Vested (in shares)			(26,549)
Canceled/Forfeited (in shares)			(500)
Unvested, end of period (in shares)	21,532		21,532
Weighted AverageGrant Date Fair Value Per Share
Unvested, weighted average grant date fair value, beginning of period (in USD per share)			$ 11.41
Vested, weighted average grant date fair value (in USD per share)			10.97
Canceled/Forfeited, weighted average grant date fair value (in USD per share)			11.93
Unvested, weighted average grant date fair value, end of period (in USD per share)	$ 11.93		$ 11.93
Stock Options
Weighted AverageGrant Date Fair Value Per Share
Unrecognized compensation cost related to unvested options	$ 192,000		$ 192,000
Unrecognized compensation cost related to awards, weighted average period for recognition			2 years
Share-based compensation expense	$ 97,140	$ 207,560

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock (Details) - Restricted Stock - USD ($)	Mar. 15, 2018	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense		$ 978,432	$ 2,209,455
Total unrecognized compensation expense		$ 3,864,982
Unrecognized compensation cost related to awards, vesting period		3 years
Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (in shares)	84,700
Award vesting period	3 years
Chief Financial Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (in shares)	20,000
Award vesting period	3 years
Vice President of Technical Services
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (in shares)	20,000
Award vesting period	3 years
Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (in shares)		16,288
Award vesting period		1 year

Inventory (Details)

Inventory (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Inventory Disclosure [Abstract]
Allowance for inventory obsolescence	$ 20,785		$ 15,000
Raw materials - current	19,565,000		22,813,000
Raw materials - long-term	3,467,000		2,829,000
Finished Goods	1,022,000		1,022,000
Work in process	2,455,000		2,389,000
Inventory, net	26,509,000		$ 29,053,000
Write-offs of obsolete inventory against allowance	$ 0	$ 0

Deferred Compensation Plans (De

Deferred Compensation Plans (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Postemployment Benefits [Abstract]
Participant's maximum compensation deferral percentage	90.00%
Company owned life insurance	$ 1,000,000	$ 754,000
Loss (gain) on company owned life insurance	55,000	(17,000)
Deferred compensation obligation	$ 1,100,000	$ 713,000
Deferred restricted stock shares (in shares)	103,691
Deferred compensation arrangement with individual, shares issued (in shares)	32,936
Deferred compensation arrangement, fair value of shares issued	$ 837,589

Credit Facility (Details)

Credit Facility (Details) - Revolving Credit Facility	6 Months Ended
	Jun. 30, 2018USD ($)loan	Dec. 31, 2017USD ($)
Line of Credit Facility [Line Items]
Aggregate credit agreement commitment	$ 30,000,000
Potential increase in borrowing capacity	20,000,000
Potential maximum borrowing capacity	$ 50,000,000
Borrowing base, component, % of eligible accounts receivable	80.00%
Borrowing base, component, % of eligible inventory	50.00%
Borrowing base, allowable share of total commitment amount attributable to inventory component	50.00%
Borrowing base, component, % of eligible equipment inventory	75.00%
Borrowing base amount available	$ 29,500,000
Weighted average interest rate	3.37%
Default trigger, certain defaults of other company indebtedness, amount	$ 50,000
Default trigger, rendering of certain judgments, amount	150,000
Line of credit balance	$ 417,000	$ 417,000
LIBOR Rate
Line of Credit Facility [Line Items]
Reference rate, number of allowable LIBOR-based borrowings outstanding | loan	3
Variable rate, applicable margin	1.50%
CB Floating Rate
Line of Credit Facility [Line Items]
Variable rate, applicable margin	1.50%
Minimum
Line of Credit Facility [Line Items]
Minimum commitment coverage ratio allowed	2
Maximum
Line of Credit Facility [Line Items]
Maximum leverage ratio allowed	2.50

Earnings per Share - Basic and

Earnings per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net income	$ 247	$ 375	$ 472	$ 627
Denominator for basic net income per common share:
Weighted average common shares outstanding (in shares)	12,963,000	12,831,000	12,941,000	12,818,000
Denominator for diluted net income per share:
Weighted average common shares outstanding (in shares)	12,963,000	12,831,000	12,941,000	12,818,000
Dilutive effect of stock options and restricted stock (in shares)	298,000	299,000	274,000	275,000
Diluted weighted average shares (in shares)	13,261,000	13,130,000	13,215,000	13,093,000
Earnings per common share:
Basic (in USD per share)	$ 0.02	$ 0.03	$ 0.04	$ 0.05
Diluted (in USD per share)	$ 0.02	$ 0.03	$ 0.04	$ 0.05
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares not included in the computation of dilutive income per share (in shares)	83,417	83,917	83,417	83,917
Antidilutive Effect
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Exercise price of shares not included in the computation of dilutive income per share, lower limit (in USD per share)	$ 28.15	$ 28.15	$ 28.15	$ 28.15
Exercise price of shares not included in the computation of dilutive income per share, upper limit (in USD per share)	$ 33.36	$ 33.36	$ 33.36	$ 33.36

Segment Information (Details)

Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018USD ($)segment	Jun. 30, 2017USD ($)	Jun. 30, 2018USD ($)	Jun. 30, 2017USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment	1
Revenue	$ 18,204	$ 16,218	$ 32,922	$ 35,120
Operating costs and corporate expenses	17,978	15,804	32,346	34,363
Total other expense, net	75	1	(1)	2
Income before provision for income taxes	301	415	575	759
Corporate
Segment Reporting Information [Line Items]
Revenue	0	0	0	0
Operating costs and corporate expenses	7,758	7,700	15,166	16,074
Total other expense, net	75	1	(1)	2
Income before provision for income taxes	(7,683)	(7,699)	(15,167)	(16,072)
Rental
Segment Reporting Information [Line Items]
Revenue	11,427	11,420	22,898	23,342
Operating costs and corporate expenses	5,195	4,255	9,899	8,923
Total other expense, net	0	0	0	0
Income before provision for income taxes	6,232	7,165	12,999	14,419
Sales
Segment Reporting Information [Line Items]
Revenue	6,383	4,407	9,381	11,044
Operating costs and corporate expenses	4,924	3,745	7,115	9,168
Total other expense, net	0	0	0	0
Income before provision for income taxes	1,459	662	2,266	1,876
Service and maintenance
Segment Reporting Information [Line Items]
Revenue	394	391	643	734
Operating costs and corporate expenses	101	104	166	198
Total other expense, net	0	0	0	0
Income before provision for income taxes	$ 293	$ 287	$ 477	$ 536

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions	Jun. 30, 2018USD ($)
Commitments and Contingencies Disclosure [Abstract]
Contractual obligation	$ 8.9