United States securities and exchange commission logo
April 12, 2023
Robert McKee
Chief Executive Officer
Kodiak Gas Services, Inc.
15320 Highway 105 W, Suite 210
Montgomery, TX 77356
Re: Kodiak Gas
Services, Inc.
Registration
Statement on Form S-1
Filed March 31,
2023
File No. 333-271050
Dear Robert McKee:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless otherwise
noted, references to prior comments are to our March 24, 2023 comment
letter.
Registration Statement on Form S-1 filed March 31, 2023
Risk Factors
EQT may have interests that conflict with the interests of our other
stockholders, page 47
1. We note your disclosure
here and elsewhere that pursuant to the Holdco Term Loan, EQT
will be limited from
taking or causing its subsidiaries from approving or taking certain
actions without the
consent of the lender, including amending organizational documents,
authorizing equity
issuances in excess of certain thresholds, incurring indebtedness for
borrowed money (other
than indebtedness under your ABL Facility, certain working
capital and ordinary
course financings, and indebtedness otherwise permitted by the ABL
Facility (other than
certain unsecured debt)), materially modifying your dividend policy,
entering into certain
affiliate transactions or entering into a voluntary liquidation or the
Robert McKee
FirstName
Kodiak GasLastNameRobert
Services, Inc. McKee
Comapany
April NameKodiak Gas Services, Inc.
12, 2023
April 212, 2023 Page 2
Page
FirstName LastName
commencement of bankruptcy proceedings. Please revise your disclosure
on page 121
regarding Kodiak Holdings' rights under its Stockholders Agreement
accordingly.
Also identify the lender that will hold these consent rights.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources
Capital Expenditures, page 73
2. We note your response to the final point of prior comment 2 explaining
that your
maintenance capital expenditures do not approximate your depreciation
and amortization
expense on an average basis because of the nature of the
maintenance required and the
timing of the incurrence of expenditures, which appears to be
frequent in comparison to
the estimated useful lives of your assets when they are first
acquired.
You further explain that maintenance capital expenditures are
typically incurred on a
four-year cycle and focus primarily on replacing significant
parts that are depreciated
over four years. As such, we understand that your maintenance capital
expenditures do
not maintain your assets indefinitely though cover the replacement of
faster wearing
components until certain longer wearing components that are either
uneconomical or
impractical to replace are no longer serviceable.
If this is correct, please modify your description of maintenance
capital expenditures on
page 73, which presently states that these are made to maintain the
operating capacity of
your assets, to clarify that your ability to maintain the operating
capacity of your assets
with the amounts designated as maintenance capital expenditures is
limited to extending
or maximizing the service lives of your assets over the near term, and
that such amounts
are not sufficient to sustain operating capacity over the long term.
Also clarify, with
respect to the 15-25 year useful lives of compression units disclosed
on page F-18, the
extent to which these lives may be increased with maintenance capital
expenditures.
Please similarly clarify disclosures elsewhere in the filing that
either present or utilize
maintenance capital expenditures in other computations such as the
measures of
discretionary cash flow and free cash flow on page 80.
3. Please clarify how you are presenting the costs of replacement when
such assets are no
longer serviceable. For example, given your description of growth
capital expenditures on
page 73, stating with regard to compression units that these are
incurred to expand the
operating capacity or operating income capacity of assets, while
also indicating these
include costs of various other assets and general items that are
typically capitalized to
operate the business that have useful life beyond one year, revise
to clarify whether the
costs you would consider to expand the income capacity of assets
includes the
replacement of compression units that are no longer serviceable.
If such costs are included in the amounts designated as growth capital
expenditures, please
qualify the description of the costs as necessary to clarify and
reflect that such amounts
Robert McKee
Kodiak Gas Services, Inc.
April 12, 2023
Page 3
also include costs that would maintain operating capacity. If such costs
include costs that
also maintain operating capacity, or costs that do not necessarily yield
growth in operating
capacity, this should be clear from your description and references to
the measures here
and elsewhere in the filing. Please also address your rationale for
positioning the proceeds
from the sale of capital assets in your computation of discretionary cash
flow.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Mark Wojciechowski, Staff Accountant, at (202) 551-3759
or John
Cannarella, Staff Accountant, at (202) 551-3337 if you have questions regarding
comments on
the financial statements and related matters. Please contact Cheryl Brown,
Staff Attorney, at
(202) 551-3905 or Irene Barberena-Meissner, Staff Attorney, at (202) 551-6548
with any other
questions.
Sincerely,
FirstName LastNameRobert McKee
Division of
Corporation Finance
Comapany NameKodiak Gas Services, Inc.
Office of Energy &
Transportation
April 12, 2023 Page 3
cc: Matt Pacey, Esq.
FirstName LastName