ARCHROCK, INC.

JUNE 2018

ARCHROCK, INC.

INVESTOR PRESENTATION

ARCHROCK, INC. (NYSE:AROC)

AROCCONTENT

2

Forward Looking StatementsAll statements in this presentation (and oral statements made regarding the subjects of this presentation) other than historical facts areforward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-lookingstatements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors thatcould cause actual results to differ materially from such statements, many of which are outside the control of Archrock, Inc. (“Archrock”or “AROC”). Forward-looking information includes, but are not limited to: the industry fundamentals, including the attractiveness ofreturns and valuation, stability of cash flows, demand dynamics and overall outlook, and Archrock’s ability to realize the benefitsthereof; Archrock’s expectations regarding future economic and market conditions and trends; Archrock’s operational and financialstrategies, including planned capital expenditures and growth activities, Archrock’s ability to successfully effect those strategies and theexpected results therefrom; Archrock’s financial and operational outlook, and ability to fulfill that outlook; demand and growthopportunities for Archrock’s services; statements related to performance, profitability, structural and process improvement initiatives,the expected timing thereof, Archrock’s ability to successfully effect those initiatives and the expected results therefrom; theoperational and financial synergies provided by Archrock’s size; and statements regarding Archrock, Inc.’s dividend policy.

While Archrock believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties inpredicting certain important factors that could impact the future performance or results of their businesses. The factors that couldcause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: changes incustomer, employee or supplier relationships; local, regional and national economic and financial market conditions and the impactthey may have on Archrock and its customers; changes in tax laws; conditions in the oil and gas industry, including a sustained decreasein the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; changes in economicconditions in key operating markets; the financial condition of Archrock’s customers; the failure of any customer to perform itscontractual obligations; changes in safety, health, environmental and other regulations; the effectiveness of our control environment,including the identification of additional control deficiencies; the results of any reviews, investigations or other preceding bygovernment authorities; the results of any shareholder actions relating to Archrock’s restatement of financial statements that may befiled; the potential additional costs related to Archrock’s restatement, cost sharing with Exterran Corporation and addressing anyreviews, investigation or other proceedings by government authorities or shareholder actions; and with respect to Archrock, theperformance of Archrock Partners.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertaintiesdescribed in Archrock’s Annual Report on Form 10-K for the year ended December 31, 2017, Archrock Partners’ Annual Report on Form10-K for the year ended December 31, 2017, and those set forth from time to time in Archrock’s and Archrock Partners’ filings with theSecurities and Exchange Commission, which are currently available at www.archrock.com. Except as required by law, Archrock andArchrock Partners expressly disclaim any intention or obligation to revise or update any forward-looking statements whether as a resultof new information, future events or otherwise.


AROCCONTENT

3

Archrock – Company Overview

Natural gas compression company based in Houston, Texas

Largest outsourced compression provider in U.S.(1)

Compression is a must-run service for gas transportation

Specialize in large HP servicing midstream gathering systems

Fee-based contracts with high-quality, long-term customers

Strong geographic diversity across all major U.S. gas & oil basins

• NYSE: AROC

• Market Cap: $1.5 billion(2)

• Enterprise Value: $2.9 billion(2)

• Dividend: $0.12/quarter(3)

• Yield: 4.1%(4)

• Shares Outstanding: 129 million(4)

(1) Based on total horsepower as of March 31, 2018. (2) Debt balance as of March 31, 2018. Stock price and shares outstanding as of June 11, 2018. (3) Paid on May 15, 2018. (4) As of June 11, 2018.

Growth and returns oriented energy infrastructure company

Our vision is to provide superior compression services, unmatched technical expertise and an unwavering commitment to safety


AROCCONTENT

4

Our Rich Company Legacy

Successful 60+ year company history with proven success over time

South Coast Gas

Hanover Compressor founded (1990) / IPO (1997). Acquisitions included:

– Dresser Rand (2000)

– Schlumberger (2001)

Universal Compression IPO (2000). Acquisitions included:

– Halliburton (1994)

– Tidewater (1998)

– Weatherford (2001)

Universal Compression forms first publicly traded compression MLP –Universal Compression Partners (2006)

Exterran formed by merger of Hanover Compression and Universal Compression (2007)

Exterran Partners LP is renamed due to merger with Universal / Hanover (2007)

Exterran Partners LP acquires ~550,000 horsepower from MidCon Compression for ~$495 million (2014)

Archrock is the renamed U.S. Contract Compression and Aftermarket Services business following spin-off of Exterran’s International Services and Global Fabrication businesses (2015)

Archrock acquires Archrock Partners and eliminates IDRs in simplification transaction (2018)

South Coast Gas Compression established – legacy entity of Universal Compression (1954)

1990 – 2006 2007 – 2014 2015 – Current1950’s


AROCCONTENT

5

Simplification Overview & Rationale

(1) Archrock acquired 41 million outstanding units of Archrock Partners that it did not already own at a fixed exchange ratio of 1.40 shares of Archrock common stock for each Archrock Partners common unit.

CompellingDeal Economics

Long-term Financial Stability

Improved Cost of Capital

Simplified C-Corp Structure

FavorableTax Position

• Accretive to AROC shareholders

• Increased retained cash flow

• Targeted dividend growth rate of 10-15% through 2020

• Accelerates achieving target leverage below 4.0x in 2020

• Expected dividend coverage of >2.0x through 2020

• Eliminated incentive distribution rights (IDRs)

• Broader universe of investors; increased float & trading liquidity

• Single public entity with simplified governance

• Improved position to participate in industry consolidation

• Federal income cash tax deferral from tax basis step-up

• No cash federal income taxes expected through at least 2023

Merger transaction positions Archrock for the future

On April 26, 2018, AROC completed a merger in which it acquired all outstanding common units of Archrock Partners (APLP) it did not already own for AROC common stock valued at ~$625 million(1)

https://www.google.com/url?sa=i&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwiSv9H6vbDbAhVD0VMKHdh8DTQQjRx6BAgBEAU&url=https://www.shutterstock.com/search/simplify&psig=AOvVaw3i_An4WDDJzJh5MUxSP6gZ&ust=1527874434953730

https://www.google.com/url?sa=i&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwiSv9H6vbDbAhVD0VMKHdh8DTQQjRx6BAgBEAU&url=https://www.shutterstock.com/search/simplify&psig=AOvVaw3i_An4WDDJzJh5MUxSP6gZ&ust=1527874434953730


AROCCONTENT

6

We are an Energy Infrastructure Company

A unique combination of attractive attributes

Energy Infrastructure Oilfield Services

Demand driven by production

Service demand driven by drilling & completion activity

Driven by production of oil & gas

Cash flow stabilityMore volatile cash flow, driven by pricing / utilization

Reliable cash flow generation

Multi-year, fee-based contracts

Spot agreements; contracts less than 1 year

Long-term, fee-based agreements

Self-funding of growth capex

Typically fund growth without incremental equity

Typically fund growth capital via external equity

Growing dividendLess consistent capital return; typically buybacks

Capital return typically dividend / distribution

C-Corp structureTypically structured as C-Corp

Typically Master Limited Partnerships (MLPs)

Service provider to energy industry

Provide services to oil & gas industry

Provide services to oil & gas industry

Attributes

-

-

-

-

-

-


AROCCONTENT

7

Archrock Investment Highlights

AROC represents an attractive energy infrastructure investment

Midstream / Large HP Focus

Resilience Through Cycles

Visible, Long-term Growth

Solid Financial Position

Proactive Leadership

• Gathering focus; a leading provider of large HP, 67% of fleet(1)

• Compression is a must-run service for gas transportation

• Attractive, long-term & diversified customer relationships

• Business driven by oil and gas production

• Multi-year, fee-based contracts

• Positive EBITDA generated through cycles

• Tied to structural growth in U.S. natural gas markets

• Diversified asset footprint in leading growth basins

• Multiple avenues of growth – organic and M&A

• Improving leverage position; self-funding

• Annual dividend growth of 10-15% through 2020

• Dividend coverage of greater than 2.0x

• Track-record of managing capex to market conditions

• Ongoing fleet standardization & profit growth initiatives

• Cost of capital and liquidity improved from simplification

(1) Based on total fleet horsepower as of March 31, 2018.


AROCDIVIDER

OPERATIONS


AROCCONTENT

9

Compression 101 – What Do we Do?

What Does it Look Like?

Large horsepower unit (1,400 HP)

Compression increases pressure within a pipeline to transport natural gas

Equipment that moves natural gas through infrastructure systems to consuming markets

Compression also used to provide enhanced oil recovery through gas lift

24 hours a day, 7 days a week, 365 days a year operation

Compression needed across the energy value chain, from the wellhead to distribution

Can be owned or outsourced to a compression specialist such as Archrock

A Must-Run Service

Reduces capital expenditures

Leverages Archrock compression expertise

Utilizes Archrock’s operational footprint & execution capability

Limits risk of idle customer assets after initial application

Benefits to customer of outsourcing


AROCCONTENT

10

Archrock’s Focus on Midstream

Our midstream focus results in greater stability

Drilling

MIDSTREAM

Characteristic The Midstream Benefit The Result to Archrock

Production Focused Relatively stable compression demand • Average utilization of 85%(1)

Longer Contracts Longer-term assignments • Average time on-site of 3-4 years

Earnings Stability Relative EBITDA stability through cycles• 10-15% annual dividend growth

through 2020

Financial Flexibility Strong cash flow generation• >2x dividend coverage• No external equity requirements

Completions Gathering ProcessingLarge pipeline/

StorageRefining Marketing

DOWNSTREAMUPSTREAM

Archrock’s Compression Focus

We provide compression services for midstream applications

(1) Average utilization 2012-2017.


AROCCONTENT

11

A Market Leader in Large Horsepower

Gas Associated with Oil Production

Lower initial pressure vs. dry gas wells; requires more compression

Almost 50% of natural gas production forecasted from associated gas plays (i.e. Permian & SCOOP/STACK)(2)

Compressors economically advantaged in gas lift

Leveraging the growing industry trend towards larger HP units

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Fleet Allocation(1)33% Small HP 67% Large HP

Drilling Efficiency & Predictability

High probability drilling programs allow for efficient infrastructure planning

Large HP is more cost effective than a series of smaller HP units

Increasing Lateral Lengths

Longer lateral lengths increases flow to the wellhead

Higher volumes require more compression

Pad Drilling from Shale Wells

Pad drilling brings multiple wells to a single wellsite, increasing volumes and compression demand

Drivers of Large HP Demand

Note: Small compressors are less than 1,000 horsepower and large compressors are greater than 1,000 horsepower. (1) Based on total fleet horsepower as of March 31, 2018. (2) Source: Drilling Info, Fundamental Edge (March 2018).


AROCCONTENT

12

Diversified Platform Across Key Shale Basins

Stability and growth opportunity across U.S. production basins

Marcellus / UticaNiobrara

SCOOP / STACK

Permian

Eagle Ford

Indicates active horsepower unit as of March 31, 2018.

Barnett

Haynesville

Material presence and scale in all major U.S. shale production basins

Largest U.S. provider of compression services by fleet size

Regional diversification provides protection against basin-specific headwinds

Mobile units capable of re-deployment to meet changing customer demand or market pressure

Gas associated with oil production is expected to drive significant compression demand across the U.S.


AROCCONTENT

13

Contract Compression Customer Base

Strong relationships with top-tier energy companies

(1) Total Contract Compression revenue for three months ended March 31, 2018. (2) As of March 31, 2018. (3) S&P credit ratings. One top 10 customer is private and not rated by S&P.

Major Customers~43%% of total revenue from top 10 customers(1)

Revenue Diversification

Long-term Relationships

High Quality

~600Total customers

Deep Base

~15 yearsAvg. relationship length with top 10 customers(2)

8 of 10Top 10 customers with investment grade credit(3)


AROCCONTENT Aftermarket Services Capabilities

Growing opportunities to service customer-owned compressors

Ability to serve the entire U.S. compression market

Margin contribution from customers with their own compression solutions

Leverages existing infrastructure and contract compression business customer network

Revenues rose 15% in 2017; expect to see continued improvement in 2018

Significant opportunity as newer compression in shale sector approaches major maintenance cycle

• Sale of compressor components (engines, compressors, other parts)

• Used for maintenance and repair of compression equipment

• Scheduled on-site maintenance

• Major on-site maintenance

• Unscheduled on-site call-outs

Field Services Parts Shop Services

• Parts remanufacturing, valve repair and machining

• Re-design of existing assets to meet new operating requirements

• Performed in Archrock shops across the U.S.

14


AROCDIVIDER

FUNDAMENTALS


AROCCONTENT

16

Abundant U.S. Natural Gas Supply

The shale revolution has transformed natural gas supply

Source: EIA, June 2018. (1) Based on 2022 estimates vs. 2017 actual production.

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Shale / Tight Gas Other Gas

2.2

50.4

2.8

48.2

7.5

47.7

28.3

37.6

52.6 50.9 55.2 65.8

Other gas

Shale gas

Total gas

40.5

33.8

2000 2004 2008 2012 2017

73.6

The U.S. has experienced significant growth in U.S. natural gas production over the last 20+ years

Advancements in horizontal drilling and fracking have unlocked previously inaccessible or uneconomic resources

The shale revolution has been a game-changer for the industry

Shale gas accounts for ~55% of total U.S. natural gas production, up from virtually no production in the early 2000’s

~45% growth in shale gas production expected by 2022(1)

The Shale Revolution

Bcf/d

58.8

34.0

2022E

92.7

Bcf/d


AROCCONTENT

17

Structural Shift in Demand Sources

The shale revolution has structurally shifted & revolutionized natural gas demand

Source: FactSet as of May 31, 2018. EIA.

Abundant U.S. Natural Gas Supply

Stable Pricing Long-Term Projects Significant Exports

Significant growth in U.S. production resulted in stable current and forecasted pricing

Supply growth has led to a significant reduction in natural gas price volatility vs. history

Natural gas prices have averaged approximately $3/mmbtu since 2010

Stability of current and forecasted gas prices supports confidence and economics needed for long-term investment

Long-term, capital intensive infrastructure projects include LNG exports, petchem plants, Mexico exports, etc.

Current U.S. supply & demand largely balanced, resulting in marginal net export position

Growth in supply expected to outpace growth in U.S. demand

Gas exports (primarily LNG) will help balance the market

(5)

0

5

10

15

20

25

2016 2033 2050

Net Exports (Forecasted)

>23 Bcf/dNet exports by 2050

0

5

10

15

Jun-98 Jan-05 Aug-11 Mar-18

Henry Hub ($/mmbtu)

Bcf/d


AROCCONTENT

18

Key Natural Gas Demand Drivers

Robust demand drivers led by natural gas export opportunities

(1) Source: Drilling Info, Fundamental Edge (March 2018). (2) Source EIA Annual Energy Outlook 2018 (February 2018).

Residential & Commercial

Industrial

Electric Power

LNG Exports

(10)

(5)

0

5

10

15

20

25

30

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

LNG Imports Canada (pipeline) Imports LNG Exports

Mexico (pipeline) Exports Canada (pipeline) Exports

77.4

92.9

6.5

3.71.9

1.81.5

70

75

80

85

90

95

2017 LNG Exports Power Gen. Mxco/Other Res / Com Industrials 2022

Forecast

LNG Exports

Mexico Exports

Canada Exports

Bcf/d

Bcf/d

U.S. Natural Gas Demand Growth(1)

U.S. Imports / Exports(2)


AROCCONTENT

19

The Leader in U.S. Natural Gas Compression

Leading contract compression position supplemented by AMS capabilities

3,314

2,948

914

750

500

440

184

0 1,000 2,000 3,000 4,000

AROC

Category 2

Category 3

Category 4

Other

Our Aftermarket Services business expands our addressable market

Allows us to service the customer base that owns their compression

Provides attractive diversification to customer and service base

(1) Chart represents operating HP for outsourced compression. As of March 31, 2018; USAC/CDM as disclosed on January 16, 2018. SEC filings and management estimates.

Total Compression Market

Outsourced Owned

~30% of market ~70% of market

Contract Compression(1) Aftermarket Services (AMS)


AROCDIVIDER

FINANCIALS


AROCCONTENT

203 233 302 339 383 328 280 322

2011 2012 2013 2014 2015 2016 2017 1Q18Ann'd

$0

$1

$2

$3

$4

$5

$6

$0

$20

$40

$60

$80

$100

$120

Crude oil prices Natural gas prices

21

Solid Profitability Through Cycle

A resilient business model tied to production, not commodity prices

Source for oil and gas prices: FactSet as of June 10, 2018. (1) See Addendum I regarding non-GAAP measures for information on EBITDA, as adjusted and EBITDA, as adjusted margin. We revised our definition of EBITDA, as adjusted to exclude the impact of non-cash stock-based compensation. Historical periods for the years ended December 31, 2011 and 2012 have not been updated to conform to the current definition. 1Q18 Ann’d represents Q1-18 EBITDA, as adjusted of $80.5 million annualized.

26%

Track record of generating attractive EBITDA margins

Financial performance tied to production

Proactive operational enhancements through cycles drive steady margin improvement

Realize positive EBITDA through cycles

EBITDA, as adjusted

EBITDA, as adjusted margin (%)(1)

28% 35% 35% 38% 41% 35% 38%Oil $/bbl

Gas $/MMBtu


AROCCONTENT

22

Financial & Operational Momentum

Improving profitability trend and fleet utilization benefiting the company

Revenue ($MM) Gross Margin %

EBITDA, as adjusted(1) ($MM)

150 151 154 156 161

40 47 44 53 51190 198 198

209 212

1Q17 2Q17 3Q17 4Q17 1Q18

Contract Operations Aftermarket Services

Total Operating HP (period end)

68 74 6474 81

36% 37%33%

36%38%

0

0

0

0

0

0

0

0

0

0

20

40

60

80

100

1Q17 2Q17 3Q17 4Q17 1Q18

Adjusted EBITDA Adjusted EBITDA Margin

3,079 3,1183,204

3,2533,314

81% 81% 83% 85% 86%

30%

40%

50%

60%

70%

80%

90%

2,500

2,600

2,700

2,800

2,900

3,000

3,100

3,200

3,300

3,400

1Q17 2Q17 3Q17 4Q17 1Q18

Operating HP (000s) Utilization (%)

(1) See Addendum I regarding non-GAAP measures for information on gross margin, EBITDA, as adjusted and EBITDA, as adjusted margin.

57% 59%53%

59% 60%

16% 16%13%

16% 17%

49% 49%44%

48% 50%

1Q17 2Q17 3Q17 4Q17 1Q18

Contract Operations AMS Total


AROCCONTENT

23

Recent Financial Highlights (Q1 2018)

Record contract operations backlog

Booking new orders at record levels and at improved pricing

Strong 8% sequential increase in EBITDA, as adjusted

Leverage improved to 5.0x pro-forma for the simplification transaction

Strong dividend coverage of 2.9x

Fleet utilization improved to 86%

Strong financial and operational performance in Q1 2018

In 000s, unless noted(1) Q1 2018 Q4 2017 Q1 2017

Revenue $212,040 $208,935 $189,885

EBITDA, as adjusted $80,539 $74,278 $67,509

Cash available for dividend $45,137 n/a n/a

Dividend coverage 2.90x n/a n/a

Total operating horsepower (period end) 3,314 3,253 3,079

Horsepower utilization (period end) 86% 85% 81%

(1) See Addendum I regarding non-GAAP measures for information on EBITDA, as adjusted, cash available for dividend, and cash available for dividend coverage.


AROCCONTENT

24

Improving Balance Sheet Position

Solid liquidity; improving balance sheet; 100% self-funding growth capex

No near-term debt maturities

Recent simplification accelerated leverage improvement to ~5.0x

Target <4.0x leverage in 2020

2018 growth capital expenditures expected to be $230-250 million

Self-funding growth capex from strong dividend coverage position of >2.0x

In 000s, unless noted March 31, 2018

Revolver credit facility capacity $ 1,250.0

Borrowings under facility and letters of credit (754.9)

Revolving credit facility unavailable due to covenant constraints (213.2)

Liquidity at Archrock $ 281.9

350 350

755

495

2017 2018 2019 2020 2021 2022

Archrock RCF (undrawn) AROC RCF AROC Notes

Debt Maturity Schedule(1) ($MM)

Archrock Liquidity Summary(1)

(1) Archrock presented pro forma for the merger of Archrock and Archrock Partners, L.P. and related financing transactions completed in April 2018. As of March 31, 2018, and including the pro forma impact of the merger transaction, Archrock had undrawn capacity of $495.1 million under its revolving credit facility. The Archrock credit agreement limits the Total Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 5.95 to 1.0 and the Senior Secured Debt (as defined in the credit agreement) to EBITDA ratio (as defined in the credit agreement) to not greater than 3.50 to 1.00. As a result of this limitation, $213.2 million of undrawn capacity under our revolving credit facility was unavailable for additional borrowings as of March 31, 2018. (2) Archrock’s $1.25 billion asset-based credit facility will mature the earlier of (i) March 30, 2022 or (ii) December 2, 2020 if any portion of Archrock Senior Notes due April 2021 are outstanding on such date. Graph assumes Senior Notes due 2021 are refinanced prior to December 2, 2020.

6% senior notes due April 2021

6% senior notes due October 2022

AB

A

B

Revolving credit facility due March 2022(2)C C

Debt detailBalance Sheet & Funding Overview


AROCCONTENT

25

Prudent Stewards of Capital

Leverage Reduction

Capital Investment

Capital Return

1

2

3

<4.0xDebt-to-EBITDA

in 2020

$230-250MM

2018 organic growth capex

10-15%Annual dividend

growth

• Recent simplification accelerates path to target leverage

• Natural de-leveraging expected from EBITDA growth

• Focused on high-return organic investments in growth plays

• M&A opportunities

• Attractive targeted dividend growth rate of 10-15% through 2020

Capital policy based on balancing three objectives


AROCCONTENT

26

Key Takeaways

We are the leader in U.S. natural gas compression

Midstream / Large HP Focus

Resilience Through Cycles

Visible, Long-term Growth

Solid Financial Position

Proactive Leadership


AROCDIVIDER

APPENDIX


AROCCONTENT

28

Management Overview

D. Bradley Childers, President and Chief Executive OfficerBrad Childers is President, Chief Executive Officer and a director of Archrock, Inc. Previously, he served as Chairman of the Board of Archrock GPLLC, the managing general partner of Archrock Partners, L.P., as Senior Vice President and as President, North America Operations, of ExterranEnergy Solutions, L.P. and as Senior Vice President, Corporate Development. Prior to the 2007 merger of Hanover Compressor Company andUniversal Compression Holdings, Inc. ("Universal"), Childers joined Universal in 2002 and served in a number of management positions, includingas President of the International Division of Universal Compression, Inc. (Universal's wholly owned subsidiary), and as Senior Vice President,Business Development of Universal. Childers also is an officer of certain Archrock majority-owned subsidiaries.

Randy Guba, Interim Chief Financial OfficerRaymond (Randy) Guba is Interim Chief Financial Officer of Archrock, Inc. Mr. Guba previously served as the Chief Financial Officer and SeniorVice President of Global Power Equipment Group Inc. from November 2013 to September 2015. He was Executive Vice President and ChiefFinancial Officer of FTS International Services, LLC from September 2011 to March 2013. Previously, he served as Executive Vice President, ChiefFinancial and Administrative Officer of Integrated Electrical Services, Inc. from April 2007 to April 2010 and as Principle Accounting Officer untilJanuary 2008. Prior to that, Mr. Guba served as Chief Financial Officer and Vice President of Kraton Polymers LLC from October 2005 to October2006. He served 19 years at General Electric Company. Mr. Guba earned his BA in Economics and English from Rutgers University.

Stephanie C. Hildebrandt, Senior Vice President, General Counsel and SecretaryStephanie Hildebrandt is Senior Vice President, General Counsel and Secretary of Archrock, Inc. Prior to joining Archrock in August 2017,Hildebrandt was a partner with the Houston law firm of Norton Rose Fulbright, with a practice focused on corporate governance, energytransactions and mergers and acquisitions. Previously, she was Senior Vice President, General Counsel and Secretary of Enterprise ProductsPartners L.P., a publicly traded pipeline partnership and a provider of midstream energy service, from 2010 to 2014, and held various other rolesat Enterprise from 2004, including Vice President, Deputy General Counsel and Assistant Secretary. Hildebrandt was an attorney for El PasoCorporation / GulfTerra Energy Partners from 2001 until its merger with Enterprise in 2004 and an attorney for Texaco, Inc. from 1989 to 2001.

Robert E. Rice, Senior Vice President and Chief Operating OfficerRob Rice is Senior Vice President and Chief Operating Officer of Archrock, Inc., having previously served as President, North America of ExterranEnergy Solutions, L.P. Previously, he served as Regional Vice President for the U.S. Gulf Coast Region of Exterran Energy Solutions, L.P. Ricejoined Hanover in 2002. Prior to its merger with Universal, he held a number of positions at Hanover including Vice President, Gulf CoastBusiness Unit; Vice President, Health, Safety & Environmental; and Director, Corporate Development. He formerly served as a Flight TestEngineer with the United States Air Force.

Jason G. Ingersoll, Senior Vice President, Marketing and SalesJason Ingersoll is Senior Vice President of Marketing & Sales of Archrock Inc., where he is responsible for sales teams and processes, includingdirect sales, strategic accounts, business development and sales support infrastructure. He also serves as Senior Vice President of Marketing &Sales of Archrock GP LLC. Previously, he held positions of increasing responsibility with Exterran Energy Solutions, L.P., including Vice President,Sales, Regional Vice President of the West Region of North America, Business Unit Director of the Northern Rockies and Business Unit Director ofthe Southern Rockies. He joined a predecessor of Archrock, Universal Compression in 1998 where he held several positions of increasingresponsibility including County Manager of China located in Beijing, China. He holds a B.S. in Mechanical Engineering from Texas A&M University.

Highly qualified and experienced management team


AROCCONTENT

29

AROC Trading Correlation

AROC stock performance vs. benchmarks

(1.0)

(0.8)

(0.6)

(0.4)

(0.2)

0.0

0.2

0.4

0.6

0.8

1.0

May-15 Dec-15 Jul-16 Feb-17 Sep-17 Apr-18

vs. Energy Infrastructure Index (AMEI)

vs. Oilfield Services Index (OSX)

Alerian Energy Infrastructure Index

• AMEI is a composite index of North American energy infrastructure companies

• Constituents are engaged in midstream activities involving energy commodities

The index has four main groups, including:

• U.S. Energy Infrastructure Companies

• Canadian Energy Infrastructure Companies

• US General Partners

• US Energy Infrastructure MLPs

AMEI Overview(3)

OSX

0.680.95

(0.01)

AROC: Trailing 200-day Correlation(1)

Note: Correlation base on trading prices. (1) Correlation begins on May 22, 2015 and ends May 22, 2018. (2) Average 200-day trailing correlation for period from May 22, 2015 through May 22, 2018. (3) Source: Alerian. Note: OSX represents the PHLX Oil Service Sector Index.

AROC: Average Correlation(2)

AMEI

0.810.980.49

Gas

0.470.98

(0.58)

Oil

0.490.89

(0.58)HighLow

Avg.


AROCCONTENT

30

Archrock Addendum I-A

Archrock, Inc.

Gross margin, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization). Gross margin percentage is defined as gross margin divided by revenue.

Cash available for dividend, a non-GAAP measure, is defined net income (loss) excluding income taxes, interest expense, depreciation and amortization, long-lived asset impairment, restatement and other charges, merger-related costs and non-cash stock-based compensation less maintenance capital expenditures, other capital expenditures, cash taxes and cash interest. Cash available for dividend coverage is defined as cash available for dividend divided by dividends declared.

EBITDA, as adjusted, a non-GAAP measure, is defined as net income (loss) excluding income taxes, interest expense, depreciation and amortization, long-lived asset impairment, restructuring and other charges, restatement and other charges, corporate office relocation costs, goodwill impairment, debt extinguishment costs, indemnification (income) expense, net, expensed acquisition and merger-related costs, non-cash stock-based compensation and other items. EBITDA, as adjusted margin is defined as EBITDA, as adjusted divided by total revenue.


AROCCONTENT

31

Archrock Addendum I-B

($ in thousands) Q1-17 Q2-17 Q3-17 Q4-17 Q1-18

Revenue

Contract Operations $ 149,984 $ 151,114 $ 153,524 $ 156,299 $ 161,197

Aftermarket Services 39,901 46,868 44,329 52,636 50,843

Total Revenue 189,885 197,982 197,853 208,935 212,040

Expense

Contract Operations 64,097 62,243 71,951 64,714 64,595


Total Expense 97,829 101,852 110,437 108,804 106,932

Gross Margin(1)



Total Gross Margin 92,056 96,130 87,416 100,131 105,108

Gross Margin Percentage(1)

Contract Operations 57% 59% 53% 59% 60%

Aftermarket Services 16% 16% 13% 16% 17%

Total Gross Margin Percentage 49% 49% 44% 48% 50%

(1) See Addendum I-A for more information on gross margin and gross margin percentage and addendum I-C for a reconciliation to net income (loss).


AROCCONTENT

32

Archrock Addendum I-C


Net income (loss) $ (14,013) $ (4,036) $ (12,683) $ 49,142 $ 2,069

Selling, general and administrative 27,553 25,162 29,108 29,660 27,508

Depreciation and amortization 47,772 47,248 47,463 46,080 44,455

Long-lived asset impairment 8,245 5,508 7,105 8,284 4,710

Restatement charges 801 1,920 566 1,083 485

Restructuring and other charges 457 366 422 141 -

Merger-related costs - - - 275 4,125

Interest expense 21,421 22,504 22,892 21,943 22,547

Debt extinguishment costs 291 - - - -

Other income, net (794) (962) (2,716) (1,446) (1,145)

Provision for (benefit from) income taxes 323 (1,580) (4,795) (55,031) 354

(Income) loss from discontinued operations, net of tax - - 54 - -

Gross margin(1) $ 92,056 $ 96,130 $ 87,416 $ 100,131 $ 105,108

(1) See Addendum I-A for more information on gross margin.


AROCCONTENT

33

Archrock Addendum I-D

(1) See Addendum I-A for more information on EBITDA, as adjusted and EBITDA, as adjusted margin.


Net income (loss) ($14,013) ($4,036) ($12,683) $49,142 $2,069

(Income) loss from discontinued operations, net of tax - - 54 - -

Depreciation and amortization 47,772 47,248 47,463 46,080 44,455

Long-lived asset impairment 8,245 5,508 7,105 8,284 4,710

Restructuring and other charges 457 366 422 141 -

Restatement and other charges 801 1,920 566 1,083 485

Corporate office relocation costs - - 1,318 - -

Debt extinguishment costs 291 - - - -

Interest expense 21,421 22,504 22,892 21,943 22,547

Indemnification (income) expense, net 59 330 23 17 -

Expensed acquisition and merger-related costs - - - 275 4,125

Stock-based compensation 2,153 1,922 2,042 2,344 1,794

Provision for (benefit from) income taxes 323 (1,580) (4,795) (55,031) 354

EBITDA, as adjusted(1) $67,509 $74,182 $64,407 $74,278 $80,539

Revenue



Total Revenue $189,885 $197,982 $197,853 $208,935 $212,040

EBITDA, as adjusted margin(1) 36% 37% 33% 36% 38%


AROCCONTENT

34

Archrock Addendum I-E

($ in thousands) 2011 2012 2013 2014 2015 2016 2017

Net income (loss) $(355,308) $ (37,696) $ 126,606 $ 88,661 $(125,697) $ (65,243) $ 18,410

(Income) loss from discontinued operations, net of tax 242,605 (96,966) (129,654) (105,774) (33,677) 426 54

Depreciation and amortization 178,492 181,678 187,476 212,268 229,127 208,986 188,563

Long-lived asset impairment 5,716 131,417 16,696 42,828 124,979 87,435 29,142

Restructuring and other charges 4,463 2,579 - 5,394 4,745 16,901 1,386

Restatement and other charges - - - - - 13,470 4,370

Corporate Office Relocation Charges - - - - - - 1,318

Goodwill impairment 31,994 - - - 3,738 - -

Debt extinguishment costs - - - - 9,201 - 291

Interest expense 145,100 129,058 112,194 112,273 107,617 83,899 88,760

Indemnification (income) expense, net - - - - - (2,593) 430

Expensed acquisition and merger-related costs - - 246 2,471 - 172 275

Stock-based compensation(1) N/A N/A 6,418 8,998 10,029 8,969 8,41

Provision for (benefit from) income taxes (50,379) (77,034) (17,840) (28,066) 53,189 (24,604) (61,083)

EBITDA, as adjusted(1), (2) $202,683 $233,036 $302,142 $339,053 $383,251 $327,818 $280,377

Revenues

Contract Operations 570,780 596,011 627,844 729,103 781,166 647,828 610,921

Aftermarket Services 209,076 240,813 234,928 230,050 216,942 159,241 183,734

Total $779,856 $836,824 $862,772 $959,153 $998,108 $807,069 $794,655

EBITDA, as adjusted margin(2) 26% 28% 35% 35% 38% 41% 35%

(1) We revised our definition of EBITDA, as adjusted to exclude the impact of non-cash stock-based compensation. Historical periods for the years ended December 31, 2011 and 2012 have not been updated to conform to the current definition. (2) See Addendum I-A for more information on EBITDA, as adjusted and EBITDA, as adjusted margin.


AROCCONTENT

35(1) See Addendum I-A for information cash available for dividend and cash available for dividend coverage.

Archrock Addendum I-F

Reconciliation of Archrock, Inc. Net Income to Cash Available for Dividend

($ in thousands) Q1-18

Net income $2,069

Depreciation and amortization 44,455

Long-lived asset impairment 4,710

Restatement and other charges 485

Merger-related costs 4,125

Interest expense 22,547

Provision for income taxes 354

Stock-based compensation 1,794

EBITDA, as adjusted (1) $80,539

Less: Maintenance capital expenditures (11,135)

Less: Other capital expenditures (4,564)

Less: Cash tax refund 679

Less: Cash interest (20,382)

Cash available for dividend(1) $45,137

Dividend declared for the period per share 0.12

Dividend declared for the period to all shareholders 15,553

Cash available for dividend coverage(1) 2.90x


AROCCONTENT

36

($ in thousands) Q1-18

Cash flows from operating activities $62,455

Inventory write downs (465)

Provision for doubtful accounts (620)

Gain on sale of property, plant and equipment 1,195

Current income tax provision 59

Cash tax refund 679

Amortization of contract balances (2,884)

Merger-related costs 4,125

Restatement and other charges 485

Payments for settlement of interest rate swaps that include financing elements

(205)

Maintenance capital expenditures (11,135)

Other capital expenditures (4,564)

Changes in assets and liabilities (3,988)

Cash available for dividend (1) $45,137

Dividend declared for the period per share $0.12

Dividend declared for the period to all shareholders 15,553

Cash available for dividend coverage (1) 2.90x

Archrock Addendum I-F (cont.)

Reconciliation of Archrock, Inc. Cash Flows from Operations to Cash Available for Dividend

(1) See Addendum I-A for information cash available for dividend and cash available for dividend coverage.


AROCCLOSE

CONTACT US

Investor Relations

Paul Burkhart (Vice President, Finance)

(281) 836-8688

[email protected]

www.archrock.com/aroc

Corporate Headquarters

9807 Katy Freeway

Suite 100

Houston, TX 77024

Date post:	04-Feb-2022
Category:	Documents
Upload:	others
View:	3 times
Download:	0 times

ARCHROCK, INC.

Documents