Contract Compression: We’re Gonna Need a Bigger Compressor; S/D Super Cycle Accelerates; Model Updates

Research evidence excerpt

Contract Compression: We’re Gonna Need a Bigger Compressor; S/D Super Cycle Accelerates; Model Updates

J P M O R G A N North America Equity Research

18 June 2026

Contract Compression

We’re Gonna Need a Bigger Compressor; S/D Super

Cycle Accelerates; Model Updates

Please find below our thoughts on AROC, KGS and USAC.

• AROC: guidance upside, compression cycle durability, best B/S, and CFO

transition in focus. Amid a demand super cycle across contract compression,

coupled with CAT 3600-series lead times exceeding 180 weeks, investor

attention remains on guidance upside and enhanced forward visibility. Given North American Midstream

AROC’s conservative track record (two guidance raises in 2025) and solid 1Q Eli Jossen, CFA AC

fundamentals, we see upside to FY26 adj EBITDA guidance ($907mm JPMe (1-212) 622-4113

versus $890mm midpoint and $894mm Street median). AROC's back-half eli.jossen@jpmchase.com

weighted newbuild delivery schedule and $250–$275mm growth capex Jeremy Tonet, CFA

program position the company to capture accelerating volume growth this year. (1-212) 622-4915

jeremy.b.tonet@jpmorgan.com

Looking ahead, management confirmed placement of orders into 2027 and

Vrathan Reddy beyond, leveraging AROC's strong balance sheet to secure queue positions

(1-212) 622-4692

with packagers. On pricing, 10-year extensions to lock in equipment vrathan.reddy@jpmchase.com

availability validate structurally stronger demand, and add to continued

Francina Kolluri

revenue per HP expansion. While we acknowledge elevated lube oil costs this (1-212) 270-5796

year, we see operational strength driving ~70%+ gross margins for the francina.kolluri@jpmchase.com

foreseeable future. Fleet high-grading activity and sub-3x leverage J.P. Morgan Securities LLC