Kodiak Gas Services Inc. (KGS): 2Q26 Preview: Focus on Growing Power Opportunity

Research evidence excerpt

Kodiak Gas Services Inc. (KGS): 2Q26 Preview: Focus on Growing Power Opportunity

Goldman Sachs Kodiak Gas Services Inc. (KGS)

KGS continues to work through its customer project.

n We forecast Power contributions of $23m, driven by the legacy DPS fleet.

Key Focus Areas

Confident in compression outlook. The outlook for the compression industry has

remained robust in 2026 as supply/demand dynamics remain tight, exhibited by growing

natural gas demand and long lead times for new engines. KGS last quoted lead times

~+190 weeks for 3600 gas compression engines at the EIC conference in May - during

1Q26 earnings, the company noted they are beginning to secure orders into 2029. We

look for more color on the 2027+ order momentum from here. While supply remains

tight, we have not seen any material shift in pricing - KGS previously highlighted that CAT

(a core compression engine supplier) has not pushed pricing higher yet (despite limited

capacity for higher demand). We look for the ability for pricing to improve from here,

including the potential upside to recontracting prices through 2028 where new unit

supply is tightest, which could generate incremental margin upside. Elsewhere, contract

duration remains top of mind. KGS has announced one 10-year contract renewal with

existing customer, a 7-year contract life from its recent purchase-leaseback, and

pointed to securing an incremental 10-year contract extension on the 1Q26 earnings

call. We continue to watch the willingness for customers to extend contracts from here

and whether locking-up term could limit pricing upside to KGS, though believe further

extension opportunities could help support the stability of KGS’s cash flows long term.

Overall, we expect continued operational strength for KGS’s compression services