Kodiak Gas Services Announces Public Offering of Common Stock by Selling Stockholder

Rhea-AI Summary

Kodiak Gas Services (NYSE: KGS) announced a public offering of 5,500,000 shares of common stock by an affiliate of EQT Infrastructure III and EQT Infrastructure IV funds. The company will not sell any shares or receive proceeds from this offering. Goldman Sachs & Co. and J.P. Morgan are acting as underwriters. The offering will be conducted through a prospectus supplement and base prospectus filed under an automatic shelf registration statement on Form S-3, which became effective on July 10, 2024.

Positive

• None.

Negative

• Large secondary offering of 5.5M shares could create selling pressure
• Company receives no proceeds from the sale
• Significant shareholder (EQT Infrastructure) reducing position could signal lack of confidence

Insights

Financial Analyst

This secondary offering of 5.5 million shares by EQT Infrastructure represents a significant liquidation event that could impact KGS's stock price. With a current market cap of $3.78 billion, this offering represents approximately 7% of outstanding shares, which could create temporary selling pressure. Secondary offerings typically price at a discount to market to facilitate the transaction, suggesting potential near-term price weakness. However, the fact that existing shares are being sold rather than new shares being issued means there's no dilution to existing shareholders. The involvement of major underwriters Goldman Sachs and J.P. Morgan adds credibility to the offering process and suggests strong institutional interest. The timing and size of this offering may indicate EQT's view on current valuation levels.

Market Research Analyst

The move by EQT Infrastructure to reduce its position signals an important ownership transition phase for Kodiak Gas Services. Large block sales by private equity firms are common post-IPO and typically follow lock-up expiration periods. The offering's structure through established investment banks suggests an orderly distribution process targeting institutional investors. While this sale could temporarily pressure the stock, it may ultimately improve trading liquidity and broaden the shareholder base. Long-term investors often view reduced private equity ownership positively as it removes the overhang of future potential sales. Market reception will largely depend on the final pricing and the quality of investors who participate in the offering.

THE WOODLANDS, Texas--(BUSINESS WIRE)-- Kodiak Gas Services, Inc. (NYSE: KGS) (“Kodiak” or the “Company”) today announced the underwritten public offering (the “Offering”) of 5,500,000 shares of its common stock by an affiliate of the funds known as EQT Infrastructure III and EQT Infrastructure IV (the “selling stockholder”). Kodiak will not sell any shares of its common stock in the Offering and will not receive any proceeds from the sale of the shares of its common stock being offered by the selling stockholder. The Offering is subject to market and other conditions, and there can be no assurance as to whether or when the Offering may be completed.

Goldman Sachs & Co. LLC and J.P. Morgan are acting as the underwriters for the Offering. The Offering will be made only by means of a prospectus supplement and the accompanying base prospectus, which was filed as part of an automatic shelf registration statement on Form S-3 (File No. 333-280737), which was filed with the Securities and Exchange Commission (the “SEC”) and became effective on July 10, 2024. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the Offering. Copies of the preliminary prospectus supplement and accompanying base prospectus relating to the Offering, as well as copies of the final prospectus supplement once available, may be obtained for free on the SEC’s website at www.sec.gov or by contacting: Goldman Sachs & Co. LLC, Prospectus Department, 200 West Street, New York, NY 10282, telephone: 1-866-471-2526, facsimile: 212-902-9316 or by emailing Prospectus-ny@ny.email.gs.com; and J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by email at prospectus-eq_fi@jpmchase.com and postsalemanualrequests@broadridge.com.

There shall not be any sale of these securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Kodiak

Kodiak is the largest contract compression services provider in the United States, serving as a critical link in the infrastructure that enables the safe and reliable production and transportation of natural gas and oil. Headquartered in The Woodlands, Texas, Kodiak provides contract compression and related services to oil and gas producers and midstream customers in high–volume gas gathering systems, processing facilities, multi-well gas lift applications and natural gas transmission systems.

Forward-Looking Statements

This press release includes “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than statements of historical fact. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. They include statements regarding the Offering, including the completion thereof. Although Kodiak believes the expectations and forecasts reflected in the forward-looking statements are reasonable, Kodiak can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward-looking statements are described under “Risk Factors” in Item 1A of Kodiak’s annual report on Form 10-K for the year ended December 31, 2023 and any updates to those factors set forth in Kodiak’s subsequent quarterly reports on Form 10-Q or current reports on Form 8-K. Kodiak undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241212263190/en/

Investor Contact:

Graham Sones, VP – Investor Relations

ir@kodiakgas.com

(936) 755-3529

Source: Kodiak Gas Services, Inc.

FAQ

How many shares are being offered in the KGS secondary offering?

The secondary offering consists of 5,500,000 shares of Kodiak Gas Services common stock being sold by an affiliate of EQT Infrastructure III and IV funds.

Will Kodiak Gas Services (KGS) receive any proceeds from this offering?

No, Kodiak Gas Services will not receive any proceeds from this offering as all shares are being sold by the selling stockholder, an affiliate of EQT Infrastructure funds.

Who are the underwriters for the KGS stock offering?

Goldman Sachs & Co. and J.P. Morgan are acting as the underwriters for the offering.

When did the KGS shelf registration statement become effective?

The automatic shelf registration statement on Form S-3 became effective on July 10, 2024.