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Business Combinations and Asset Acquisition
 12 Months Ended
Dec. 31, 2025
Business Combination [Abstract]  
Business Combinations and Asset Acquisition

Note 2 – Business Combinations and Asset Acquisition

2024 Business Combination

On June 20, 2024, the 2024 Business Combination was completed and accounted for using the acquisition method for business combination pursuant to ASC 805. The results of operations are included in the accompanying consolidated statements of operations from the date of the acquisition. Under the acquisition method of accounting, the assets and liabilities have been recorded at their respective estimated fair values as of the date of closing and reported into the

accompanying consolidated balance sheets. Determining the fair value of acquired assets and liabilities assumed requires management’s judgment and the use of independent valuation specialists.

The carrying amounts of cash and cash equivalents, and other net working capital accounts approximated their fair values due to their nature or the short-term maturity of instruments. The acquired debt was determined to approximate fair value as the terms were commensurate with current market terms. The acquired leases were accounted for in accordance with ASC 842. The fair value of the intangible assets acquired was determined using variations of the income approach that utilizes unobservable inputs classified as Level 3 measurements.

The total purchase price for the 2024 Business Combination was $854.6 million consisting of $399.8 million relating to Flogistix and $454.8 million relating to Flowco Productions. The value of the consideration was equivalent to the enterprise value of the underlying businesses which were determined using the guideline public company method market approach. Goodwill was recognized as the excess of consideration over the net assets acquired of Flowco Productions and Flogistix and represented the value derived from the assembled workforce, established processes, and expected future market growth. In the fourth quarter ended December 31, 2024, the Company identified an adjustment to the fair value of the acquired intangible assets resulting in a decrease to the fair value of goodwill of $17.8 million and $3.0 million for Flogistix and Flowco Productions, respectively, with a corresponding increase to the intangible assets related to the respective entities. These adjustment were not considered measurement period adjustments.

As of December 31, 2025, the fair value allocation was final, with no measurement period adjustment made to the account balances recorded at the acquisition date. The following table presents the consideration transferred and fair value of Flogistix assets acquired and liabilities assumed in accordance with ASC 805 (in thousands):

 

Cash and cash equivalents

$

 

193

 

Accounts receivable - trade, net

 

 

18,104

 

Inventory

 

 

82,378

 

Prepaid expenses and other current assets

 

 

2,551

 

Property, plant and equipment

 

 

357,443

 

Intangible assets

 

 

110,290

 

Finance lease right-of-use assets

 

 

8,629

 

Operating lease right-of-use assets

 

 

9,763

 

Other assets

 

 

358

 

Accounts payable - Trade

 

 

(18,143

)

Accrued expenses

 

 

(9,495

)

Current portion of finance lease obligations

 

 

(2,356

)

Current portion of operating lease obligations

 

 

(3,579

)

Deferred revenue

 

 

(4,085

)

Operating lease obligations, net of current portion

 

 

(6,172

)

Finance lease obligations, net of current portion

 

 

(6,506

)

Long-term debt

 

 

(205,933

)

Identifiable net assets acquired

 

 

333,440

 

Goodwill

 

 

66,325

 

Total consideration transferred

$

 

399,765

 

 

The following table presents the consideration transferred and fair value of Flowco Productions assets acquired and liabilities assumed in accordance with ASC 805 (in thousands):

 

Cash and cash equivalents

$

 

2,895

 

Accounts receivable - trade, net

 

 

42,999

 

Inventory

 

 

61,194

 

Prepaid expenses and other current assets

 

 

1,565

 

Property, plant and equipment

 

 

28,608

 

Intangible assets

 

 

194,000

 

Finance lease right-of-use assets

 

 

6,102

 

Operating lease right-of-use assets

 

 

5,151

 

Other assets

 

 

300

 

Accounts payable - Trade

 

 

(11,119

)

Accrued expenses

 

 

(15,534

)

Current portion of finance lease obligations

 

 

(3,225

)

Current portion of operating lease obligations

 

 

(2,179

)

Operating lease obligations, net of current portion

 

 

(2,972

)

Finance lease obligations, net of current portion

 

 

(2,877

)

Long-term debt

 

 

(29,930

)

Identifiable net assets acquired

 

 

274,978

 

Goodwill

 

 

179,885

 

Total consideration transferred

$

 

454,863

 

 

Identifiable intangible assets and their amortization periods were estimated as follows (in thousands):

 

 

Cost Basis

 

 

Useful Life (years)

Flogistix

 

 

 

 

 

 

Trade name

$

 

16,650

 

 

10

Developed Technology

 

 

47,450

 

 

20

Customer relationships

 

 

46,190

 

 

14

$

 

110,290

 

 

 

FPS

 

 

 

 

 

 

Trade name

$

 

39,000

 

 

10

Developed Technology

 

 

39,000

 

 

10

Customer relationships

 

 

116,000

 

 

9

$

 

194,000

 

 

 

 

$66.3 million of Flogistix goodwill was recognized within the Natural Gas Technology segment and $179.9 million of Flowco Productions goodwill was recognized within the Productions Solutions segment in the consolidated balance sheet. The Company determined the useful life of the customer relationships using a form of the income approach referred to as excess earnings method. This approach is based on forecasted revenue expected from the acquired customers, accounting for the loss of customers over time. The Company determined the useful life of the trade name based on anticipated future use of the trade name and industry norms. The Company determined the useful life of the developed technology on the basis of the obsolescence factor and long-term projections for U.S. gross domestic product (“GDP”) and consumer price index (“CPI”) and the understanding of the current and expected future state of the technology.

The following table (in thousands) presents certain unaudited pro forma financial information for the years ended December 31, 2024 and 2023, as if the 2024 Business Combination had been completed on January 1, 2023. Net Sales and net income of Flogistix in the historical consolidated statements of operations for the period from June 20, 2024 to December 31, 2024 were $125.7 million and $18.4 million, respectively. Net Sales and net income of Flowco

Productions in the historical consolidated statements of operations for the period from June 20, 2024 to December 31, 2024 were $135.5 million and $4.6 million, respectively. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma information reflects adjustments for depreciation and amortization resulting from the fair value step-up of property, plant and equipment and the intangible assets acquired, recognition of incremental costs due to the fair value step-up for inventory acquired, and the reduction in interest expense from elimination of deferred financing costs.

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

Pro forma net sales

 

$

 

733,259

 

 

$

 

665,311

 

Pro forma net income

 

$

 

103,999

 

 

$

 

122,177

 

 

Other Business Combination

On October 25, 2024, the Company completed the acquisition of 100% of the equity interests in an oilfield services company located in Midland, Texas, for a total purchase price of $7.0 million. This acquisition consists primarily of machinery and equipment and certain intangible assets related to customer relationships contract and intellectual property. This acquisition is complementary to the Company's existing oilfield service presence already in the area and provides additional service capacity in a region where producers are actively drilling for crude oil and natural gas.

This acquisition was accounted for as a business combination which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. The agreement also contained a contingent liability in the form of an earnout arrangement whereby the Company is contractually obligated to pay the seller if certain operating conditions are met. This contingent liability has been included as part of the consideration given up at the closing of this acquisition. The excess of consideration given up over the net fair values was recorded to goodwill. As of December 31, 2025, the earnout arrangement had been paid in full and the contingent liability was fully released from the accompanying consolidated financial statements.

The table below presents the final purchase price and assessment of the fair value of the assets acquired (in thousands). There was no measurement period adjustment made to the account balances recorded at the acquisition date.

Property, plant and equipment

$

 

2,363

 

Intangible assets

 

 

3,928

 

Earnout liability

 

 

(548

)

Identifiable net assets acquired

 

 

5,743

 

Goodwill

 

 

1,257

 

Total consideration transferred

$

 

7,000

 

Property, plant and equipment recognized in the above acquisition are primarily related to vehicles and trailers. The net book value was assumed to be the fair value for these acquired property, plant and equipment.

Identifiable intangible assets recognized in the above acquisition are primarily related to oilfield services contracts, non-compete agreements and customer relationships. The basis for determining the fair value of these intangible assets is the estimated future net cash flows expected to be generated from the acquired agreements and customer relationships. The intangibles acquired in this acquisition are being amortized on a straight-line basis over an initial six-year period for the acquired customer relationships and three-year period for the acquired non-compete agreements and other contracts.

Revenues and earnings related to this acquisition are included within the consolidated statements of operations since the acquisition date and are not considered to be material for separate disclosure. Supplemental pro forma revenue and

earnings reflecting this acquisition as if it had been completed on January 1, 2023, are not materially different from the information presented in the accompanying consolidated statement of operations and are, therefore, not presented.

Asset Acquisition

On July 1, 2025, the Company entered into an asset purchase agreement with Archrock, Inc. (“Archrock”), pursuant to which the Company acquired certain HPGL and VRU systems, related intangible assets, and a small amount of inventory, for cash consideration of $71.0 million. The Company completed this transaction on August 1, 2025 and accounted for this transaction as an asset acquisition, as substantially all of the fair value is concentrated in a group of similar identifiable assets. As such, the Company allocated the total cost of the asset acquisition to the net assets acquired on the basis of their estimated relative fair values on the acquisition date. Transaction costs incurred in connection with this transaction were de minimis.

The purchase price allocation related to the Archrock acquisition is as follows (in thousands):

 

Cost Basis

 

 

Useful Life (years)

 

Property, plant and equipment

$

 

68,903

 

 

 

7 – 15

 

Intangible assets - customer contracts

 

 

1,925

 

 

 

 

3

 

Inventory

 

 

172

 

 

 

N/A

 

Total consideration transferred

$

 

71,000