<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>ngsg8kex101050906.txt
<DESCRIPTION>STOCK OPTION PLAN DTD 05-09-06
<TEXT>

                                                                    Exhibit 10.1

                        NATURAL GAS SERVICES GROUP, INC.
                             1998 STOCK OPTION PLAN

                           (as amended on May 9, 2006)


1.  Purposes of this Plan.  The  purposes of this 1998 Stock  Option Plan are to
attract and retain the best  available  personnel for  positions of  substantial
responsibility, to provide additional incentive to Employees and Consultants and
to promote the success of the Company's business.  Options granted hereunder may
be either  "incentive  stock options," as defined in Section 422 of the Internal
Revenue  Code of 1986,  as amended,  or  "nonstatutory  stock  options,"  at the
discretion  of the Board and as  reflected  in the  terms of the  written  stock
option agreement.

2. Definitions. As used herein, the following definitions shall apply:

     a. "Board"  shall mean the  Committee,  if one has been  appointed,  or the
Board of Directors of the Company if no Committee is appointed.

     b. "Code" shall mean the Internal Revenue Code of 1986, as amended.

     c.  "Common  Stock"  shall  mean the $0.01 par  value  common  stock of the
Company.

     d.  "Company"  shall mean  Natural Gas  Services  Group,  Inc.,  a Colorado
corporation.

     e.  "Committee"  shall  mean  the  Committee  appointed  by  the  Board  in
accordance with paragraph (a) of Section 4 of this Plan, if one is appointed, or
the Board if no committee is appointed.

     f.  "Consultant"  shall mean any person who is engaged by the Company or by
any Parent or Subsidiary to render  consulting  services and is compensated  for
such consulting services,  but does not include a director of the Company who is
compensated for services as a director only with the payment of a director's fee
by the Company.

     g.  "Continuous  Status  as an  Employee"  shall  mean the  absence  of any
interruption or termination of service as an Employee.  Continuous  Status as an
Employee shall not be considered interrupted in the case of sick leave, military
leave, or any other leave of absence  approved by the Board,  provided that such
leave  is for a  period  of not  more  than  90 days or  reemployment  upon  the
expiration of such leave is guaranteed by contract or statute.

     h.  "Employee"  shall mean any person,  including  officers and  directors,
employed  by the  Company  or by any  Parent or  Subsidiary.  The  payment  of a
director's fee by the Company shall not be sufficient to constitute "employment"
by the Company.

     i.  "Incentive  Stock  Option"  shall mean an Option  which is  intended to
qualify as an incentive  stock  option  within the meaning of Section 422 of the
Code and which shall be clearly  identified  as such in the written Stock Option


<PAGE>

Agreement  provided by the Company to each Optionee  granted an Incentive  Stock
Option under this Plan.

     j. "Non-Employee Director" shall mean a director who:

          (i) Is not currently an officer (as defined in Section 16a-1(1) of the
     Securities  Exchange Act of 1934, as amended) of the Company or of a Parent
     or Subsidiary or otherwise currently employed by the Company or by a Parent
     or Subsidiary.

          (ii) Does not receive  compensation,  either  directly or  indirectly,
     from the Company or from a Parent or Subsidiary, for services rendered as a
     Consultant  or in any  capacity  other  than as a  director,  except for an
     amount that does not exceed the dollar amount for which disclosure would be
     required  pursuant to Item 404(a) of  Regulation  S-K adopted by the United
     States Securities and Exchange Commission.

          (iii) Does not possess an interest in any other  transaction for which
     disclosure  would be required  pursuant to Item  404(a) of  Regulation  S-K
     adopted by the United States Securities and Exchange Commission.

     k. "Nonstatutory Stock Option" shall mean an Option granted under this Plan
which does not qualify as an  Incentive  Stock Option and which shall be clearly
identified as such in the written Stock Option Agreement provided by the Company
to each  Optionee  granted a  Nonstatutory  Stock Option under this Plan. To the
extent that the aggregate fair market value of Optioned Stock to which Incentive
Stock Options granted under Options to an Employee are exercisable for the first
time during any  calendar  year (under this Plan and all plans of the Company or
any Parent or  Subsidiary)  exceeds  $100,000,  such Options shall be treated as
Nonstatutory  Stock Options under this Plan.  The aggregate fair market value of
the Optioned  Stock shall be  determined  as of the date of grant of each Option
and the  determination  of which  Incentive  Stock  Options  shall be treated as
qualified  incentive  stock  options  under  Section  422 of the Code and  which
Incentive  Stock Options  exercisable for the first time in a particular year in
excess of the $100,000 limitation shall be treated as Nonstatutory Stock Options
shall be  determined  based on the order in which such  Options  were granted in
accordance with Section 422(d) of the Code.

     l. "Option"  shall mean an Incentive  Stock Option,  a  Nonstatutory  Stock
Option or both as identified in a written  Stock Option  Agreement  representing
such stock option granted pursuant to this Plan.

     m. "Optioned Stock" shall mean the Common Stock subject to an Option.

     n.  "Optionee"  shall mean an  Employee  or other  person who is granted an
option.

     o. "Parent" shall mean a "parent  corporation" of the Company,  whether now
or hereafter existing, as defined in Section 424(e) of the Code.


                                       2
<PAGE>

     p. "Plan" shall mean this 1998 Stock Option Plan.

     q.  "Share"  shall  mean a share of the  Common  Stock of the  Company,  as
adjusted in accordance with Section 11 of this Plan.

     r. "Stock  Option  Agreement"  shall mean the  agreement to be entered into
between  the  Company  and each  Optionee  which  shall  set forth the terms and
conditions  of each Option  granted to each  Optionee,  including  the number of
Shares  underlying  such Option and the exercise price of each Option granted to
such Optionee under such agreement.

     s.  "Subsidiary"  shall mean a  "subsidiary  corporation"  of the  Company,
whether now or hereafter existing, as defined in Section 424(f) of the Code.

3. Stock Subject to this Plan.  Subject to the  provisions of Section 11 of this
Plan,  the maximum  aggregate  number of Shares  which may be optioned  and sold
under this Plan is 550,000 shares of Common Stock. The Shares may be authorized,
but unissued,  or reacquired  Common Stock. If an Option should expire or become
unexercisable  for any  reason  without  having  been  exercised  in  full,  the
unpurchased Shares which were subject thereto shall, unless this Plan shall have
been terminated, become available for future grant under this Plan.

4. Administration of this Plan.

     a.  Procedure.  This Plan shall be administered by the Board or a Committee
appointed  by the Board  consisting  of two or more  Non-Employee  Directors  to
administer  this  Plan  on  behalf  of the  Board,  subject  to such  terms  and
conditions as the Board may prescribe.

          (i) Once  appointed,  the  Committee  shall  continue  to serve  until
     otherwise  directed  by the Board  (which for  purposes  of this  paragraph
     (a)(i) of this Section 4 shall be the Board of  Directors of the  Company).
     From time to time the  Board may  increase  the size of the  Committee  and
     appoint additional members thereof,  remove members (with or without cause)
     and appoint new members in substitution  therefor,  fill vacancies  however
     caused,  or remove all members of the  Committee  and  thereafter  directly
     administer this Plan.

          (ii)  Members  of the Board  who are  granted,  or have been  granted,
     Options may vote on any matters  affecting the  administration of this Plan
     or the grant of any Options pursuant to this Plan.

     b. Powers of the Board.  Subject to the  provisions of this Plan, the Board
shall have the authority, in its discretion:

          (i) To grant Incentive  Stock Options,  in accordance with Section 422
     of the  Code,  and  Nonstatutory  Stock  Options  or both as  provided  and
     identified in a separate  written  Stock Option  Agreement to each Optionee
     granted such Option or Options under this Plan;  provided however,  that in
     no event shall an Incentive  Stock Option and a  Nonstatutory  Stock Option


                                       3
<PAGE>

     granted to any Optionee under a single Stock Option Agreement be subject to
     a "tandem"  exercise  arrangement such that the exercise of one such Option
     affects the  Optionee's  right to exercise the other Option  granted  under
     such Stock Option Agreement;

          (ii)  To  determine,  upon  review  of  relevant  information  and  in
     accordance  with  Section  8(b) of this Plan,  the fair market value of the
     Common Stock;

          (iii) To  determine  the  exercise  price per Share of  Options  to be
     granted,  which  exercise  price shall be  determined  in  accordance  with
     Section 8(a) of this Plan;

          (iv) To determine the Employees or other persons to whom, and the time
     or times at which,  Options shall be granted and the number of Shares to be
     represented by each Option;

          (v) To interpret this Plan;

          (vi) To prescribe, amend and rescind rules and regulations relating to
     this Plan;

          (vii) To determine  the terms and  provisions  of each Option  granted
     (which need not be identical)  and, with the consent of the holder thereof,
     modify or amend each Option;

          (viii) To  accelerate  or defer (with the consent of the Optionee) the
     exercise date of any Option, consistent with the provisions of Section 7 of
     this Plan;

          (ix) To  authorize  any person to execute on behalf of the Company any
     instrument required to effectuate the grant of an Option previously granted
     by the Board; and

          (x) To make all other determinations deemed necessary or advisable for
     the administration of this Plan.

     c.  Effect  of  Board's  Decision.   All  decisions,   determinations   and
interpretations of the Board shall be final and binding on all Optionees and any
other permissible holders of any Options granted under this Plan.

5. Eligibility.

     a. Persons  Eligible.  Options may be granted to any person selected by the
Board.  Incentive  Stock Options may be granted only to Employees.  An Employee,
who is also a director  of the  Company,  its Parent or a  Subsidiary,  shall be
treated as an  Employee  for  purposes  of this  Section 5. An Employee or other
person who has been  granted an Option  may,  if he is  otherwise  eligible,  be
granted an additional Option or Options.


                                       4
<PAGE>

     b. No Effect on Relationship.  This Plan shall not confer upon any Optionee
any right with respect to continuation of employment or other  relationship with
the Company nor shall it  interfere  in any way with his right or the  Company's
right to terminate his employment or other relationship at any time.

6. Term of Plan.  This Plan, as amended,  became  effective on June 21, 2006. It
shall  continue in effect until March 1, 2016,  unless sooner  terminated  under
Section 13 of this Plan.

7. Term of Option.  The term of each  Option  shall be 10 years from the date of
grant  thereof  or such  shorter  term as may be  provided  in the Stock  Option
Agreement.  However, in the case of an Option granted to an Optionee who, at the
time the Option is granted,  owns stock  representing more than 10% of the total
combined  voting  power of all  classes of stock of the Company or any Parent or
Subsidiary,  if the Option is an Incentive Stock Option,  the term of the Option
shall be five years from the date of grant  thereof or such  shorter time as may
be provided in the Stock Option Agreement.

8. Exercise Price and Consideration.

     a. Exercise Price. The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option  shall be such price as is  determined  by the
Board, but the per Share exercise price under an Incentive Stock Option shall be
subject to the following:

          (i) If granted to an  Employee  who,  at the time of the grant of such
     Incentive Stock Option, owns stock representing more than 10% of the voting
     power of all classes of stock of the  Company or any Parent or  Subsidiary,
     the per Share exercise price shall not be less than 110% of the fair market
     value per Share on the date of grant.

          (ii) If granted to any other  Employee,  the per Share  exercise price
     shall not be less than 100% of the fair market  value per Share on the date
     of grant.

     b.  Determination  of Fair Market Value. The fair market value per Share on
the date of grant shall be determined as follows:

          (i) If the Common Stock is listed on the New York Stock Exchange,  the
     American Stock Exchange or such other securities exchange designated by the
     Board, or admitted to unlisted trading privileges on any such exchange,  or
     if the  Common  Stock is quoted on a  National  Association  of  Securities
     Dealers,  Inc. system that reports  closing  prices,  the fair market value
     shall be the closing price of the Common Stock as reported by such exchange
     or system on the day the fair market  value is to be  determined,  or if no
     such price is reported for such day, then the determination of such closing
     price  shall  be as of the last  immediately  preceding  day on  which  the
     closing price is so reported;

          (ii) If the  Common  Stock is not so listed or  admitted  to  unlisted
     trading privileges or so quoted, the fair market value shall be the average
     of the last reported  highest bid and the lowest asked prices quoted on the


                                       5
<PAGE>

     National  Association  of Securities  Dealers,  Inc.  Automated  Quotations
     System or, if not so quoted, then by the National Quotation Bureau, Inc. on
     the day the fair market value is determined; or

          (iii) If the Common  Stock is not so listed or  admitted  to  unlisted
     trading privileges or so quoted, and bid and asked prices are not reported,
     the fair market value shall be determined in such reasonable  manner as may
     be prescribed by the Board.

     c.  Consideration  and Method of Payment.  The consideration to be paid for
the Shares to be issued  upon  exercise  of an Option,  including  the method of
payment,  shall be  determined  by the Board and may  consist  entirely of cash,
check,  other  shares of Common  Stock having a fair market value on the date of
exercise  equal to the aggregate  exercise  price of the Shares as to which said
Option shall be exercised,  or any  combination  of such methods of payment,  or
such other consideration and method of payment for the issuance of Shares to the
extent permitted under the Colorado Business Corporation Act.

9. Exercise of Option.

     a.  Procedure for Exercise:  Rights as a  Shareholder.  Any Option  granted
hereunder  shall be  exercisable  at such  times and under  such  conditions  as
determined  by the Board,  including  performance  criteria  with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of this
Plan.

     An Option may not be exercised for a fraction of a Share.

     An option  shall be  deemed to be  exercised  when  written  notice of such
exercise has been given to the Company in accordance with the terms of the Stock
Option  Agreement by the person entitled to exercise the Option and full payment
for the Shares with respect to which the Option is exercised  has been  received
by the Company.  Full  payment,  as  authorized  by the Board,  may consist of a
consideration  and  method of  payment  allowable  under  Section  8(c) and this
Section 9(a) of this Plan.  Until the issuance (as evidenced by the  appropriate
entry on the books of the Company or of the duly  authorized  transfer  agent of
the Company) of the stock  certificate  evidencing such Shares, no right to vote
or receive  dividends  or any other  rights as a  shareholder  shall  exist with
respect to the Optioned Stock,  notwithstanding  the exercise of the Option.  No
adjustment  will be made for a dividend or other right for which the record date
is prior to the date the stock  certificate  is issued,  except as  provided  in
Section 11 of this Plan.

     Exercise  of an Option in any  manner  shall  result in a  decrease  in the
number of Shares which  thereafter  may be available,  both for purposes of this
Plan and for sale  under  the  Option,  by the  number of Shares as to which the
Option is exercised.

     b. Termination of Status as an Employee.  In the case of an Incentive Stock
Option, if any Employee ceases to serve as an Employee,  he may, but only within
such period of time not exceeding  three months as is determined by the Board at
the time of grant of the Option  after the date he ceases to be an  Employee  of
the Company,  exercise his Option to the extent that he was entitled to exercise
it at the date of such  termination.  To the extent that he was not  entitled to


                                       6
<PAGE>

exercise the Option at the date of such termination,  or if he does not exercise
such  Option  (which he was  entitled  to  exercise)  within the time  specified
herein, the Option shall terminate.

     c.  Disability  of  Optionee.  In the case of an  Incentive  Stock  Option,
notwithstanding  the provisions of Section 9(b) above,  in the event an Employee
is unable to continue his  employment  with the Company as a result of his total
and permanent  disability (as defined in Section  22(e)(3) of the Code), he may,
but only within such period of time not  exceeding 12 months as is determined by
the  Board  at the time of grant  of the  Option  from the date of  termination,
exercise  his Option to the extent he was entitled to exercise it at the date of
such termination.  To the extent that he was not entitled to exercise the Option
at the date of termination, or if he does not exercise such Option (which he was
entitled  to  exercise)  within the time  specified  herein,  the  Option  shall
terminate.

     d. Death of Optionee.  In the case of an  Incentive  Stock  Option,  in the
event of the death of the Optionee:

          (i) During the term of the Option if the  Optionee  was at the time of
     his death an Employee and had been in  Continuous  Status as an Employee or
     Consultant  since  the date of  grant  of the  Option,  the  Option  may be
     exercised, at any time within 12 months following the date of death, by the
     Optionee's  estate or by a person who  acquired  the right to exercise  the
     Option by bequest or inheritance,  but only to the extent that the right to
     exercise would have accrued had the Optionee  continued living and remained
     in Continuous Status as an Employee 12 months after the date of death; or

          (ii)  Within  such  period of time not  exceeding  three  months as is
     determined  by the  Board  at the time of grant  of the  Option  after  the
     termination  of  Continuous  Status  as an  Employee,  the  Option  may  be
     exercised, at any time within 12 months following the date of death, by the
     Optionee's  estate or by a person who  acquired  the right to exercise  the
     Option by bequest or inheritance,  but only to the extent that the right to
     exercise had accrued at the date of termination.

10.  Nontransferability of Options. Unless permitted by the Code, in the case of
an  Incentive  Stock  Option,  the  Option may not be sold,  pledged,  assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent and distribution  and may be exercised,  during the lifetime
of the Optionee, only by the Optionee.

11.  Adjustments  Upon  Changes  in  Capitalization  or  Merger.  Subject to any
required action by the shareholders of the Company, the number of Shares covered
by each outstanding  Option, and the number of Shares which have been authorized
for issuance under this Plan but as to which no Options have yet been granted or
which have been  returned to this Plan upon  cancellation  or  expiration of any
Option, as well as the price per Share covered by each such outstanding  Option,
shall be proportionately  adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or  reclassification  of the Common Stock,  or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of  consideration  by the Company;  provided,  however,  that  conversion of any


                                       7
<PAGE>

convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as  expressly  provided  herein,  no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares subject to an Option.

     In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate  immediately  prior to the  consummation  of such proposed
action,  unless otherwise  provided by the Board. The Board may, in the exercise
of its  sole  discretion  in such  instances,  declare  that  any  Option  shall
terminate  as of a date fixed by the Board and give each  Optionee  the right to
exercise  his  Option  as to all or any part of the  Optioned  Stock,  including
Shares as to which the Option would not otherwise be  exercisable.  In the event
of the proposed sale of all or  substantially  all of the assets of the Company,
or the merger of the Company with or into  another  entity in a  transaction  in
which the  Company  is not the  survivor,  the  Option  shall be  assumed  or an
equivalent option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or  substitution,
that the  Optionee  shall have the right to exercise the Option as to all of the
Optioned Stock,  including  Shares as to which the Option would not otherwise be
exercisable.  If the  Board  makes  an  Option  fully  exercisable  in  lieu  of
assumption or substitution in the event of such a merger or sale of assets,  the
Board shall notify the Optionee that the Option shall be fully exercisable for a
period of 30 days from the date of such  notice,  and the Option will  terminate
upon the expiration of such period.

12.  Time of Granting  Options.  The date of grant of an Option  shall,  for all
purposes,  be the date on which the Board makes the determination  granting such
Option.  Notice of the  determination  shall be given to each  Employee or other
person to whom an Option is so granted  within a reasonable  time after the date
of such  grant.  Within a  reasonable  time  after  the date of the  grant of an
Option,  the  Company  shall  enter into and  deliver to each  Employee or other
person  granted  such Option a written  Stock  Option  Agreement  as provided in
Sections  2(r) and 16 hereof,  setting  forth the terms and  conditions  of such
Option  and  separately  identifying  the  portion  of the  Option  which  is an
Incentive Stock Option and/or the portion of such Option which is a Nonstatutory
Stock Option.

13. Amendment and Termination of this Plan.

     a.  Amendment and  Termination.  The Board may amend or terminate this Plan
from time to time in such  respects  as the Board may deem  advisable;  provided
that,  the  following  revisions or  amendments  shall  require  approval of the
shareholders of the Company in the manner described in Section 17 of this Plan:

          (i) Any change in the  designation of the class of Employees  eligible
     to be granted Incentive Stock Options; or


                                       8
<PAGE>

          (ii) Any  material  amendment  under  this Plan that  would have to be
     approved by the shareholders of the Company for the Board to continue to be
     able to grant Incentive Stock Options under this Plan.

     b. Effect of Amendment or Termination. Any such amendment or termination of
this Plan shall not affect Options already granted and such Options shall remain
in full  force and effect as if this Plan had not been  amended  or  terminated,
unless  mutually  agreed  otherwise  between the Optionee  and the Board,  which
agreement must be in writing and signed by the Optionee and the Company.

14.  Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant to
the  exercise of an Option  unless the  exercise of such Option and the issuance
and  delivery of such Shares  pursuant  thereto  shall  comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended,  the  Securities  Exchange  Act of 1934,  as  amended,  the  rules  and
regulations  promulgated  thereunder,  applicable state securities laws, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further  subject to the approval of legal  counsel for the Company with
respect to such compliance.

     As a condition to the  existence of an Option,  the Company may require the
person  exercising  such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present   intention   to  sell  or   distribute   such  Shares  and  such  other
representations  and  warranties  which in the opinion of legal  counsel for the
Company,  are  necessary or  appropriate  to  establish  an  exemption  from the
registration  requirements  under  applicable  federal and state securities laws
with respect to the acquisition of such Shares.

15.  Reservation of Shares.  The Company,  during the term of this Plan, will at
all  times  reserve  and  keep  available  such  number  of  Shares  as shall be
sufficient to satisfy the requirements of this Plan. Inability of the Company to
obtain authority from any regulatory body having  jurisdiction,  which authority
is deemed by the Company's legal counsel to be necessary for the lawful issuance
and sale of any Share  hereunder,  shall  relieve the  Company of any  liability
relating to the failure to issue or sell such Shares as to which such  requisite
authority shall not have been obtained.

16. Stock Option Agreement.  Each Option granted to an Employee or other persons
shall be evidenced by a written Stock Option Agreement in such form as the Board
shall approve.

17. Shareholder Approval. Continuance of this Plan, as amended, shall be subject
to approval by the shareholders of the Company on or before July 31, 2006.

18. Information to Optionees. The Company shall provide to each Optionee, during
the period for which such Optionee has one or more Options  outstanding,  copies
of  all  annual  reports  and  other  information  which  are  provided  to  all
shareholders  of the Company.  The Company shall not be required to provide such
information  if the  issuance  of  Options  under  this Plan is  limited  to key


                                       9
<PAGE>

employees  whose duties in  connection  with the Company  assure their access to
equivalent information.

19. Gender. As used herein, the masculine,  feminine and neuter genders shall be
deemed to include the others in all cases where they would so apply.

20.  CHOICE OF LAW. ALL  QUESTIONS  CONCERNING  THE  CONSTRUCTION,  VALIDITY AND
INTERPRETATION  OF THIS  PLAN AND THE  INSTRUMENTS  EVIDENCING  OPTIONS  WILL BE
GOVERNED BY THE  INTERNAL  LAW,  AND NOT THE LAW OF  CONFLICTS,  OF THE STATE OF
COLORADO.














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</TEXT>
</DOCUMENT>
