Archrock Inc., which rents out the compressors that move natural gas through Permian Basin pipelines, agreed to buy HiVolt Energy Holdings LLC for up to $450 million in cash, betting that the oil patch’s next bottleneck is electricity.
Houston-based Archrock will pay $415 million at closing, subject to adjustments, plus up to $35 million in earnout incentives that selected HiVolt employees can earn based on the unit’s gross margin from 2027 through 2029, according to a securities filing. Payments would come in 2028, 2029 and 2030.
Power where the grid isn’t
HiVolt, based in Midland, Texas, builds, owns and runs what the industry calls prime-power microgrids: on-site gas-fired generation, battery storage, fuel lines and private power lines that supply drilling and production sites that can’t get enough electricity from the utility grid. It sells the power under long-term contracts. Archrock said the purchase price plus earnouts paid through 2028 equals about 6.1 times the midpoint of HiVolt’s expected 2028 adjusted Ebitda of $70 million to $75 million, and that about 70% of that forecast is backed by operating, contracted or awarded projects.
The deal pushes a compression company into a new line of business. Producers in West Texas have increasingly turned to self-generated power as electrification of field equipment outruns grid buildout, and Archrock said it sees eventual demand from other industrial users as well. It expects the acquisition to add immediately to earnings per share and to cash available for dividends.
Funding and timing
Archrock plans to fund the upfront payment from its asset-based lending facility and said leverage will stay within its target range of 3 to 3.5 times debt to Ebitda. HiVolt will operate as a separate segment led by Chief Executive Josh Evans and keep its Midland presence. The boards approved the merger agreement, and closing is expected in early 2027 subject to regulatory approval. The deal comes on the same day Diamondback and KKR agreed to buy control of a Permian water network, another sign that investors are paying up for the infrastructure that sits around the wells.
