MIDLAND, Texas August 7, 2012 - Natural Gas Services Group, Inc. (NYSE:NGS), a leading provider of gas compression equipment and services to the natural gas industry, announces its financial results for the three and six months ended June 30, 2012.

Revenue: Total revenue increased to $24.5 million from $13.8 million, or 78%, for the three months ended June 30, 2012, compared to the same period ended June 30, 2011. This increase includes the second half of a non-recurring sale of units from our fleet to a large customer. Rental revenues increased 18% in the same year-over-year period. Sequentially, total revenues decreased $1.9 million primarily due to lower sales of custom-fabricated compressor units caused by some customer design changes and delays
           
Gross Margins: Overall gross margin was $11.0 million for the three months ended June 30, 2012 which was 36% higher than the $8.1 million recorded for the same period ended June 30, 2011. Due to a mix shift from higher margin rentals to relatively lower margin compressor sales, gross margins moved to 45% of revenue from 59% in those same respective quarters. Sequentially, gross margins decreased slightly from $11.2 million for the quarter ended March 31, 2012.

Operating Income: Operating income for the three months ended June 30, 2012 was $4.8 million, up 50% from the comparative prior year's level of $3.2 million. This increase was primarily driven by higher year-over-year revenues, particularly the non-recurring sales revenues. Sequentially, operating income decreased from $5.6 million to $4.8 million due to lower compressor sales revenues and higher SG&A expenses.

Net Income:  Net income for the three months ended June 30, 2012 increased 50% to $3.0 million, when compared to net income of $2.0 million for the same period in 2011. As already mentioned, the mix shift towards compressor sales resulted in net income margins for the three months ended June 30, 2012 decreasing to 12% from 15% for the three months ended June 30, 2011. Net income decreased in sequential quarters from $3.5 million to $3.0 million.

Earnings per share:  Comparing the second quarter of 2012 versus 2011, earnings per diluted share improved 50% to 24 cents from 16 cents. Diluted earnings decreased from 29 cents to 24 cents between sequential quarters.

EBITDA:  EBITDA increased 30% to $8.7 million or 35% of revenue for the three months ended June 30, 2012 versus $6.7 million or 49% of revenue for the same three months ended June 30, 2011. Please see discussion of Non-GAAP measures in this release.

Cash flow: At June 30, 2012, cash and cash equivalents were approximately $30.5 million; working capital was $49.6 million with a total bank debt level of $1.0 million, all of which was classified as non-current. Positive net cash flow from operating activities was approximately $20 million during the first six months of 2012 compared to $16.0 million for the same period in 2011.

Commenting on 2012 results, Stephen C. Taylor, President and CEO, said:

"In spite of shifting markets, NGS continues to grow our sales and rental businesses and our operating results confirm our strategy and direction. Our sales revenues maintained a healthy level of activity and our backlog is at a constant level. Our rental fleet is growing with every new unit built being fully utilized and rented at premium rates. Expansion of our rental operations into new liquids-oriented areas is proceeding and we are setting new equipment on a regular basis. We are optimistic that our growth will continue. "

Selected data: The table below shows revenues and gross margin, exclusive of depreciation, of each business segment for the three months ended June 30, 2012 and 2011.  Gross margin is the difference between revenue and cost of sales, exclusive of depreciation.

(1) For a reconciliation of gross margin to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read "Non-GAAP Financial Measures" below.

Non GAAP Measures: "EBITDA" reflects net income or loss before interest, taxes, depreciation and amortization.  EBITDA is a measure used by analysts and investors as an indicator of operating cash flow since it excludes the impact of movements in working capital items, non-cash charges and financing costs.  Therefore, EBITDA gives the investor information as to the cash generated from the operations of a business.  However, EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America ("GAAP"), and should not be considered a substitute for other financial measures of performance.  EBITDA as calculated by NGS may not be comparable to EBITDA as calculated and reported by other companies. The most comparable GAAP measure to EBITDA is net income. The reconciliation of net income to EBITDA and gross margin is as follows:

Cautionary Note Regarding Forward-Looking Statements:

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements involve known and unknown risks and uncertainties, which may cause NGS's actual results in future periods to differ materially from forecasted results.  Those risks include, among other things, the loss of market share through competition or otherwise; the introduction of competing technologies by other companies; a prolonged, substantial reduction in oil and gas prices which could cause a decline in the demand for NGS's products and services; and new governmental safety, health and environmental regulations which could require NGS to make significant capital expenditures. The forward-looking statements included in this press release are only made as of the date of this press release, and NGS undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. A discussion of these factors is included in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Conference Call Details:

Teleconference: Tuesday, August 7, 2012 at 10:00 a.m. Central (11:00 a.m. Eastern).  Live via phone by dialing 800-624-7038, pass code "Natural Gas Services".   All attendees and participants to the conference call should arrange to call in at least 5 minutes prior to the start time.

Live Webcast: The webcast will be available in listen only mode via our website www.ngsgi.com, investor relations section.

Webcast Reply: For those unable to attend or participate, a replay of the conference call will be available within 24 hours on the NGS website at www.ngsgi.com.

Stephen C. Taylor, President and CEO of Natural Gas Services Group, Inc. will be leading the call and discussing the financial results for the three months ended June 30, 2012.

About Natural Gas Services Group, Inc. (NGS):
NGS is a leading provider of medium horsepower, wellhead compression equipment to the natural gas industry with a primary focus on the non-conventional gas and oil industry, i.e., coal bed methane, gas and oil shales and tight gas. The Company manufactures, fabricates, rents and maintains natural gas compressors that enhance the production of natural gas wells. The Company also designs and sells custom fabricated natural gas compressors to particular customer specifications and sells flare systems for gas plant and production facilities. NGS is headquartered in Midland, Texas with manufacturing facilities located in Tulsa, Oklahoma and Midland, Texas and service facilities located in major gas producing basins in the U.S.