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## 2011 Letter To Our Shareholders 

Fellow NGSG Shareholders, 

2011 was a year of growth in a challenging atmosphere. Against a backdrop of stagnant natural gas prices NGSG was able to grow our rental fleet and, along with it, rental and sales revenues. Fleet utilization grew to 75% at year-end and our sales segment showed improvement with a significant contribution coming from production flare revenues. On the challenging side, competitive pressures held price increases to a lower level than desired and field operating costs continued to climb due to higher labor and maintenance costs. In spite of all this, NGSG's margins and growth rates continued to outperform our industry as a whole. 

Total revenues for NGSG in 2011 were $65.2 million, a 21% increase over 2010 with operating income growing by 31% to $14.9 million. Sales, general and administrative expenses fell to 9% of revenue and net income increased 39% to $9.8 million. I’d also like to highlight the fact that our rental revenues in the fourth quarter of 2011 were at a record high level. This performance was primarily driven by our ability to quickly reorient our rental operations towards the emerging oil shale and liquids-oriented plays. As our customers shifted away from dry natural gas drilling and production towards oil and liquids areas and activities and its associated gas, NGSG followed suit. We continued to place equipment into 

the Barnett Shale, but also saw increasing volumes of associated gas business in the Granite Wash of Texas and Oklahoma and the Utica Shale in Ohio. As an indication of the speed at which we moved into these new operating areas; at year-end 2011 approximately 20% of our active rental fleet was installed in oil shale areas whereas in 2009 we had no exposure at all. Reorienting a material portion of our fleet while moving into new operating areas within two years attests to our ability to quickly identify trends and effectively and profitably act on them. With oil prices at a record price differential with respect to natural gas we expect the trend towards liquids and associated gas production to continue. 

Now that 2012 is here we have seen a further deterioration in the price of natural gas. The very warm weather across the country this winter upset the supply/demand balance that prevailed during most of 2011 and has sent commodity prices down almost a third just since the beginning of the year to a ten year low. Along with this, the gas-directed rig count is also at its lowest level in ten years and storage levels are running at least 30% higher than last year. From this it is obvious that the dry-gas (non-liquids associated) markets will not provide any potential for growth this year and our challenge will be to continue our penetration of the liquids oriented markets while maintaining our preferred position in the traditional dry-gas areas of operation. The newer operations we have established over the past couple of years hold a promise of future growth and we are currently evaluating other geographic areas for additional expansion. Our strategy is solid, our ability to execute proven and we look forward to delivering added value and performance for our shareholders and employees this year. 

We were also happy to welcome two new directors to our board this year with both of them having extensive experience in the oil and gas operating and service businesses. Ken Huseman, President and CEO of Basin Energy Services and David Bradshaw, former Chairman and CEO of Tipperary Corporation, joined us in 2011 and will be able to bring additional industry knowledge and insight to NGSG. 

As always, we invite you to NGSG’s Annual Shareholders Meeti ng to be held in Midland, TX on June 13, 2012 at 8:30 am at the DoubleTree Hotel at Midland Plaza. 

Sincerely, Stephen Taylor Chairman, President and Chief Executive Officer 

