Axip Energy Services: PE-Backed Compression Company Pursues 363 Sale

Axip Energy Services, LP, a Houston-based natural gas compression provider backed by private equity firm Energy Spectrum Capital, filed chapter 11 petitions on February 22, 2026, in the U.S. Bankruptcy Court for the Southern District of Texas. The company and six affiliates entered bankruptcy carrying $240.5 million in funded debt and a pre-arranged stalking horse bid from Service Compression LLC valued at $161 million in cash. The filing is structured as a Section 363 sale, with an auction scheduled for April 1, 2026, if competing bids emerge.

Energy Spectrum Capital acquired Axip in September 2022, and the resulting leveraged capital structure — $240.5 million in funded debt against a stalking horse bid valuing the enterprise at $161 million — left the company unable to service its obligations. The debtors filed with a stalking horse asset purchase agreement, debtor-in-possession financing commitment, and a comprehensive first day package of 29 docket entries, reflecting advance preparation with lenders and the proposed buyer.

Debtor(s)	Axip Energy Services, LP (7 jointly administered entities)
Court	U.S. Bankruptcy Court, Southern District of Texas (Houston Division)
Case Number	26-90338
Petition Date	February 22, 2026
Judge	Hon. Christopher M. Lopez
Claims Agent	Epiq Corporate Restructuring LLC
DIP Facility	~$91.7 million total: $25.5 million new money + $66.2 million rollup of prepetition ABL debt; provided by certain prepetition ABL lenders

363 Sale Process

Stalking horse bid. Service Compression LLC submitted a $161 million cash bid to acquire substantially all of the debtors' assets. The debtors entered into a stalking horse asset purchase agreement with Service Compression before the petition date, and filed an emergency bidding procedures motion on the petition date. The APA establishes a baseline offer for the debtors' compression fleet, customer contracts, and related operations.

Bidding procedures and auction. The emergency sale and bidding procedures motion seeks approval of bidding procedures, the form and manner of notice, and assumption and assignment procedures for executory contracts and unexpired leases. If superior offers emerge, an auction is scheduled for April 1, 2026, approximately 38 days after the petition date. Break-up fee and overbid increment terms are specified in the stalking horse APA but have not been publicly reported.

Service Compression LLC. The stalking horse bidder is a Lubbock, Texas-based natural gas compression company and member of the Gas Compressor Association. Service Compression operates in the Permian Basin, the same region where Axip maintains its primary operational focus. The buyer's profile as a compression industry operator — rather than a financial sponsor or liquidator — is consistent with a going-concern acquisition.

Going-concern sale. The debtors intend to continue operating in the ordinary course throughout the chapter 11 process. First day motions filed on the petition date seek authority to pay prepetition wages and employee benefits, honor critical vendor obligations, continue insurance coverage programs, provide adequate assurance to utilities, pay prepetition taxes, and maintain existing cash management systems.

First day hearing. The first day hearing agenda notice scheduled the hearing for February 24, 2026, at 11:00 AM CT, two days after the petition date. The agenda included the DIP financing motion, the sale and bidding procedures motion, and the operational first day motions.

Execution timeline. The timeline from petition to auction spans about 38 days, from February 22, 2026 to April 1, 2026. Within the first two days, the debtors filed the DIP motion, sale motion, supporting declarations, and first day operating motions. That sequence reflects a transaction process launched at filing rather than a case where sale terms are developed later in chapter 11.

As publicly reported, the bidding process began with an executed stalking horse framework instead of an open pre-signing marketing period. The debtors' filing posture combined sale mechanics, financing requests, and operating motions on day one, which placed valuation testing and liquidity issues on the same early-hearing track. The reported first day agenda also paired those items with immediate operational relief requests to avoid business interruption while the sale process moved forward.

Company Background

Operations. Axip Energy Services provides natural gas rental compression infrastructure to upstream and midstream customers across all major U.S. producing basins and the offshore Gulf of Mexico. The company operates a compression fleet exceeding 500,000 horsepower, comprising both electric and natural gas-driven reciprocating compressor packages ranging from 100 to 2,500 HP. Services include reciprocating compressor packages, gas processing solutions, liquid separation systems, and field services. The company's primary operational focus is the Permian Basin. Axip is headquartered at 1221 McKinney, Suite 3175, Houston, TX 77010. The case was designated as a complex chapter 11 case on the petition date.

Private equity ownership. Energy Spectrum Capital, a Dallas-based midstream-focused private equity firm, acquired Axip Energy Services in September 2022. The acquisition introduced the leveraged capital structure — $240.5 million in funded debt — that led to the filing. Energy Spectrum's portfolio focus is midstream energy infrastructure, and Axip represented a compression platform investment concentrated in the Permian Basin.

Management. Robert Stiles serves as President and CEO, having previously founded E3 Energy Services, E2, and Enerven Compression Services. Stephen Childress serves as CFO. The affiliate debtor E3 Compression Holdings LLC reflects the corporate lineage from Stiles's prior ventures.

Operational leadership. Axip lists Earl Ashley as VP Operations, John Guoynes as VP Product Development, and Mike Wright as VP Sales and Business Development in company materials. The listed leadership structure spans operations, product development, and sales functions that support a fleet-based rental compression business.

Corporate structure. The sale motion identifies seven debtors: Axip Energy Services, LP; Axip Energy Services Management, LLC; Axip Holdings, LLC; Axip Leasing Company, LLC; Axip Producer Services - Marcellus I, LLC; Axip Producer Services, LLC; and E3 Compression Holdings LLC. The debtors filed a motion for joint administration and a complex case designation on the petition date.

Key professionals. The debtors retained Vinson & Elkins LLP as bankruptcy counsel, led by David S. Meyer (head of V&E's Restructuring and Reorganization group, New York) and Paul E. Heath (Houston). Ankura Consulting Group LLC provides restructuring advisory services, with Ben Chesters serving as Chief Restructuring Officer. Evercore serves as investment banker, with Senior Managing Director Robert A. Pacha filing a declaration in support of both the DIP financing and sale motions. Epiq Corporate Restructuring LLC serves as claims and noticing agent. C Street Advisory Group handles strategic communications.

Capital Structure and DIP Financing

Prepetition debt. The company carried $240.5 million in total funded debt across three facilities:

Superpriority Facility	$13.2 million
Asset-Based Lending (ABL) Facility	$207.8 million (first-lien secured)
Second-Lien Facility	$19.5 million
Total Funded Debt	$240.5 million

The $13.2 million superpriority facility sits senior to both the ABL and second-lien facilities. Trade claims are estimated at $17 million to $20 million.

In addition to funded debt, the reported trade claim range adds another layer in the priority stack behind secured facilities and administrative costs. In a sale-centered chapter 11, final recoveries depend on gross sale proceeds, carve-outs and professional fees, and any incremental value from competitive bidding above the stalking horse amount.

Superpriority facility. The $13.2 million superpriority facility sits senior to both the ABL and second-lien facilities. Its position places it first in priority for sale proceeds.

Debt-to-value gap. Total funded debt of $240.5 million against a stalking horse bid of $161 million creates a ~$79.5 million shortfall before administrative costs, break-up fees, and transaction expenses. If sale proceeds matched the stalking horse bid, then after the $13.2 million superpriority facility the remaining ~$147.8 million would be available to the $207.8 million ABL facility, implying recovery of about 71 cents on the dollar before administrative deductions. Under that scenario, the $19.5 million second-lien facility and unsecured claims, including $17 million to $20 million of trade claims, would depend on higher proceeds or lower administrative costs for recovery.

DIP financing. The emergency DIP motion seeks authority to obtain postpetition financing with senior liens and superpriority administrative expense status. The proposed DIP facility includes approximately $25.5 million in new money and a $66.2 million rollup of existing ABL debt. Public sources report total commitments of ~$91.7 million and ~$104.8 million; available reporting does not reconcile the difference. The DIP lenders are certain prepetition ABL lenders.

DIP rollup. The $66.2 million rollup converts a portion of prepetition ABL debt into postpetition DIP obligations with superpriority status, improving participating lenders' position in the capital stack. The rollup mechanism means that $66.2 million of the $207.8 million ABL facility would receive superpriority treatment, ahead of other administrative and secured claims, rather than retaining its prepetition first-lien position.

DIP declarations and terms. CRO Ben Chesters and Evercore Senior Managing Director Robert A. Pacha filed declarations in support of the proposed DIP terms. The DIP motion also seeks authority to use cash collateral and to provide adequate protection to prepetition secured lenders. A separate motion to seal the DIP fee letter was filed concurrently. Specific DIP terms -- including interest rate, maturity, milestones, and professional fee carve-out -- have not been publicly reported.

First day operating relief. The first day package also included requests to continue wages and benefits, pay certain prepetition taxes, maintain insurance programs, honor critical vendor obligations, provide utilities with adequate assurance, and keep existing cash management systems in place. Those motions are consistent with preserving operations while marketing assets in an expedited 363 process.

First Day Docket Activity

Operating motions filed at launch. Within the first two docket days, the debtors filed motions covering taxes, utilities, insurance, critical vendors, wages and benefits, and cash management and bank account continuity. They also sought an extension to file schedules and statements, and filed a motion to redact certain information from the creditor matrix and related filings.

Transaction and financing evidentiary support. The debtors filed the CRO declaration and Evercore declaration in support of the sale and DIP motions, followed by a witness and exhibit list identifying 19 exhibits for first day proceedings. The first day hearing agenda set February 24, 2026 at 11:00 a.m. Central as the initial hearing for both financing and sale-track relief.

Claims noticing and process administration. The debtors moved on day one to retain Epiq as claims and noticing agent. A notice of first day motions and emergency hearing and later agenda notice centralized hearing logistics for parties in interest while the sale process and DIP relief were both pending.

Path to Financial Distress

Leveraged acquisition. Energy Spectrum Capital acquired Axip in September 2022. The capital structure resulting from that acquisition — $240.5 million in funded debt — exceeded the company's enterprise value as indicated by the $161 million stalking horse bid, a gap of ~$79.5 million before administrative costs.

CRO characterization. CRO Ben Chesters characterized the filing as "a strategic step to position Axip for long-term success under new ownership." The company's press release similarly described the process as designed to "facilitate a value-maximizing sale and support ongoing operations."

Pre-arranged process. The filing arrived with a stalking horse APA, DIP financing commitment, and a comprehensive first day package of 29 docket entries filed within the first two days, indicating advance preparation with lenders and the proposed buyer. Both the DIP motion and the sale and bidding procedures motion were filed on an emergency basis, with the first day hearing set for just two days after the petition date. The CRO's first day declaration and the Evercore declaration were filed concurrently, providing evidentiary support for the proposed sale process and DIP terms. A witness list identifying 19 exhibits was also filed on the petition date.

Compressed timeline. The auction date of April 1, 2026, provides approximately five weeks from the petition date for competing bidders to emerge. This timeline is consistent with expedited 363 sale processes. The bid deadline and sale hearing date have not been publicly reported.

Timeline of events. The key known milestones are as follows:

September 2022	Energy Spectrum Capital acquires Axip Energy Services
February 22, 2026	Voluntary chapter 11 petitions filed (7 entities); first day motions filed; emergency DIP and sale motions filed
February 24, 2026	First day hearing scheduled (11:00 AM CT)
April 1, 2026	Auction scheduled (if competing bids emerge)

Frequently Asked Questions

Why did Axip Energy Services file for bankruptcy?

Axip carried $240.5 million in funded debt following Energy Spectrum Capital's September 2022 acquisition. The company filed chapter 11 to facilitate a going-concern sale through a Section 363 process. CRO Ben Chesters described the filing as "a strategic step to position Axip for long-term success under new ownership."

Who is buying Axip Energy Services?

Service Compression LLC, a Lubbock, Texas-based natural gas compression company, submitted a $161 million cash stalking horse bid to acquire substantially all of the debtors' assets. An auction is scheduled for April 1, 2026, if superior offers emerge. The sale has not yet been approved by the court.

What is Axip Energy Services?

Axip is a Houston-based provider of natural gas rental compression services to upstream and midstream customers across all major U.S. producing basins. The company operates a fleet exceeding 500,000 horsepower of electric and natural gas-driven reciprocating compressor packages.

Who owns Axip Energy Services?

Energy Spectrum Capital, a Dallas-based midstream-focused private equity firm, acquired Axip in September 2022. Robert Stiles serves as President and CEO.

How much debt does Axip Energy Services have?

Total funded debt is $240.5 million, comprising a $13.2 million superpriority facility, a $207.8 million asset-based lending facility, and a $19.5 million second-lien facility. Trade claims are estimated at $17 million to $20 million.

What is the DIP financing for Axip Energy Services?

The proposed DIP facility provides approximately $25.5 million in new money plus a $66.2 million rollup of existing ABL debt. The total commitment is reported as ~$91.7 million or ~$104.8 million depending on the source. The DIP lenders are certain prepetition ABL lenders.

Will Axip Energy Services continue to operate during bankruptcy?

Yes. The company intends to continue operating in the ordinary course throughout the chapter 11 sale process. The debtors filed first day motions to pay wages, honor critical vendor obligations, maintain insurance, and continue cash management operations.

Who is the claims agent for Axip Energy Services?

Epiq Corporate Restructuring LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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