SCHEDULE 14A
                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|


Check the appropriate box:
|X|      Preliminary Proxy Statement
|_|      Confidential  for use of the  Commission  Only  (as  permitted  by Rule
         14a-6(e)(2))
|_|      Definitive Proxy Statement
|_|      Definitive Additional Materials
|_|      Soliciting Material Pursuant to Section 240.14a-12

                        NATURAL GAS SERVICES GROUP, INC.
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                (Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):
|X|      No fee required.
|_|      Fee  computed on table below per  Exchange  Act Rules  14a-6(i)(4)  and
         0-11.
         (1) Title of each class of securities to which the transaction applies:

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         (2) Aggregate number of securities to which transaction applies:
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         (3) Per unit price or other  underlying  value of transaction  computed
             pursuant to Exchange Act Rule 0-11:
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         (4) Proposed maximum aggregate value of transaction:
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         (5) Total fee paid:
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|_|      Fee paid previously with preliminary materials.
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|_|      Check box if any part of the fee is offset as provided by Exchange  Act
         Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee
         was paid  previously.  Identify  the  previous  filing by  registration
         statement number, or the Form or Schedule and the date of its filing.

         (1) Amount Previously Paid:
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         (2) Form, Schedule or Registration Statement No.:
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         (3) Filing Party:
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         (4) Date Filed:
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                                                                PRELIMINARY COPY

                        NATURAL GAS SERVICES GROUP, INC.
                           2911 South County Road 1260
                              Midland, Texas 79706

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                           To be held on June 18, 2003


         NOTICE IS  HEREBY  GIVEN  that an annual  meeting  of  shareholders  of
Natural Gas Services Group,  Inc., a Colorado  corporation,  will be held at the
Hilton Hotel, 117 West Wall Avenue, Midland, Texas 79701 on Wednesday,  June 18,
2003 at 9:00 a.m.,  Central Time, for the purpose of considering and voting upon
proposals to:

         1.       elect one  director  to serve  until  the  annual  meeting  of
                  shareholders  to be held in 2004;  elect one director to serve
                  until the annual meeting of  shareholders  to be held in 2005;
                  and elect two  directors to serve until the annual  meeting of
                  shareholders to be held in 2006 or until their  successors are
                  elected and qualify;

         2.       adopt an amendment to the articles of incorporation of Natural
                  Gas Services  Group,  Inc. to reduce the number of  designated
                  shares of 10% Convertible Series A Preferred Stock; and

         3.       transact  such other  business as may lawfully come before the
                  meeting or at any adjournment(s) of the meeting.

         Only  shareholders  of record at the close of business on May 14, 2003,
are  entitled to notice of and to vote at the meeting and at any  adjournment(s)
of the meeting.

         The  enclosed  proxy is  solicited  by and on  behalf  of the  Board of
Directors of Natural Gas Services  Group,  Inc. All  shareholders  are cordially
invited to attend the  meeting  in  person.  Whether  you plan to attend or not,
please date, sign and return the accompanying  proxy card in the enclosed return
envelope,  to which no postage  need be affixed if mailed in the United  States.
The giving of a proxy will not affect your right to vote in person if you attend
the meeting.


                                              BY ORDER OF THE BOARD OF DIRECTORS


                                              SCOTT W. SPARKMAN, SECRETARY

Midland, Texas
May 19, 2003



                                                                PRELIMINARY COPY

                        NATURAL GAS SERVICES GROUP, INC.
                           2911 South County Road 1260
                              Midland, Texas 79706

                                 PROXY STATEMENT
                         ANNUAL MEETING OF SHAREHOLDERS
                           TO BE HELD ON JUNE 18, 2003


         This  proxy  statement  is  being  furnished  in  connection  with  the
solicitation of proxies by the Board of Directors of Natural Gas Services Group,
Inc., a Colorado corporation, to be used at an annual meeting of shareholders to
be held at the Hilton  Hotel,  117 West Wall  Avenue,  Midland,  Texas  79701 on
Wednesday,  June 18, 2003 at 9:00 a.m.,  Central Time, and at any adjournment(s)
of the meeting.

         This  proxy  statement  and the  accompanying  proxy  will be mailed to
Natural Gas' shareholders on or about May 19, 2003.

         Any person  signing and mailing the enclosed proxy may revoke it at any
time before it is voted by:

         o        giving  written  notice  of the  revocation  to  Natural  Gas'
                  corporate secretary;

         o        voting in person at the meeting; or

         o        voting again by submitting a new proxy card.

         Only the latest dated proxy card, including one which a person may vote
in person at the meeting, will count. If not revoked, the proxy will be voted at
the meeting in accordance  with the  instructions  indicated on the proxy by the
shareholder,  or, if no instructions are indicated,  will be voted FOR the slate
of directors described in the proxy and for the adoption of the amendment to the
articles of incorporation.

                                VOTING SECURITIES

         Voting rights are vested in the holders of Natural Gas' $0.01 par value
common stock and 10% Series A Preferred  Stock,  with each share entitled to one
vote.  Cumulative  voting in the election of directors  is not  permitted.  Only
shareholders of record at the close of business on May 14, 2003, are entitled to
notice of and to vote at the meeting or any adjournments of the meeting.  On May
14, 2003 Natural Gas had 4,857,632  shares of common stock and 381,654 shares of
10% Convertible Series A Preferred Stock outstanding.


                                       1


                         ACTIONS TO BE TAKEN AT MEETING

         The meeting has been called by the Board of Directors of Natural Gas to
consider and act upon the following matters:

         1.       elect one  director  to serve  until  the  annual  meeting  of
                  shareholders  to be held in 2004;  elect one director to serve
                  until the annual meeting of  shareholders  to be held in 2005;
                  and elect two  directors to serve until the annual  meeting of
                  shareholders to be held in 2006 or until their  successors are
                  elected and qualify;

         2.       adopt an amendment to the articles of incorporation of Natural
                  Gas Services  Group,  Inc. to reduce the number of  designated
                  shares of 10% Convertible Series A Preferred Stock; and

         3.       transact  such other  business as may lawfully come before the
                  meeting or at any adjournment(s) of the meeting.

         The holders of a majority of the combined  outstanding shares of common
stock and 10%  Convertible  Series A Preferred  Stock  present at the meeting in
person  or  represented  by proxy  shall  constitute  a  quorum.  If a quorum is
present,  directors are elected by a plurality of the vote, i.e., the candidates
receiving  the highest  number of votes cast in favor of their  election will be
elected  to the  Board of  Directors.  As to all other  actions  voted on at the
meeting,  if a quorum is  present,  the  affirmative  vote of a majority  of the
shares  represented in person or by proxy at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders.  Where brokers have not
received  any  instruction  from their  clients  on how to vote on a  particular
proposal,  brokers  are  permitted  to  vote  on  routine  proposals  but not on
nonroutine  matters.  The  absence of votes on  nonroutine  matters  are "broker
nonvotes."  Abstentions  and broker  nonvotes  will be  counted  as present  for
purposes of  establishing  a quorum,  but will have no effect on the election of
directors.  Abstentions and broker nonvotes on proposals other than the election
of  directors,  if any,  will be counted as present  for  purposes  of the other
proposals and will count as votes against all other proposals.












                                       2




                               PROPOSAL NUMBER ONE

                              ELECTION OF DIRECTORS

         The number of directors  on Natural  Gas' Board of  Directors  has been
established by the shareholders as seven directors.  Therefore,  there currently
are two  vacancies on the Board of  Directors.  The Board of Directors  has been
divided into three classes with directors  serving staggered terms. With respect
to the existing  Board of Directors,  the terms of James T. Grigsby and Scott W.
Sparkman will expire at the meeting,  the term of Wayne L. Vinson will expire in
2004,  and the terms of Charles G. Curtis and Wallace O.  Sellers will expire in
2005.

         The persons  named in the  enclosed  form of Proxy will vote the shares
represented  by such Proxy for the  election of the four  nominees  for director
named below. If, at the time of the meeting,  any of these nominees shall become
unavailable  for any reason,  which event is not expected to occur,  the persons
entitled to vote the Proxy will vote for such substitute nominee or nominees, if
any, as they determine in their sole discretion.  If elected,  Richard L. Yadon,
Gene A. Strasheim, James T. Grigsby and Scott W. Sparkman will hold office until
the  annual  meetings  of  shareholders  to be  held in  2004,  2005  and  2006,
respectively,  until their  successors  are duly  elected or  appointed or until
their earlier death,  resignation or removal. The nominees for director, each of
whom has consented to serve if elected, are as follows:


                       Director                Principal Occupation for At Least the Last
Name of Nominee        Since          Age      Five Years
---------------        --------       ---      ------------------------------------------
                                      
Richard L. Yadon          Not         45       Mr. Yadon is one of the original founders of
                      currently a              Rotary Gas  Systems  Inc.  and has served as
                        Director               advisor to Natural  Gas' Board of  Directors
                                               since June 2002.  Since 1981,  Mr. Yadon has
                                               owned and  operated  Yadeco Pipe & Equipment
                                               and since  December  1994,  has co-owned and
                                               presided  as  President  of  Midland  Pipe &
                                               Equipment,  Inc. Both companies are directly
                                               related to drilling  and  completion  of oil
                                               and  gas   wells  in  Texas,   New   Mexico,
                                               Louisiana and  Oklahoma.  Since 1981, he has
                                               owned  Yadon  Properties,   which  owns  and
                                               operates real estate in Midland,  Texas. Mr.
                                               Yadon  has 22  years  of  experience  in the
                                               energy service industry.










                                       3


Gene A.  Strasheim        Not         62       Since  2001,   Mr.   Strasheim  has  been  a
                      currently a              financial      consultant     to     Skyline
                        Director               Electronics/Products,   a  manufacturer   of
                                               circuit boards and large remotely controlled
                                               digital  interstate highway signs. From 1992
                                               to  2001,   Mr.   Strasheim  was  the  Chief
                                               Financial       Officer      of      Skyline
                                               Electronics/Products. From 1985 to 1992, Mr.
                                               Strasheim was the Vice President-Finance and
                                               Treasurer of CF&I Steel  Corporation.  Prior
                                               to  that,   Mr.   Strasheim   was  the  Vice
                                               President-Finance  for two companies and was
                                               a partner with Deloitte  Haskins & Sells,  a
                                               large   accounting   firm.   Mr.   Strasheim
                                               practiced as a Certified  Public  Accountant
                                               in three states and has a BS degree from the
                                               University of Wyoming.


James T. Grigsby      1999            55       Mr.   Grigsby  has  been  one  Natural  Gas'
                                               directors   since  1999.   Since  1996,  Mr.
                                               Grigsby   has  been  a  director  of  and  a
                                               consultant   to  Blue  River  Paint  Co.,  a
                                               development  stage  environmental   friendly
                                               coatings  technology  company.  From 1996 to
                                               1997,   Mr.  Grigsby  was  a  consultant  to
                                               Outlook Window Partnership,  a regional wood
                                               window manufacturer.  From 1989 to 1996, Mr.
                                               Grigsby was  President  and Chief  Executive
                                               Officer  of Seal  Right  Windows,  Inc.  and
                                               Chief  Executive  Officer  of Oldach  Window
                                               Corp.,  manufacturers of wood, wood-clad and
                                               vinyl   windows  and  doors.   Mr.   Grigsby
                                               received a BS degree from the  University of
                                               Michigan  and an MBA  degree  from  Stanford
                                               University.














                                       4


Scott W. Sparkman     1998            41       Mr.  Sparkman  has  served as one of Natural
                                               Gas'  directors  since  1998,  has served as
                                               Executive  Vice-President  of  NGE  Leasing,
                                               Inc., or NGE, since July 2001, has served as
                                               Secretary  and  Treasurer of NGE since March
                                               1999  and has  served  as the  Secretary  of
                                               Great Lakes Compression, Inc. since February
                                               2001. Mr.  Sparkman  served as the President
                                               of NGE from December 1998 to July 2001. From
                                               May 1997 to July 1998, Mr.  Sparkman  served
                                               as  Project   Manager  and  Comptroller  for
                                               Business  Development  Strategies,  Inc.,  a
                                               designer of internet websites.  Mr. Sparkman
                                               pursued personal business interests from May
                                               1996 to May 1997.  From February 1991 to May
                                               1996, Mr.  Sparkman served as Vice President
                                               and   Director,   later  as  President   and
                                               Director,  of  Diamond  S  Safety  Services,
                                               Inc.,  a seller  and  servicer  of  hydrogen
                                               sulfide monitoring  equipment.  Mr. Sparkman
                                               filed for personal  bankruptcy  in 1998 as a
                                               result of personal  debt  created when there
                                               was a decline  in the need for the  oilfield
                                               services  that  were  provided  by a company
                                               that was owned by Mr. Sparkman.  He received
                                               a BBA degree from Texas A&M University.




            THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
                     ELECTION OF THE NOMINEES LISTED ABOVE.

                                 OTHER DIRECTORS

         The current  directors of Natural Gas are James T. Grigsby and Scott W.
Sparkman,  information  pertaining  to  whom is set  forth  under  "Election  of
Directors" above, and Charles G. Curtis, Wallace O. Sellers and Wayne L. Vinson,
information pertaining to whom is set forth below.









                                       5




Name of              Director           Principal Occupation for at Least the
Executive Officer     Since      Age    Last Five Years
-----------------     -----      ---    -------------------------------------
                               
Charles G. Curtis     2001        70    Mr.  Curtis  has  been one of  Natural  Gas'
                                        directors since April 2001.  Since 1992, Mr.
                                        Curtis  has been  the  President  and  Chief
                                        Executive Officer of Curtis One, Inc. d/b/a/
                                        Roll Stair, a  manufacturer  of aluminum and
                                        steel mobile stools and mobile ladders. From
                                        1988 to 1992,  Mr.  Curtis was the President
                                        and Chief Executive Officer of Cramer,  Inc.
                                        a  manufacturer  of  office  furniture.  Mr.
                                        Curtis  has a B.S.  degree  from the  United
                                        States Naval  Academy and a MSAE degree from
                                        the University of Southern California



Wallace O. Sellers    1998        73    Mr.  Sellers is one of Natural Gas' founders
                                        and  has  served  as  a  director   and  the
                                        Chairman of Natural  Gas' Board of Directors
                                        since   December  17,  1998.   Although  Mr.
                                        Sellers  retired in December 1994, he served
                                        as  Vice-Chairman  of the Board and Chairman
                                        of  the   Executive   Committee  of  Enhance
                                        Financial   Services,   Inc.,   a  financial
                                        guaranty  reinsurer,  from  January  1995 to
                                        2001. From November 1986 to December 1991 he
                                        was President and Chief Executive Officer of
                                        Enhance.  From 1951 to 1986 Mr.  Sellers was
                                        employed by Merrill Lynch, Pierce,  Fenner &
                                        Smith Incorporated, an investment banker, in
                                        various  capacities,  including  Director of
                                        the Municipal  and  Corporate  Bond Division
                                        and  Director  of  the  Securities  Research
                                        Division.    Immediately    prior   to   his
                                        retirement  from Merrill Lynch, he served as
                                        Senior  Vice   President   and  director  of
                                        Strategic Development.  Mr. Sellers received
                                        a BA  degree  from  the  University  of  New
                                        Mexico,   an  MA   degree   from   New  York
                                        University   and   attended   the   Advanced
                                        Management  Program at  Harvard  University.
                                        Mr.   Sellers  is  a   Chartered   Financial
                                        Analyst.


















                                       6


Wayne L. Vinson       2000        44    Mr. Vinson has served as one of Natural Gas'
                                        directors  since April 2000, as Natural Gas'
                                        President  since July 2001,  as Natural Gas'
                                        Executive  Vice  President  from October 31,
                                        2000  to  July  2001,  as the  President  of
                                        Rotary   Gas   Systems,    Inc.   (and   its
                                        predecessor,   Hi-Tech  Compressor  Company)
                                        since  February  1994, and as Executive Vice
                                        President  of Great Lakes  Compression  Inc.
                                        since  February  2001.  He  also  served  as
                                        Natural Gas' Vice  President from April 2000
                                        to October  2000.  From January 1990 to June
                                        1995,  Mr. Vinson  served as Vice  President
                                        and  since   June  1995  he  has  served  as
                                        President of Vinson  Operating  Company,  an
                                        oil and gas well  operator.  Mr.  Vinson has
                                        more  than 22  years  of  experience  in the
                                        energy services industry.




         Natural Gas' Board of Directors held three  meetings  during the fiscal
year ending December 31, 2002. All of Natural Gas' directors attended all of the
aggregate of (1) the total  number of meetings of the Board of  Directors  (held
during the period for which he has been a director)  and (2) the total number of
meetings  held by all  committees  of the Board of Directors for which he served
(during the periods that he served).  The Board of  Directors  acts from time to
time by  unanimous  written  consent in lieu of  holding a  meeting.  During the
fiscal year ending  December 31, 2002,  the Board of Directors  conducted  eight
meetings by unanimous written consent.

         Directors  who are not  employees  are paid  $1,000 per  quarter and at
December 31 of each year are issued a five year option to purchase  2,500 shares
of  Natural  Gas'  common  stock  at the then  market  value.  Natural  Gas also
reimburses  its  directors  for  accountable  expenses  incurred on Natural Gas'
behalf.

         None of Natural  Gas'  directors is a director of any other entity that
has its securities  registered pursuant to Section 12 of the Securities Exchange
Act of 1934 or that is subject to the  requirements of Section 15(d) of the 1934
Act.

                               PROPOSAL NUMBER TWO

          APPROVAL OF AN AMENDMENT TO NATURAL GAS' AMENDED ARTICLES OF
         INCORPORATION TO REDUCE THE NUMBER OF DESIGNATED SHARES OF 10%
                      CONVERTIBLE SERIES A PREFERRED STOCK

         Natural Gas' articles of incorporation presently authorize the issuance
of 5,000,000 shares of preferred stock. Of these 5,000,000  shares,  Natural Gas
designated 1,177,000 shares as 10% Convertible Series A Preferred Stock. Natural
Gas sold 381,654  shares of its 10%  Convertible  Series A Preferred  Stock in a



                                       7


private offering in 2001. Natural Gas does not plan on selling additional shares
of 10% Convertible Series A Preferred Stock.  Natural Gas' Board of Directors is
recommending  that the number of shares of 10%  Convertible  Series A  Preferred
Stock be  reduced to 381,654  shares  and the  balance of 795,346  shares of 10%
Series A Preferred Stock be returned to undesignated  shares of preferred stock.
If the number of designated  shares of 10% Convertible  Series A Preferred Stock
is reduced to 381,654 shares,  the Board of Directors will be able to retain the
balance of the shares,  or 795,346  shares,  for further  issuances of preferred
stock.

            THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
            PROPOSAL TO APPROVE AN AMENDMENT TO NATURAL GAS' AMENDED
          ARTICLES OF INCORPORATION TO REDUCE THE NUMBER OF DESIGNATED
               SHARES OF 10% CONVERTIBLE SERIES A PREFERRED STOCK

                               EXECUTIVE OFFICERS

         The  executive  officers of Natural Gas are Scott W. Sparkman and Wayne
L.  Vinson,  information  pertaining  to whom is set forth  under  "Election  of
Directors" and "Other Directors" above, and Earl R. Wait, information pertaining
to whom is set forth below.  The  executive  officers of Natural Gas are elected
annually at the first  meeting of the Board of Directors  held after each annual
meeting of  shareholders.  Each executive  officer will hold office until his or
her  successor  duly  is  elected  and  qualified,  until  his or her  death  or
resignation  or until he or she  shall be  removed  in the  manner  provided  by
Natural  Gas'  bylaws.  Earl R. Wait's  positions  with Natural Gas, the periods
during which he has served as an  executive  officer of Natural Gas, his age and
his biography are as follows:

Name of                          Principal Occupation for At Least the
Executive Officer      Age       Last Five Years
-----------------      ---       -------------------------------------

Earl R. Wait            59       Mr.  Wait has  served  as  Natural  Gas'  Chief
                                 Financial  Officer  since May 2000 and  Natural
                                 Gas' Treasurer since 1998. Mr. Wait was Natural
                                 Gas' Chief Accounting  Officer from 1998 to May
                                 2000.  Mr.  Wait has been the  Chief  Financial
                                 Officer and  Secretary/Treasurer of Flare King,
                                 Inc.  and then Rotary Gas Systems,  Inc.  since
                                 April 1993,  the Assistant  Secretary/Treasurer
                                 for Hi-Tech Compressor Company since June 1996,
                                 the        Controller       and       Assistant
                                 Secretary/Treasurer   for  Hi-Tech   Compressor
                                 Company  from  1994  to  1999,  and  the  Chief
                                 Accounting Officer and Treasurer of Great Lakes
                                 Compression  Inc. since February 2001. Mr. Wait
                                 is a certified public accountant with an MBA in
                                 management  and  has  more  than  25  years  of
                                 experience in the energy industry.














                                       8


         The following sets forth biographical information for at least the past
five years for two of Natural Gas'  employees  whom Natural Gas  considers to be
key employees.

Name of Employee        Age

Wallace C. Sparkman     73       Mr.  Sparkman is one of the founders of Natural
                                 Gas and has been  the  President  of NGE  since
                                 July 2001, the President of Rotary Gas Systems,
                                 Inc.  (and its  predecessor,  Flare  King) from
                                 April 1993 to April 1997. Mr.  Sparkman  served
                                 as Natural Gas' President from May 2000 to July
                                 2001  and  as  the  President  of  Great  Lakes
                                 Compression,  Inc.  from  February 2001 to July
                                 2001.  Mr.  Sparkman was Vice  President of NGE
                                 from  February  1996 to  November  1999.  Since
                                 December  1998,  Mr.  Sparkman  has  acted as a
                                 consultant  to Natural Gas' Board of Directors.
                                 From  1985 to  1998,  Mr.  Sparkman  acted as a
                                 management  consultant to various  entities and
                                 acted  as  a  principal   in  forming   several
                                 privately-owned  companies.  Mr. Sparkman was a
                                 co-founder of Sparkman  Energy  Corporation,  a
                                 natural gas gathering and transmission company,
                                 in  1979  and  served  as its  Chairman  of the
                                 Board,  President and Chief  Executive  Officer
                                 until 1985,  when  ownership  control  changed.
                                 From 1968 to 1979,  Mr.  Sparkman  held various
                                 executive positions and served as a director of
                                 Tejas Gas Corporation,  a natural gas gathering
                                 and  transmission  company.  At the time of his
                                 resignation from Tejas Gas Corporation in 1979,
                                 Mr.  Sparkman was President and Chief Executive
                                 Officer. Mr. Sparkman has more than 34 years of
                                 experience in the energy service industry.


Ronald D. Bingham       58       Mr.  Bingham  has  served as the  President  of
                                 Great Lakes Compression,  Inc. since 2001. From
                                 March 2001 to July 2001,  Mr.  Bingham  was the
                                 General  Manager  of Great  Lakes  Compression,
                                 Inc.  From  January  1989 to  March  2001,  Mr.
                                 Bingham was the  District  Manager for Waukesha
                                 Pearce  Industries,   Inc.,  a  distributor  of
                                 Waukesha natural gas engines.  Mr. Bingham is a
                                 member of the Michigan Oil and Gas  Association
                                 and received a bachelors degree in Graphic Arts
                                 from Sam Houston State University.








                                       9




             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires  Natural Gas'  officers and directors and persons who own more than 10%
of the outstanding common stock of Natural Gas to file reports of ownership with
the Securities and Exchange Commission ("SEC"). Directors,  officers and greater
than 10%  shareholders  are required by SEC  regulations to furnish  Natural Gas
with copies of all Section 16(a) forms they file.

         Based  solely  on a review of Forms 3, 4 and 5 and  amendments  thereto
furnished to Natural Gas during and for its fiscal year ended December 31, 2002,
there were no directors,  officers or more than 10%  shareholders of Natural Gas
who failed to timely file a report  required by Section 16(a) of the  Securities
Exchange  Act of 1934 except that  Charles G. Curtis  filed an  amendment to his
Form 3 to add 10%  Convertible  Series  A  Preferred  Stock he  owned,  filed an
amendment  to a Form 4 to  include  common  stock  and  warrants  that  were not
previously reported and was late in filing a Form 4 to report the granting of an
option to him;  Diamond S DGT  Trust  was late in  filing  its Form 3;  James T.
Grigsby filed an amendment to his Form 4 to report warrants that were previously
not  included  on his  Form 4 and was  late in  filing  a Form 4 to  report  the
granting of an option to him; Alan P. Kurus, a former officer,  filed amendments
to his Form 3 to change  the  nature  of his  ownership  of common  stock and to
report a stock  option that he owned;  Sharon Renee Pipes was late in filing her
Form 3; Wallace O. Sellers was late in filing a Form 4 to report the granting of
an option to him;  and Earl R. Wait filed an amendment to his Form 3 to report a
stock option that he owned.

                             EXECUTIVE COMPENSATION

         The following table sets forth  information  regarding the compensation
paid during the years ended  December 31, 2002,  2001 and 2000 by Natural Gas to
Wayne L. Vinson and Earl R. Wait,  Natural Gas' only  executive  officers  whose
combined salary and bonuses exceeded $100,000 during the year ended December 31,
2002.

                                                                                    Long-Term
                                       Annual Compensation                     Compensation Awards
Name and Principal Position       Year       Salary        Bonus         Securities Underlying Options
---------------------------       ----       ------        -----         -----------------------------
                                                                         
Wayne L. Vinson                   2002    $ 120,000(1)   $  39,452                  -0- (2)
     Executive Vice President     2001      102,692         25,583                  -0-
     until 7/25/01                2000       74,423         25,604                  -0-
     President since 7/25/01

Earl R. Wait                      2002    $  90,000      $  29,589                15,000
     Chief Financial Officer      2001       85,385         23,164                  -0-
                                  2000       80,088          7,416                  -0-
--------------------------


(1)      Does not include any  compensation  paid to the wife of Wayne L. Vinson
         for her services as Natural Gas' accounts payable and payroll clerk for
         2002, 2001 and 2000, respectively.


                                       10


(2)      CAV-RDV,  Ltd.,  a Texas  limited  partnership  for the  benefit of the
         children of Wayne L. Vinson, was issued a five year warrant to purchase
         15,756  shares  of  Natural  Gas'  common  stock at $2.50  per share in
         consideration for CAV-RDV,  Ltd. guaranteeing a portion of Natural Gas'
         debt.  The children are eighteen  years old or older and Mr.  Vinson is
         not a partner in CAV-RDV,  Ltd. and disclaims  beneficial  ownership of
         the warrants.

         Natural Gas has  established a bonus  program for its officers.  At the
end of each of Natural Gas' fiscal  years,  its Board of  Directors  reviews its
operating  history and  determines  whether or not any bonuses should be paid to
its  officers.  If so, the Board of Directors  determines  what amount should be
allocated. The Board of Directors may discontinue the bonus program at any time.

                        Option Grants in Last Fiscal Year

         The following table sets forth information  pertaining to option grants
to Wayne L. Vinson and Earl R. Wait,  Natural Gas' only executive officers whose
combined salary and bonuses exceeded $100,000 during the year ended December 31,
2002:




                   Number of
                  Securities     % of Total Options
                  Underlying   Granted to Employees in
Name               Options          Fiscal Year          Exercise Price    Expiration Date
----               -------          -----------          --------------    ---------------
                                                               
Wayne L. Vinson          0                    0                     N/A                N/A

Earl R. Wait        15,000                   35                   $3.25         04/23/2012


Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

         The  following  table  sets  forth  information  pertaining  to  option
exercises  by and fiscal  year end option  values of options  held by,  Wayne L.
Vinson and Earl R. Wait,  Natural Gas' only  executive  officers  whose combined
salary and bonuses exceeded $100,000 during the year ended December 31, 2002:



                                                               Fiscal Year End Option Values
                                                               -----------------------------

                                                   Number of Securities
                                                  Underlying Unexercised       Value of Unexercised
                       Shares                     Options at Fiscal Year        In-the-Money Options
                      Acquired        Value                End                  at Fiscal Year End
Name                 On Exercise     Received    Exercisable/Unexercisable   Exercisable/Unexercisable
----                 -----------     --------    -------------------------   -------------------------
                                                                 
Wayne L. Vinson                0            0                          0/0                         0/0

Earl R. Wait                   0            0                     0/15,000                    0/$9,750





                                       11


Compensation of Directors

         Directors  who are not  employees  are paid  $1,000 per  quarter and at
December  31 of each year will be issued a five year  option to  purchase  2,500
shares of Natural Gas' common stock at the then market  value.  Natural Gas also
reimburses its directors for accountable expenses incurred on its behalf.

1998 Stock Option Plan

         Natural  Gas has the 1998  Stock  Option  Plan which  provides  for the
issuance of options to purchase up to 150,000  shares of its common  stock.  The
purpose of the plan is to attract and retain the best  available  personnel  for
positions of substantial  responsibility and to provide additional  incentive to
employees and consultants  and to promote the success of its business.  The plan
is administered by the Board of Directors or a compensation committee consisting
of two or more  non-employee  directors,  if appointed.  At its discretion,  the
administrator  of the plan may  determine  the  persons to whom  options  may be
granted and the terms upon which such options will be granted. In addition,  the
administrator  of the plan may  interpret  the plan  and may  adopt,  amend  and
rescind rules and regulations for its administration. Options to purchase 12,000
shares of Natural  Gas' common  stock at an  exercise  price of $2.00 per share,
options to purchase  42,000  shares of Natural  Gas' common stock at an exercise
price of $3.25 per share,  and options to purchase  7,500 shares of Natural Gas'
common stock at an exercise price of $3.88 per share have been granted under the
plan and are outstanding.

Compensation Committee

         The Compensation Committee of the Board of Directors determines Natural
Gas'  executive  compensation  policy and sets  compensation  for  Natural  Gas'
executive officers.

         The Compensation  Committee's policy is to offer the executive officers
competitive  compensation  packages that will permit  Natural Gas to attract and
retain  individuals  with  superior  abilities  and to motivate  and reward such
individuals in an appropriate  fashion in the long-term interests of Natural Gas
and its shareholders.  Currently,  executive compensation is comprised of salary
and cash  bonuses  that  may be  awarded  from  time to time  such as  long-term
incentive  opportunities  in the form of stock  options  under Natural Gas' 1998
Stock Option Plan.  Messrs.  Curtis,  Grigsby and Sellers are members of Natural
Gas' Compensation Committee. The Compensation Committee met five times in 2002.

          PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT

         The following  table sets forth, as of the May 14, 2003, the beneficial
ownership of Natural Gas' common stock and 10% Series A Preferred  Stock: (i) by
each of its  directors,  its nominees for director and its  executive  officers;
(ii) by all of its executive officers and directors as a group; and (iii) by all
persons  known by it to  beneficially  own more than five  percent of its common
stock and of its 10% Series A Preferred Stock:



                                       12
















                                           Shares of
                                         Common Stock
                                           and 10%
                                          Convertible
                                           Series A
                                           Preferred
                                             Stock                Percent
                                         Beneficially           Beneficially
Name and Address                             Owned                  Owned
----------------                             -----                  -----

Wallace O. and Naudain Sellers             698,159(1)               13.2%
P.O. Box 106, 6539 Upper York Road
Solebury, PA  18963-0106

Wayne L. Vinson                                  0(2)               0.0%
5619 Fenway
Midland, TX  79707

Scott W. Sparkman                          516,467(3)               9.8%
1604 Ventura Avenue
Midland, TX  79705

Charles G. Curtis                           70,500(4)               1.3%
1 Penrose Lane
Colorado Springs, CO  80906

James T. Grigsby                             81,700(5)              1.8%
3345 Grimsby Lane
Lincoln, NE  68502

Earl R. Wait                                75,000(6)               1.4%
109 Seco
Portland, TX  78374

Richard L. Yadon                           294,183(7)               5.6%
P.O. Box 8715
Midland, TX  79708-8715

Gene A. Strasheim                                0                  0.0%
165 Huntington Place
Colorado Springs, CO 80906

All current directors and executive
officers as a group (six persons)        1,441,826(8)              26.7%





                                       13


CAV-RDV, Ltd.                              486,006(2)               9.2%
1541 Shannon Drive
Lewisville, TX  75077
RWG Investments LLC                        394,000(9)               7.3%
5980 Wildwood Drive
Rapid City, SD  57902
-----------------------------------

(1)      Includes  300,000 shares of common stock owned by the Wallace  Sellers,
         July 11, 2002 GRAT, warrants to purchase 21,936 shares of common stock,
         9,032 shares of common stock and 5,000 shares of common stock at $ 2.50
         per  share,  at $3.25 per share and at $6.25 per  share,  respectively,
         owned by Wallace Sellers,  an option to purchase 2,500 shares of common
         stock at $3.88 per share  owned by Wallace  Sellers,  34,691  shares of
         common  stock owned by Naudain  Sellers,  and 300,000  shares of common
         stock owned by the  Naudain  Sellers,  July 11, 2002 GRAT.  Wallace and
         Naudain Sellers are husband and wife. Wallace Sellers is the trustee of
         his  wife's  trust  and  his  wife is the  trustee  of his  trust.  The
         beneficiaries  of the trusts are two trusts.  The  beneficiaries of one
         trust  are  Naudain   Sellers  and  their   three   children   and  the
         beneficiaries of the other trust are their three children.

(2)      CAV-RDV,  Ltd.,  a Texas  limited  partnership  for the  benefit of the
         children of Wayne L. Vinson,  owns  470,250  shares of common stock and
         warrants to purchase  15,756  shares of common stock at $2.50 per share
         and 2,122 shares of common stock at $3.25 per share, respectively. Both
         children  are 18 years old or older and Mr.  Vinson is not a partner in
         CAV-RDV,  Ltd. Mr. Vinson disclaims  beneficial ownership of any of the
         shares of common stock.

(3)      Includes  20,000  shares of common stock owned by Scott W. Sparkman and
         475,000  shares of common stock and warrants to purchase  21,467 shares
         of common  stock at $2.50 per share owned by Diamond S DGT, a trust for
         which Mr. Sparkman is a co-trustee and co-beneficiary with his sister.

(4)      Represents  warrants to purchase 40,000 shares of common stock at $3.25
         per share,  an option to purchase 2,500 shares of common stock at $3.88
         per share,  warrants to purchase  5,000 shares of common stock at $6.25
         per share, and 18,000 shares of common stock which may be obtained upon
         conversion of shares of our 10% Convertible Series A Preferred Stock.

(5)      Includes  warrants to purchase  9,600  shares at $6.25 per share and an
         option to purchase 2,500 shares at $3.88 per share.

(6)      Includes an option to purchase  15,000  shares of common stock at $3.25
         per share that began to vest in April 2003.

(7)      Includes  warrants to purchase  9,365 shares and 5,318 shares of common
         stock at $2.50 per share and $3.25 per share, respectively.

(8)      Includes the shares set forth in footnotes (1) through (6) above.

(9)      Includes an option to purchase  100,000 shares of common stock at $2.00
         per share,  warrants to purchase 32,000 shares of common stock at $3.25
         per share and 12,000  shares of common stock which may be obtained upon
         conversion of shares of our 10% Convertible  Series A Preferred  Stock.
         RWG Investments LLC is a limited liability company the beneficial owner
         of which is Roland W. Gentner,  5980 Wildwood Drive,  Rapid City, South
         Dakota 57902.


                                       14


          TRANSACTIONS WITH MANAGEMENT AND OTHERS AND CERTAIN BUSINESS
                                 RELATIONSHIPS

         In March 2001, Natural Gas issued warrants that will expire on December
31,  2006,  to  purchase  shares of its  common  stock at $2.50 per share to the
following persons for guaranteeing the amount of its debt indicated:

                                     Number of Shares               Amount of
Name                                Underlying Warrants          Debt Guaranteed
----                                -------------------          ---------------
Wallace O. Sellers                        21,936                 $       548,399
Wallace C. Sparkman(1)                    21,467                         536,671
CAV-RDV, Ltd.(2)                          15,756                         393,902
Richard L. Yadon                           9,365                         234,121
----------------------------

(1)      Wallace C. Sparkman  subsequently  transferred  his warrants for 21,467
         shares to  Diamond S DGT,  a trust of which  Scott W.  Sparkman  is the
         trustee and a  beneficiary.  Wallace C.  Sparkman  has  represented  to
         Natural Gas that he has no beneficial interest in Diamond S DGT.

(2)      CAV-RDV,  Ltd., is a Texas limited  partnership  for the benefit of the
         children of Wayne L. Vinson.  Both  children are eighteen  years old or
         older and Mr.  Vinson is not a partner  in  CAV-RDV,  Ltd.  Mr.  Vinson
         disclaims beneficial ownership of the warrants.

         None of the guarantees are still in effect.

         In April 2002, Natural Gas issued five year warrants to purchase shares
of its common stock at $3.25 per share to the following persons for guaranteeing
its restructured bank debt indicated:

                                      Number of Shares      Amount of Additional
Name                                Underlying Warrants       Debt Guaranteed
----                                -------------------       ---------------
Wallace O. Sellers                         9,032              $       451,601
CAV-RDV, Ltd.(1)                           2,122                      106,098
Richard L. Yadon                           5,318                      265,879
---------------------------

(1)      CAV-RDV,  Ltd., is a Texas limited  partnership  for the benefit of the
         children of Wayne L. Vinson.  Both  children are eighteen  years old or
         older and Mr.  Vinson is not a partner  in  CAV-RDV,  Ltd.  Mr.  Vinson
         disclaims beneficial ownership of the warrants.


         None of the guarantees are still in effect.


         Wayne L.  Vinson,  Earl R.  Wait and  Wallace  C.  Sparkman  have  also
guaranteed  approximately  $21,479,  $53,361  and  $48,384,   respectively,   of
additional  debt for Natural Gas without  consideration.  This debt was incurred
when  Natural Gas acquired  vehicles,  equipment  and  software.  The  following
schedule  provides  information as to the remaining debt balances as of December
31, 2002:


                                       15


                           Balance at           Interest              Maturity
Guarantor               December 31, 2002         Rate                  Date
---------               -----------------         ----                  ----
Earl Wait                    $13,283                1.90%            3/26/2004
Earl Wait                     40,078                10.50%          10/10/2005
Wallace Sparkman              48,384          Prime + 1.0%           7/06/2004
Wayne Vinson                   1,802          Prime + 1.0%           7/15/2003
Wayne Vinson                  11,873                 1.90%           4/22/2004
Wayne Vinson                   7,804                 7.50%           6/21/2004


         In October,  1999, RWG Investments,  LLC was granted a five year option
to  purchase  100,000  shares  of  its  common  stock  at  $2.00  per  share  in
consideration of one of its members serving as an advisor to Natural Gas.

         Hunter  Wise  Financial  Group LLC  served as Natural  Gas'  investment
banker and advisor in connection with its acquisition of the compression related
assets of Dominion  Michigan for which  Natural Gas paid Hunter Wise a total fee
of $440,000.  James T. Grigsby, one of Natural Gas' directors, has a 1% interest
in Hunter Wise.

         Charles G. Curtis, one of Natural Gas' directors, Alan P. Kurus, one of
Natural  Gas'  officers  until  April 14,  2003,  and RWG  Investments,  LLC,  a
beneficial  owner of more than 5% of Natural Gas' outstanding  stock,  purchased
Natural Gas' notes and five year warrants to purchase  common stock in a private
offering that  commenced in October 2000 and  concluded in May 2001.  Mr. Curtis
purchased $100,000 of the notes and warrants, Mr. Kurus purchased  approximately
$79,000 of the notes and warrants and RWG Investments,  LLC purchased $80,000 of
the notes and  warrants.  The notes and warrants  purchased by Mr.  Curtis,  Mr.
Kurus and RWG Investments, LLC were on the same terms and conditions as sales to
non-affiliated purchasers in the private offering.

         Charles G. Curtis, one of Natural Gas' directors,  and RWG Investments,
LLC, a  beneficial  owner of more than 5% of  Natural  Gas'  outstanding  stock,
purchased 18,000 shares and 12,000 shares, respectively, or $58,500 and $39,000,
respectively,  of Natural  Gas' 10%  Convertible  Series A Preferred  Stock in a
private offering that commenced in July 2001. The shares purchased by Mr. Curtis
and RWG  Investments,  LLC were on the same  terms  and  conditions  as sales to
non-affiliated purchasers in the private offering.

         Wallace O.  Sellers,  Charles G. Curtis and James T.  Grigsby,  Natural
Gas' independent directors, were each paid $1,000 and were each issued an option
to purchase  2,500  shares of Natural  Gas' common  stock at $3.88 per share for
serving as Natural Gas' directors during the year ended December 31, 2002.

                          REPORT OF THE AUDIT COMMITTEE

         The  Audit  Committee  met five  times in 2002 and is  responsible  for
Natural  Gas'  internal  controls and the  financial  reports  process.  Messrs.
Curtis, Grigsby and Sellers are members of Natural Gas' Audit Committee.


                                       16


         Natural Gas' independent  accountants are responsible for performing an
independent  audit  of  Natural  Gas'  consolidated   financial   statements  in
accordance with auditing  standards  generally  accepted in the United States of
America  and  issuing  an  independent  accountants'  report  on such  financial
statements.   The  Audit  Committee   reviews  with   management   Natural  Gas'
consolidated  financial  statements;  reviews with the  independent  accountants
their  independent  accountants'  report;  and  reviews  the  activities  of the
independent  accountants.  The Audit Committee  selects Natural Gas' independent
accountants  each year.  The Audit  Committee  also  considers  the  adequacy of
Natural Gas' internal controls and accounting policies. The chairman and members
of the Audit Committee are all  independent  directors of Natural Gas within the
meaning  of  Section  121(A) of the  listing  standards  of the  American  Stock
Exchange.

         The Audit  Committee has reviewed and  discussed the audited  financial
statements  with  management  of Natural Gas. The Audit  Committee has discussed
with Natural Gas'  independent  auditors the matters required to be discussed by
SAS 61. In addition,  the Audit  Committee has received the written  disclosures
and letter from Natural Gas'  independent  accountants  required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
as may be modified  or  supplemented,  and has  discussed  with the  independent
accountants matters pertaining to their  independence.  The Audit Committee also
considered whether the additional services unrelated to Audit Services performed
by HEIN + ASSOCIATES LLP were compatible with maintaining their  independence in
performing their Audit Services. Based upon the reviews and discussions referred
to above,  the Audit  Committee  recommended  to the Board of Directors that the
audited  financial  statements be included in Natural Gas' Annual Report on Form
10-KSB for 2002 for filing with the  Securities  and  Exchange  Commission.  The
Audit  Committee and Board of Directors has also selected HEIN + ASSOCIATES  LLP
as Natural Gas' independent  accountants for the fiscal year ending December 31,
2003.  The members of Natural Gas' Audit  Committee are  independent.  The Audit
Committee  has a written  Audit  Committee  Charter that has been adopted by the
Natural Gas Board of Directors and is attached hereto as Exhibit A.

Respectfully submitted by the Audit Committee:

Wallace O. Sellers             Charles G. Curtis                James T. Grigsby

                         INDEPENDENT PUBLIC ACCOUNTANTS

         The  principal  accountant  selected for Natural Gas' fiscal year ended
December 31, 2003 is HEIN + ASSOCIATES LLP. Representatives of HEIN + ASSOCIATES
LLP, Natural Gas' auditors for Natural Gas' fiscal year ended December 31, 2002,
are expected to be present at the annual meeting of shareholders, they will have
an  opportunity  to  make  a  statement  if  they  desire  to  do  so  and  such
representatives   are  expected  to  be  available  to  respond  to  appropriate
questions.




                                       17


Audit Fees

         The aggregate fees billed for professional  services rendered by HEIN +
ASSOCIATES LLP for the audit of Natural Gas' financial statements for its fiscal
year ended  December 31, 2002 and the review of the financial  statements in its
Forms 10-QSB for such fiscal year were $43,691.

Financial Information Systems Design and Implementation Fees

         No fees were billed by HEIN + ASSOCIATES LLP during Natural Gas' fiscal
year ended  December 31, 2002 for any service  related to financial  information
systems design and implementation.

All Other Fees

         The  aggregate  fees billed for services  rendered by HEIN + ASSOCIATES
LLP, other than as listed above, for Natural Gas' fiscal year ended December 31,
2002 were $29,216.

                       2002 ANNUAL REPORT TO SHAREHOLDERS

         You may obtain  Natural Gas' 2002 Annual  Report on Form 10-KSB for the
fiscal year ended  December 31, 2002 upon written  request to Scott W. Sparkman,
Secretary, at its principal offices, 2911 South County Road 1260, Midland, Texas
79706. Each such request must set forth a good faith  representation that, as of
May 14, 2003 the person  making the request  was a  beneficial  owner of Natural
Gas' common stock or its 10% Convertible  Series A Preferred Stock. In addition,
the  exhibits to the Annual  Report on Form 10-KSB,  as amended,  for the fiscal
year ended  December  31, 2002 may be obtained by any  stockholder  upon written
request to Mr. Sparkman. Each person making any such request will be required to
pay a fee of $0.25 per page to cover Natural Gas'  expenses in  furnishing  such
exhibits.

                              SHAREHOLDER PROPOSALS

         Proposals of shareholders intended for inclusion in the proxy statement
to be furnished to all shareholders  entitled to vote at the 2004 Annual Meeting
of shareholders must be received at Natural Gas' principal executive offices not
later than January 20, 2004 or in the event that the due date of the 2004 Annual
Meeting  changes by more than 30 days from the day that the 2004 Annual  Meeting
is held, a reasonable  time before Natural Gas mails its proxy materials for the
2004 Annual Meeting.  In order to curtail  controversy as to the date on which a
proposal  was  received by us, it is  suggested  that  proponents  submit  their
proposals by certified  mail-return receipt requested.  Such proposals must also
meet  the  other  requirements   established  by  the  Securities  and  Exchange
Commission for shareholder proposals.

                             DISCRETIONARY AUTHORITY

         If Natural Gas does not have notice of a matter by April 3, 2004,  then
the Proxies at Natural Gas' next Annual Meeting of Shareholders  will be able to
exercise discretionary authority in voting on such matters.



                                       18


                             SOLICITATION OF PROXIES

         The  cost of  soliciting  proxies,  including  the  cost of  preparing,
assembling  and mailing this proxy  material to  shareholders,  will be borne by
Natural Gas.  Solicitations will be made only by use of the mails,  except that,
if necessary to obtain a quorum,  officers and regular  employees of Natural Gas
may make  solicitations  of proxies by telephone or  electronic  facsimile or by
personal calls. Brokerage houses,  custodians,  nominees and fiduciaries will be
requested to forward the proxy soliciting  material to the beneficial  owners of
Natural  Gas'  shares  held of  record  by such  persons  and  Natural  Gas will
reimburse them for their charges and expenses in this connection.

                                 OTHER BUSINESS

         Natural  Gas'  Board of  Directors  does not know of any  matters to be
presented at the meeting other than the matters set forth  herein.  If any other
business  should come before the  meeting,  the  person's  names in the enclosed
proxy card will vote such proxy according to their judgment on such matters.

                                              BY ORDER OF THE BOARD OF DIRECTORS


                                              SCOTT W. SPARKMAN, SECRETARY

Midland, Texas
May 19, 2003




                                       19


                                                                       EXHIBIT A


                             AUDIT COMMITTEE CHARTER
                                       OF
                        NATURAL GAS SERVICES GROUP, INC.


I.       Composition  of the  Audit  Committee.  The  Audit  Committee  shall be
comprised  of  all  independent  directors  to be  appointed  by  the  Board  of
Directors.  To be an independent director, such director shall not be an officer
or  employee  of the  Company  or its  subsidiaries,  shall  be  free  from  any
relationship  which,  in the  opinion of the Board of  Directors  of the Company
("Board"),  would interfere with the exercise of his or her independent judgment
in carrying out the responsibilities of a director, shall not own or control 20%
or  more  of the  Company's  securities,  or such  lower  measurement  as may be
established  by the Securities  and Exchange  Commission  ("SEC") in rule making
under Section 302 of the  Sarbanes-Oxley  Act of 2002, shall be able to read and
understand  fundamental  financial  statements,  including the Company's balance
sheet,  income  statement  and cash  flow  statement,  shall  not,  directly  or
indirectly,  accept any consulting,  advisory or other compensation fee from the
Company,  be an  affiliated  person of the  Company  of any  subsidiary  thereof
(except as a member of the Audit  Committee,  the Board or any  Committee of the
Board) and shall otherwise satisfy the applicable membership  requirements under
the  rules  of  the  American  Stock  Exchange  all  as  such  requirements  are
interpreted by the Board.  On and after December 31, 2003, or at such time as is
required by the rules of the American Stock Exchange,  which ever is earlier, at
least one member of the Audit  Committee  shall be a "financial  expert" as such
term is defined by rules adopted by the SEC.

II.      Purposes of the Audit Committee.  The Audit Committee's  primary duties
and responsibilities are to:

         1. Monitor the integrity of the Company's  financial  reporting process
and  systems  of  internal  controls  regarding  finance,  accounting  and legal
compliance.

         2.  Monitor  the   independence   and   performance  of  the  Company's
independent auditors and internal auditing department.

         3. Provide an avenue of communication  among the independent  auditors,
management, the internal auditing department and the Board.

         The function of the Audit Committee is oversight. The management of the
Company is responsible for the  preparation,  presentation  and integrity of the
Company's financial statements.  Management and the internal auditing department
are responsible for maintaining  appropriate  accounting and financial reporting
principles and policies and internal  controls and  procedures  that provide for
compliance with accounting  standards and applicable laws and  regulations.  The
outside auditors are responsible for planning and carrying out a proper audit of
the Company's financial statements, reviews of the Company's quarterly financial
statements  prior to the filing of each quarterly report on Form I O-Q or Form I
O-QSB, and other procedures. In fulfilling their responsibilities  hereunder, it




is recognized that members of the Audit Committee are not fulltime  employees of
the Company and are not, and do not represent  themselves to be,  accountants or
auditors  by  profession  or  experts in the fields of  accounting  or  auditing
including  in respect of auditor  independence.  As such,  it is not the duty or
responsibility  of the Audit Committee or its members to conduct "field work" or
other types of auditing or  accounting  reviews or  procedures or to set auditor
independence standards, and each member of the Audit Committee shall be entitled
to rely on (i) the  integrity  of those  persons  and  organizations  within and
outside the Company from which it receives  information (ii) the accuracy of the
financial and other information  provided to the Audit Committee by such persons
or  organizations  absent  actual  knowledge  to the  contrary  (which  shall be
promptly reported to the Board of Directors) and (111)  representations  made by
management as to any information technology,  internal audit and other non-audit
services provided by the auditors to the Company.

         Notwithstanding the foregoing, the Audit Committee has the authority to
conduct any investigation  appropriate to fulfilling its  responsibilities,  and
shall have direct access to the independent  auditors as well as any employee of
the Company.  The Audit  Committee  has the ability to retain,  at the Company's
expense,  special legal,  accounting,  or other  consultants or experts it deems
necessary in the performance of its duties.

III.     Meeting of the Audit Committee.

         Audit  Committee  members shall be appointed by the Board.  If an Audit
Committee  Chair is not designated or present,  the members of the Committee may
designate a Chair by majority vote of the Committee membership.

         The  Committee  shall  meet  at  least  four  times  annually,  or more
frequently as  circumstances  dictate.  The Audit  Committee Chair shall prepare
and/or approve an agenda in advance of each meeting. In addition,  the Committee
should meet privately in executive  session at least  annually with  management,
the director of the internal auditing department,  the independent auditors, and
as a committee to discuss any matters that the Committee or each of these groups
believe should be discussed.

IV.      Audit Committee Responsibilities and Duties.

         1. Review Procedures.

         The Audit Committee shall:

                  a. Review and  reassess  the adequacy of this Charter at least
annually, submit the charter to the Board of Directors for approval and have the
document   published  at  least  every  three  years  in  accordance   with  SEC
regulations.

                  b. Review the Company's  annual audited  financial  statements
prior  to  filing  or  distribution.   Review  should  include  discussion  with
management and independent  auditors of significant issues regarding  accounting
principles, practices, and judgments.




                  c. In consultation with management,  the independent  auditors
and the internal  auditors,  consider the integrity of the  Company's  financial
reporting  processes and controls.  Meet periodically with management to discuss
significant  financial  risk  exposures  and the steps  management  has taken to
monitor,  control,  and  report  such  exposures.  Review  significant  findings
prepared  by the  independent  auditors  and the  internal  auditing  department
together with management's responses.

                  d.  Review  with  financial  management  and  the  independent
auditors  the  Company's  quarterly  financial  results  prior to the release of
earnings and/or the Company's quarterly financial  statements prior to filing or
distribution.  Discuss  any  significant  changes  to the  Company's  accounting
principles and any items required to be communicated by the independent auditors
in  accordance  with SAS 61. The Chair of the Committee may represent the entire
Audit Committee for purposes of this quarterly review.

         2. Independent Auditors.

         The  independent  auditors  are  ultimately  accountable  to the  Audit
Committee.  The Audit Committee shall review the independence and performance of
the auditors.  The Audit  Committee,  shall select,  evaluate,  and where deemed
appropriate,  replace the outside  auditors (or nominate the outside auditors to
be proposed for shareholder approval in any proxy statement).

         The outside  auditors  shall  submit to the  Company  annually a formal
written statement delineating all relationships between the outside auditors and
the Company ("Statement as to Independence"),  addressing each non-audit service
provided  to the  Company  and at least the  matters  set forth in  Independence
Standards Board No. 1.

         The Audit Committee shall:

                  a. Approve the fees and other  significant  compensation to be
paid to the independent auditors for audit services and approve the retention of
the  independent  auditors  for any  non-audit  service and the fee for any such
service.

                  b. On an annual basis,  ensure that the  independent  auditors
prepare and deliver a Statement as to Independence,  and review and discuss with
the  independent  auditors  all  significant  relationships  they  have with the
Company that could impair the auditors' independence.  The Audit Committee shall
take appropriate action to oversee the independence of the independent auditors.

                  c. Review the  independent  auditors'  audit plan,  discussing
scope,  staffing,  locations,  reliance upon management,  and internal audit and
general audit approach.

                  d. Prior to  releasing  the  year-end  earnings,  discuss  the
results of the audit with the independent auditors.

                  e.  Consider  the  independent  auditors'  judgment  about the
quality and appropriateness of the Company's accounting principles as applied in
its financial reporting.



                  f.  Instruct the  independent  auditors  that the  independent
auditors are ultimately accountable to the Audit Committee.

                  g. Resolve any  disagreements  between the  management  of the
Company and the Company's independent auditors.

         3. Internal Audit Department and Legal Compliance.

         The Audit Committee shall:

                  a.  Review the  budget,  plan,  changes  in plan,  activities,
organization structure, and qualifications of the internal audit department,  as
needed.

                  b. Review the appointment, performance, and replacement of the
senior internal audit executive.

                  c. Review  significant  reports prepared by the internal audit
department together with management's response and follow-up to these reports.

                  d. Consider any reports or  communications  (and  management's
and/or the internal audit department's responses thereto) submitted to the Audit
Committee by the independent  auditors required by or referred to in SAS 6 1, as
may be modified or supplemented.

                  e. Review on a regular  basis with the  Company's  counsel any
legal matters that could have a material impact on the organization's  financial
statements,  the Company's compliance with applicable laws and regulations,  and
inquiries received from regulators or governmental agencies.

         4. Other Audit Committee Responsibilities.

         The Audit Committee shall:

                  a. Annually  prepare a report to  shareholders  as required by
the  Securities  and Exchange  Commission.  The report should be included in the
Company's annual proxy statement.

                  b. Maintain minutes of meetings and periodically report to the
Board of Directors on significant results of the foregoing activities.

                  c.  Periodically  perform  self-assessment  of Audit Committee
performance.

                  d. Annually  review  policies and procedures  associated  with
directors' and officers' expense accounts and perquisites.




                  e. Approve in advance all  director,  officer and other person
related party transactions with the Company.

                  f. Monitor a code of ethics for the Company's  Chief Executive
Officer, Chief Financial Officer,  Principal Accounting Officer or Controller or
persons performing similar functions.

                  g.  Establish  procedures  for  the  receipt,   retention  and
treatment of complaints received by the Company regarding  accounting,  internal
accounting  controls or auditing  matters  and for the  confidential,  anonymous
submission  by  employees  of the  Company of  concerns  regarding  questionable
accounting or auditing matters.

                  h. Engage  independent  counsel and other advisors as it deems
necessary to carry out its duties.

                  i.  Determine  funding  for  independent   counsel  and  other
advisors employed under paragraph IV.4.h of this Charter.

                  j. Review any other  aspects of the  Company's  affairs as the
Committee deems necessary or appropriate.

                  k. Perform any other activities  consistent with this Charter,
the Company's  by-laws,  and governing  law, as the Committee or the Board deems
necessary or appropriate.





                                                                PRELIMINARY COPY

                                    APPENDIX

                                      PROXY

                        NATURAL GAS SERVICES GROUP, INC.
                    PROXY SOLICITED BY THE BOARD OF DIRECTORS
                     FOR THE ANNUAL MEETING OF SHAREHOLDERS
                            TO BE HELD June 18, 2003

         The undersigned  hereby constitutes and appoints Wallace O. Sellers and
Scott W. Sparkman,  and each of them, the true and lawful  attorneys and proxies
of the undersigned with full power of substitution  and appointment,  for and in
the name, place and stead of the undersigned,  to act for and to vote all of the
undersigned's  shares of $0.01 par value common stock and 10% Convertible Series
A Preferred Stock of Natural Gas Services Group,  Inc., a Colorado  corporation,
to be used at an annual meeting of  shareholders  to be held will be held at the
Hilton Hotel, 117 West Wall Avenue, Midland, Texas 79701 on Wednesday,  June 18,
2003 at 9:00  a.m.  Central  Time,  and at any  adjournment(s)  thereof  for the
following purposes:

         1. Election of Directors:

            [  ]  FOR THE DIRECTOR              [  ]  WITHHOLD AUTHORITY TO VOTE
                  NOMINEES LISTED BELOW               FOR ALL NOMINEES LISTED
                                                      BELOW
                  (EXCEPT AS MARKED TO
                  THE CONTRARY BELOW)


         INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
         -----------------------------------------------------------------------
         STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
         -----------------------------------------------------------

         Richard L. Yadon

         Gene A. Strasheim

         James T. Grigsby

         Scott W. Sparkman

         2. Adopt an amendment to the articles of  incorporation  of Natural Gas
Services  Group,  Inc.  to  reduce  the  number  of  designated  shares  of  10%
Convertible Series A Preferred Stock:

         [  ] FOR            [  ] AGAINST            [  ] ABSTAIN




         The undersigned hereby revokes any proxies as to said shares heretofore
given by the  undersigned  and ratifies and confirms all that said attorneys and
proxies lawfully may do by virtue hereof.

         THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED.  IF NO
SPECIFICATION  IS MADE, THEN THE SHARES  REPRESENTED BY THIS PROXY WILL BE VOTED
AT THE  MEETING FOR THE  ELECTION  OF THE  DIRECTORS  AND FOR THE  AMENDMENT  TO
NATURAL GAS' ARTICLES OF INCORPORATION.

         It is  understood  that this proxy confers  discretionary  authority in
respect to matters  not known or  determined  at the time of the  mailing of the
Notice of Annual Meeting of to the undersigned. The proxies and attorneys intend
to vote the  shares  represented  by this  proxy  on such  matters,  if any,  as
determined by the Board of Directors.

         The undersigned  hereby  acknowledges  receipt of the Notice of Special
Meeting of  Shareholders,  and the Proxy  Statement and Annual Report  furnished
therewith.

                                            Dated and Signed:

                                                                          , 2003
                                    --------------------------------------

                                    --------------------------------------------

                                    --------------------------------------------

                                    Signature(s)  should  agree with the name(s)
                                    stenciled hereon. Executors, administrators,
                                    trustee,  guardians and attorneys  should so
                                    indicate  when  signing.   Attorneys  should
                                    submit powers of attorney.