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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

                (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2003

                                       OR

                 ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
               For the transition period from ________ to ________

Commission File Number 1-31398

                        NATURAL GAS SERVICES GROUP, INC.
        (Exact name of small business issuer as specified in its charter)

                    Colorado                              75-2811855
        (State or other jurisdiction of               (I.R.S. Employer
         incorporation or organization)               Identification No.)

                                  2911 SCR 1260
                              Midland, Texas 79706
                    (Address of principal executive offices)

                                 (915) 563-3974
                           (Issuer's Telephone number)

                                       N/A
     ----------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court.

                               Yes       No
                                  ---      ----

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                                                            Outstanding at
           Class                                            June 30, 2003
--------------------------                            --------------------------

Common Stock, $.001 par value                                 4,881,632
                                                      --------------------------

Transitional Small Business Disclosure Format (Check one):  Yes    No X
                                                               ---   ---



                        NATURAL GAS SERVICES GROUP, INC.

Commission File Number:  1-31398

Quarter Ended June 30, 2003


FORM 10-QSB

Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements............................................Page  1

Unaudited Consolidated Balance Sheet.....................................Page  1

Unaudited Consolidated Income Statements.................................Page  2

Unaudited Consolidated Statements of Cash Flows..........................Page  3

Notes to Unaudited Consolidated Financial Statements.....................Page  4

Item 2.  Management's Discussion and Analysis or Plan of Operation.......Page  7

Item 3.  Controls and Procedures.........................................Page 12


Part II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds.......................Page 13

Item 4.  Submission of Matters to a Vote of Security Holders.............Page 14

Item 6.  Exhibits and Reports on Form 8-K................................Page 15

Signatures...............................................................Page 16




                        Natural Gas Services Group, Inc.
                           Consolidated Balance Sheet
                                   (unaudited)
                                  June 30, 2003

                                     ASSETS
Current Assets:
   Cash and cash equivalents                                         $   976,004
   Accounts receivable - trade                                         1,482,762
   Inventory                                                           2,292,196
   Prepaid expenses                                                       81,156
                                                                     -----------
   Total current assets                                                4,832,118

Lease equipment, net                                                  16,709,633
Other property, plant and equipment, net                               2,616,661
Goodwill, net                                                          2,589,655
Patents, net                                                             127,684
Other assets                                                             114,605
                                                                     -----------
         Total assets                                                $26,990,356
                                                                     ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Current portion of long term debt and capital lease               $ 2,278,951
   Accounts payable and accrued liabilities                              973,025
   Unearned Income                                                       588,007
                                                                     -----------
         Total current liabilities                                     3,839,983

Long term debt and capital lease, less current portion                 6,708,947
Subordinated notes, net                                                1,376,865
Deferred income tax payable                                            1,492,573
                                                                     -----------
              Total liabilities                                       13,418,368
                              SHAREHOLDERS' EQUITY
Preferred stock                                                            3,577
Common stock                                                              49,816
Paid in capital                                                       11,167,733
Retained earnings                                                      2,350,862
                                                                     -----------
         Total shareholders' equity                                   13,571,988
                                                                     -----------
         Total liabilities and shareholders' equity                  $26,990,356
                                                                     ===========



The accompanying notes are an integral part of the consolidated balance sheet.



1





                        Natural Gas Services Group, Inc.
                         Consolidated Income Statements
                                   (unaudited)

                                              Three months ended June 30     Six months ended June 30
                                              --------------------------    --------------------------
                                                  2003           2002           2003           2002
                                              -----------    -----------    -----------    -----------
                                                                               
Revenue:
   Sales                                      $   939,838    $   962,252    $ 1,505,110    $ 2,311,269
   Service and maintenance                        516,573        410,158        893,883        752,020
   Leasing income                               1,764,404      1,056,750      3,165,567      2,056,267
                                              -----------    -----------    -----------    -----------
                                                3,220,815      2,429,160      5,564,560      5,119,556
Cost of revenue:
   Cost of sales                                  713,624        472,567      1,146,797      1,561,452
   Cost of service and maintenance                335,928        348,634        671,229        658,049
   Cost of leasing                                406,867        303,764        767,784        586,299
                                              -----------    -----------    -----------    -----------
                                                1,456,419      1,124,965      2,585,810      2,805,800
                                              -----------    -----------    -----------    -----------
Gross Margin                                    1,764,396      1,304,195      2,978,750      2,313,756
Operating Cost:
   Selling expense                                185,604        119,003        324,551        243,670
   General and administrative expense             410,838        326,946        791,004        600,487
   Amortization and depreciation                  417,589        283,196        779,555        537,600
                                              -----------    -----------    -----------    -----------
                                                1,014,031        729,145      1,895,110      1,381,757
                                              -----------    -----------    -----------    -----------
Operating income                                  750,365        575,050      1,083,640        931,999

   Interest expense                              (175,706)      (265,480)      (329,789)      (522,840)
   Equity in earnings of joint venture               --          124,151           --          207,603
   Other income                                   (21,760)           212            787          1,910
                                              -----------    -----------    -----------    -----------
Income before income taxes                        552,899        433,933        754,638        618,672
   Income tax expense                             237,747        191,000        321,603        279,563
                                              -----------    -----------    -----------    -----------
Net income                                        315,152        242,933        433,035        339,109
   Preferred dividends                             31,010         31,430         62,020         75,614
                                              -----------    -----------    -----------    -----------
Net income available to common shareholders   $   284,142    $   211,503    $   371,015    $   263,495
                                              ===========    ===========    ===========    ===========


         Earnings per share:
         Basic                                $      0.06    $      0.06    $      0.08    $      0.08
         Diluted                              $      0.06    $      0.05    $      0.07    $      0.06
         Weighted average shares:
         Basic                                  4,875,324      3,357,632      4,866,527      3,357,632
         Diluted                                5,024,774      4,193,490      5,116,332      4,163,710



The  accompanying  notes  are  an  integral  part  of  the  consolidated  income
statements.


2





                        Natural Gas Services Group, Inc.
                      Consolidated Statements of Cash Flows
                                   (unaudited)
                                                                               Six Months       Six Months
                                                                                  Ended            Ended
                                                                              June 30, 2003    June 30, 2002
                                                                              -------------    -------------
                                                                                         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income                                                                 $     433,035    $     339,109
      Adjustments to reconcile net income to net cash used in
      operating activities:
      Depreciation and amortization                                                 779,555          537,600
      Deferred taxes                                                                321,573          279,563
      Amortization of debt issuance costs                                            32,478           32,477
      Warrants Issued for debt guarantee                                               --             42,025
      Equity in earnings of joint venture                                              --           (207,603)
      Gain on disposal of assets                                                     10,547             --
      Changes in operating assets and liabilities:
      Trade and other receivables                                                  (836,812)        (174,984)
      Inventory and work in progress                                               (746,248)        (247,991)
      Prepaid expenses and other                                                     92,146          (23,513)
      Accounts payable and accrued liabilities                                      270,867          276,419
      Unearned income                                                               270,446          449,065
      Other                                                                         (91,341)         (23,760)
                                                                              -------------    -------------
  NET CASH PROVIDED BY OPERATING ACTIVITIES                                         536,246        1,278,407

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                            (4,465,223)      (2,296,033)
   Acquisition of remaining interest in joint venture, net of cash acquired         242,753             --
   Proceeds from sale of property and equipment                                     112,500             --
   Decrease in lease receivable                                                     210,512           40,954
   Distribution from equity method investee                                          49,090          123,353
                                                                              -------------    -------------
  NET CASH USED IN INVESTING ACTIVITIES                                          (3,850,368)      (2,131,726)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from bank loans and line of credit                                2,438,997        1,353,386
   Repayments of long term debt                                                  (1,000,489)        (449,123)
   Deferred offering costs                                                             --           (152,326)
   Proceeds from stock offering, net of offering cost                                  --             12,724
   Dividends paid on preferred stock                                                (62,020)         (75,614)
   Proceeds from exercise of warrants                                               200,000             --
                                                                              -------------    -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                         1,576,488          689,047
                                                                              -------------    -------------
NET CHANGE IN CASH AND CASH EQUVALENTS                                           (1,737,634)        (164,272)
CASH AT BEGINNING OF PERIOD                                                       2,713,638          506,669
                                                                              -------------    -------------
CASH AT END OF PERIOD                                                         $     976,004    $     342,397
                                                                              =============    =============

SUPPLEMENTAL DICLOSURE OF CASH FLOW INFORMATION:
      Interest paid                                                           $     329,789    $     470,697
      Income taxes paid                                                       $        --      $        --



The accompanying notes are an integral part of the consolidated statements of
cash flows.


3



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

         The   accompanying   unaudited   financial   statements   present   the
consolidated results of our company and its wholly-owned subsidiaries taken from
our  books  and  records.  In  our  opinion,   such  information   includes  all
adjustments,   consisting  of  only  normal  recurring  adjustments,  which  are
necessary to make our financial position at June 30, 2003 and the results of our
operations  for the six  months  periods  ended  June  30,  2003  and  2002  not
misleading.  As permitted by the rules and  regulations  of the  Securities  and
Exchange Commission (SEC) the accompanying  financial  statements do not include
all disclosures normally required by accounting principles generally accepted in
the United  States of  America.  These  financial  statements  should be read in
conjunction with the financial  statements included in our Annual Report on Form
10-KSB on file with the SEC.  Investments in joint ventures in which our company
does not have majority  voting  control are accounted for by the equity  method.
All   intercompany   balances  and   transactions   have  been   eliminated   in
consolidation. In our opinion , the consolidated financial statements are a fair
presentation of the financial position, results of operations and cash flows for
the periods presented.

         The results of  operations  for the six months  ended June 30, 2003 are
not  necessarily  indicative of the results of operations to be expected for the
full fiscal year ending December 31, 2003

(2) Stock-based Compensation

         Statement  of  Financial  Accounting  Standards  No. 123,  ("SFAS 123")
"Accounting for Stock-Based Compensation," encourages, but does not require, the
adoption of a fair  value-based  method of accounting  for employee  stock-based
compensation transactions. We have elected to apply the provisions of Accounting
Principles Board Opinion No. 25 ("Opinion 25"),  "Accounting for Stock Issued to
Employees,"  and  related  interpretations,   in  accounting  for  our  employee
stock-based  compensation plans. Under Opinion 25, compensation cost is measured
as the excess,  if any, of the quoted  market  price of our stock at the date of
the grant above the amount an employee must pay to acquire the stock.

         Had  compensation  costs for  options  granted  to our  employees  been
determined based on the fair value at the grant dates consistent with the method
prescribed  by SFAS No.  123,  our pro forma net income and  earnings  per share
would have been reduced to the pro forma amounts listed below:



                                                       Three Months Ended              Six Months Ended
                                                             June 30                       June 30
                                                        2003           2002           2003           2002
                                                    -----------    -----------    -----------    -----------
                                                                                     
Pro forma impact of fair value method
Income applicable to common shares, as reported     $   284,142    $   211,503    $   371,015    $   263,495
Pro-forma stock-based compensation costs under
  the fair value method, net of related tax              (7,683)       (14,010)       (15,365)       (14,010)
                                                    -----------    -----------    -----------    -----------
Pro-forma income applicable to common shares        $   276,459    $   197,493    $   355,650    $   249,485
  under the fair-value method
Earnings per common share
Basic earnings per share reported                   $      0.06    $      0.06    $      0.08    $      0.08
Diluted earnings per share reported                 $      0.06    $      0.05    $      0.07    $      0.06

Pro-forma basic earnings per share under the fair
 value method                                       $      0.06    $      0.06    $      0.07    $      0.07
Pro-forma diluted earnings per share under the
 fair value method                                  $      0.05    $      0.05    $      0.07    $      0.06
Weighted average Black-Scholes fair value
   assumptions:
 Risk free rate                                      4.0% - 5.2%
 Expected life                                        5-10 yrs
 Expected volatility                                       50.0%
 Expected dividend yield                                    0.0%





4



(3) Acquisitions

         On March 31, 2003 we acquired 28 gas  compressor  packages  from Hy-Bon
Engineering Company,  Inc.  ("Hy-Bon").  The adjusted purchase price amounted to
approximately  $2,140,000.  As part of the purchase and sale  agreement,  Hy-Bon
withdrew as a member of Hy-Bon  Rotary  Compression,  L.L.C.  ("Joint  Venture")
effective  as of  January  1,  2003.  We, as the other  member of Hy-Bon  Rotary
Compression,  L.L.C.,  retained all assets of Hy-Bon Rotary Compression,  L.L.C.
that as of December 31, 2002 had an unaudited  aggregate  value of $346,511.  We
plan to  dissolve  Hy-Bon  Rotary  Compression,  L.L.C.  and have  agreed not to
operate under the name Hy-Bon.  We have consolidated the operations of the Joint
Venture  beginning  January  1, 2003 and then began  recording  our share of the
profit of the acquired interest beginning April 1, 2003.

(4) Long Term Debt

         We entered  into a new loan  agreement  with our bank,  as of March 26,
2003 that  included new  borrowing of $2,150,000 in the form of a term loan with
monthly  principal  payments of $35,833  with  interest at 1% over prime but not
less than 5.25% for 60 months. The proceeds from this new borrowing were used to
purchase the 28 gas compressors from Hy-Bon  Engineering  Company,  Inc. The new
loan agreement also included the renewal of our line of credit for $750,000 with
interest at 1% over prime but not less than 5.25% for one year.

(5) Segment Information

         FAS No. 131,  Disclosures  about  Segments of an Enterprise and Related
Information,   establishes  standards  for  public  companies  relating  to  the
reporting of information about their operating segments in financial statements.
Operating  segments  are  components  of  an  enterprise  about  which  separate
financial  information  is  available  that  is  evaluated  regularly  by  chief
operating decision-makers in deciding how to allocate resources and in assessing
performance.

Our segment information is set forth in the following table:



                                                                       Natural Gas
         (in thousands)       Rotary           NGE       Great Lakes     Services
                                Gas          Leasing     Compression      Group         Total
        Six Months Ended    -----------    -----------   -----------   -----------    -----------
          June 30, 2003
                                                                       
Revenue                     $     1,200    $     2,070   $     2,295   $      --      $     5,565
Inter-segment revenue             2,744             35             8          --            2,787
Net Income (loss)                   (54)           874           394          (781)           433
Segment Assets                    4,323         12,986         9,195           486         26,990

                                                                       Natural Gas
         (in thousands)       Rotary           NGE       Great Lakes     Services
                                Gas          Leasing     Compression      Group         Total
        Six Months Ended    -----------    -----------   -----------   -----------    -----------
          June 30, 2002
Revenue                     $     1,571    $     1,059   $     2,490   $      --      $     5,120
Inter-segment revenue             3,046           --            --            --            3,046
Net Income  (loss)                  196            515           188          (560)           339
Segment Assets                    4,504          6,711         9,160           695         21,070



5



                                                                       Natural Gas
         (in thousands)       Rotary           NGE       Great Lakes     Services
                                Gas          Leasing     Compression      Group         Total
      Three Months Ended    -----------    -----------   -----------   -----------    -----------
         June 30, 2003
Revenue                     $       756    $     1,211   $     1,254   $      --      $     3,221
Inter-segment revenue             1,337             18             3          --            1,358
Net Income  (loss)                  (11)           541           265          (480)           315

                                                                       Natural Gas
         (in thousands)       Rotary           NGE       Great Lakes     Services
                                Gas          Leasing     Compression      Group         Total
      Three Months Ended    -----------    -----------   -----------   -----------    -----------
         June 30, 2002
Revenue                     $       704    $       560   $     1,166   $      --      $     2,430
Inter-segment revenue             1,629           --            --            --            1,629
Net Income  (loss)                  179            282           134          (352)           243




(6) Earnings per common share

The following table  reconciles the numerators and denominators of the basic and
diluted earnings per share computation.



                                                    Three Months Ended             Six Months Ended
                                                         June 30,                      June 30,
                                                    2003           2002           2003           2002
                                                -------------- -----------    --------------------------
                                                                                 
Basic earnings per share Numerator:
  Net income                                    $   315,152    $   242,933    $   433,035    $   339,109
  Less: dividends on preferred shares               (31,010)       (31,430)       (62,020)       (75,614)
                                                -----------    -----------    -----------    -----------
  Net income available to common shareholders   $   284,142    $   211,503    $   371,015    $   263,495
                                                ===========    ===========    ===========    ===========

 Denominator -
  Weighted average common shares outstanding      4,875,324      3,357,632      4,866,527      3,357,632
                                                ===========    ===========    ===========    ===========

  Basic earnings per share                      $      0.06    $      0.06    $      0.08    $      0.08
                                                ===========    ===========    ===========    ===========

Diluted earnings per share Numerator:
  Net income                                    $   315,152    $   242,933    $   433,035    $   339,109
  Less: dividends on preferred shares (1)           (31,010)       (31,430)       (62,020)       (75,614)
                                                -----------    -----------    -----------    -----------
  Net income available to common shareholders   $   284,142    $   211,503    $   371,015    $   263,495
                                                ===========    ===========    ===========    ===========

 Denominator :
  Weighted average common shares outstanding      4,875,324      3,357,632      4,866,527      3,357,632
  Common stock options and warrants                 149,450        835,858        249,805        806,078
  Conversion of preferred shares (1)                   --             --             --             --
                                                -----------    -----------    -----------    -----------
                                                  5,024,774      4,193,490      5,116,332      4,163,710
                                                ===========    ===========    ===========    ===========

  Diluted earnings per share                    $      0.06    $      0.05    $      0.07    $      0.06
                                                ===========    ===========    ===========    ===========



(1) Preferred shares were  anti-dilutive for the six and three months ended June
30, 2003 and 2002.



6



Item 2.  Management's Discussion and Analysis or Plan of Operation

Overview

         We include the operations of Rotary Gas Systems,  NGE Leasing and Great
Lakes Compression,  which are wholly owned subsidiaries.  These entities provide
products  and  services to the oil and gas  industry  and are engaged in (1) the
manufacture, service, sale, and rental of natural gas compressors to enhance the
productivity of oil and gas wells, and (2) the  manufacture,  sale and rental of
flares and flare ignition  systems for plant and production  facilities.  We are
the parent  company  and  provide  administrative  and  management  support  and
therefore, have expenses associated with that activity.

         Liquidity and Capital Resources

         We have funded our operations  through public and private  offerings of
our common and preferred stock,  subordinated debt and bank debt.  Proceeds were
primarily  used to pay debt  and to fund  the  manufacture  and  fabrication  of
additional units for our rental fleet of gas compressors.

         At June 30, 2003, we had cash and cash equivalents of $976,004, working
capital of $992,135 and non-subordinated debt of $8,987,898, of which $2,278,951
was  classified as current.  We had net cash flow from  operating  activities of
$536,246 during the first six months of 2003. This was primarily from net income
of $433,035  plus  depreciation  and  amortization  of $779,555,  an increase in
accounts  payable and accrued  liabilities of $270,867,  an increase in deferred
taxes of $321,573 and an increase in deferred  income of $270,446,  offset by an
increase in inventory of $746,248 and accounts receivable of $836,812.

         On October  24,  2002,  we paid off the note of  $6,952,464  payable to
Dominion Michigan, used for the acquisition of the compression related assets of
Great Lakes  Compression.  $3,452,464 of the funds to pay the note came from the
proceeds of our initial public  offering,  and $3,500,000  came from  additional
bank financing to be amortized over 60 months at prime plus 1%.

         We entered into a new loan agreement  with our bank,  dated as of March
26, 2003.  This  included new borrowing of $2,150,000 in the form of a term loan
with monthly  principal  payments of $35,833 with  interest at 1% over prime but
not less than 5.25% for 60 months.  The proceeds  from this new  borrowing  were
used to purchase the 28 gas compressors from Hy-Bon. The new loan agreement also
included the renewal of our line of credit for $750,000 with interest at 1% over
prime  for one year.  We have not  drawn  from the line of credit as of June 30,
2003.

         Funds from the initial  public  offering,  which  closed on October 24,
2002,  will permit us to actively  pursue adding gas  compressors  to our rental
fleet. We expect to fund additional rental units through the use of the offering
proceeds, additional bank debt and cash flow from operations.

         A summary of the use of proceeds from our initial public offering as of
June 30, 2003 is as follows:

         o        $3,458,464 to reduce indebtedness;

         o        $2,577,870 for the  manufacture of gas  compressors  placed in
                  our rental fleet and

         o        $492,836 in temporary investments - Bank Money Market Account.





7





Results of Operations

Six Months Ended June 30, 2003.  Compared to the Six Months Ended June 30, 2002.


                                                                            Natural Gas
         (in thousands)            Rotary          NGE       Great Lakes      Services
                                    Gas          Leasing     Compression       Group          Total
                                -----------    -----------   -----------    -----------    -----------
                                                                            
        Six Months Ended
         June 30, 2003
Revenue                         $     1,200    $     2,070   $     2,295    $      --      $     5,565
Inter-segment revenue
                                      2,744             35             8           --            2,787
Gross margin                            479          1,554           946           --            2,979
Selling, general and
administrative
   expense                              460             86           135            434          1,115
Depreciation and amortization
expense                                  70            379           319             12            780
Operating income (loss)                 (51)         1,089           492           (446)         1,084
Interest expense                          3            224            89             13            329
Other income or (expense)              --                9            (9)          --             --
Provision for income tax               --             --            --              322            322
                                -----------    -----------   -----------    -----------    -----------
Net Income (loss)               $       (54)   $       874   $       394    $      (781)   $       433
                                ===========    ===========   ===========    ===========    ===========

        Six Months Ended
         June 30, 2002
Revenue                         $     1,571    $     1,059   $     2,490    $      --      $     5,120
Inter-segment revenue                 3,046           --            --             --            3,046
Gross margin                            656            761           897           --            2,314
Selling, general and
administrative
   expense                              398             80           126            240            844
Depreciation and amortization
expense                                  59            189           270             20            538
Operating income  (loss)                199            492           501           (260)           932
Interest expense                          4            186           313             20            523
Equity in earnings from joint
venture                                --              208          --             --              208
Other income or (expense)                 1              1          --             --                2
Provision for income tax               --             --            --              280            280
                                -----------    -----------   -----------    -----------    -----------
Net income (loss)               $       196    $       515   $       188    $      (560)   $       339
                                ===========    ===========   ===========    ===========    ===========


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

Rotary Gas Systems Operations

         Revenue  from  outside  sources  decreased  24% or $371,000 for the six
months ended June 30, 2003,  as compared to the same period ended June 30, 2002.
Because our  products  are  custom-built,  fluctuations  in revenue from outside
sources are expected.  This decrease was mainly the result of a reduction in the
sale of flare units to third parties.

         The gross margin percentage decreased from 42% for the six months ended
June 30,  2002,  to 40% for the same  period  ended June 30,  2003.  The cost of
revenue  is  comprised  of  expenses   associated   with   service,   parts  and
manufacturing  expenses.  This  decrease  resulted  mainly  from a change in the
product mix.

         Selling,  general and  administrative  expense increased $62,000 or 16%
for the six months  ended June 30,  2003,  as compared to the same period  ended
June 30, 2002. This was mainly the result of the addition of new salesmen in the
Farmington, New Mexico and West Texas areas.

         Depreciation  expense increased 19% or $11,000 for the six months ended
June 30, 2003, as compared to the same period ended June 30, 2002. This increase
was mainly due to the purchase of  additional  sales  vehicles,  shop and office
equipment.



8



         There was a decrease of $1,000 in  interest  expense for the six months
ended June 30, 2003, as compared to the same period ended June 30, 2002,  mainly
due to the reduction in loan balances on vehicles.

NGE Leasing Operations

         Revenue from our rental of natural gas  compressors  increased  95% for
the six months ended June 30, 2003, as compared to the same period in 2002. This
increase is the result of units added to our rental  fleet.  From June 30, 2002,
to June 30, 2003, we added 137 gas compressor  units to our rental fleet,  which
included  the 28 units we purchased  from Hy-Bon  Engineering  Company,  Inc. on
March 31, 2003. The revenue from the Joint Venture,  which was previously  using
the equity method, has been consolidated  beginning January 1, 2003. The revenue
from the units purchased from Hy-Bon  Engineering  Company,  Inc. is included in
our consolidated revenue beginning April 1, 2003.

         The gross margin percentage increased from 72% for the six months ended
June 30, 2002 to 75% for the same  period  ending  2003.  This  increase  mainly
resulted from a slight reduction in the maintenance expenses associated with the
compressor  units and also  additional  revenue  recognized from the sale of our
irrigation pump engines.

         Selling,  general and administrative expense increased $6,000 or 8% for
the six months ended June 30, 2003, as compared to the same period in 2002. This
was mainly the result of an increase in sales  commissions from increased rental
revenue.

         Depreciation  expense  increased  101% or  $190,000  for the six months
ended June 30, 2003,  as compared to the same period  ended June 30, 2002.  This
increase  was the result of new gas  compressor  rental units being added to the
rental fleet during the period.

         There was an increase in interest  expense of 20% from $186,000 for the
six months ended June 30,  2002,  to $224,000 for the same period ended June 30,
2003.  This is mainly as a result of an  increase  in bank debt used to purchase
equipment for the rental fleet.

Great Lakes Compression

         Revenue  decreased 8% for the six months ended June 30, 2003,  compared
to the same period in 2002. This decrease  resulted from a decrease in the sales
of compressor  units to third parties.  In the period ended June 30, 2002 we had
unit sales of  approximately  $501,000 to third parties while in the same period
2003 we had no unit sales to third parties.  At the same time our rental revenue
increased 5% and our parts sales increased 2%. Because our compressor  units are
custom-built, fluctuations in revenue from outside sources are expected.

         The gross margin percentage increased from 36% for the six months ended
June  30,  2002 to 41% for the same  period  in 2003.  The  cost of  revenue  is
comprised of expenses  associated  with the  maintenance  of the gas  compressor
rental  activity,  service,  parts and  manufacturing  expenses.  This  increase
resulted mainly from a change in the sales product mix.

         Selling,  general and administrative  expense increased by 7% or $9,000
for the six months ended June 30, 2003,  as compared to the same period in 2002.
This is mainly the result of an increase in selling expense.

         Depreciation  expense  increased from $270,000 for the six months ended
June 30, 2002, to $319,000 for the same period ended June 30, 2003. The increase
is the  result  of  equipment  that  was  added  to the  rental  fleet  and  the
replacement of several service vehicles.


9



         There was a decrease in interest  expense of 72% from  $313,000 for the
six months  ended June 30,  2002 to  $89,000  for the six months  ended June 30,
2003.  This  decrease  resulted  from a  reduction  of the debt owed to Dominion
Michigan.  Part of the  proceeds  from our initial  public  offering was used to
reduce debt in the amount of  $3,452,464  and our bank  financed  the  remaining
balance of $3,500,000 at a more favorable interest rate.

         Natural Gas Services Group

         Selling, general and administrative expense increased 81% from $240,000
for the six months  ended June 30,  2002,  as compared to $434,000  for the same
period ended June 30, 2003.  This was mainly the result of the added expense for
being a publicly held company such as legal fees, auditor fees, underwriters and
public relations fees.

         Amortization  and depreciation  expense  decreased 40% from $20,000 for
the six months  ended June 30,  2002,  to $12,000 for the same period ended June
30, 2003.  This mainly resulted from vehicles that were moved to our subsidiary,
Great Lakes Compression.

         Interest  expense  decreased  35% from $20,000 for the six months ended
June 30, 2002, to $13,000 for the same period ended June 30, 2003. This decrease
resulted  from a reduction in the interest rate and from bank notes for vehicles
moved to our subsidiary.

         Provision  for income tax is  accounted  for on a  consolidated  basis.
Therefore, the tax for all companies is included in the provision for income tax
for Natural Gas Services Group Inc. Income tax expense increased $42,000 or 15%,
which is  consistent  with and  pursuant  to  changes in state and  federal  tax
statutes and the increase in net taxable income.

Three Months  Ended June 30,  2003.  Compared to the Three Months Ended June 30,
2003.



         (in thousands)                                                     Natural Gas
                                  Rotary           NGE       Great Lakes     Services
                                   Gas           Leasing     Compression       Group          Total
                                -----------    -----------   -----------    -----------    -----------
                                                                            
      Three Months Ended
        June 30, 2003
Revenue                         $       756    $     1,211   $     1,254    $      --      $     3,221
Inter-segment revenue                 1,337             18             3           --            1,358
Gross margin                            276            923           566           --            1,765
Selling, general and
administrative
     expense                            250             45            70            230            595
Depreciation and amortization
     Expense                             36            215           161              7            419
Operating income (loss)                 (10)           663           335           (237)           751
Interest expense                          2            124            44              5            175
Other income or (expense)                 1              2           (26)          --              (23)
Provision for income tax               --             --            --             (238)           238
                                ===========    ===========   ===========    ===========    ===========
Net Income (loss)               $       (11)   $       541   $       265    $      (480)   $       315
                                ===========    ===========   ===========    ===========    ===========

      Three Months Ended
        June 30, 2002
Revenue
                                $       704    $       560   $     1,166    $      --      $     2,430
Inter-segment revenue
                                      1,629           --            --             --            1,629
Gross margin                            410            399           495           --            1,304
Selling, general and
administrative
     expense                            199             42            65            139            445
Depreciation and amortization
     Expense                             30            103           140             11            284
Operating income  (loss)                181            254           290           (150)           575
Interest expense                          2             96           156             11            265
Equity in earnings from joint
venture                                --              124          --             --              124
Provision for income tax               --             --            --              191            191
                                -----------    -----------   -----------    -----------    -----------
Net income (loss)               $       179    $       282   $       134    $      (352)   $       243
                                ===========    ===========   ===========    ===========    ===========




10



Rotary Gas Systems Operations

         Revenue  from  outside  sources  decreased  $52,000 or 7% for the three
months ended June 30, 2003,  as compared to the same period ended June 30, 2002.
Because our  products  are  custom-built,  fluctuations  in revenue from outside
sources are expected.  This decrease was mainly the result of a reduction in the
sale of flare units to third parties.

         The gross margin percentage decreased to 37% for the three months ended
June 30, 2003,  as compared to 58% for the same period ended June 30, 2002.  The
cost of revenue is  comprised of expenses  associated  with  service,  parts and
manufacturing  expenses.  This  decrease  resulted  mainly  from a change in the
product-mix.

         Selling,  general and  administrative  expense increased 26% or $51,000
for the three months  ended June 30, 2003,  as compared to the same period ended
June 30, 2002. This was mainly the result of the addition of new salesmen in the
Farmington,  New Mexico and West Texas areas. Depreciation expense increased 20%
from $30,000 for the three  months ended June 30, 2002,  to $36,000 for the same
period  ended June 30,  2003.  This  increase  was mainly due to the purchase of
additional service vehicles, shop and office equipment.

         There was a slight  decrease in interest  expense for the three  months
ended June 30, 2003, as compared to the same period ended June 30, 2002,  mainly
due to the reduction in loan balances on vehicles.

NGE Leasing Operations

         Revenue from our rental of natural gas  compressors  increased 116% for
the three months  ended June 30,  2003,  as compared to the same period in 2002.
This  increase is the result of the revenue from units added to our rental fleet
and also  additional  revenue  recognized  from the sale of our irrigation  pump
engines.

         The gross  margin  percentage  increased  from 71% for the three months
ended  June 30,  2002,  to 76% the same  period in 2003.  This  increase  mainly
resulted from the sale of the irrigation pump engines mentioned above and slight
reduction in the maintenance expenses associated with the compressor units.

         Selling,  general and administrative expense increased from $42,000 for
the three months  ended June 30,  2002,  to $45,000 for the same period in 2003.
This was mainly the result of an increase in sales  commissions due to increased
rental revenue.

         Depreciation expense increased 109% from $103,000, for the three months
ended June 30, 2002 to $215,000 for the three  months ended June 30, 2003.  This
increase  was the result of new gas  compressor  rental units being added to the
rental fleet during the period.

         There was an increase in interest  expense  from  $96,000 for the three
months ended June 30, 2002, to $124,000 for the same period ended June 30, 2003.
This is mainly a result of an increase  in bank debt used to purchase  equipment
for the rental fleet.

Great Lakes Compression

         Revenue  increased  8% for the three  months  ended June 30,  2003,  as
compared to the same period in 2002. This increase was the result of an increase
in maintenance, labor and parts sales to third parties.



11



         The gross  margin  percentage  increased  from 42% for the three months
ended June 30, 2002, to 45% for the same period in 2003.  The cost of revenue is
comprised of expenses  associated  with the  maintenance  of the gas  compressor
rental  activity,  service,  parts and  manufacturing  expenses.  This  increase
resulted mainly from a change in the sales product mix.

         Selling,  general and administrative expense increased from $65,000 for
the three months  ended June 30,  2002,  to $70,000 for the same period in 2003.
This is mainly the result of an increase in selling expense.

         Depreciation expense increased from $140,000 for the three months ended
June 30, 2002, to $161,000 for the same period ended June 30, 2003. The increase
is the result of equipment that was added to the rental fleet.

         There was a decrease in interest  expense  from  $156,000 for the three
months ended June 30, 2002,  to $44,000 for the same period ended June 30, 2003.
This decrease  resulted from a reduction of the debt owed to Dominion  Michigan.
Part of the proceeds from our initial public offering was used to reduce debt in
the  amount  of  $3,452,464  and our bank  financed  the  remaining  balance  of
$3,500,000 at a more favorable interest rate.


         Natural Gas Services Group

         Selling, general and administrative expense increased 65% from $139,000
for the three months ended June 30, 2002,  to $230,000 for the same period ended
June 30,  2003.  This was  mainly  the  result of an added  expense  for being a
publicly held company such as legal fees, auditor fees,  underwriters and public
relations fees.

         Amortization  and depreciation  expense  decreased 36% from $11,000 for
the three months  ended June 30, 2002,  to $7,000 for the same period ended June
30, 2003.  This mainly resulted from vehicles that were moved to our subsidiary,
Great Lakes Compression.

         Interest expense  decreased 55% from $11,000 for the three months ended
June 30, 2002, to $5,000 for the same period ended June 30, 2003.  This decrease
resulted  from a reduction in the interest  rate and for bank notes for vehicles
moved to our subsidiary.

         Provision  for income tax is  accounted  for on a  consolidated  basis.
Therefore, the tax for all companies is included in the provision for income tax
for Natural Gas Services  Group,  Inc. Income tax expense  increased  $47,000 or
25%,  which is consistent  with and pursuant to changes in state and federal tax
statutes. This increase is mainly due to an increase in income before taxes.


Item 3.  Controls and Procedures

         (a) Evaluation of disclosure controls and procedures.

         Under the  supervision  and with the  participation  of our management,
including our chief executive officer and chief financial officer,  we evaluated
the  effectiveness  of the design and operation of our  disclosure  controls and
procedures  (as defined in Rule 13a-14(c)  under the Securities  Exchange Act of
1934) as of a date (the  "Evaluation  Date")  within 90 days prior to the filing
date of this report. Based upon that evaluation, our chief executive officer and
chief  financial  officer  concluded  that,  as  of  the  Evaluation  Date,  our
disclosure  controls and procedures are effective in timely alerting them to the
material information relating to us and our consolidated  subsidiaries  required
to be included in our periodic filings with the SEC.



12



         (b) Changes in internal controls.

         There were no significant  changes made in our internal controls during
the period  covered by this report or, to our  knowledge,  in other factors that
could  significantly  affect  these  controls  subsequent  to the  date of their
evaluation.



PART II - OTHER INFORMATION



Item 2. Changes in Securities and Use of Proceeds

         (c) During the three  months  ended  June 30,  2003,  holders of 24,000
shares of our outstanding 10% Convertible Series A Preferred Stock converted the
shares into 24,000 shares of our common stock. There was no underwriter involved
in the transactions.  The shares of our common stock were all issued in reliance
upon the exemption  contained in Section 4(2) of the  Securities Act of 1933, as
amended,  because all of the persons were  accredited  investors and appropriate
restrictive  legends were placed on the certificates unless the shares were sold
pursuant to the provisions of Rule 144.

         (d)  On  October  21,  2002,  our  Registration   Statement  (File  No.
333-88314) was declared effective.

         Since October 21, 2002, we have incurred an aggregate of approximately
$1,345,830 of expenses in connection with the offering, including underwriting
discounts ($708,750), expenses paid to or for the underwriter ($157,500), and
other expenses of the offering ($479,680). Such amounts were not paid directly
or indirectly to the directors, the officers or to persons owning 10% or more of
any class of our equity securities or to our affiliates. Rather, such payments
were to others. After deducting the total expenses, we received net offering
proceeds of approximately $6,529,170. Through June 30, 2003, the net offering
proceeds have been used for:

         o        $3,458,464 to reduce indebtedness;

         o        $2,577,870 for the  manufacture of gas  compressors  placed in
                  our rental fleet and

         o        $492,836 in temporary investments - Bank Money Market Account.



























13



Item 4.  Submission of Matters to a Vote of Security Holders

         On June 18, 2003, we held our Annual  Meeting of  Shareholders.  At the
Annual Meeting of Shareholders, Richard L. Yadon was elected for a term expiring
at the Annual Meeting of  Shareholders to be held in 2004, Gene A. Strasheim was
elected for a term expiring at the Annual Meeting of  Shareholders to be held in
2005, and James T. Grigsby and Scott W. Sparkman were elected for terms expiring
at the Annual Meeting of  Shareholders  to be held in 2006. The terms of Charles
G. Curtis,  Wallace O. Sellers and Wayne L. Vinson as directors  continued after
the Annual Meeting of  Shareholders  until the Annual  Meetings of  Shareholders
held in 2005, 2005 and 2004, respectively.

          Voting for Richard L. Yadon

         For:     4,680,928      Withheld:        25       Abstentions:      -0-
         ----                    ---------                 -------------

         Voting for Gene A. Strasheim

         For:     4,680,928      Withheld:        25       Abstentions:      -0-
         ----                    ---------                 ------------

          Voting for James T. Grisgby

         For:     4,680,928      Withheld:        25       Abstentions:      -0-
         ----                    ---------                 ------------

         Voting for Scott W. Sparkman

         For:     4,680,928      Withheld:        25       Abstentions:      -0-
         ----                    ---------                 ------------

         Also, at the Annual Meeting of Shareholders  held on June 18, 2003, the
shareholders adopted an amendment to the Articles of Incorporation to reduce the
number of designated  shares of 10% Convertible  Series A Preferred  Stock.  The
votes were as follows:

         For: 3,431,554  Against: 25  Abstentions: 71,150  Broker Non-Votes: -0-
         ----            --------     ------------         -----------------






















14



                        NATURAL GAS SERVICES GROUP, INC.

Commission File Number:  1-31398
Quarter Ended June 30, 2003
Form 10-QSB

Item 6.  Exhibits and Reports on Form 8-K
(a)      Exhibits

         2.1      Purchase and Sale Agreement by and between Hy-Bon  Engineering
                  Company,  Inc.  and NGE  Leasing,  Inc.  (previously  filed as
                  Exhibit 2.1 to Natural Gas Services Group, Inc. Current Report
                  on Form 8-K  filed on March 6,  2003,  File No.  1-31398,  and
                  incorporated herein by reference)

         3.1      Articles of Amendment to the Articles of  Incorporation  filed
                  on June 19, 2003

         10.1     First Amended and Restated Loan Agreement  between Natural Gas
                  Services  Group,  Inc. and Western  National Bank  (previously
                  filed as Exhibit  10.1 to Natural  Gas  Services  Group,  Inc.
                  Current  Report on Form 8-K filed on April 14, 2003,  File No.
                  1-31398, and incorporated herein by reference)

         31.1     Certification  of Chief  Executive  Officer  Pursuant  to Rule
                  13a-14(a)

         31.2     Certification  of Chief  Financial  Officer  Pursuant  to Rule
                  13a-14(a)

         32.1     Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section 1350

         32.2     Certification of Chief Financial Officer Pursuant to 18 U.S.C.
                  Section 1350

(b)      Reports on Form 8-K
                  On April 14, 2003, we filed a Current Report on Form 8-K dated
                  March 27,  2003,  reporting  under  Item 5 the  closing of the
                  agreement to acquire certain  compressor  packages from Hy-Bon
                  Engineering  Company,  Inc.,  and filing the Purchase and Sale
                  Agreement and the First Amended and Restated Loan Agreement as
                  an Exhibits under Item 7.

                  On May 8,  2003,  we filed a Current  Report on Form 8-K dated
                  May 9, 2003, filing a news release as an Exhibit under Item 7.













15



SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


NATURAL GAS SERVICES GROUP, INC.


By:   /s/ Wayne L. Vinson
      -----------------------------
      Wayne L. Vinson
      President and Chief Executive
      Officer

By:   /s/ Earl R. Wait
      -----------------------------
      Earl R. Wait
      Chief Financial Officer
      And Treasurer

August 7, 2003

                                  EXHIBIT INDEX


2.1      Purchase and Sale Agreement by and between Hy-Bon Engineering  Company,
         Inc. and NGE Leasing,  Inc. (previously filed as Exhibit 2.1 to Natural
         Gas Services Group,  Inc.  Current Report on Form 8-K filed on March 6,
         2003, File No. 1-31398, and incorporated herein by reference)

3.1      Articles of Amendment to the  Articles of  Incorporation  filed on June
         19, 2003

10.1     First Amended and Restated Loan Agreement  between Natural Gas Services
         Group, Inc. and Western National Bank (previously filed as Exhibit 10.1
         to Natural Gas Services Group, Inc. Current Report on Form 8-K filed on
         April 14, 2003, File No. 1-31398, and incorporated herein by reference)

31.1     Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)

31.2     Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)

32.1     Certification of Chief Executive Officer Pursuant to 18 U.S.C.  Section
         1350

32.2     Certification of Chief Financial Officer Pursuant to 18 U.S.C.  Section
         1350


























16