On March 17, 2009, the Compensation Committee of the Board of Directors of Natural Gas Services Group, Inc. (the "Company") granted cash bonuses to each of its executive officers as follows:

                                                                          Amount of
                          Name and Position                              Cash Bonus

Stephen C. Taylor
 Chairman of the Board, President & Chief Executive Officer              $    70,125

Paul D. Hensley
 Director & Senior Vice President - Technology                           $    36,975

Earl R. Wait
 Vice President - Accounting                                             $    14,875

James R. Hazlett
 Vice President-Technical Services                                       $    22,313

The cash bonuses were granted under our incentive cash bonus program or, the "IBP," that provides guidelines for the calculation of annual non-equity incentive based compensation in the form of cash bonuses to our executives. Each year, the Compensation Committee of the Board of Directors approves the group of executives eligible to participate in the IBP and establishes target award opportunities for such executives, excluding our Chief Executive Officer, whose employment agreement provides for a target award opportunity of up to 50% of his base salary. Target award opportunities for our executives range from 20% to 50% of base salary.

In 2008, 85% of an executive officer's IBP award was based on achievement of company financial objectives relating to:

· total revenues;

· net income before taxes; and

· EBITDA. EBITDA is calculated from our audited consolidated financial statements by adding to net income, or loss, (1) amortization and depreciation expense, (2) interest expense and (3) provision for income tax expense.

Each of these three components accounts for 30% of the total company financial objective portion of the IBP. The remaining 10% of an executive officer's IBP award is based upon individual performance as evaluated by our Chief Executive Officer (except with respect to our Chief Executive Officer whose individual performance is evaluated by the Compensation Committee).

Each year, the Compensation Committee sets a target level for each component of the company financial objective portion of the IBP. The payment of awards under the IBP is based upon whether these target levels are achieved for the year. As an example, if we achieve the target levels for all components of the company financial object portion of the IBP, an executive with a base salary of $100,000 and a target award opportunity of 40% will receive a cash bonus of $40,000, assuming the executive receives the full amount (10%) of the individual performance portion of the IBP. If we do not achieve the target levels for all of the components, the target award opportunity for each executive officer is decreased by 30% for each component in which there is a shortfall. For instance, if we meet all target levels except the target level for EBITDA, the executive's award opportunity is decreased by 30%. With respect to the example described above, the award opportunity for the executive would be reduced from 40% to 28% (the target bonus of 40% multiplied by 70%) and the executive would receive a cash bonus of $28,000, assuming the executive receives the full amount of the individual performance portion of the IBP. In 2008, we met nearly all of our targets and each of our executives received no less than 85% of the maximum bonus amount they could be awarded.

In connection with the bonuses for 2008, rather than pay the entire bonus amounts in cash, our Compensation Committee elected to issue a portion of the bonus for each executive officer by an award of stock options. Thus, on March 17, 2009, as a part of the bonus earned by the employee, our Compensation Committee granted stock options to each of our executive officers as set forth below:

                                                                            Number of
                                                                               Shares
                                                                           Underlying
                          Name and Position                                    Option

Stephen C. Taylor
 Chairman of the Board, President & Chief Executive Officer               $    23,852

Paul D. Hensley
 Director & Senior Vice President - Technology                            $     6,288

Earl R. Wait
 Vice President - Accounting                                              $    11,384

James R. Hazlett
 Vice President-Technical Services                                        $     7,589

The stock options granted to the employees noted above were pursuant to the Company's 1998 Stock Option Plan, as amended. The options are not exercisable until their first anniversary date, although each option will immediately become exercisable if the employee's employment is terminated for any reason. The exercise price of the options is $7.84 per share, which was equal to the fair market value of our common stock on the date of grant. The committee believes that the options qualify as "incentive stock options" under federal tax laws and are exercisable for a term of 10 years from the date of grant, subject to the vesting requirements described above and earlier termination pursuant to the terms of the 1998 Stock Option Plan.

In addition, on March 18, 2009 the Compensation Committee also approved the grant to each of the six non-employee Directors of the Company of a regular annual stock option to purchase 2,500 shares of the Company's common stock. The six non-employee Directors of the Company include Alan A. Baker, John W. Chisholm, Charles G. Curtis, William F. Hughes, Jr., Richard L. Yadon and Gene
A. Strasheim.

The stock options granted to the non-employee Directors were pursuant to the Company's 1998 Stock Option Plan, as amended. Each stock option has an exercise price equal to $8.00 per share, which was equal to the fair market value of our common stock on the date of grant. The stock options vest in quarterly installments through 2009, and will be fully exercisable on December 31, 2009. The stock options are "nonstatutory" stock options and are exercisable for a term of 10 years from the date of grant, subject to the vesting requirements described above and earlier termination pursuant to the terms of the 1998 Stock Option Plan.

The purchase price of shares as to which an option is exercised must be paid in full at the time of exercise either in cash or by delivering to the Company shares of stock having a fair market value equal to the purchase price, or a combination of cash and stock.

(d) Exhibits

The Exhibits listed below are filed as Exhibits to this Current Report on Form 8-K.

Exhibit No.
              Description of Exhibit

10.1          Natural Gas Services Group, Inc. 1998 Stock Option Plan,
              as amended by the Board of Directors on May 9, 2006 and
              approved by the shareholders on June 20, 2006
              (Incorporated by reference to Exhibit 10.1 of the
              Registrant's Form 8-K Report dated May 9, 2006 and filed
              with the Securities and Exchange Commission on May 15,
              2006).

10.2          Form of Nonstatutory Stock Option Agreement for
              non-employee directors (Incorporated by reference to
              Exhibit 10.2 of the Registrant's Form 8-K Report dated
              May 9, 2006 and filed with the Securities and Exchange
              Commission on May 15, 2006).