Exterran Holdings and Exterran Partners Report Second Quarter 2008 Results

Exterran Holdings reported net income for the second quarter 2008 of $21.7 million, or $0.33 per share, including $31.8 million in pretax charges, or approximately $0.29 per share, for estimated cost overruns in the fabrication segment. Net income was $49.4 million, or $0.73 per share, for the first quarter 2008 and $26.1 million, or $0.71 per share, for the second quarter 2007.

Revenue was $812.2 million for the second quarter 2008 compared to $740.1 million for the first quarter 2008 and $494.5 million for the second quarter 2007. EBITDA, as adjusted (as defined below), was $166.1 million for the second quarter 2008 compared to $211.2 million for the first quarter 2008 and $124.8 million for the second quarter 2007.

The merger of Hanover Compressor Company and Universal Compression Holdings, Inc. was completed on August 20, 2007, and periods prior to the merger reflect only Hanover’s results. Merger and integration pretax charges totaled $1.5 million, or $0.01 per share, in the second quarter 2008 compared to $4.4 million, or $0.05 per share, in the first quarter 2008 and $3.1 million, or $0.05 per share, in the second quarter 2007. All share and per share amounts have been retroactively adjusted to reflect the merger conversion ratio of 0.325 shares of Exterran Holdings common stock for each share of Hanover common stock for all periods discussed or presented.

Stephen A. Snider, Exterran Holdings’ President and CEO said, “Although disappointed that profitability in the second quarter was negatively impacted by cost overruns on two international fabrication projects, we are pleased overall with the solid demand for our products and services during the first half of 2008. Second quarter results reflect sequential increases in revenue in each of our international contract operations, aftermarket services and fabrication segments. Our North American contract operations business continues to face challenges, but we believe we are making progress as costs in that segment declined in the second quarter.”

“During the second quarter, we were awarded several new international contract operations orders, more than doubling the backlog in that segment,” continued Mr. Snider. “We remain optimistic about the prospects for our business in the last half of 2008 due to healthy market conditions in North America as well as strong demand for our Total Solutions products and services throughout Latin America and the Eastern Hemisphere.”

Exterran Partners, L.P. Financial Results

Exterran Partners reported revenue of $35.0 million for the second quarter 2008 compared to $35.3 million for the first quarter 2008 and $18.8 million for the second quarter 2007. Net income was $6.1 million for the second quarter 2008 compared to $6.5 million for the first quarter 2008 and $2.3 million for the second quarter 2007. EBITDA, as further adjusted (as defined below), totaled $20.3 million for the second quarter 2008 compared to $19.2 million for the first quarter 2008 and $10.4 million for the second quarter 2007. Distributable cash flow (as defined below) totaled $14.0 million both for the second quarter 2008 and first quarter 2008 and $6.9 million for the second quarter 2007.

“Exterran Partners generated strong cash flows in the second quarter,” commented Mr. Snider, Chairman, President and CEO of Exterran Partners’ general partner. “Additionally, Exterran Partners completed its previously announced acquisition of customer contracts and compressors used to provide services under those contracts from Exterran Holdings and its affiliates for approximately $247 million on July 30. As previously stated, Exterran Partners expects the transaction, which significantly increased the size of EXLP’s asset base, to be accretive to cash distributions per unit by approximately $0.15 per year. We remain very positive regarding the outlook for Exterran Partners due to the expectation of future drop-down transactions with Exterran Holdings as well as other growth opportunities.”

On July 29, 2008, Exterran Partners announced a cash distribution of $0.425 per limited partner unit for the second quarter 2008 compared to $0.425 per limited partner unit for the first quarter 2008 and $0.35 per limited partner unit for the second quarter 2007. The aggregate amount of the cash distributions to all unitholders increased to $8.3 million for the second quarter 2008 as compared to $7.3 million for the first quarter 2008 as a result of units issued to Exterran Holdings in conjunction with the acquisition completed on July 30.

Conference Call Details

Exterran Holdings, Inc. (NYSE:EXH – News) and Exterran Partners, L.P. (NASDAQ:EXLP – News) announce the following schedule and teleconference information for their second quarter 2008 earnings release:

* Teleconference: Wednesday, August 6, 2008 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To access the call, United States and Canadian participants should dial 866-454-4205. International participants should dial 913-312-0635 at least 10 minutes before the scheduled start time. Please reference Exterran conference call number 9006649.
* Live Webcast: The webcast will be available in listen-only mode via the Companies’ website: www.exterran.com.
* Webcast Replay: For those unable to participate, a replay will be available from 2:00 p.m. Eastern Time on Wednesday, August 6, until 2:00 p.m. Eastern Time on Wednesday, August 13, 2008. To listen to the replay, please dial 888-203-1112 in the United States and Canada, or 719-457-0820 internationally, and enter access code 9006649.

With respect to Exterran Holdings, EBITDA, as adjusted, a non-GAAP measure, is defined as income from continuing operations plus income taxes, interest expense (including debt extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, merger and integration expenses, minority interest, excluding non-recurring items, and extraordinary gains or losses.

With respect to Exterran Partners, EBITDA, as further adjusted, a non-GAAP measure, is defined as net income plus income taxes, interest expense, depreciation expense, non-cash selling, general and administrative expenses and any amounts by which cost of sales and selling, general and administrative costs are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes, and excluding non-recurring items.

With respect to Exterran Partners, distributable cash flow, a non-GAAP measure, is defined as net income plus depreciation expense, non-cash selling, general and administrative expenses, interest expense and any amounts by which cost of sales and selling, general and administrative costs are reduced as a result of caps on these costs contained in the omnibus agreement to which Exterran Holdings and Exterran Partners are parties (the “Omnibus Agreement”), which amounts are treated as capital contributions from Exterran Holdings for accounting purposes, less cash interest expense and maintenance capital expenditures, and excluding gains/losses on asset sales and non-recurring items.

With respect to Exterran Holdings, Gross Margin, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense).

With respect to Exterran Partners, Gross Margin, as adjusted, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation expense) plus any amounts by which cost of sales are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes.

About Exterran Holdings and Exterran Partners

Exterran Holdings, Inc. is a global market leader in full service natural gas compression and a premier provider of operations, maintenance, service and equipment for oil and gas production, processing and transportation applications. Exterran Holdings serves customers across the energy spectrum — from producers to transporters to processors to storage owners. Headquartered in Houston, Texas, Exterran and its over 10,000 employees have operations in more than 30 countries.

Exterran Partners, L.P. was formed by Exterran Holdings to provide natural gas contract operations services to customers throughout the United States. Exterran Holdings indirectly owns a majority interest in Exterran Partners.

For more information, visit www.exterran.com.