Exterran Report Third Quarter 2007 Results



Exterran Holdings and Exterran Partners, L.P. (NASDAQ:EXLP) reported financial results for the quarter ended September 30, 2007.

The merger of Hanover Compressor Company with Universal Compression Holdings, Inc. into the new combined company, Exterran Holdings, was completed on August 20, 2007. Hanover was the acquirer for accounting purposes and, as a result, Exterran Holdings' financial statements include Universal's results for only the last 42 days of the quarter. Periods prior to the merger reflect only Hanover's results.

Exterran Holdings reported revenue and other income of $753.5 million in the third quarter 2007, compared to $515.7 million in the second quarter 2007 and $423.8 million in the third quarter 2006. Net loss for the third quarter 2007 was $75.4 million, or a $1.55 loss per share, including pretax charges related to merger, integration and refinancing activities and asset impairments that totaled $179.9 million, or $2.37 per share.

Net income was $26.1 million, or $0.71 per share, in the second quarter 2007, including a charge for merger and integration expense of $3.1 million, or $0.05 per share. Net income was $12.3 million, or $0.37 per share, in the third quarter 2006. 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.

EBITDA, as adjusted, was $161.2 million in the third quarter 2007 compared to $125.2 million in the second quarter 2007 and $97.8 million in the third quarter 2006.

Merger, integration and asset impairment charges in the third quarter include $34.0 million for merger and integration expense, $77.3 million in charges related to the refinancing of much of Hanover's and Universal's outstanding debt, $61.9 million for fleet asset impairment charges and $6.7 million in impairment of an investment in a non-consolidated affiliate. Exterran Holdings continues to expect to achieve cost synergies of approximately $50 million on an annualized run rate basis when the integration is completed, which is expected to occur by the end of 2008. Exterran Holdings also expects ongoing interest expense savings of approximately $25 million based upon the completion of the debt refinancing and interest rate hedging activities in late September 2007.

Exterran Holdings repurchased 641,300 shares of its common stock during the third quarter, at an average price of $77.94 per share. This share repurchase of approximately $50 million was completed under the $200 million share repurchase program previously authorized by Exterran Holdings' Board of Directors.

Exterran Partners, L.P. Financial Results

Exterran Partners was renamed from Universal Compression Partners upon the completion of the merger of Hanover and Universal.

Exterran Partners reported revenue of $34.7 million and net income of $7.5 million in the third quarter 2007, compared to revenue of $18.8 million and net income of $2.3 million in the second quarter 2007. EBITDA, as further adjusted (as defined below), totaled $19.1 million in the third quarter 2007 compared to $10.4 million in the second quarter 2007. Distributable cash flow (as defined below) totaled $13.5 million in the third quarter 2007 compared to $6.9 million in the second quarter 2007.

In early July, Exterran Partners completed its previously announced acquisition of a fleet of compressor units and associated customer contracts from Exterran Holdings. The majority of the increase in Exterran Partners' results for the third quarter was a result of that acquisition. On October 30, 2007, Exterran Partners announced a cash distribution for the third quarter of $0.40 per unit, compared to a cash distribution for the second quarter of $0.35 per unit announced on July 30, 2007. This distribution increase is Exterran Partners' first since its initial public offering in October 2006. The distributable cash flow generated in the third quarter is approximately 2.0 times the amount of the cash distribution to unitholders, reflecting the strong performance of Exterran Partners in the quarter.

"Exterran Partners had a strong performance in the third quarter, driven by favorable market conditions and the completion of its previously announced acquisition of approximately 282,000 horsepower. As a result, we increased cash distributions for the third quarter by 14.3% as compared to the second quarter distribution," commented Mr. Snider, Chairman, President and CEO of Exterran Partners' general partner. "With the completion of the merger of Hanover and Universal, the fleet of additional compression assets in the United States that can be offered for sale over time to Exterran Partners from Exterran Holdings increased by approximately 2.2 million horsepower, enhancing our outlook for future growth."

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