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SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

6 Months Ended

Jun. 30, 2012

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

17. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

Exterran Energy Corp., our 100% owned subsidiary, was the original issuer of the 4.75% Notes, which Exterran Holdings, Inc. (“Parent”) had agreed to fully and unconditionally guarantee. In the second quarter of 2012, in connection with an organizational restructuring of certain of our subsidiaries, Exterran Energy Corp. distributed and assigned substantially all its assets and liabilities, including its obligations under the 4.75% Notes, to Parent. As a result, Parent became the direct obligor under the 4.75% Notes; therefore, subsidiary issuer financial information is no longer provided in this footnote.

Parent is the issuer of the 7.25% Notes. Exterran Energy Solutions, L.P., EES Leasing LLC, EXH GP LP LLC, and EXH MLP LP LLC (each a 100% owned subsidiary; together, the Guarantor Subsidiaries), have agreed to fully and unconditionally guarantee Parent’s obligations relating to the 7.25% Notes. As a result of this guarantee, we are presenting the following condensed consolidating financial information pursuant to Rule 3-10 of Regulation S-X. These schedules are presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for our share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions. The Other Subsidiaries column includes financial information for those subsidiaries that do not guarantee the 7.25% Notes.

Condensed Consolidating Balance Sheet

June 30, 2012

(In thousands)

	Parent		Guarantor Subsidiaries		Other Subsidiaries		Eliminations			Consolidation
ASSETS

Current assets	$	277	$	721,516	$	468,525	$	892		$	1,191,210
Current assets associated with discontinued operations	—		—		40,005		—			40,005
Total current assets	277		721,516		508,530		892			1,231,215
Property, plant and equipment, net	—		1,309,128		1,525,931		—			2,835,059
Investments in affiliates	1,492,092		1,395,337		—		(2,887,429		)	—
Intangible and other assets, net	35,883		42,183		152,121		(22,158		)	208,029
Intercompany receivables	991,627		91,354		567,245		(1,650,226		)	—
Long-term assets held for sale	—		—		294		—			294
Long-term assets associated with discontinued operations	—		—		29,088		—			29,088
Total long-term assets	2,519,602		2,838,002		2,274,679		(4,559,813		)	3,072,470
Total assets	$	2,519,879	$	3,559,518	$	2,783,209	$	(4,558,921	)	$	4,303,685

LIABILITIES AND EQUITY

Current liabilities	$	8,297	$	439,612	$	244,619	$	(22	)	$	692,506
Current liabilities associated with discontinued operations	—		—		13,872		—			13,872
Total current liabilities	8,297		439,612		258,491		(22		)	706,378
Long-term debt	1,160,370		—		643,536		—			1,803,906
Intercompany payables	—		1,558,872		91,354		(1,650,226		)	—
Other long-term liabilities	—		68,942		139,807		(21,244		)	187,505
Long-term liabilities associated with discontinued operations	—		—		16,341		—			16,341
Total liabilities	1,168,667		2,067,426		1,149,529		(1,671,492		)	2,714,130
Total equity	1,351,212		1,492,092		1,633,680		(2,887,429		)	1,589,555
Total liabilities and equity	$	2,519,879	$	3,559,518	$	2,783,209	$	(4,558,921	)	$	4,303,685

Condensed Consolidating Balance Sheet

December 31, 2011

(In thousands)

	Parent		Guarantor Subsidiaries		Other Subsidiaries		Eliminations			Consolidation
ASSETS

Current assets	$	94	$	562,964	$	522,193	$	12		$	1,085,263
Current assets associated with discontinued operations	—		—		38,664		—			38,664
Total current assets	94		562,964		560,857		12			1,123,927
Property, plant and equipment, net	—		1,504,399		1,430,265		—			2,934,664
Investments in affiliates	1,531,223		1,456,782		—		(2,988,005		)	—
Intangible and other assets, net	57,556		78,835		125,248		(38,788		)	222,851
Intercompany receivables	1,092,298		96,378		637,165		(1,825,841		)	—
Long-term assets associated with discontinued operations	—		—		79,220		—			79,220
Total long-term assets	2,681,077		3,136,394		2,271,898		(4,852,634		)	3,236,735
Total assets	$	2,681,171	$	3,699,358	$	2,832,755	$	(4,852,622	)	$	4,360,662

LIABILITIES AND EQUITY

Current liabilities	$	14,268	$	352,981	$	299,408	$	(12,918	)	$	653,739
Current liabilities associated with discontinued operations	—		—		16,142		—			16,142
Total current liabilities	14,268		352,981		315,550		(12,918		)	669,881
Long-term debt	1,227,399		—		545,640		—			1,773,039
Intercompany payables	—		1,705,911		119,930		(1,825,841		)	—
Other long-term liabilities	2,268		109,243		137,359		(25,858		)	223,012
Long-term liabilities associated with discontinued operations	—		—		14,688		—			14,688
Total liabilities	1,243,935		2,168,135		1,133,167		(1,864,617		)	2,680,620
Total equity	1,437,236		1,531,223		1,699,588		(2,988,005		)	1,680,042
Total liabilities and equity	$	2,681,171	$	3,699,358	$	2,832,755	$	(4,852,622	)	$	4,360,662

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended June 30, 2012

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	411,262		$	257,037		$	(37,564	)	$	630,735
Costs of sales (excluding depreciation and amortization expense)	—			315,099			158,865			(37,564		)	436,400
Selling, general and administrative	133			45,184			48,817			—			94,134
Depreciation and amortization	—			34,278			54,631			—			88,909
Long-lived asset impairment	—			97,626			30,917			—			128,543
Restructuring charges	—			746			520			—			1,266
Interest expense	26,554			3,743			6,671			—			36,968
Other (income) expense:
Intercompany charges, net	(16,595		)	16,149			446			—			—
Equity in (income) loss of affiliates	146,205			85,477			(4,728		)	(231,682		)	(4,728		)
Other, net	10			(1,945		)	10,687			—			8,752
Loss before income taxes	(156,307		)	(185,095		)	(49,789		)	231,682			(159,509		)
Provision for (benefit from) income taxes	(3,699		)	(38,890		)	7,087			—			(35,502		)
Loss from continuing operations	(152,608		)	(146,205		)	(56,876		)	231,682			(124,007		)
Loss from discontinued operations, net of tax	—			—			(42,891		)	—			(42,891		)
Net loss	(152,608		)	(146,205		)	(99,767		)	231,682			(166,898		)
Less: Net loss attributable to the noncontrolling interest	—			—			14,290			—			14,290
Net loss attributable to Exterran stockholders	(152,608		)	(146,205		)	(85,477		)	231,682			(152,608		)
Other comprehensive loss attributable to Exterran stockholders	(259		)	(1,103		)	(4,391		)	5,494			(259		)
Comprehensive loss attributable to Exterran stockholders	$	(152,867	)	$	(147,308	)	$	(89,868	)	$	237,176		$	(152,867	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended June 30, 2011

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	344,033		$	421,643		$	(121,608	)	$	644,068
Costs of sales (excluding depreciation and amortization expense)	—			273,929			318,350			(121,608		)	470,671
Selling, general and administrative	207			42,953			47,290			—			90,450
Depreciation and amortization	—			39,218			51,194			—			90,412
Long-lived assets impairment	—			1,743			320			—			2,063
Interest expense	24,533			13			10,040			—			34,586
Other (income) expense:
Intercompany charges, net	(16,287		)	16,287			—			—			—
Equity in loss of affiliates	22,470			409			—			(22,879		)	—
Other, net	10			(2,453		)	(410		)	—			(2,853		)
Loss before income taxes	(30,933		)	(28,066		)	(5,141		)	22,879			(41,261		)
Benefit from income taxes	(2,907		)	(5,596		)	(5,610		)	—			(14,113		)
Loss from continuing operations	(28,026		)	(22,470		)	469			22,879			(27,148		)
Loss from discontinued operations, net of tax	—			—			(3,076		)	—			(3,076		)
Net loss	(28,026		)	(22,470		)	(2,607		)	22,879			(30,224		)
Less: Net loss attributable to the noncontrolling interest	—			—			2,198			—			2,198
Net loss attributable to Exterran stockholders	(28,026		)	(22,470		)	(409		)	22,879			(28,026		)
Other comprehensive income attributable to Exterran stockholders	5,451			7,428			4,640			(12,068		)	5,451
Comprehensive income (loss) attributable to Exterran stockholders	$	(22,575	)	$	(15,042	)	$	4,231		$	10,811		$	(22,575	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Six Months Ended June 30, 2012

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	741,253		$	604,614		$	(99,891	)	$	1,245,976
Costs of sales (excluding depreciation and amortization expense)	—			572,219			389,531			(99,891		)	861,859
Selling, general and administrative	341			94,535			94,097			—			188,973
Depreciation and amortization	—			70,541			103,479			—			174,020
Long-lived asset impairment	—			100,542			32,123			—			132,665
Restructuring charges	—			2,948			1,365			—			4,313
Interest expense	55,237			6,796			12,926			—			74,959
Other (income) expense:
Intercompany charges, net	(33,870		)	30,951			2,919			—			—
Equity in (income) loss of affiliates	132,903			47,656			(42,067		)	(180,559		)	(42,067		)
Other, net	20			(3,996		)	6,633			—			2,657
Income (loss) before income taxes	(154,631		)	(180,939		)	3,608			180,559			(151,403		)
Provision for (benefit from) income taxes	(7,518		)	(48,036		)	19,709			—			(35,845		)
Loss from continuing operations	(147,113		)	(132,903		)	(16,101		)	180,559			(115,558		)
Loss from discontinued operations, net of tax	—			—			(44,053		)	—			(44,053		)
Net loss	(147,113		)	(132,903		)	(60,154		)	180,559			(159,611		)
Less: Net loss attributable to the noncontrolling interest	—			—			12,498			—			12,498
Net loss attributable to Exterran stockholders	(147,113		)	(132,903		)	(47,656		)	180,559			(147,113		)
Other comprehensive income (loss) attributable to Exterran stockholders	6,269			4,053			(3,160		)	(893		)	6,269
Comprehensive loss attributable to Exterran stockholders	$	(140,844	)	$	(128,850	)	$	(50,816	)	$	179,666		$	(140,844	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Six Months Ended June 30, 2011

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Revenues	$	—		$	640,367		$	810,907		$	(200,278	)	$	1,250,996
Costs of sales (excluding depreciation and amortization expense)	—			506,905			587,251			(200,278		)	893,878
Selling, general and administrative	397			88,120			91,358			—			179,875
Depreciation and amortization	—			77,695			100,916			—			178,611
Long-lived asset impairment	—			1,743			320			—			2,063
Interest (income) expense	49,902			(542		)	22,396			—			71,756
Other (income) expense:
Intercompany charges, net	(32,506		)	32,506			—			—			—
Equity in loss of affiliates	46,559			3,661			—			(50,220		)	—
Other, net	20			(5,426		)	2,476			—			(2,930		)
Income (loss) before income taxes	(64,372		)	(64,295		)	6,190			50,220			(72,257		)
Provision for (benefit from) income taxes	(6,316		)	(17,736		)	6,472			—			(17,580		)
Loss from continuing operations	(58,056		)	(46,559		)	(282		)	50,220			(54,677		)
Loss from discontinued operations, net of tax	—			—			(6,011		)	—			(6,011		)
Net loss	(58,056		)	(46,559		)	(6,293		)	50,220			(60,688		)
Less: Net loss attributable to the noncontrolling interest	—			—			2,632			—			2,632
Net loss attributable to Exterran stockholders	(58,056		)	(46,559		)	(3,661		)	50,220			(58,056		)
Other comprehensive income attributable to Exterran stockholders	28,671			28,317			22,543			(50,860		)	28,671
Comprehensive income (loss) attributable to Exterran stockholders	$	(29,385	)	$	(18,242	)	$	18,882		$	(640	)	$	(29,385	)

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2012

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Cash flows from operating activities:
Net cash provided by (used in) continuing operations	$	2,324		$	(11,787	)	$	62,067		$	—		$	52,604
Net cash provided by discontinued operations	—			—			1,123			—			1,123
Net cash provided by (used in) operating activities	2,324			(11,787		)	63,190			—			53,727
Cash flows from investing activities:
Capital expenditures	—			(143,969		)	(83,885		)	—			(227,854		)
Contract operations acquisition	—			77,415			(77,415		)	—			—
Proceeds from sale of property, plant and equipment	—			7,719			18,314			—			26,033
Capital distributions received from consolidated subsidiaries	—			15,043			—			(15,043		)	—
Increase in restricted cash	—			—			(162		)	—			(162		)
Return of investments in non-consolidated affiliates	—			—			42,291			—			42,291
Cash invested in non-consolidated affiliates	—			—			(224		)	—			(224		)
Investment in consolidated subsidiaries	—			(16,552		)	—			16,552			—
Net cash used in continuing operations	—			(60,344		)	(101,081		)	1,509			(159,916		)
Net cash used in discontinued operations	—			—			(973		)	—			(973		)
Net cash used in investing activities	—			(60,344		)	(102,054		)	1,509			(160,889		)
Cash flows from financing activities:
Proceeds from borrowings of long-term debt	570,000			—			609,000			—			1,179,000
Repayments of long-term debt	(541,650		)	—			(616,454		)	—			(1,158,104		)
Payments for debt issue costs	—			—			(549		)	—			(549		)
Net proceeds from the sale of Partnership units	—			—			114,530			—			114,530
Proceeds from stock issued pursuant to our employee stock purchase plan	888			—			—			—			888
Purchases of treasury stock	(1,842		)	—			—			—			(1,842		)
Stock-based compensation excess tax benefit	208			—			—			—			208
Distributions to noncontrolling partners in the Partnership	—			—			(42,060		)	15,043			(27,017		)
Net proceeds from sale of general partner units	—			—			2,426			(2,426		)	—
Captial contribution received from consolidated subsidiaries	—			—			14,126			(14,126		)	—
Borrowings (repayments) between consolidated subsidiaries, net	(29,744		)	69,909			(40,165		)	—			—
Net cash provided by financing activities	(2,140		)	69,909			40,854			(1,509		)	107,114
Effect of exchange rate changes on cash and cash equivalents	—			—			(476		)	—			(476		)
Net increase (decrease) in cash and cash equivalents	184			(2,222		)	1,514			—			(524		)
Cash and cash equivalents at beginning of year	93			2,810			19,000			—			21,903
Cash and cash equivalents at end of year	$	277		$	588		$	20,514		$	—		$	21,379

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2011

(In thousands)

	Parent			Guarantor Subsidiaries			Other Subsidiaries			Eliminations			Consolidation
Cash flows from operating activities:
Net cash provided by (used in) continuing operations	$	(471	)	$	(19,552	)	$	13,155		$	—		$	(6,868	)
Net cash provided by discontinued operations	—			—			1,990			—			1,990
Net cash provided by (used in) operating activities	(471		)	(19,552		)	15,145			—			(4,878		)
Cash flows from investing activities:
Capital expenditures	—			(56,592		)	(47,710		)	—			(104,302		)
Contract operations acquisition	—			62,217			(62,217		)	—			—
Proceeds from sale of property, plant and equipment	—			6,105			24,528			—			30,633
Capital distributions received from consolidated subsidiaries	—			16,392			—			(16,392		)	—
Increase in restricted cash	—			—			184			—			184
Investment in consolidated subsidiaries	—			(20,645		)	—			20,645			—
Return on investment in consolidated subsidiaries	87,419			—			87,419			(174,838		)	—
Net cash provided by (used in) continuing operations	87,419			7,477			2,204			(170,585		)	(73,485		)
Net cash used in discontinued operations	—			—			(1,269		)	—			(1,269		)
Net cash provided by (used in) investing activities	87,419			7,477			935			(170,585		)	(74,754		)
Cash flows from financing activities:
Proceeds from borrowings of long-term debt	528,740			—			474,669			—			1,003,409
Repayments of long-term debt	(655,824		)	—			(549,434		)	—			(1,205,258		)
Payments for debt issue costs	—			—			(980		)	—			(980		)
Net proceeds from the sale of Partnership units	—			162,236			127,672			—			289,908
Proceeds from stock options exercised	487			—			—			—			487
Proceeds from stock issued pursuant to our employee stock purchase plan	940			—			—			—			940
Purchases of treasury stock	(2,415		)	—			—			—			(2,415		)
Stock-based compensation excess tax benefit	816			—			—			—			816
Distributions to noncontrolling partners in the Partnership	—			—			(32,233		)	16,392			(15,841		)
Net proceeds from sale of general partner units	—			—			1,316			(1,316		)	—
Capital distributions to affiliates	—			(87,419		)	(87,419		)	174,838			—
Captial contribution received from consolidated subsidiaries	—			—			19,329			(19,329		)	—
Borrowings (repayments) between consolidated subsidiaries, net	40,283			(61,146		)	20,863			—			—
Net cash provided by (used in) financing activities	(86,973		)	13,671			(26,217		)	170,585			71,066
Effect of exchange rate changes on cash and cash equivalents	—			—			(1,012		)	—			(1,012		)
Net increase (decrease) in cash and cash equivalents	(25		)	1,596			(11,149		)	—			(9,578		)
Cash and cash equivalents at beginning of year	160			1,586			42,615			—			44,361
Cash and cash equivalents at end of year	$	135		$	3,182		$	31,466		$	—		$	34,783