10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission File Numbers:	001-15843
	333-48279

UNIVERSAL COMPRESSION HOLDINGS, INC.
UNIVERSAL COMPRESSION, INC.

(Exact name of registrants as specified in their charters)

DELAWARE	13-3989167
TEXAS	74-1282680
(States or Other Jurisdictions of	(I.R.S. Employer Identification Nos.)
Incorporation or Organization)
4444 BRITTMOORE ROAD
HOUSTON, TEXAS	77041
(Address of Principal Executive Offices)	(Zip Code)

(713) 335-7000

(Registrants’ telephone number, including area code)

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrants are accelerated filers (as defined in Rule 12b-2 of the Exchange Act).

Yes ý  No o  (Universal Compression Holdings, Inc.)

Yes o No ý  (Universal Compression, Inc.)

                    Indicate by check mark whether the registrants are a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ý

UNIVERSAL COMPRESSION, INC. MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.

As of November 1, 2005, there were 32,252,732 shares of Universal Compression Holdings, Inc.’s common stock, $0.01 par value, outstanding and 4,910 shares of Universal Compression, Inc.’s common stock, $10.00 par value, outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

UNIVERSAL COMPRESSION HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

	September 30, 2005			March 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	26,979		$		38,723
Restricted cash	4,801			—
Accounts receivable, net of allowance for bad debts of $3,614 and $2,747 as of September 30, 2005 and March 31, 2005, respectively	103,089			116,270
Current portion of notes receivable	101			129
Inventories, net of reserve for obsolescence of $11,823 and $10,981 as of September 30, 2005 and March 31, 2005, respectively	106,242			95,394
Deferred income taxes	6,138			6,138
Other	12,572			13,206
Total current assets	259,922			269,860
Contract compression equipment	1,538,797			1,485,637
Other property	163,625			141,114
Accumulated depreciation and amortization	(351,960		)	(300,968			)
Net property, plant and equipment	1,350,462			1,325,783
Goodwill	402,881			401,278
Notes receivable	1,090			1,038
Other assets	26,126			24,799
Total assets	$	2,040,481		$	2,022,758
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, trade	$	44,199		$	57,942
Accrued liabilities	42,684			37,862
Unearned revenue	31,686			32,201
Accrued interest	5,908			5,619
Current portion of long-term debt and capital lease obligations	25,200			20,400
Total current liabilities	149,677			154,024
Capital lease obligations	305			347
Long-term debt	793,141			837,349
Deferred income taxes	176,051			158,017
Derivative financial instruments used for hedging purposes	5,486			6,283
Other liabilities	7,216			5,066
Total liabilities	1,131,876			1,161,086
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock	323			320
Treasury stock	(11		)	(11			)
Additional paid-in capital	757,903			751,898
Deferred compensation	(6,611		)	(7,438			)
Accumulated other comprehensive loss	(13,833		)	(18,116			)
Retained earnings	170,834			135,019
Total stockholders’ equity	908,605			861,672
Total liabilities and stockholders’ equity	$	2,040,481		$	2,022,758

See accompanying notes to unaudited consolidated financial statements.

2

UNIVERSAL COMPRESSION HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)

	Three Months Ended September 30,						Six Months Ended September 30,
	2005			2004			2005				2004
Revenue:
Domestic contract compression	$	81,964		$	73,178		$		161,636		$	144,151
International contract compression	31,076			22,872			61,376				45,617
Fabrication	28,193			57,772			84,029				115,135
Aftermarket services	39,895			38,062			81,771				71,854
Total revenue	181,128			191,884			388,812				376,757
Costs and expenses:
Domestic contract compression—direct costs	29,849			26,798			57,625				53,062
International contract compression—direct costs	8,087			5,412			15,994				10,324
Fabrication—direct costs	24,769			51,772			77,741				105,108
Aftermarket services—direct costs	31,782			30,204			64,829				56,817
Depreciation and amortization	26,439			23,123			52,072				45,796
Selling, general and administrative	21,012			18,245			41,450				36,460
Interest expense, net	13,034			16,154			25,494				32,972
Debt extinguishment costs	—			—			—				475
Gain on termination of interest rate swaps	—			—			—				(3,197			)
Foreign currency (gain) loss	(610		)	882			(1,447			)	524
Other (income) loss, net	(524		)	(56		)	(172			)	361
Total costs and expenses	153,838			172,534			333,586				338,702
Income before income taxes	27,290			19,350			55,226				38,055
Income tax expense	9,611			7,160			19,411				14,080
Net income	$	17,679		$	12,190		$		35,815		$	23,975
Weighted average common and common equivalent shares outstanding:
Basic	31,902			31,336			31,853				31,291
Diluted	32,836			32,045			32,749				31,981
Earnings per share—Basic	$	0.55		$	0.39		$	1.12			$		0.77
Earnings per share—Diluted	$	0.54		$	0.38		$	1.09			$		0.75

See accompanying notes to unaudited consolidated financial statements.

3

UNIVERSAL COMPRESSION HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

	Six Months Ended September 30,
	2005			2004
Cash flows from operating activities:
Net income	$	35,815		$	23,975
Adjustments to reconcile net income to cash provided by operating activities, net of effect of acquisitions:
Depreciation and amortization	52,072			45,796
Non-cash gain from interest rate swap settlement	—			(3,197		)
Loss on early extinguishment of debt	—			475
(Gain) loss on asset sales	(169		)	303
Amortization of debt issuance costs	1,151			2,139
Amortization of deferred compensation	938			434
Deferred taxes provision	15,221			8,904
(Increase) decrease in receivables	14,341			(16,199		)
Increase in inventories	(10,848		)	(474		)
Increase (decrease) in accounts payables	(13,743		)	4,373
Increase (decrease) in accrued liabilities	5,144			(2,126		)
Decrease in unearned revenue	(515		)	(8,598		)
Increase (decrease) in accrued interest	289			(1,015		)
Decrease in other current assets and liabilities, net	1,036			3,514
Other	(913		)	(3,604		)
Net cash provided by operating activities	99,819			54,700
Cash flows from investing activities:
Additions to property, plant and equipment	(80,528		)	(59,585		)
Proceeds from sale of property, plant and equipment	8,276			4,659
Increase in restricted cash	(4,801		)	—
Cash paid for acquisitions, net of cash acquired	—			(3,099		)
Net cash used in investing activities	(77,053		)	(58,025		)
Cash flows from financing activities:
Principal repayments of long-term debt	(40,040		)	(99,238		)
Borrowings under revolving credit facility	—			12,000
Debt extinguishment premium and costs	—			(400		)
Interest rate swap settlement	—			(3,067		)
Proceeds from common stock issuance	5,087			2,537
Payments on capital lease agreements	(407		)	(1,294		)
Net cash used in financing activities	(35,360		)	(89,462		)
Effect of exchange rate changes on cash and cash equivalents	850			317
Net decrease in cash and cash equivalents	(11,744		)	(92,470		)
Cash and cash equivalents at beginning of period	38,723			121,189
Cash and cash equivalents at end of period	$	26,979		$	28,719

See accompanying notes to unaudited consolidated financial statements.

4

UNIVERSAL COMPRESSION, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

	September 30, 2005			March 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	26,979		$		38,723
Restricted cash	4,801			—
Accounts receivable, net of allowance for bad debts of $3,614 and $2,747 as of September 30, 2005 and March 31, 2005, respectively	103,089			116,270
Current portion of notes receivable	101			129
Inventories, net of reserve for obsolescence of $11,823 and $10,981 as of September 30, 2005 and March 31, 2005, respectively	106,242			95,394
Deferred income taxes	6,138			6,138
Other	12,572			13,206
Total current assets	259,922			269,860
Contract compression equipment	1,538,797			1,485,637
Other property	163,625			141,114
Accumulated depreciation and amortization	(351,960		)	(300,968			)
Net property, plant and equipment	1,350,462			1,325,783
Goodwill	402,881			401,278
Notes receivable	1,090			1,038
Other assets	26,126			24,799
Total assets	$	2,040,481		$	2,022,758
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable, trade	$	44,199		$	57,942
Accrued liabilities	42,684			37,862
Unearned revenue	31,686			32,201
Accrued interest	5,908			5,619
Current portion of long-term debt and capital lease obligations	25,200			20,400
Total current liabilities	149,677			154,024
Capital lease obligations	305			347
Long-term debt	793,141			837,349
Deferred income taxes	176,051			158,017
Derivative financial instruments used for hedging purposes	5,486			6,283
Other liabilities	7,216			5,066
Total liabilities	1,131,876			1,161,086
Commitments and contingencies (Note 8)
Stockholder’s equity:
Common stock	49			49
Additional paid-in capital	744,128			737,293
Accumulated other comprehensive loss	(13,833		)	(18,116			)
Retained earnings	178,261			142,446
Total stockholder’s equity	908,605			861,672
Total liabilities and stockholder’s equity	$	2,040,481		$	2,022,758

See accompanying notes to unaudited consolidated financial statements.

5

UNIVERSAL COMPRESSION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(unaudited)

	Three Months Ended September 30,							Six Months Ended September 30,
	2005				2004			2005			2004
Revenue:
Domestic contract compression	$		81,964		$	73,178		$	161,636		$	144,151
International contract compression	31,076				22,872			61,376			45,617
Fabrication	28,193				57,772			84,029			115,135
Aftermarket services	39,895				38,062			81,771			71,854
Total revenue	181,128				191,884			388,812			376,757
Costs and expenses:
Domestic contract compression—direct costs	29,849				26,798			57,625			53,062
International contract compression—direct costs	8,087				5,412			15,994			10,324
Fabrication—direct costs	24,769				51,772			77,741			105,108
Aftermarket services—direct costs	31,782				30,204			64,829			56,817
Depreciation and amortization	26,439				23,123			52,072			45,796
Selling, general and administrative	21,012				18,245			41,450			36,460
Interest expense, net	13,034				16,154			25,494			32,972
Debt extinguishment costs	—				—			—			475
Gain on termination of interest rate swaps	—				—			—			(3,197			)
Foreign currency (gain) loss	(610			)	882			(1,447		)	524
Other (income) loss, net	(524			)	(56		)	(172		)	361
Total costs and expenses	153,838				172,534			333,586			338,702
Income before income taxes	27,290				19,350			55,226			38,055
Income tax expense	9,611				7,160			19,411			14,080
Net income	$	17,679			$	12,190		$	35,815		$		23,975

See accompanying notes to unaudited consolidated financial statements.

6

UNIVERSAL COMPRESSION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

	Six Months Ended September 30,
	2005			2004
Cash flows from operating activities:
Net income	$	35,815		$	23,975
Adjustments to reconcile net income to cash provided by operating activities, net of effect of acquisitions:
Depreciation and amortization	52,072			45,796
Non-cash gain from interest rate swap settlement	—			(3,197		)
Loss on early extinguishment of debt	—			475
(Gain) loss on asset sales	(169		)	303
Amortization of debt issuance costs	1,151			2,139
Amortization of deferred compensation	938			434
Deferred taxes provision	15,221			8,904
(Increase) decrease in receivables	14,341			(16,199		)
Increase in inventories	(10,848		)	(474		)
Increase (decrease) in accounts payable	(13,743		)	4,373
Increase (decrease) in accrued liabilities	5,144			(2,126		)
Decrease in unearned revenue	(515		)	(8,598		)
Increase (decrease) in accrued interest	289			(1,015		)
Decrease in other current assets and liabilities, net	1,036			3,514
Other	(913		)	(3,604		)
Net cash provided by operating activities	99,819			54,700
Cash flows from investing activities:
Additions to property, plant and equipment	(80,528		)	(59,585		)
Proceeds from sale of property, plant and equipment	8,276			4,659
Increase in restricted cash	(4,801		)	—
Cash paid for acquisitions, net of cash acquired	—			(3,099		)
Net cash used in investing activities	(77,053		)	(58,025		)
Cash flows from financing activities:
Principal repayments of long-term debt	(40,040		)	(99,238		)
Borrowings under revolving credit facility	—			12,000
Debt extinguishment premium and costs	—			(400		)
Interest rate swap settlement	—			(3,067		)
Capital contributions from stockholder	5,087			2,537
Payments on capital lease agreements	(407		)	(1,294		)
Net cash used in financing activities	(35,360		)	(89,462		)
Effect of exchange rate changes on cash and cash equivalents	850			317
Net decrease in cash and cash equivalents	(11,744		)	(92,470		)
Cash and cash equivalents at beginning of period	38,723			121,189
Cash and cash equivalents at end of period	$	26,979		$	28,719

See accompanying notes to unaudited consolidated financial statements.

7

UNIVERSAL COMPRESSION HOLDINGS, INC.

UNIVERSAL COMPRESSION, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005

1.Basis of Presentation

These notes apply to the unaudited consolidated financial statements of both Universal Compression Holdings, Inc. (“Holdings”) and Universal Compression, Inc. (“Universal”). The term “Company” will be used if a statement is applicable to both Holdings and Universal; the term “Holdings” will be used if a statement refers only to Universal Compression Holdings, Inc.; and the term “Universal” will be used if a statement refers to only Universal Compression, Inc.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the year ended March 31, 2005. That report contains a more comprehensive summary of the Company’s major accounting policies. In the opinion of management, the accompanying unaudited consolidated financial statements contain all appropriate adjustments, all of which are normally recurring adjustments unless otherwise noted, considered necessary to present fairly the financial position of the Company and its consolidated subsidiaries and the results of operations and cash flows for the respective periods. Operating results for the three-month and six-month periods ended September 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2006.

Earnings per share

Net income per share, basic and diluted, is calculated for Holdings in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share.”

The only potentially dilutive securities issued by Holdings are stock options and unvested restricted stock grants, neither of which would impact the calculation of net income for dilutive earnings per share purposes.

The dilutive effect of stock options and unvested restricted stock grants outstanding for the three and six months ended September 30, 2005 was 934,000 shares and 896,000 shares, respectively.  The dilutive effect of stock options and unvested restricted stock grants outstanding for the three and six months ended September 30, 2004, was 709,000 shares and 690,000 shares, respectively.  For the three and six months ended September 30, 2005, outstanding stock options of 2,000 and 194,000 shares, respectively, were excluded from the computation of diluted earnings per share as the options’ exercise prices were greater than the average market price of the common stock for such periods.  For the three and six months ended September 30, 2004, outstanding stock options of 367,000 and 368,000 shares, respectively, were excluded from the computation of diluted earnings per share as the options’ exercise prices were greater than the average market price of the common stock for such periods.

Reclassifications

Certain reclassifications have been made to the prior period amounts to conform to the current period classification.

Stock Options

In electing to follow Accounting Principles Board (“APB”) No. 25, “Accounting for Stock Issued to Employees,” for expense recognition purposes, the Company is obligated to provide the expanded disclosures required under SFAS No. 123, “Accounting for Stock Based Compensation,” and SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS No. 123,” for stock-based compensation granted in 1998 and thereafter. In addition, if materially different from reported results, the Company is obligated to disclose pro forma net income and earnings per share had compensation expense relating to the three months and six months ended September 30, 2005 and September 30, 2004 grants been measured under the fair value recognition provisions of SFAS No. 123.

8

The following table summarizes results as if the Company had recorded compensation expense under the provisions of SFAS No. 123 for the three months and six months ended September 30, 2005 and 2004 (earnings per share information is for Holdings only) (in thousands, except per share amounts):

	Three Months Ended September 30,						Six Months Ended September 30,
	2005			2004			2005			2004
Net income, as reported	$	17,679		$	12,190		$	35,815		$	23,975
Add: Stock-based compensation for restricted stock awards included in reported net income, net of tax	285			146			609			273
Deduct: Stock-based compensation determined under the fair value method, net of tax	(1,033		)	(732		)	(2,105		)	(1,444		)
Pro forma net income	$	16,931		$	11,604		$	34,319		$	22,804
Basic earnings per share:
As reported	$	0.55		$	0.39		$	1.12		$	0.77
Pro forma	$	0.53		$	0.37		$	1.08		$	0.73
Diluted earnings per share:
As reported	$	0.54		$	0.38		$	1.09		$	0.75
Pro forma	$	0.52		$	0.36		$	1.05		$	0.71

2.  Recent Accounting Pronouncements

                In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, “Inventory Costs - an amendment of ARB 43, Chapter 4.”  SFAS No. 151 provides clarification that abnormal amounts of idle facility expense, freight, handling costs and wasted material be recognized as current period charges. In addition, SFAS No. 151 requires the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The implementation of SFAS No. 151 is not expected to have a material impact on the Company’s financial statements.

                In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.”  This statement is a revision to SFAS No. 123 and supercedes APB Opinion No. 25.  This statement requires that the compensation cost relating to share-based payment transactions be recognized in the financial statements.  That cost will be measured based on the fair value of the equity or liability instruments issued.  This statement will be effective for the Company beginning in fiscal year 2007.  See Note 1 for the pro forma impact that the adoption of SFAS No. 123R would have on the Company’s results of operations.

                In December 2004, the FASB issued SFAS No. 153,“Exchanges of Nonmonetary Assets — an amendment of APB Opinion No. 29,” to address the measurement of exchanges of nonmonetary assets.  SFAS No. 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance.  This statement was adopted by the Company beginning July 1, 2005.  The adoption of this statement had no impact on the Company’s previously issued financial statements and is not expected to have a material impact on future financial statements.

In December 2004, the FASB issued FASB Staff Position (“FSP”) No. 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, concerning the Tax Deduction on Qualified Production Activities provided for by the American Jobs Creation Act of 2004.” The American Jobs Creation Act provides for a tax deduction from income of qualified domestic production activities. FSP No. 109-1 provides for the treatment of the deduction as a “special deduction” as described in SFAS No. 109. Based upon the Company’s analysis of FSP No. 109-1, the Company does not expect to benefit from this special deduction for several more years and as such, this deduction will have no effect on existing deferred tax assets or liabilities.

In December 2004, the FASB issued FSP No. 109-2, “Accounting and Disclosure Guidance for the Foreign Repatriation Provision within the American Jobs Creation Act of 2004,” which provides guidance under SFAS No. 109 with respect to recording the potential impact of the repatriation provisions of the Act on a company’s income tax expense and deferred tax liability. FSP No. 109-2 states that a company is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS No. 109. The Company has no current plans to repatriate foreign earnings under the provisions in the Act. Any such repatriation under the Act must occur by December 31, 2005. Accordingly, the Company’s financial statements are not expected to be impacted by FSP No. 109-2.

9

In March 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143.” This statement clarifies that an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred, if the liability’s fair value can be reasonably estimated. The provisions of FIN 47 are effective January 1, 2006.  The Company does not expect the adoption of this Interpretation will have a material effect on its financial statements.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3.” SFAS No. 154 requires retrospective application to prior periods’ financial statements for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also requires that a change in depreciation, amortization, or depletion method for long-lived, non-financial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The implementation of SFAS No. 154 is not expected to have a material impact on the Company’s financial statements.

3.  Inventories, Net

Inventories, net consisted of the following (in thousands):

	September 30, 2005			March 31, 2005
Raw materials	$	66,282		$		62,599
Work-in-progress	50,047			40,560
Finished goods	1,736			3,216
Total inventories	118,065			106,375
Reserve	(11,823		)	(10,981			)
Inventories, net	$	106,242		$	95,394

4.  Long-Term Debt

                  As of September 30, 2005, the Company had approximately $818.2 million in outstanding debt obligations consisting of $398.0 million outstanding under the seven-year term loan, $171.5 million outstanding under the 7 1/4 % senior notes, $200.0 million outstanding under the asset-backed securitization lease facility (the “ABS Facility”) and $48.7 million outstanding under the revolving credit facility.

In September 2005, the Company entered into an amendment to its senior secured credit agreement (the “Amendment”).  Prior to entering into the Amendment, the senior secured credit agreement consisted of a seven-year term loan and a five-year $250.0 million revolving credit facility. The Amendment provides, among other things, that the interest rate applicable to the Company’s seven-year term loan is reduced by 0.25%, resulting in a rate of LIBOR plus 1.50%.   The borrowing capacity under the revolving credit facility was reduced by $75.0 million to $175.0 million. In addition, under the terms of the Amendment, in October 2005, $75.0 million of the Company’s outstanding revolving credit facility balance was funded to the seven-year term loan.  The additional $75.0 million of seven-year term loan will amortize over the remaining term of the original seven-year term loan.  Additionally, the Amendment increases the Company’s ability to enter into future unsecured indebtedness from $125.0 million to $200.0 million and reduces the collateral ratio required from 1.25 to 1.0 downward to 1.15 to 1.0.  The Amendment also modifies the total leverage ratio required for a redemption of Holding’s stock up to $100.0 million from 3.5 to 1.0 upward to 4.0 to 1.0.  Finally, the Amendment provides, at the Company’s option, with the prior approval of the administrative agent and subject to other stated requirements, for one or more future increases of the revolving credit facility up to a maximum of $250.0 million.

Maturities of long-term debt for the twelve months ended September 30 of the periods indicated are as follows (in thousands):

2006	$	25,099
2007	25,099
2008	25,099
2009	25,099
2010	245,339
Thereafter	472,505
Total debt	$	818,239

10

5.  Accounting for Interest Rate Swaps

                In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, all derivative instruments must be recognized on the balance sheet at fair value, and changes in such fair values are recognized in earnings unless specific hedging criteria are met. Changes in the values of derivatives that meet these hedging criteria will ultimately offset related earnings effects of the hedged item pending recognition in earnings.

                 In June 2004, the Company reduced the notional amount of the interest rate swap agreement that converts variable interest payments under the ABS Facility to fixed interest payments in connection with a debt repayment of $80.0 million.  In accordance with SFAS No. 133, the Company recorded a gain of $3.2 million to earnings that had previously been recorded in other comprehensive income as a result of the reduction in the notional amount of such interest rate swap agreement.  As of September 30, 2005, the Company had an interest rate swap agreement with a notional amount of $79.7 million related to the $200.0 million outstanding under the ABS Facility. The interest rate swap agreement terminates in February 2013 and has a fixed rate of 5.21%, resulting in a net effective fixed interest rate of 6.48% (5.21% plus the 1.27% margin applicable under the ABS Facility).  In accordance with SFAS No. 133, the Company’s balance sheet at September 30, 2005 includes a $2.1 million derivative liability related to the interest rate swap agreement.

In January 2005, the Company entered into interest rate swap agreements to convert variable interest payments related to $300 million of the seven-year term loan to fixed interest payments. These interest rate swap agreements terminate in March 2010 and have a weighted average fixed rate of 4.02%, resulting in a net effective fixed interest rate of 5.52% (4.02% plus the 1.50% margin applicable under the amended senior secured credit facility).  In accordance with SFAS No. 133, the Company’s balance sheet at September 30, 2005 includes a $4.4 million derivative asset related to these interest rate swap agreements.

                These interest rate swap agreements, which the Company has designated as cash flow hedging instruments, meet the specific hedge criteria and any changes in their fair values were recognized in accumulated other comprehensive income or loss. Because the terms of the hedged items and the interest rate swap agreements substantially coincide, the hedges are expected to exactly offset changes in expected cash flows due to fluctuations in the variable rate and, therefore, the Company currently does not expect any ineffectiveness.

               The Company has entered into interest rate swap agreements to hedge $100.0 million of its 7 1/4% senior notes.  The interest rate swap agreements are used to hedge the change in fair value of the debt and, in effect, convert the fixed interest payment to a variable interest payment based on the six-month LIBOR rate.  The swaps are accounted for in accordance with SFAS No. 133 and, as such, are recorded at fair value on the balance sheet.  The Company’s balance sheet at September 30, 2005 includes a $3.4 million derivative liability related to these interest rate swap agreements.  The change in the debt’s fair value is also recorded, with the offset being recorded to income.  The interest rate swap agreements, which the Company has designated as fair value hedging instruments, meet the specific hedge criteria and any changes in their fair values were recognized in income. For the three and six months ended September 30, 2005, the change in the debt’s fair value and the change in the interest rate swap agreements’ fair value exactly offset and did not impact net income.  Because the terms of the hedged item and the interest rate swap agreements substantially coincide, the hedge is expected to exactly offset changes in fair values due to fluctuations in the variable rate and, therefore, the Company currently does not expect any ineffectiveness.

The counterparties to the Company’s interest rate swap agreements are major international financial institutions. The Company monitors the credit quality of these financial institutions and does not expect non-performance by them.

6.  Comprehensive Income

Comprehensive income consisted of the following (in thousands):

	Three Months Ended September 30,					Six Months Ended September 30,
	2005		2004			2005			2004
Net income	$	17,679	$	12,190		$	35,815		$	23,975
Other comprehensive income, net of tax:
Interest rate swap gain (loss)	3,963		(1,852		)	(2,483		)	2,677
Cumulative translation adjustment	6,185		6,669			6,766			2,974
Comprehensive income	$	27,827	$	17,007		$	40,098		$	29,626

For the three and six months ended September 30, 2005, the change in cumulative translation adjustment is primarily related to the translation of the balance sheets for the Company’s Canada and Brazil subsidiaries.  For the three and six months ended

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September 30, 2004, the change in cumulative translation adjustment is primarily related to the translation of the balance sheets for the Company’s Canada and Argentina subsidiaries.

7.  Industry Segments

The Company has four principal business segments:  domestic contract compression, international contract compression, fabrication and aftermarket services.  The domestic contract compression segment provides natural gas compression to customers in the United States. The international contract compression segment provides natural gas compression to international customers, including those in Canada. The fabrication segment provides services related to the design, engineering and assembly of natural gas compressors for sale to third parties in addition to those that the Company uses in its contract compression fleet, as well as construction of installation projects. The aftermarket services segment sells parts and components and provides maintenance and operations services to customers who own their compression equipment or use equipment provided by other companies.  Revenue presented in the table below includes only sales to third parties.

                The Company’s reportable segments are strategic business units that offer distinct products and services. They are managed separately since each business segment requires different marketing strategies due to customer specifications. The Company evaluates the performance of its reportable segments based on segment gross profit.  Gross profit is defined as total revenue less direct costs.  The segment gross profit measure used by management for evaluation purposes excludes inter-segment transactions and, accordingly, there is no inter-segment revenue to be reported.

The following table presents unaudited revenue and gross profit by business segment (in thousands):

	Three Months Ended September 30,					Six Months Ended September 30,
	2005		2004			2005		2004
Revenue:
Domestic contract compression	$	81,964	$		73,178	$	161,636	$		144,151
International contract compression	31,076		22,872			61,376		45,617
Fabrication	28,193		57,772			84,029		115,135
Aftermarket services	39,895		38,062			81,771		71,854
Total	$	181,128	$	191,884		$	388,812	$		376,757
Gross Profit:
Domestic contract compression	$	52,115	$	46,380		$	104,011	$		91,089
International contract compression	22,989		17,460			45,382		35,293
Fabrication	3,424		6,000			6,288		10,027
Aftermarket services	8,113		7,858			16,942		15,037
Total	$	86,641	$	77,698		$	172,623	$	151,446

                 No one customer accounted for more than 10% of total revenue for any of the periods presented.

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          The table below presents unaudited revenue and gross profit by geographic location (in thousands).  The basis of attributing revenue and gross profit to specific geographic locations is primarily based upon the geographic location of the sale, service or where the assets are utilized.

	Three Months Ended September 30,					Six Months Ended September 30,
	2005		2004			2005					2004
Revenue:
United States	$	128,001	$		138,586	$			268,523		$	265,677
Canada	21,360		21,922			40,998					40,979
Latin America	25,573		21,616			63,274					43,712
Asia Pacific	6,194		9,760			16,017					26,389
Total	$	181,128	$		191,884	$				388,812	$	376,757
Gross Profit:
United States	$	60,073	$		55,612	$	119,387				$	107,684
Canada	6,235		4,827			12,878					9,416
Latin America	16,900		13,941			33,329					28,009
Asia Pacific	3,433		3,318			7,029					6,337
Total	$	86,641	$	77,698		$		172,623			$	151,446

8.  Commitments and Contingencies

                In the ordinary course of business, the Company is involved in various pending or threatened legal actions. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions will not have a material adverse effect on the Company’s financial position, operating results or cash flows.

                In December 1999, Weatherford Global sold the assets and properties of its Gemini compressor business in Corpus Christi, Texas to GE Packaged Power, L.P., (“GEPP”). As part of that sale, Weatherford Global entered into an agreement to purchase from GEPP $38.0 million of compressor components over five years and $3.0 million of parts over three years, and GEPP agreed to provide compressors to Weatherford Global during that time period at negotiated prices. The Company assumed this obligation in connection with our acquisition of Weatherford Global in February 2001. As of September 30, 2005, approximately $26.7 million of components and approximately $18.5 million of parts have been purchased from GEPP. As a result of GEPP product performance issues, we have been unable to satisfy and have not satisfied in full our purchase commitment in respect of components under this agreement with GEPP.  The unsatisfied portion of the purchase commitment is approximately $11.3 million.  GEPP could assert its right to enforce this obligation, but has not indicated any intention to do so at this time.  However, if GEPP should seek to enforce this obligation, we believe we have valid defenses and counter claims and would aggressively defend against such enforcement and pursue such counter claims.

                In the quarter ended September 30, 2005, our operations were impacted by the two major hurricanes that entered the Gulf of Mexico (Hurricanes Katrina and Rita).  Of our 2.5 million horsepower worldwide contract compression fleet, 394 units totaling 212,000 horsepower were located in the paths taken by these hurricanes.  To date, the Company has discovered that eight units totaling approximately 5,200 horsepower have been lost due to the hurricanes, but it is reasonable to expect that the Company will find that additional units were lost or damaged once our on-going inspection process is completed.  The Company’s southern Louisiana-area aftermarket services locations suffered what is currently estimated to be minimal damage.  The Company will continue to assess the impact of Hurricanes Katrina and Rita on its operations as additional information becomes available.

The Company maintains insurance coverage of up to $50 million for windstorm, property and flood damage.  The deductible for windstorm damage under the Company’s insurance coverage is $1 million per named storm.  In addition, most of our contract compression contracts with customers provide that the customer is responsible for loss of or damage to equipment caused by windstorms and floods and require the customer to maintain physical loss insurance for the replacement cost of the equipment.  Of the eight units known to be lost at this time, the customers are responsible for maintaining the physical loss insurance.  There are a total of twelve units, of the 394 units in the hurricanes path, on which the Company is responsible for carrying the physical loss insurance that have incurred some damage (nine units with a net book value of $0.9 million) or that we have been unable to access to determine if any damage has occurred (three units with a net book value of $0.4 million).  We are unable at this time to estimate the cost of repairing these units.  The Company currently believes that the impact of these hurricanes will not have a material adverse

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impact on its results of operations, financial condition or cash flows.  However, the Company’s investigation of the scope of loss or damage to its contract compression fleet that was located in the path of the hurricanes is not complete.

                The Company has no other commitments or contingent liabilities, which, in the judgment of management, would result in losses that would materially affect its consolidated financial position, operating results or cash flows.

9.  Subsequent Events

On October 28, 2005, the Company completed the planned restructuring of the ABS Facility and added a $25.0 million revolving warehouse facility, increasing the total borrowing capacity to $225.0 million (the “2005 ABS Facility”). The issuer of the 2005 ABS Facility notes is UCO Compression 2005 LLC, a wholly-owned subsidiary of the Company.  The notes will amortize based on the revenues of the secured assets, which is expected to be based on a fourteen-year amortization.  Under the 2005 ABS Facility, the outstanding balance is subject to a variable interest rate based on one-month LIBOR plus 0.74%. The agreement requires 90% of the outstanding balance to be subject to interest rate swap agreements within 30 days after the closing of the transaction.

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ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The terms “our,” “Company,” “we” and “us” when used in this report refer to Universal Compression Holdings, Inc. (“Holdings”) and Universal Compression, Inc. (“Universal”).

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

                This report contains “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this report are forward-looking statements, including, without limitation, statements regarding future financial position, business strategy, proposed acquisitions, budgets, litigation, projected costs and plans and objectives of management for future operations. You can identify many of these statements by looking for words such as “believes,” “expects,” “will,” “intends,” “projects,” “anticipates,” “estimates,” “continues” or similar words or the negative thereof.

                Such forward-looking statements in this report include, without limitation:

•our business growth strategy and projected costs;

•our future financial position;

•the sufficiency of available cash flows to fund continuing operations;

•the expected amount of our capital expenditures;

•anticipated cost savings, future revenue, gross profits, EBITDA, as adjusted, and other financial or operational measures related to our business and our primary business segments; and

•plans and objectives of our management for our future operations.

                Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this report. These forward looking statements are also affected by the risk factors and forward looking statements described in our Annual Report on Form 10-K for the year ended March 31, 2005 and those set forth from time to time in our filings with the Securities and Exchange Commission (“SEC”), which are available through our website and through the SEC’s Electronic Data Gathering and Retrieval System (“EDGAR”) at http://www.sec.gov. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will prove to be correct. Important factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include, among other things:

•conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for natural gas and the impact of the price of natural gas;

•the ability of our competitors to capture market share and our ability to retain or increase our market share;

•changes in political or economic conditions in key operating markets, including international markets;

•changes in safety and environmental regulations pertaining to the production and transportation of natural gas;

•introduction of competing technologies by us or by other companies;

•our ability to retain and grow our customer base;

•our level of indebtedness and ability to fund our business;

•currency exchange rate fluctuations;

•employment workforce factors, including loss of key employees;

•liability claims related to the use of our products and services;

•our ability to implement and effect price increases for our products and services;

•our ability to manage the rising costs and availability of components and materials from our vendors;

•changes in our strategic direction;

•changes in laws or regulatory conditions in the U.S. and other countries in which we operate;

•our ability to timely, properly and cost-effectively implement our enterprise resource planning (“ERP”) system; and

•our ability to accurately make estimates and assumptions that affect the amounts reported in the financial statements and related disclosures.

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                All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report.

General

                The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements, and the notes thereto, appearing elsewhere in this report, as well as the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented in our Annual Report on Form 10-K for the fiscal year ended March 31, 2005.

Overview

General

                We provide a full range of natural gas compression services, including sales, operations, maintenance and fabrication services and products to the natural gas industry, both domestically and internationally.  Through our contract compression business, and our fleet as of September 30, 2005 of approximately 7,100 compressor units comprising approximately 2.5 million horsepower, we provide natural gas compression to domestic and international customers. Through our equipment fabrication business we design, engineer and assemble natural gas compressors for sale to third parties and for use in our contract compression fleet. Through our aftermarket services business, we sell parts and components and provide maintenance and operations services to customers who own their compression equipment or use equipment provided by other companies. These services and products are essential to the natural gas industry as gas must be compressed to be delivered from the wellhead to end-users and, sometimes in the case of declining reservoir pressure, in order for gas to be produced from the wellhead itself.  Our customers consist primarily of domestic and international oil and gas companies, international state-owned oil and gas companies and natural gas producers, processors, gatherers and pipelines.

 Generally, our overall business activity and revenue increase as the demand for natural gas increases.  In the United States, increases in the demand for compression services and products are driven by growth in the production of natural gas, by declining reservoir pressure in maturing natural gas producing fields and, more recently, by increased demand for compression equipment for growing non-conventional natural gas production from places such as coal bed methane, tight sands and shale gas.  In international markets, increases in the demand for compression services and products are driven by growth in natural gas industry infrastructure, environmental initiatives encouraging the production and consumption of natural gas and the growth in the worldwide transportation and use of natural gas.  The demand for compression services is also driven by general increases in the demand for energy fuel stocks, including natural gas, which is generally driven by economic growth, and by increases in the outsourcing of compression needs.

Industry Conditions and Trends

                Generally, the worldwide natural gas industry continued to exhibit strength during our second fiscal quarter, as evidenced by higher natural gas prices, an active natural gas production and exploration market and continued strong demand for our compression services and products.

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Company Performance Trends and Fiscal Year 2006 Outlook

We continue to expect strong demand in the contract compression segment to support an average utilization rate in the 90% range.  We continue to experience increasing direct costs in this segment and have continued to implement price increases to our customers when feasible.  Domestic contract compression gross margin is expected to stay within its historical mid-60% range and we expect our international contract compression gross margin to remain in the mid-70% range.  Additionally, we continue to selectively add new large-horsepower units to our contract compression fleet to meet customer requirements in both domestic and international markets.

Although aftermarket service revenues were impacted by the two major hurricanes that recently entered the Gulf of Mexico (Hurricanes Katrina and Rita), we are optimistic that aftermarket service activities in the affected areas will improve in the third quarter as general access improves and our customers resume more normal activity levels.  Customer demand is expected to support continued revenue growth in this segment.  We expect aftermarket services gross margin to remain within its historical range of low-20%.

We continue to expect solid customer demand in our fabrication segment, however, segment revenue is likely to be lower and gross margins higher in fiscal year 2006 than in fiscal year 2005 as we continue to implement our process improvements, maintain greater pricing discipline and focus on more standard compression packages.  The fabrication segment experienced $3.1 million in warranty and start-up expenses during this fiscal year related to packages shipped in fiscal year 2005.  We believe we have resolved or appropriately reserved for those issues and do not expect to incur a similar magnitude of costs in the future, primarily as a result of the process improvements and other changes referred to above.  Excluding these warranty and start-up expenses, gross margins will likely be higher in fiscal year 2006 than in fiscal year 2005.

We are investing in key initiatives to help support the future growth of our company.  These initiatives include an increased marketing and business development commitment targeted at aftermarket services and international expansion, and the implementation of our new company-wide ERP system.

Challenges and Uncertainties

                As mentioned above and described in more detail in “Item 1. Financial Statements — footnote 8, Commitments and Contingencies” in this report, in the quarter ended September 30, 2005, our operations were impacted by Hurricanes Katrina and Rita.  We currently believe that the impact of these hurricanes will not have a material adverse impact on our results of operations, financial condition or cash flows.  However, our investigation of the scope of loss or damage to our contract compression fleet that was located in the path of the hurricanes is not complete.

                Market conditions in the natural gas industry, competition in the natural gas compression industry and the risks inherent in our on-going international expansion continue to represent key challenges and uncertainties.  Additionally, the implementation of our ERP system is anticipated to have a continuing impact on our selling, general and administrative expenses until implementation is completed, which we now anticipate will be in fiscal year 2007.  We expect to see these higher ERP-related expense levels through the remainder of fiscal year 2006, but believe they will moderate as we move into fiscal year 2007.  Moreover, implementation problems, if encountered, could negatively impact our business by disrupting our operations.  Although we currently have no reason to believe that any such significant implementation problems will occur, there are inherent limitations in our ability to predict and plan for these risks and estimate the magnitude of their impact.  Consequently, it is possible that the occurrence of a significant implementation problem could be material to our business operations.

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Financial Highlights

Some of the more significant financial items for the three and six months ended September 30, 2005, as compared to the prior year periods, which are discussed below in “Financial Results of Operations,” were as follows:

•Net Income.  Net income for the three months ended September 30, 2005 increased by $5.5 million, or 45.0%, and by $11.8 million, or 49.4%, for the six months ended September 30, 2005.

•Revenue and Gross Profit. Revenue and gross profit were higher in the three and six month periods ended September 30, 2005 for all segments except fabrication.

•Lower Interest Expense.  Interest expense was lower by $3.1 million, or 19.3%, for the three months ended September 30, 2005, and by $7.5 million, or 22.7%, for the six months ended September 30, 2005.

•Higher Depreciation and Amortization Expense.  Depreciation and amortization expense increased by $3.3 million, or 14.3%, for the three months ended September 30, 2005, and by $6.3 million, or 13.7% for the six months ended September 30, 2005.

•Higher Selling, General and Administrative Expense.  Selling, general and administrative (“SG&A”) expense increased by $2.8 million, or 15.2%, for the three months ended September 30, 2005, and by $5.0 million, or 13.7%, for the six months ended September 30, 2005.

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Operating Highlights

The following table summarizes total available horsepower, average contracted horsepower, horsepower utilization percentages and fabrication backlog.

	Three Months Ended						Six Months Ended
	September 30, 2005		March 31, 2005		September 30, 2004		September 30, 2005		September 30, 2004
	(Horsepower in thousands)						(Horsepower in thousands)
Total Available Horsepower (at period end):
Domestic contract compression	1,948		1,925		1,896		1,948		1,896
International contract compression	565		544		437		565		437
Total	2,513		2,469		2,333		2,513		2,333
Average Contracted Horsepower:
Domestic contract compression	1,751		1,717		1,665		1,746		1,646
International contract compression	524		484		401		517		394
Total	2,275		2,201		2,066		2,263		2,040
Horsepower Utilization:
Spot (at period end)	91.0	%	90.4	%	89.8	%	91.0	%	89.8	%
Average	91.0	%	90.0	%	88.9	%	90.8	%	87.8	%

	September 30, 2005		March 31, 2005		September 30, 2004
	(In millions)
Fabrication Backlog	$	113.8	$	68.7	$	65.7

The increase in domestic available horsepower as of September 30, 2005 compared to September 30, 2004 was primarily attributable to large horsepower units added to our fleet to meet the incremental demand for these units by the industry.  The increase in international horsepower was primarily attributable to the Canadian acquisition in November 2004 and additions in Latin America.

Domestic average contracted horsepower increased by 5.2% for the three months ended September 30, 2005 compared to the prior year quarter and by 6.1% for the six months ended September 30, 2005 compared to the prior year period.  International average contracted horsepower increased by 30.7% for the three months ended September 30, 2005 compared to the prior year quarter and by 31.2% for the six months ended September 30, 2005 compared to the prior year period. These increases were primarily attributable to the Canadian acquisition in November 2004 and higher customer demand.

                Fabrication backlog fluctuates quarter to quarter due to the timing of receipt of orders placed by customers and the timing of recognition of revenue.  The backlog of fabrication projects at November 1, 2005 was approximately $151.0 million.  A majority of the backlog is expected to be completed within a 180-day period.

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Financial Results of Operations

     Three months ended September 30, 2005 compared to three months ended September 30, 2004

     The following table summarizes the results of operations for the Company:

	Three Months Ended September 30,
	2005							2004
	(Dollars in thousands)
Revenue:
Domestic contract compression	$				81,964			$			73,178
% of revenue	45.2						%	38.2					%
International contract compression	$					31,076		$			22,872
% of revenue	17.2						%	11.9					%
Fabrication	$			28,193				$			57,772
% of revenue	15.6						%	30.1					%
Aftermarket services	$	39,895						$			38,062
% of revenue	22.0						%	19.8					%
Total Revenue.	$	181,128						$			191,884
Gross Profit:
Domestic contract compression	$	52,115						$				46,380
International contract compression	22,989							17,460
Fabrication	3,424							6,000
Aftermarket services	8,113							7,858
Total Gross Profit	$	86,641						$		77,698
Gross Margin:
Domestic contract compression.	63.6						%	63.4					%
International contract compression	74.0						%	76.3					%
Fabrication.	12.1						%	10.4					%
Aftermarket services	20.3						%	20.6					%
Total Gross Margin	47.8						%	40.5					%
Expenses:
Depreciation and amortization	$	26,439						$	23,123
Selling, general and administrative	21,012							18,245
Interest expense, net	13,034							16,154
Foreign currency (gain) loss	(610						)	882
Other income, net	(524						)	(56					)
Income tax expense	9,611							7,160
Net income	$		17,679					$	12,190

                Revenue.  Domestic contract compression revenue increased due to increased contracted horsepower and higher average contract rates in the three months ended September 30, 2005.  International contract compression revenue increased primarily as a result of the acquisition of a contract compression fleet in Canada and additional compression business in Argentina and Mexico, which contributed to increases of $3.4 million, $2.7 million and $0.9 million, respectively.  Fabrication revenue decreased $19.4 million in the United States, $4.9 million in the Asia Pacific region, $4.1 million in Canada and $1.2 million in Latin America as we maintained greater pricing discipline and focused on more standard compression packages in the three months ended September 30, 2005.  Aftermarket services revenue was higher due primarily to increases within Latin America and the Asia Pacific region of $1.0 million and $0.6 million, respectively.

Gross Profit.  The changes to gross profit (defined as total revenues less direct costs) for the three months ended September 30, 2005 compared to the prior year period were primarily attributable to revenue increases discussed above for domestic and international contract compression.   These increases were partially offset by a decrease in fabrication gross profit for the current year period due to reduced revenue activity and warranty and start-up expenses related to packages shipped in fiscal year 2005.

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Gross Margin.  As a percentage of segment revenue, direct costs for the domestic contact compression, international contract compression and aftermarket services segments for the three months ended September 30, 2005 remained relatively stable compared to the prior year period.  The higher fabrication gross margin primarily resulted from the implementation of process improvements, maintaining greater pricing discipline and focusing on more standard compression packages. Combined gross margin increased due to changes in the mix of revenues for the three months ended September 30, 2005, with additional higher margin domestic and international contract compression revenues and lower fabrication revenue.

                Depreciation and Amortization.  The increase in depreciation and amortization expense for the three months ended September 30, 2005 compared to the prior year primarily resulted from on-going capital expenditures, consisting primarily of additions to our contract compression fleet and compressor overhauls, and the acquisition of the contract compression fleet in Canada in November 2004.

                SG&A Expenses.  The increase in SG&A expenses for the three months ended September 30, 2005 relates to the increased expenses within the United States of $1.6 million due primarily to increased marketing and business development activities and the on-going implementation of our ERP system.  SG&A expenses in Latin America increased $1.1 million due to our on-going investment in our international infrastructure and growing international revenue taxes, which are classified as SG&A.  SG&A expenses represented 11.6% and 9.5% of revenues for the three months ended September 30, 2005 and 2004, respectively.

                 Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as adjusted.  EBITDA, as adjusted, for the three months ended September 30, 2005 was $66.2 million compared to $59.5 million for the prior year period.  The increase in EBITDA of 11.2% from the prior year is primarily attributable to the revenue and gross profit increases discussed above, partially offset by increased SG&A expenses.  EBITDA, as adjusted, is defined, discussed and reconciled to net income on page 26 of this report, within Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

                 Interest Expense, Net.  The decrease in interest expense for the three months ended September 30, 2005 is primarily related to our debt refinancing activities.  The lower interest rates resulting from the refinancing of debt in February 2005 reduced interest expense.  This decrease was partially offset by an increase in interest expense due to higher total debt levels outstanding during the three months ended September 30, 2005 compared to the same period in the prior year, largely due to the acquisition of the contract compression fleet in Canada in November 2004.

                Income Tax Expense.  The increase in income tax expense for the three months ended September 30, 2005 primarily relates to increased income before taxes as compared to the three months ended September 30, 2004 due to items mentioned above.

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Six months ended September 30, 2005 compared to six months ended September 30, 2004

     The following table summarizes the results of operations for the Company:

	Six Months Ended September 30,
	2005				2004
	(Dollars in thousands)
Revenue:
Domestic contract compression	$	161,636				$			144,151
% of revenue	41.6			%		38.3					%
International contract compression	$	61,376				$			45,617
% of revenue	15.8			%		12.1					%
Fabrication	$	84,029				$			115,135
% of revenue	21.6			%		30.5					%
Aftermarket services	$	81,771				$			71,854
% of revenue	21.0			%		19.1					%
Total Revenue	$	388,812				$				376,757
Gross Profit:
Domestic contract compression	$	104,011				$				91,089
International contract compression	45,382					35,293
Fabrication	6,288					10,027
Aftermarket services	16,942					15,037
Total Gross Profit	$	172,623				$		151,446
Gross Margin:
Domestic contract compression.	64.3			%		63.2					%
International contract compression	73.9			%		77.4					%
Fabrication.	7.5			%		8.7					%
Aftermarket services	20.7			%		20.9					%
Total Gross Margin	44.4			%		40.2					%
Expenses:
Depreciation and amortization	$	52,072				$	45,796
Selling, general and administrative	41,450					36,460
Interest expense, net	25,494					32,972
Foreign currency (gain) loss	(1,447			)		524
Other (income) loss, net	(172			)		361
Debt extinguishment costs	—					475
Gain on termination of interest rate swaps	—					(3,197					)
Income tax expense	19,411					14,080
Net income	$		35,815			$	23,975

                Revenue.  Domestic contract compression revenue increased due primarily to higher average contract rates and increased contracted horsepower in the six months ended September 30, 2005.  International contract compression revenue increased primarily as a result of the acquisition of a contract compression fleet in Canada and additional compression business in Argentina and Mexico, which contributed to increases of $7.0 million, $4.7 million and $1.9 million, respectively.  Fabrication revenue decreased $19.9 million in the United States, $12.2 million in the Asia Pacific region and $8.1 million in Canada as we maintained greater pricing discipline and focused on more standard compression packages.  This decrease was partially offset by an increase of $9.1 million in Latin America related to installation projects.  Aftermarket services revenue was higher primarily due to increases within the United States, Latin America and Canada of $5.3 million, $3.0 million and $1.1 million, respectively.

Gross Profit.  The changes to gross profit (defined as total revenues less direct costs) for the six months ended September 30, 2005 compared to the prior year period were primarily attributable to revenue increases discussed above for domestic contract compression, international contract compression and aftermarket services.  These increases were partially offset by a decrease in

22

fabrication gross profit for the current year period due to reduced revenue activity and warranty and start-up expenses related to packages shipped in fiscal year 2005.

                Gross Margin.  As a percentage of segment revenue, direct costs for the domestic contract compression, international contract compression and aftermarket services segments for the six months ended September 30, 2005 remained relatively stable as compared to the prior year period.  Combined gross margin increased due to changes in the mix of revenues in the current year, with additional higher-margin domestic and international contract compression revenues and lower fabrication revenue.  Fabrication gross margin was lower for the six months ended September 30, 2005 compared to the same period in the prior year primarily as a result of warranty and start-up expenses related to packages shipped in fiscal year 2005.  This was partially offset by the implementation of process improvements, greater pricing discipline and focus on more standard compression packages.

                Depreciation and Amortization.  The increase in depreciation and amortization expense for the six months ended September 30, 2005 compared to the prior year period primarily resulted from on-going capital expenditures, consisting primarily of additions to our contract compression fleet and compressor overhauls, and the acquisition of the contract compression fleet in Canada in November 2004.

                SG&A Expenses.  The increase in SG&A expenses for the six months ended September 30, 2005 relates to the increased expenses within the United States of $2.9 million due primarily to increased marketing and business development activities and the on-going implementation of our ERP system.  SG&A expenses in Latin America increased $2.0 million due to our on-going investment in our international infrastructure and growing international revenue taxes, which are classified as SG&A.  SG&A expenses represented 10.7% and 9.7% of revenues for the six months ended September 30, 2005 and 2004, respectively.

                EBITDA, as adjusted.  EBITDA, as adjusted, for the six months ended September 30, 2005 was $131.3 million compared to $114.6 million for the prior year period.  The increase in EBITDA of 14.6% from the prior year period is primarily attributable to the revenue and gross profit increases discussed above for domestic contract compression, international contract compression and aftermarket services, partially offset by increased SG&A expenses.  EBITDA, as adjusted, is defined, discussed and reconciled to net income on page 26 of this report, within Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

                 Interest Expense, Net.  The decrease in interest expense for the six months ended September 30, 2005 is primarily related to our debt refinancing activities.  The lower interest rates resulting from the refinancing of debt in February 2005 reduced interest expense.  This decrease was partially offset by an increase in interest expense due to higher total debt levels outstanding during the six months ended September 30, 2005, largely due to the acquisition of the contract compression fleet in Canada in November 2004.

                Gain on Termination of Interest Rate Swaps. A $3.2 million gain on the termination of interest rate swap agreements was recognized for the six months ended September 30, 2004.  This gain was the result of reducing the notional amount of interest rate swaps by $84.8 million on our ABS Facility in connection with a principal reduction of $80.0 million in June 2004.

                Income Tax Expense.  The increase in income tax expense for the six months ended September 30, 2005 primarily relates to increased income before taxes as compared to the six months ended September 30, 2004 due to the items mentioned above.

23

Liquidity and Capital Resources

Our primary sources of cash are operating activities and financing activities.  Our primary uses of cash are operating expenditures, capital expenditures and long-term debt repayments.  The following table summarizes our sources and uses of cash for the six months ended September 30, 2005 and 2004, and our cash and working capital as of the end of such periods (in thousands):

	Six Months Ended September 30,
	2005			2004
Net cash provided by (used in):
Operating activities	$	99,819		$	54,700
Investing activities.	$	(77,053	)	$	(58,025	)
Financing activities	$	(35,360	)	$	(89,462	)

	As of September 30,
	2005			2004
Cash.	$	26,979		$		28,719
Working capital, net of cash	$		83,266	$	83,859

Overview.  Net cash used in investing and financing activities exceeded net cash provided by operating activities by $12.6 million for the six months ended September 30, 2005 primarily as a result of $80.5 million of capital expenditures and $40.0 million of debt repayments.  As a result, the cash balance of $38.7 million at March 31, 2005 declined to $27.0 million at September 30, 2005.  For the six months ended September 30, 2004, net cash used in investing and financing activities exceeded net cash provided by operating activities by $92.8 million.

Operations. Net cash provided by operating activities increased $45.1 million for the six months ended September 30, 2005 compared to the prior year period primarily as a result of increased earnings and changes in working capital.

                Capital Expenditures.  Capital expenditures for the six months ended September 30, 2005 were $80.5 million consisting of $43.4 million for fleet additions, $22.2 million for compressor overhauls, $4.2 million for service trucks and $10.7 million for machinery, equipment, information technology equipment and other items.  This excluded proceeds from asset sales of $8.3 million, resulting in net capital expenditures of $72.2 million.  Based on current market conditions, we expect to continue to invest in fleet additions, compressor overhauls and maintenance and other capital requirements.  We expect net capital expenditures (defined as capital expenditures less proceeds from asset sales) of approximately $145.0 million to $155.0 million for the fiscal year ending March 31, 2006, including approximately $40.0 million for compression fleet maintenance capital.

                Long-term Debt. As of September 30, 2005, we had approximately $818.2 million in outstanding debt obligations consisting  of $398.0 million outstanding under the seven-year term loan, $171.5 million outstanding under the 7 1/4% senior notes, $200.0 million outstanding under the ABS Facility and $48.7 million outstanding under the revolving credit facility.

                The maturities of this debt for the twelve months ended September 30 of the periods indicated are shown below (in thousands).  We expect to pay these principal payments through cash generated by operations and debt refinancing activity.

2006	$	25,099
2007	25,099
2008	25,099
2009	25,099
2010	245,339
Thereafter	472,505
Total debt	$	818,239

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                Historically, we have financed capital expenditures with net cash provided by operating and financing activities.  Based on current market conditions, we expect that net cash provided by operating activities will be sufficient to finance our operating expenditures, capital expenditures and scheduled interest and debt repayments through the 2006 fiscal year.  To the extent that net cash provided by operating activities is not sufficient to finance our operating expenditures, capital expenditures and scheduled interest and debt repayments through the 2006 fiscal year, we may borrow additional funds under our revolving credit facility or we may obtain additional debt or equity financing.

Debt Covenants and Availability.  Covenants in our credit facilities require that we maintain various financial ratios, including a collateral coverage ratio (market value of domestic compression collateral to amount of indebtedness outstanding under our credit facility) of greater than or equal to 1.15 to 1.0, a total leverage ratio (total debt to earnings before interest, taxes, depreciation and amortization expense) of less than or equal to 5.0 to 1.0, and an interest coverage ratio (earnings before interest, taxes, depreciation and amortization expense to interest expense) of greater than or equal to 2.5 to 1.0.   As of September 30, 2005, we and our subsidiaries were in compliance with all financial covenants.

As of September 30, 2005, due to restrictive covenants and after giving effect to $21.7 million of outstanding letters of credit under our financing documents, we had an aggregate unused credit availability of approximately $104.7 million from our revolving credit facility.

Recent Debt Amendment.  In September 2005, we entered into an amendment to our senior secured credit agreement (the “Amendment”).  Prior to entering into the Amendment, the senior secured credit agreement consisted of a seven-year term loan and a five-year $250.0 million revolving credit facility.  The Amendment provides, among other things, that the interest rate applicable to our seven-year term loan is reduced by 0.25% resulting in a rate of LIBOR plus 1.50%.  The borrowing capacity under the revolving credit facility was reduced by $75.0 million to $175.0 million.  In addition, under the terms of the Amendment, in October 2005, $75.0 million of our outstanding revolving credit facility balance was funded to our seven-year term loan.  The additional $75.0 million of seven-year term loan will amortize over the remaining term of the original seven-year term loan.  Additionally, the Amendment increases our ability to enter into future unsecured indebtedness from $125.0 million to $200.0 million and reduces the collateral ratio required from 1.25 to 1.0 downward to 1.15 to 1.0.  The Amendment also modifies the total leverage ratio required for a redemption of our stock up to $100.0 million from 3.5 to 1.0 upward to 4.0 to 1.0.  Finally, the Amendment provides, at our option, with the prior approval of the administrative agent and subject to other stated requirements, for one or more future increases of the revolving credit facility up to a maximum of $250.0 million.

Recent Debt Restructuring.  On October 28, 2005, we completed the planned restructuring of the ABS Facility and added a $25.0 million revolving warehouse facility, increasing the total borrowing capacity to $225.0 million (the “2005 ABS Facility”). The issuer of the 2005 ABS Facility notes is UCO Compression 2005 LLC, a wholly-owned subsidiary.  The notes will amortize based on the revenues of the secured assets, which is expected to be based on a fourteen-year amortization.  Under the 2005 ABS Facility, the outstanding balance is subject to a variable interest rate based on one-month LIBOR plus 0.74%. The agreement requires 90% of the outstanding balance to be subject to interest rate swap agreements within 30 days after the closing of the transaction.

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THE COMPANY’S DEFINITION, RECONCILIATION

AND USE OF EBITDA, AS ADJUSTED

EBITDA, as adjusted, is defined as net income plus income taxes, interest expense (including debt extinguishment costs and gain on the termination of interest rate swaps), depreciation and amortization, foreign currency gains or losses, excluding non-recurring items (including facility consolidation costs) and extraordinary gains or losses.

EBITDA, as adjusted, represents a measure upon which management assesses performance and, as such, we believe that the generally accepted accounting principle (“GAAP”) measure most directly comparable to it is net income or net loss.  The following table reconciles our EBITDA, as adjusted, to net income (in thousands):

	Three Months Ended September 30,								Six Months Ended September 30,
	2005				2004				2005				2004
EBITDA, as adjusted	$		66,153		$	59,509			$	131,345			$	114,625
Depreciation and amortization	(26,439			)	(23,123			)	(52,072			)	(45,796			)
Interest expense, net	(13,034			)	(16,154			)	(25,494			)	(32,972			)
Debt extinguishment costs	—				—				—				(475			)
Gain on termination of interest rate swaps	—				—				—				3,197
Foreign currency gain (loss)	610				(882			)	1,447				(524			)
Income tax expense	(9,611			)	(7,160			)	(19,411			)	(14,080			)
Net income	$	17,679			$		12,190		$		35,815		$		23,975

Management believes disclosure of EBITDA, as adjusted, a non-GAAP measure, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, it provides a more complete understanding of our performance than GAAP results alone.  Management uses EBITDA, as adjusted, as a supplemental measure to review current period operating performance, a comparability measure, a performance measure for period to period comparisons and a valuation measure.

Use of EBITDA, as adjusted, by itself and without consideration of other measures, is not an adequate measure of the Company’s performance because this measure excludes certain material items.  Further, the measure has a limitation in that many users of financial statements believe that EBITDA is a measure of liquidity or of cash flows.  We do not use EBITDA, as adjusted, in this way because it excludes interest and income tax payments and changes in working capital accounts and therefore we urge the readers of our financial statements to not use the measure in this way either.  Management compensates for these limitations by using EBITDA, as adjusted, as a supplemental measure to other GAAP results to provide a more complete understanding of our performance without considering financial and other items that have less bearing on operating performance. The measure has a limitation, as it does not consider the amount of required reinvestment to maintain similar going forward results.  Management mitigates this limitation by reviewing and disclosing the Company’s capital and maintenance capital expenditures on a regular basis as yet another supplemental tool to evaluate the Company.

EBITDA, as adjusted, is not a measure of financial performance under GAAP and should not be considered an alternative to net income as an indicator of our operating performance or to net cash provided by operating activities as a measure of our liquidity.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

Variable Rate Debt

                We are exposed to market risk due to variable interest rates under our financing and interest rate swap arrangements.

                The interest rate under our revolving credit facility, which had $48.7 million outstanding as of September 30, 2005, is based upon, at our option, either a base rate plus an applicable margin, which varies from 0.25% to 1.25% based on our leverage ratio, or the one, two, three or six month LIBOR, plus an applicable margin which varies from 1.25% to 2.25% based on our leverage ratio.  At November 1, 2005, the applicable rate was the one month LIBOR, which was 4.09% and the applicable margin was 1.50%.

                At September 30, 2005, $98.0 million of the $398.0 million outstanding under the seven-year term loan remained floating.  The remaining $300.0 million outstanding under the seven-year term loan is subject to interest rate swap agreements, which are described below in “Interest Rate Swap Arrangements.”  This facility provides, at our option, for interest at a base rate plus an applicable margin of either 0.50% or 0.75% depending on our rating from S&P and Moodys, or the one, two, three or six month LIBOR, plus a margin of either 1.50% or 1.75% depending on the rating from S&P and Moodys. At November 1, 2005, the applicable rate was the one month LIBOR, which was 4.09%, and the applicable margin was 1.50%.

26

                Also at September 30, 2005, $120.3 million of our ABS Facility was subject to a variable interest rate based on the one month LIBOR, which was 4.09% at November 1, 2005, plus 1.27%. The remaining $79.7 million is subject to an interest rate swap agreement, which is described below in “Interest Rate Swap Arrangements.”

                In addition, $100 million of our 7 1/4% senior notes are subject to interest rate swap agreements which convert the fixed rate to a variable rate. The variable rate under these interest rate swap agreements is six month LIBOR, payable in arrears, plus an average applicable margin of 3.21%. At November 1, 2005, the six month LIBOR was 4.47%.

                As of September 30, 2005, approximately $367.0 million of our outstanding indebtedness and other obligations bore interest at floating rates and a 1.0% increase in interest rates would result in an approximate $3.7 million annual increase in our interest expense.

     Interest Rate Swap Arrangements

                We are also a party to interest rate swap agreements which are recorded at fair-market value in our financial statements.  A change in the underlying interest rates may also result in a change in their recorded value.

                At September 30, 2005, the notional amount of the interest rate swap agreement related to our ABS Facility was $79.7 million and the fair market value of this interest rate swap agreement was a liability of approximately $2.1 million, which was recorded as a derivative liability. The interest rate swap agreement terminates in February 2013. The fixed rate of this swap agreement is 5.21%, for an all-in fixed rate of 6.48% on this portion of the ABS Facility, inclusive of the ABS Facility’s applicable margin of 1.27%.

                At September 30, 2005, the notional amount of the interest rate swap agreements related to the seven-year term loan was $300.0 million. The fair market value of these interest rate swap agreements was an asset of approximately $4.4 million, which was recorded as a derivative asset.  The interest rate swap agreements terminate in March 2010.  The weighted average fixed rate of these interest rate swap agreements is 4.02%, for an all-in weighted average fixed rate of 5.52% on this portion of the term loan, inclusive of the term loan’s applicable margin of 1.50%.

                As noted above, the notional amount of the interest rate swap agreements related to our 7 1/4% senior notes was $100 million.  The fair market value of these interest rate swap agreements at September 30, 2005, was a liability of approximately $3.4 million, which is recorded as a derivative liability.  These interest rate swap agreements terminate in May 2010.

     Foreign Currency Exchange Rates

                To minimize any significant foreign currency credit risk, we generally contractually require that payment by our customers be made in U.S. dollars. If payment is not made in U.S. dollars, we generally utilize the exchange rate into U.S. dollars on the payment date and balance payments in local currency against local expenses.

ITEM 4.  Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), Company and Universal management, including the Chief Executive Officer and Chief Financial Officer of Holdings and of Universal, evaluated as of the end of the period covered by this report, the effectiveness of their disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e).  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of Holdings and Universal concluded that their disclosure controls and procedures, as of the end of the period covered by this report, were effective for the purpose of ensuring that information required to be disclosed by Holdings and Universal in this report is recorded, processed, summarized and reported within the time periods specified by the rules and forms under the Exchange Act and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

                There were no changes in Holdings’ or Universal’s internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, their internal control over financial reporting.

27

PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings

None.

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3.  Defaults Upon Senior Securities

None.

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

                On July 26, 2005, we held our Annual Meeting of Stockholders.  The matters voted upon at the meeting and the results of those votes were as follows:

1.Re-election of three Class B members of the Board of Directors for a term expiring at our 2008 Annual Meeting of Stockholders:

	Votes For	Votes Withheld
Ernie L. Danner	26,858,807	3,981,803
Lisa W. Rodriguez	26,063,122	4,777,488
Stephen A. Snider	27,122,724	3,717,886

2.An amendment to the Company’s Restricted Stock Plan, which was rejected:

For	Against	Abstain	Broker Non-Vote
14,215,984	13,958,716	729,497	1,936,413

3.Ratification of the appointment of Deloitte & Touche LLP to serve as the Company’s Independent Auditors for the fiscal  year ending March 31, 2006.

For	Against	Abstain	Broker Non-Vote
30,501,110	337,573	1,927	0

ITEM 5.  Other Information

                The Audit Committee has approved certain non-audit services to be performed by our independent auditors, none of which would be prohibited services under the Sarbanes-Oxley Act of 2002.

28

ITEM 6.  Exhibits

(a)Exhibits.

Exhibit No.	Description
10.1	First Amendment to $650,000,000 Senior Secured Credit Agreement, dated as September 22, 2005, among Universal Compression, Inc., as Co-US Borrower and Guarantor, Universal Compression Holdings, Inc., as Co-US Borrower and Guarantor, UC Canadian Partnership Holdings Company, as Canadian Borrower, Wachovia Bank, National Association, as US Administrative Agent, Congress Financial Corporation (Canada), as Canadian Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Deutsche Bank Securities Inc., The Bank of Nova Scotia and The Royal Bank of Scotland plc as Co-Documentation Agents and the Lenders signatory thereto arranged by Wachovia Capital Markets, LLC.
10.2	Form of Change of Control Agreement for designated executive officers of Universal Compression Holdings, Inc.
31.1	Certification of the Chief Executive Officer of Universal Compression Holdings, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.
31.2	Certification of the Chief Financial Officer of Universal Compression Holdings, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.
31.3	Certification of the Chief Executive Officer of Universal Compression, Inc. pursuant to Rule 15d-14 under the Securities Exchange Act of 1934.
31.4	Certification of the Chief Financial Officer of Universal Compression, Inc. pursuant to Rule 15d-14 under the Securities Exchange Act of 1934.
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer of Universal Compression Holdings, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications of the Chief Executive Officer and Chief Financial Officer of Universal Compression, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

29

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

	UNIVERSAL COMPRESSION HOLDINGS, INC.
Date: November 3, 2005	By:	/s/ J. MICHAEL ANDERSON
		J. Michael Anderson,
		Senior Vice President and
		Chief Financial Officer
		(Principal Financial Officer)
	By:	/s/ KENNETH R. BICKETT
		Kenneth R. Bickett
		Vice President, Accounting and Corporate Controller
		(Principal Accounting Officer)
	UNIVERSAL COMPRESSION, INC.
	By:	/s/ J. MICHAEL ANDERSON
		J. Michael Anderson,
		Senior Vice President and
		Chief Financial Officer
		(Principal Financial Officer)
	By:	/s/ KENNETH R. BICKETT
		Kenneth R. Bickett
		Vice President, Accounting and Corporate Controller
		(Principal Accounting Officer)

30

EXHIBIT INDEX

Exhibit No.	Description
10.1	First Amendment to $650,000,000 Senior Secured Credit Agreement, dated as September 22, 2005, among Universal Compression, Inc., as Co-US Borrower and Guarantor, Universal Compression Holdings, Inc., as Co-US Borrower and Guarantor, UC Canadian Partnership Holdings Company, as Canadian Borrower, Wachovia Bank, National Association, as US Administrative Agent, Congress Financial Corporation (Canada), as Canadian Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, Deutsche Bank Securities Inc., The Bank of Nova Scotia and The Royal Bank of Scotland plc as Co-Documentation Agents and the Lenders signatory thereto arranged by Wachovia Capital Markets, LLC.
10.2	Form of Change of Control Agreement for designated executive officers of Universal Compression Holdings, Inc.
31.1	Certification of the Chief Executive Officer of Universal Compression Holdings, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.
31.2	Certification of the Chief Financial Officer of Universal Compression Holdings, Inc. pursuant to Rule 13a-14 under the Securities Exchange Act of 1934.
31.3	Certification of the Chief Executive Officer of Universal Compression, Inc. pursuant to Rule 15d-14 under the Securities Exchange Act of 1934.
31.4	Certification of the Chief Financial Officer of Universal Compression, Inc. pursuant to Rule 15d-14 under the Securities Exchange Act of 1934.
32.1	Certifications of the Chief Executive Officer and Chief Financial Officer of Universal Compression Holdings, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications of the Chief Executive Officer and Chief Financial Officer of Universal Compression, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

31

EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO

SENIOR SECURED CREDIT AGREEMENT

Dated as of September 22, 2005

Among

UNIVERSAL COMPRESSION, INC.,
as Co-US Borrower and Guarantor,

UNIVERSAL COMPRESSION HOLDINGS, INC.,
as Co-US Borrower and Guarantor,

UC CANADIAN PARTNERSHIP HOLDINGS COMPANY,
as Canadian Borrower,

WACHOVIA BANK, NATIONAL ASSOCIATION,
as US Administrative Agent,

CONGRESS FINANCIAL CORPORATION (CANADA),
as Canadian Administrative Agent,

JPMORGAN CHASE BANK, N.A.,
as Syndication Agent,

DEUTSCHE BANK SECURITIES INC., THE BANK OF NOVA SCOTIA AND
THE ROYAL BANK OF SCOTLAND PLC
as Co-Documentation Agents

AND

THE LENDERS PARTY HERETO

Arranged by:

WACHOVIA CAPITAL MARKETS, LLC
as Sole Lead Arranger and Sole Book Runner

$75,000,000 Senior Secured Additional Term B Loan

EXECUTION COPY

THIS FIRST AMENDMENT TO SENIOR SECURED CREDIT AGREEMENT dated as of September 22, 2005 (this “First Amendment”), is among:  UNIVERSAL COMPRESSION, INC., a corporation formed under the laws of the State of Texas (a “US Borrower” and sometimes referred to herein as “UCI”, and in its capacity as guarantor of the Canadian Tranche Loans, a “Guarantor”); UNIVERSAL COMPRESSION HOLDINGS, INC., a corporation formed under the laws of the State of Delaware (a “US Borrower” and sometimes referred to herein as “Holdings”, and in its capacity as guarantor of the Canadian Tranche Loans, a “Guarantor”, together with UCI, the “US Borrowers”); UC CANADIAN PARTNERSHIP HOLDINGS COMPANY, a Nova Scotia ULC (the “Canadian Borrower”); WACHOVIA BANK, NATIONAL ASSOCIATION, individually and as US administrative agent for the Lenders (herein, together with its successors in such capacity, the “US Administrative Agent”); CONGRESS FINANCIAL CORPORATION (CANADA), individually and as Canadian administrative agent for the Lenders (herein, together with its successors in such capacity, the “Canadian Administrative Agent”); WACHOVIA CAPITAL MARKETS, LLC (“Wachovia Securities” and its successor in such capacity, the “Sole Lead Arranger” and “Sole Book Runner”); and the lenders party to the Credit Agreement defined below (the “Lenders”) pursuant to the authorization (in the form attached hereto as Appendix I, the “Authorization”).  Capitalized terms used and not otherwise defined herein are used as defined in the Credit Agreement (as defined below).

R E C I T A L S

A.On January 14, 2005, the Borrowers, the Administrative Agents, and the Lenders entered into that certain Senior Secured Credit Agreement (as amended, modified or restated from time to time, the “Credit Agreement”).

B.The Borrowers have requested that the Administrative Agents and the Majority Lenders amend certain provisions of the Credit Agreement to, among other things, transfer $75,000,000 of the Aggregate Revolving Commitments under the Revolving Credit Facility to the Term Loan B Facility.

C.Subject to satisfaction of the conditions set forth herein, the Administrative Agents and the Majority Lenders are willing to amend the Credit Agreement and to such other actions as provided herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and of the loans, extensions of credit and commitments hereinafter referred to, the parties hereto agree as follows:

ARTICLE 1
Amendments to the Credit Agreement

1.1The definitions of “Additional Term Loan Funding Date”, “Additional Term Loan Lender”, “Additional Term Loans”, “CI Lender”, “Commitment Increase”, “Commitment Increase Effective Date”, “Joinder Agreement”, “New Funds Amount”, “Notice of Commitment Increase”, “Reducing Percentage Lender” and “Reduction Amount” are hereby added in alphabetical order to Section 1.02 of the Credit Agreement to read as follows:

“‘Additional Term Loan Funding Date’ shall mean October 3, 2005.”

“‘Additional Term Loan Lender’ shall mean any Lender with an outstanding Additional Term Loan.”

“‘Additional Term Loans’ shall have the meaning assigned such term in Section 2.01(a)(v).”

“‘CI Lender’ shall have the meaning assigned such term in Section 2.03(f)(i).”

“‘Commitment Increase’ shall have the meaning assigned such term in Section 2.03(f)(i).”

“‘Commitment Increase Effective Date’ shall have the meaning assigned such term in Section 2.03(f)(ii).”

“‘Joinder Agreement’ shall have the meaning assigned such term in Section 2.03(f)(i).”

“‘New Funds Amount’ shall have the meaning assigned such term in Section 2.03(f)(iv).”

“‘Notice of Commitment Increase’ shall have the meaning assigned such term in Section 2.03(f)(ii).”

“‘Reducing Percentage Lender’ shall have the meaning assigned such term in Section 2.03(f)(iv).”

“‘Reduction Amount’ shall have the meaning assigned such term in Section 2.03(f)(iv).”

1.2The last sentence of the definition of “Aggregate Revolving Commitments” in Section 1.02 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“As of the Additional Term Loan Funding Date, the Aggregate Revolving Commitments are $175,000,000.”

1.3The definition of “Aggregate US Tranche Commitments” in Section 1.02 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“‘Aggregate US Tranche Commitments’ at any time shall equal the sum of the US Tranche Commitments of all US Tranche Revolving Lenders, as the same may be reduced pursuant to Sections 2.03(b) and (c) or increased pursuant to Section 2.03(f).  As of the Additional Term Loan Funding Date, the Aggregate US Tranche Commitments are $150,000,000.”

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1.4Subsection (a) of the definition of “Applicable Margin” in Section 1.02 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“In respect of the Term Loan B Facility, a percentage per annum equal to 1.50% for US Dollar LIBOR Loans and 0.50% for US Dollar Base Rate Loans.”

1.5The definition of “Term Loan” in Section 1.02 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“‘Terms Loan’ shall mean each senior secured amortizing term loan made pursuant to Section 2.01(a)(v).”

1.6The definition of “Term Loan Lender” in Section 1.02 of the Credit Agreement is hereby amended by deleting the second sentence it in its entirety.

1.7The definition of “Term Loan Percentages” in Section 1.02 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“‘Terms Loan Percentages’ shall mean with respect to any Term Loan Lender, a fraction (expressed as a percentage, carried out to the sixth decimal place), the numerator of which is such Term Loan Lender’s outstanding Term Loans, and the denominator of which is the total outstanding Term Loans of all Term Loan Lenders.”

1.8The definition of “US Lender” in Section 1.02 of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“‘US Lender’ shall mean a Lender who is either a US Tranche Revolving Lender or a Term Loan Lender.”

1.9Section 2.01(a)(v) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“Each Term Loan Lender severally agrees, subject to the terms and conditions set forth herein, to make a senior secured amortizing term loan to the US Borrowers on the Term Loan Funding Date in the principal amount of such Term Loan Lender’s Term Commitment.  Each Additional Term Loan Lender severally agrees, subject to the terms and conditions set forth herein, to make a senior secured amortizing term loan to the US Borrowers on the Additional Term Loan Funding Date in the aggregate principal amount of $75,000,000.00 (collectively, the “Additional Term Loans”).  Once repaid or prepaid, Term Loans may not be reborrowed.”

1.10Section 2.03 of the Credit Agreement is hereby amended by adding the following new subsection (f):

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“(f)Commitment Increase.

(i)Subject to the terms and conditions set forth herein, the US Borrowers shall have the right, without the consent of the Lenders but with the prior approval of the US Administrative Agent, to cause from time to time an increase in the Aggregate US Tranche Commitmentsof the US Tranche Revolving Lenders(a “Commitment Increase”) by adding to this Agreement one or more additional financial institutions that is not already a Lender hereunder and that is reasonably satisfactory to the US Administrative Agent or by allowing one or more existing US Tranche Revolving Lenders to increase their respective US Tranche Commitments (each a “CI Lender”); provided, however that (A) no Event of Default shall have occurred which is continuing, (B) the Principal Amount outstanding on the date of such increase of all Term Loans shall not exceed $399,000,000, (C) the amount of such Commitment Increase shall be a multiple of $25,000,000, (D) no such Commitment Increase shall cause the Aggregate Revolving Commitments under this Agreement to exceed $250,000,000, (E) each CI Lender shall execute a joinder agreement (a “Joinder Agreement”) in the form of Exhibit H attached hereto, (F) no US Tranche Revolving Lender’s US Tranche Commitmentshall be increased without such Lender’s prior written consent and (G) if, on the effective date of such increase, any US Tranche Loanshave been funded, then the US Borrowers shall be obligated to pay any breakage fees or costs in connection with the reallocation of such outstanding Revolving Loans.

(ii)Any Commitment Increase shall be requested by written notice from the US Borrowers to the US Administrative Agent (a “Notice of Commitment Increase”) in the form of Exhibit I attached hereto and shall be subject to the approval of the US Administrative Agent, such consent to not be unreasonably withheld.  Each such Notice of Commitment Increase shall specify (A) the proposed effective date of such Commitment Increase, which date shall be no earlier than five (5) Business Days after receipt by the US Administrative Agent of such Notice of Commitment Increase, (B) the amount of the requested Commitment Increase (provided that after giving effect to such requested Commitment Increase, the aggregate amount of the Commitments does not exceed the amount set forth in subsection (i)(D) above), (C) the identity of each CI Lender hereunder, and (D) the amount of the respective US Tranche Commitmentof the then existing US Tranche Revolving Lenders and the CI Lenders from and after the Commitment Increase Effective Date (as defined below).  The US Administrative Agent shall review each Notice of Commitment Increase and shall notify the US Borrowers whether or not the US Administrative Agent consents to the proposed Commitment Increase.  If the US Administrative Agent consents to such Commitment Increase (such consent not to be unreasonably withheld), the US Administrative Agent shall execute a counterpart of the Notice of Commitment Increase and such Commitment Increase shall be effective on the proposed effective date set forth in the Notice of Commitment Increase (if the Administrative Agent consented to such Commitment Increase prior to such proposed date) or on another date agreed to by the US Administrative Agent and the US Borrowers (such date referred to as the “Commitment Increase Effective Date”).

(iii)On each Commitment Increase Effective Date, to the extent that there are US Tranche Loansoutstanding as of such date, (A) each CI Lender shall, by wire transfer of immediately available funds, deliver to the US Administrative Agent such CI Lender’s New Funds Amount, which amount, for each such CI Lender, shall constitute the

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US Tranche Loans made by such CI Lender to the US Borrowers pursuant to this Agreement on such Commitment Increase Effective Date, (B) the US Administrative Agent shall, by wire transfer of immediately available funds, pay to each then Reducing Percentage Lender its Reduction Amount, which amount, for each such Reducing Percentage Lender, shall constitute a prepayment by the US Borrowers pursuant to Section 2.07, ratably in accordance with the respective principal amounts thereof, of the principal amounts of all then outstandingUS Tranche Loansof such Reducing Percentage Lender, and (C) the US Borrowers shall be responsible to pay to each US Tranche Revolving Lender any breakage fees or costs in connection with the reallocation of any outstanding US Tranche Loans.

(iv)For purposes of this Section 2.03(f) and Exhibit I, the following defined terms shall have the following meanings:  (A) ”New Funds Amount” means the amount equal to the product of (y) the difference of a CI Lender’s US Tranche Commitmentafter giving effect to the Commitment Increase minus such CI Lender’s US Tranche Commitment immediately prior to giving effect to the Commitment Increase, if any, represented as a percentage of the Aggregate US Tranche Commitments, times (z) the aggregate principal amount of the outstanding US Tranche Loansimmediately prior to giving effect to the Commitment Increase, if any, as of a Commitment Increase Effective Date (without regard to any increase in the aggregate principal amount of US Tranche Loansas a result of borrowings made after giving effect to the Commitment Increase on such Commitment Increase Effective Date); (B) ”Reducing Percentage Lender” means each then existing US Tranche Revolving Lender immediately prior to giving effect to the Commitment Increase that does not increase its respective US Tranche Commitmentas a result of the Commitment Increase and whose relative percentage of the Aggregate US Tranche Commitments shall be reduced after giving effect to such Commitment Increase; and (C) ”Reduction Amount” means the amount by which a Reducing Percentage Lender’s outstanding US Tranche Loansdecrease as of a Commitment Increase Effective Date (without regard to the effect of any borrowings made on such Commitment Increase Effective Date after giving effect to the Commitment Increase).

(v)Each Commitment Increase shall become effective on its Commitment Increase Effective Date and upon such effectiveness (A) the US Administrative Agent shall record in the Register each then CI Lender’s information as provided in the Notice of Commitment Increase, (B) Annex Ishall be amended and restated to set forth all US Tranche Revolving Lenders (including any CI Lenders) that will be Lenders hereunder after giving effect to such Commitment Increase (which amended and restated Annex I shall be set forth in Annex I to the applicable Notice of Commitment Increase) and the US Administrative Agent shall distribute to each US Tranche Revolving Lender (including each CI Lender) and the Canadian Administrative Agent a copy of such amended and restated Annex I, and (C) each CI Lender identified on the Notice of Commitment Increase for such Commitment Increase shall be a “US Tranche Revolving Lender” for all purposes under this Agreement.

1.11Section 3.01(b) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

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“The US Borrowers shall pay to the US Administrative Agent, for the account of each Applicable Lender, the Term Loans in consecutive quarterly installments on or before each Quarterly Date, as set forth below ($1,000,000.00 was paid on June 30, 2005):

Payment Date	Principal Installment
September 30, 2005	$	1,000,000.00
December 31, 2005	$	1,187,500.00
March 31, 2006	$	1,187,500.00
June 30, 2006	$	1,187,500.00
September 30, 2006	$	1,187,500.00
December 31, 2006	$	1,187,500.00
March 31, 2007	$	1,187,500.00
June 30, 2007	$	1,187,500.00
September 30, 2007	$	1,187,500.00
December 31, 2007	$	1,187,500.00
March 31, 2008	$	1,187,500.00
June 30, 2008	$	1,187,500.00
September 30, 2008	$	1,187,500.00
December 31, 2008	$	1,187,500.00
March 31, 2009	$	1,187,500.00
June 30, 2009	$	1,187,500.00
September 30, 2009	$	1,187,500.00
December 31, 2009	$	1,187,500.00
March 31, 2010	$	1,187,500.00
June 30, 2010	$	1,187,500.00
September 30, 2010	$	1,187,500.00
December 31, 2010	$	1,187,500.00
March 31, 2011	$	1,187,500.00
June 30, 2011	$	111,718,750.00
September 30, 2011	$	111,718,750.00
December 31, 2011	$	111,718,750.00
Term Loan Maturity Date	$	111,718,750.00
Total	$	474,000,000.00

; provided that upon any partial prepayment pursuant to Section 2.07, such prepayment shall be applied inversely to the remaining installments in accordance with Section 2.07.

If not sooner paid, the US Borrowers promise to repay in full the Term Loans on the Term Loan Maturity Date.”

1.12Section 7.07(b) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“The US Borrowers will use the proceeds of the Term Loans for (a) the repayment of the Term Loan B Existing Indebtedness and (b) for general corporate purposes not in contravention of any Governmental Requirement or of any Loan Document.”

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1.13Section 9.01(h) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“The US Borrowers, within ten (10) Business Days of any deemed delivery of any annual report or quarterly report pursuant to paragraph (a) above, will furnish to the US Administrative Agent (i) a certificate substantially in the form of Exhibit C-2 executed by a Responsible Officer of one of the US Borrowers (A) certifying as to the matters set forth therein and stating that no Default has occurred and is continuing (or, if any Default has occurred and is continuing, describing the same in reasonable detail) and (B) setting forth in reasonable detail the computations necessary to determine whether the US Borrowers are in compliance with Section 10.13(a), (b) and (c) as of the end of the respective fiscal quarter or fiscal year; and (ii) a report, in form and substance satisfactory to the US Administrative Agent, setting forth as of such Quarterly Date a true and complete list of all Hedging Agreements (including commodity price swap agreements, forward agreements or contracts of sale which provide for prepayment for deferred shipment or delivery of oil, gas or other commodities) of it, each of its Subsidiaries or pursuant to the ABS Facility, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value therefor, any new credit support agreements relating thereto not listed on Schedule 7.20, any margin required or supplied under any credit support document, and the counter party to each such agreement.”

1.14Section 10.01(f) of the Credit Agreement is hereby amended by replacing “$125,000,000” with “$200,000,000”.

1.15Section 10.04(c) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“Holdings may purchase common stock of Holdings held by any stockholder or stockholders not to exceed $100,000,000 in the aggregate during the term of this Agreement (not including any purchases permitted by Section 10.04(b)) if the Total Leverage Ratio is less than 4.0 to 1.0 for the most recent Testing Period at the time of such purchase.”

1.16Section 10.13(c) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:

“The US Borrowers will not permit the ratio of (i) the Market Value of Compression Collateral to (ii) Aggregate Credit Exposure to be less than 1.15 to 1.0 at any time.  As used herein, “Market Value” of the Compression Collateral shall be determined by the most recent Appraisal or update as required in Section 9.11; provided, however, in the period between the effective date of Appraisals or updates, “Market Value” will also include the cost of any newly added Compression Collateral during such period and will not include the Market Value of any Property that is not Compression Collateral.”

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1.17Annex I of the Credit Agreement is hereby deleted in its entirety and is replaced by Annex I attached to this First Amendment.

1.18Exhibit H attached to this First Amendment is hereby added to the Credit Agreement as Exhibit H thereto.

1.19Exhibit I attached to this First Amendment is hereby added to the Credit Agreement as Exhibit I thereto.

ARTICLE 2
Conditions Precedent

2.1Conditions Precedent.  This First Amendment shall be subject to the satisfaction of the following conditions precedent or concurrent, and after giving effect to this First Amendment:

(a)the representations and warranties contained herein and in all other Loan Documents shall be true and correct in all material respects as of the date hereof, except for such representations and warranties limited to an earlier date;

(b)no Default shall have occurred and be continuing;

(c)no Material Adverse Effect shall have occurred and be continuing;

(d)a certificate of the Secretary or an Assistant Secretary (or the equivalent) of each Borrower and each Pledgor party to the Ratification and Affirmation of Pledgors attached hereto shall have been delivered to the US Administrative Agent setting forth (i) resolutions of its board of directors (or the equivalent) with respect to the authorization of it to execute and deliver this First Amendment and the other Loan Documents to which it is a party and to enter into the transactions contemplated in those documents, (ii) its officers (or the equivalent) (A) who are authorized to sign this First Amendment and the other Loan Documents to which it is a party and (B) who will, until replaced by another officer or officers (or the equivalent) duly authorized for that purpose, act as its representative for the purposes of signing documents and giving notices and other communications in connection with this First Amendment and the transactions contemplated hereby;

(e)a compliance certificate shall have been delivered to the US Administrative Agent, in form and substance satisfactory to the US Administrative Agent, duly and properly executed by a Responsible Officer of each US Borrower and dated as of the date hereof;

(f)the Borrowers shall have delivered to the US Administrative Agent an executed original copy of this First Amendment in form and substance satisfactory to the US Administrative Agent;

(g)the US Administrative Agent shall have received counterparts hereof duly executed by the Borrowers and the Majority Lenders and the Additional Term Lenders;

(h)Notes duly completed and executed shall have been delivered to the US Administrative Agent, if requested;

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(i)an opinion of Gardere Wynne Sewell LLP, counsel to the US Borrowers and the Subsidiaries party to a Loan Document, shall have been delivered to the US Administrative Agent in form and substance satisfactory to the US Administrative Agent, as to such matters incident to the transactions herein contemplated and as the US Administrative Agent may reasonably request; and

(j)all costs, fees, expenses (including, without limitation, reasonable legal fees and expenses and recording taxes and fees) and other compensation contemplated by this First Amendment and the other Loan Documents, and for which statements or invoices have been submitted to the US Borrowers shall have been paid.

ARTICLE 3
Miscellaneous

3.1Credit Agreement in Full Force and Effect as Amended.  Except as specifically amended hereby, the Credit Agreement and other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed as so amended.  Except as expressly set forth herein, this First Amendment shall not be deemed to be a waiver, amendment or modification of any provisions of the Credit Agreement or any other Loan Document or any right, power or remedy of the Administrative Agents or Lenders, or constitute a waiver of any provision of the Credit Agreement or any other Loan Document, or any other document, instrument and/or agreement executed or delivered in connection therewith or of any Default or Event of Default under any of the foregoing, in each case whether arising before or after the date hereof or as a result of performance hereunder or thereunder.  This First Amendment also shall not preclude the future exercise of any right, remedy, power, or privilege available to the Administrative Agents and/or Lenders whether under the Credit Agreement, the other Loan Documents, at law or otherwise.  All references to the Credit Agreement shall be deemed to mean the Credit Agreement as modified hereby.  This First Amendment shall not constitute a novation or satisfaction and accord of the Credit Agreement and/or other Loan Documents, but shall constitute an amendment thereof.  The parties hereto agree to be bound by the terms and conditions of the Credit Agreement and Loan Documents as amended by this First Amendment, as though such terms and conditions were set forth herein.  Each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall mean and be a reference to the Credit Agreement as amended by this First Amendment, and each reference herein or in any other Loan Documents to the “Credit Agreement” shall mean and be a reference to the Credit Agreement as amended and modified by this First Amendment.

3.2Representations.  Each Borrower hereby represents and warrants to each Lender that:

(a)each of the representations and warranties made by the Borrower under the Credit Agreement and each other Loan Document is true and correct in all material respects on and as of the date hereof, as if made on and as of such date, except for any representations and warranties made as of a specified date, which are true and correct in all material respects as of such specified date;

(b)The execution, delivery and performance by each Borrower of this First Amendment have been duly authorized by each Borrower;

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(c)This First Amendment constitutes the legal, valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms.

(d)The execution, delivery and performance by each Borrower of this First Amendment (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including shareholders or any class of directors, whether interested or disinterested, of each Borrower or any other Person), nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of this First Amendment or any Loan Document or the consummation of the transactions contemplated thereby, except such as have been obtained or made and are in full force and effect other than (A) the recording and filing of the Security Instruments as required by this First Amendment of the Credit Agreement and (B) those third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could not reasonably be expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of the Loan Documents, (ii) will not violate any applicable law or regulation or the charter, by-laws or the organizational documents of any Borrower or any Subsidiary or any order of any Governmental Authority, (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon any Borrower or any Subsidiary or its Properties, or give rise to a right thereunder to require any payment to be made by any Borrower or such Subsidiary and (iv) will not result in the creation or imposition of any Lien on any Property of any Borrower or any Property (other than the Liens created by this First Amendment or the Loan Documents).

3.3Counterparts.  This First Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this First Amendment by signing any such counterpart.

3.4NO ORAL AGREEMENTS.  THIS FIRST AMENDMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF.  THIS FIRST AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

3.5GOVERNING LAW.  THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

[Signatures begin on the following page]

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The parties hereto have caused this First Amendment to be duly executed as of the day and year first above written.

US BORROWER AND GUARANTOR:	UNIVERSAL COMPRESSION, INC.
	By:	/s/ J. Michael Anderson
	Name:	J. Michael Anderson
	Title:	Senior Vice President and Chief Financial Officer
Address for Notices:
	4444 Brittmoore Road
	Houston, Texas 77041
	Attention: President
	Copy to: General Counsel
	Copy to:
	Carol M. Burke
	Gardere Wynne Sewell LLP
	1000 Louisiana, Suite 3400
	Houston, Texas 77002
	Telecopier No.: (713) 276-6561
	Telephone No.: (713) 276-5561

Signature Page to First Amendment to Senior Secured Credit Agreement

US BORROWER AND GUARANTOR:	UNIVERSAL COMPRESSION HOLDINGS, INC.
	By:	/s/ J. Michael Anderson
	Name:	J. Michael Anderson
	Title:	Senior Vice President and Chief Financial Officer
Address for Notices:
	4444 Brittmoore Road
	Houston, Texas 77041
	Attention: President
	Copy to: General Counsel
	Copy to:
	Carol M. Burke
	Gardere Wynne Sewell LLP
	1000 Louisiana, Suite 3400
	Houston, Texas 77002
	Telecopier No.: (713) 276-6561
	Telephone No.: (713) 276-5561

CANADIAN BORROWER:	UC CANADIAN PARTNERSHIP HOLDINGS COMPANY
	By:	/s/ J. Michael Anderson
	Name:	J. Michael Anderson
	Title:	Senior Vice President and Chief Financial Officer
Address for Notices:
	1959 Upper Water Street
	Suite 1100
	Halifax, Nova Scotia B3J3E5
	Attention: Chief Financial Officer
	Copy to: General Counsel
	Copy to:
	Carol M. Burke
	Gardere Wynne Sewell LLP
	1000 Louisiana, Suite 3400
	Houston, Texas 77002
	Telecopier No.: (713) 276-6561
	Telephone No.: (713) 276-5561

AGENTS AND LENDERS:	WACHOVIA BANK, NATIONAL
	ASSOCIATION, in its capacity as US Administrative Agent and in its capacity as a Lender, on behalf of itself and the other Lenders pursuant to the Authorization
	By:	/s/ Shawn Young
	Name:		Shawn Young
	Title:		Vice President
	Lending Office for US Dollar Base Rate Loans and LIBOR Loans:
	301 South College Street
	23rd Floor NC 0680
	Charlotte, North Carolina 28288
	Telecopier No.: (704) 383-0288
	Address for Notices:
	301 South College Street
	23rd Floor NC 0680
	Charlotte, North Carolina 28288
	Attention: Syndication Agency Services
	Telecopier No.: (704) 383-0288
	With copy to:
	Wachovia Capital Markets, LLC
	1001 Fannin, Suite 2255
	Houston, Texas 77002
	Attention: David Humphreys
	Telecopier No.: 713-605-6354

Ratification and Affirmation of Pledgors

Each of the undersigned Pledgors hereby expressly (a) acknowledges the terms of this First Amendment, (b) ratifies and affirms its obligations under that certain Pledge and Security Agreement dated as of January 14, 2005, as amended, to which it is a party, (c) acknowledges, renews and extends its continued liability under said Pledge and Security Agreement and agrees that said Pledge and Security Agreement remains in full force and effect notwithstanding the matters contained herein, and (d) represents and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this First Amendment, all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date.

PLEDGORS:	UNIVERAL COMPRESSION INTERNATIONAL, INC.
	By:	/s/ J. Michael Anderson
	Name:	J. Michael Anderson
	Title:	Senior Vice President and Chief Financial Officer
	UNIVERSAL COMPRESSION CANADIAN HOLDINGS, INC.
	By:	/s/ J. Michael Anderson
	Name:	J. Michael Anderson
	Title:	Senior Vice President and Chief Financial Officer
	ENTERRA COMPRESSION INVESTMENT COMPANY
	By:	/s/ J. Michael Anderson
	Name:	J. Michael Anderson
	Title:	Senior Vice President and Chief Financial Officer
	UNIVERSAL COMPRESSION SERVICES, LLC
	By:	/s/ J. Michael Anderson
	Name:	J. Michael Anderson
	Title:	Senior Vice President and Chief Financial Officer

RATIFICATION Page to First Amendment to Senior Secured Credit Agreement

ANNEX I
US TRANCHE COMMITMENTS
AND PERCENTAGE SHARE

US Tranche Revolving Lender	US Tranche Commitment Amount (in $)		US Tranche Percentage
Wachovia Bank, National Association	12,908,602.15		8.605735	%
JPMorgan Chase Bank, N.A.	12,908,602.15		8.605735	%
Deutsche Bank Trust Company Americas	12,695,340.50		8.463560	%
The Bank of Nova Scotia	10,964,157.71		7.309438	%
The Royal Bank of Scotland plc	12,666,666.67		8.444444	%
Bank of America, N.A.	10,387,096.77		6.924731	%
Comerica Bank	9,810,035.84		6.540024	%
Union Bank of California, N.A.	9,810,035.84		6.540024	%
Wells Fargo Bank, NA	11,333,333.33		7.555556	%
BNP Paribas	6,924,731.18		4.616487	%
SunTrust Bank	8,000,000.02		5.333333	%
National City Bank	6,924,731.18		4.616487	%
Natexis Banques Populares	6,666,666.67		4.444444	%
Guaranty Bank	6,000,000.00		4.000000	%
Allied Irish Banks, p.l.c.	6,000,000.00		4.000000	%
Amegy	6,000,000.00		4.000000	%
TOTAL	$	150,000,000.00	100.000000	%

* US Tranche Percentages have been rounded to nearest 6th decimal point.

ANNEX I TO FIRST AMENDMENT TO SENIOR SECURED CREDIT AGREEMENT

EXHIBIT H
FORM OF JOINDER AGREEMENT

This Joinder Agreement (the “Joinder”) is dated as of                                 ,       (the “Effective Date”) and is entered into by and between [Insert name of Lender] (the “Lender”) and Wachovia Bank, National Association (the “US Administrative Agent”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Senior Secured Credit Agreement dated as of January 14, 2005, among Universal Compression, Inc. and Universal Compression Holdings, Inc., as the US Borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia ULC, as the Canadian Borrower, the US Administrative Agent, Congress Financial Corporation (Canada), as the Canadian Administrative Agent and the Lenders which are or become parties thereto (as the same may be amended or supplemented from time to time, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Lender.

The Lender represents and warrants as follows:

(a)it has all requisite power and authority, and has taken all action necessary to execute and deliver this Joinder and to fulfill its obligations under, and consummate the transactions contemplated by, this Joinder;

(b)the execution, delivery and compliance with the terms hereof by Lender and the delivery of all instruments required to be delivered by it hereunder do not and will not violate any Governmental Requirement applicable to it;

(c)this Joinder has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Lender, enforceable against it in accordance with its terms;

(d)all approvals and authorizations of, all filings with and all actions by any Governmental Authority necessary for the validity or enforceability of its obligations under this Joinder have been obtained;

(e)the Lender is not a competitor of Holdings or any of its Subsidiaries;

(f)the Lender has fully reviewed the terms of the Credit Agreement and the other Security Instruments and has independently and without reliance upon the Assignor, and based on such information as the Lender has deemed appropriate, made its own credit analysis and decision to enter into this Joinder; and

(g)the Lender hereby affirms that the representations contained in Section 4.06(d)[(i)] [(vi)] of the Credit Agreement are true and accurate as to it [IF (i) IS SELECTED ADD:  and, the Lender has contemporaneously herewith delivered to the US Administrative Agent and the US Borrower such certifications as are required thereby to avoid the withholding taxes referred to in Section 4.06 of the Credit Agreement].

This Joinder shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Joinder may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Joinder by telecopy shall be effective as delivery of a manually executed counterpart of this

eXHIBIT h to First Amendment to Senior Secured Credit Agreement

Joinder.  This Joinder shall be governed by, and construed in accordance with, the law of the State of Texas.

LENDER

[NAME OF LENDER]

By:

Name:

Title:

	US ADMINISTRATIVE AGENT
	WACHOVIA BANK, NATIONAL ASSOCIATION
	By:
	Name:
	Title:
Approved and Consented to by:
UNIVERSAL COMPRESSION, INC.
By:
Name:
Title:
UNIVERSAL COMPRESSION HOLDINGS, INC.
By:
Name:
Title:

EXHIBIT I
FORM OF NOTICE OF COMMITMENT INCREASE

[Date]

Wachovia Bank, National Association

301 South College Street

23rd Floor NC 0680

Charlotte, NC 28288

Attention:  Syndication Agency Services

Ladies and Gentlemen:

The undersigned, Universal Compression, Inc. and Universal Compression Holdings, Inc. (the “US Borrowers”), refer to the Senior Secured Credit Agreement dated as of January 14, 2005, among the US Borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia ULC, as the Canadian Borrower, the US Administrative Agent, Congress Financial Corporation (Canada), as the Canadian Administrative Agent and the Lenders which are or become parties thereto (as the same may be amended or supplemented from time to time, the “Credit Agreement”, with terms defined in the Credit Agreement and not otherwise defined herein being used herein as therein defined).  The US Borrowers hereby notify you, pursuant to Section 2.03(f)(ii) of the Credit Agreement, that the US Borrowers hereby request that the Aggregate US Tranche Commitments under the Credit Agreement be increased and the CI Lenders agree to provide US Tranche Commitments under the Credit Agreement, and in that connection sets forth below the information relating to such proposed Commitment Increase as required by Section 2.03(f)(ii) of the Credit Agreement:

(a)the effective date of such increase of aggregate amount of the Lenders’ Aggregate US Tranche Commitments is                             ;

(b)the amount of the requested increase of the Aggregate US Tranche Commitments is $                                ;

(c)the CI Lenders that have agreed with the Borrowers to provide or increase their respective US Tranche Commitments, are                                                                   [INSERT NAMES OF THE CI LENDERS]; and

(d)set forth on Annex I attached hereto is the amount of the respective US Tranche Commitments of all Reducing Percentage Lenders and all CI Lenders as of effective date of such Commitment Increase, and such Annex I shall amend and replace Annex I to the Credit Agreement.

Delivery of an executed counterpart of this Notice of Commitment Increase by telecopier shall be effective as delivery of an original executed counterpart of this Notice of Commitment Increase.

eXHIBIT I to First Amendment to Senior Secured Credit Agreement

	Very truly yours,
	UNIVERSAL COMPRESSION, INC.
	By:
	Name:
	Title:
	UNIVERSAL COMPRESSION HOLDINGS, INC.
	By:
	Name:
	Title:
Approved and Consented to by:
WACHOVIA BANK, NATIONAL ASSOCIATION, as US Administrative Agent
By:
Name:
Title:

ANNEX I

US TRANCHE COMMITMENTS

AND PERCENTAGE SHARE

[Attach updated Annex I]

APPENDIX I

FORM OF

AUTHORIZATION

                         , 2005

Wachovia Bank, National Association,

as Administrative Agent

Charlotte Plaza, CP-8

201 South College Street

Charlotte, North Carolina 28288-0608

Attention:  Syndication Agency Services

Re:First Amendment to Senior Secured Credit Agreement dated as of September 22, 2005 (the “Amendment”) to that certain Senior Secured Credit Agreement dated as of January 14, 2005 (as the same may be amended or supplemented from time to time, the “Credit Agreement”) by and among Universal Compression, Inc. and Universal Compression Holdings, Inc., as the US Borrowers, UC Canadian Partnership Holdings Company, a Nova Scotia ULC, as the Canadian Borrower, Wachovia Bank, National Association, as the US Administrative Agent, Congress Financial Corporation (Canada), as the Canadian Administrative Agent and the Lenders which are or become parties thereto.

This letter acknowledges our receipt and review of the Amendment in the form posted to SyndTrak Online.  By executing this letter, we hereby approve the Amendment and authorize the US Administrative Agent to execute and deliver the Amendment on our behalf.

Each financial institution executing this Authorization agrees or reaffirms that it shall be a party to the Credit Agreement and the other Loan Documents to which Lenders are parties and shall have the rights and obligations of a Lender under each such agreement.

[Insert name of applicable financial institution]

By:

Name:

Title:

aPPENDIX I to First Amendment to Senior Secured Credit Agreement

EX-10.2

Exhibit 10.2

CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement (this “Agreement”) is entered into and effective as of                      ,          by and between Universal Compression Holdings, Inc., a Delaware corporation, (the “Company”), and                                   (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Company and Employee wish to enter an agreement regarding their respective rights and obligations in connection with a Change of Control (as defined below) within three (3) years from the date of this Agreement;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the parties hereto do hereby agree as follows:

1.Certain Definitions.

(a)“Cause” shall mean:

(i)the willful and continued failure of the Employee to perform substantially the Employee’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Employee by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Employee has not substantially performed the Employee’s duties, or

(ii)the willful engaging by the Employee in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.

No act, or failure to act, on the part of the Employee shall be considered “willful” unless it is done, or omitted to be done, by the Employee in bad faith or without reasonable belief that the Employee’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or of a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Employee in good faith and in the best interests of the Company.  The cessation of employment of the Employee shall not be deemed to be for Cause unless and until there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Employee, and the Employee is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the

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Employee is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

(b)“Change of Control” shall mean:

(i)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35 percent or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control:

(A)any acquisition directly from the Company,

(B)any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or

(C)any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 1(b); or

(ii)Individuals, who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board; or

(iii)Consummation of a reorganization, merger or consolidation or sale or other disposition, directly or indirectly, of all or substantially all of the assets of the Company (a “Corporate Transaction”) in each case, unless, following such Corporate Transaction, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 50 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of

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the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no individual or entity (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 35 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (C) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or

(c)“Good Reason” shall mean the occurrence of any of the following:

(i)the assignment to the Employee of any duties inconsistent in any material respect with the Employee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities during the ninety (90) day period prior to a Change of Control, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Employee;

(ii)the Company’s requiring the Employee to be based at any other office or location than required during the ninety (90) day period prior to a Change of Control, or the Company’s requiring the Employee to travel on Company business to a substantially greater extent than required during the ninety (90) day period prior to a Change of Control;

(iii)any purported termination by the Company of the Employee’s employment otherwise than as expressly permitted by this Agreement; or

(iv)in the event of a Change of Control or merger, consolidation or other business combination of the Company in which the Company’s securities cease to be publicly traded, the assignment to the Employee of any position (including status, offices, titles and reporting requirements), authority, duties or responsibilities that are not (A) at or with the ultimate parent company of the entity surviving or resulting from such merger, consolidation or other business combination and

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(B) substantially similar to the Employee’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities during the ninety (90) day period prior to the Change of Control.

For purposes of this Agreement, any good faith determination of “Good Reason” made by the Employee shall be conclusive.

(d)“Board” shall mean the Board of Directors of the Company.

2.Termination for Good Reason or Other than Cause, Death or Disability following a Change of Control.  If during the one (1) year period following a Change of Control, the Company terminates the Employee’s employment other than for Cause, death or disability, or the Employee terminates employment for Good Reason:

(a)The Company shall pay to the Employee in a lump sum in cash within thirty (30) days after the date of termination the aggregate of the following amounts:

(i)the sum of (1) the Employee’s annual base salary through the date of termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the highest annual bonus received by the Employee over the preceding three-year period and (II) the annual bonus that would be payable in respect of the current fiscal year (and annualized for any fiscal year consisting of less than 12 months) (such higher amount being referred to as the “Highest Annual Bonus”) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the date of termination, and the denominator of which is 365, and (3) any compensation previously deferred by the Employee under a plan sponsored by the Company or any of its affiliated companies (together with any accrued interest or earnings thereon), and any accrued vacation pay, in each case to the extent not theretofore paid;

(ii)an amount equal to two times the sum of (i) the then current annual base salary of the Employee and (ii) the Highest Annual Bonus; and

(iii)an amount equal to the total of the employer basic and matching contributions credited to the Employee under the Company’s (or any of its affiliated companies’) 401(k) Retirement and Savings Plan (the “401(k) Plan”) and any other deferred compensation plan during the 12-month period immediately preceding the month of the Employee’s date of termination multiplied by two, such amount to be grossed up so that the amount the Employee actually receives after payment of any federal or state taxes payable thereon equals the amount first described above.

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(b)For a period of two years from the Employee’s date of termination, or such longer period as may be provided by the terms of the appropriate medical and/or welfare benefit plan, program, practice or policy, the Company shall provide benefits to the Employee and/or the Employee’s family equal to those which would have been provided to them in accordance with the plans, programs, practices and policies if the Employee’s employment had not been terminated; provided, however, that with respect to any of such plans, programs, practices or policies requiring an employee contribution, the Employee shall continue to pay the monthly employee contribution for same, and provided further, that if the Employee becomes employed by another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility.

(c)The Company shall pay to the Employee an amount equal to the forfeiture of the Employee, if any, under the Company’s (or any of its affiliated companies’) deferred compensation plan and/or the 401(k) Plan and any other similar plans.  Such payment shall be made in each case within 15 days after the forfeiture occurs under the applicable plan.  If a forfeiture under a plan has not occurred by March 1^st of the calendar year after the year of termination (the “Determination Date”), but the Employee is less than 100 percent vested in his account in such plan as of the date of the Employee’s termination of employment for which benefits are payable pursuant to this Agreement, then the benefit payable pursuant to this Section 2(c) shall be calculated as if such forfeiture occurred as of the Determination Date and the benefit due under this section shall be paid on or before 15 days after the Determination Date.  The payment provided in the preceding sentence shall be in full satisfaction of the Company’s obligation to make a payment pursuant to this Section 2(c).

(d)All stock options, restricted stock, restricted stock units, or other stock-based awards held by the Employee, not already vested shall be 100% vested.  Notwithstanding the terms of any Company (or affiliate) plan or agreement between the Company (or affiliate) and Employee to the contrary, the accelerated vesting of all stock options, restricted stock, restricted stock units, or other awards required pursuant to the terms of this Section 2(c) shall supercede and govern.

(e)To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Employee any other amounts or benefits required to be paid or provided or which the Employee is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies.

(f)The Company and the Employee agree that to the extent that the Company determines in good faith (which determination shall include, at a minimum, an opinion of outside legal counsel supporting the same) that the provisions of Section 409A of the Code require a delay in payment of any benefits

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(which as of the date of this Agreement, would not exceed 6 months) to which the Employee is entitled pursuant to this Agreement in order to avoid the penalties and additional taxes provided under such section, such payment or provision of benefit shall be delayed until the earliest date on which payment can be made without penalty pursuant to Section 409A of the Code.  If the Employee disagrees with the Company’s determination that Section 409A requires a delay in payment, the payment can be made prior to the payment date determined by the Company if the Employee agrees that should the Internal Revenue Service subsequently assert that some or all of the payments made pursuant to this Agreement do not comply with the requirements of Section 409A of the Code, (A) the Employee agrees that he is solely responsible for excise taxes, penalties and interest resulting from such determination, and that he will not seek contribution, reimbursement or any other recovery from the Company or any of its affiliates, officers, employees or directors for any excise tax, interest or penalty paid or due or any costs he incurs in challenging such position of the Internal Revenue Service, and (B) the Employee will reimburse, and hold the Company harmless for, any costs, including attorneys fees and costs of court, penalties or fees, that it may incur in connection with a later determination that the payments made pursuant to this Agreement are covered by Section 409A of the Code and were not properly reported as such.

3.Other Rights.  Except as provided herein, nothing in this Agreement shall prevent or limit the Employee’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Employee may qualify, nor shall anything herein limit or otherwise affect such rights as the Employee may have under any contract or agreement with the Company or any of its affiliated companies.  Except as provided hereinafter, amounts which are vested benefits or which the Employee is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the date of termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement.  It is expressly agreed by the Employee that the Employee shall have no right to receive, and hereby waives any entitlement to, any severance pay or similar benefit under any other plan, policy, practice or program of the Company; provided, however, that this Section 3 shall not affect the Company’s obligations, if any, relating to post-retirement health coverage for the Employee and/or the Employee’s spouse.  The Employee also agrees that to the extent he may be eligible for any severance pay or similar benefit under any laws providing for severance or termination benefits, such other severance pay or similar benefit shall be coordinated with the benefits owed hereunder, such that the Employee shall not receive duplicate benefits.

4.Full Settlement.

(a)No Rights of Offset.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense

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or other claim, right or action which the Company may have against the Employee or others.

(b)No Mitigation Required.  In no event shall the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Employee obtains other employment.

(c)Legal Fees.  The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Employee may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company or the Employee of the validity or enforceability of, or liability under, any provision of Sections 1, 2, 3, 4, 5, 7 or 8 of this Agreement or any guarantee of performance thereto (including as a result of any contest by the Employee about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment (including any payment delayed as provided in Section 2(f)), at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the “Code”).

5.Certain Additional Payments by the Company.

(a)Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 5) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.  Notwithstanding the foregoing provisions of this Section 5(a), if it shall be determined that the Employee is entitled to a Gross-Up Payment, but that the Employee, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $1,000 (taking into account both income taxes and any Excise Tax) as compared to the net after-tax proceeds to the Employee resulting from an elimination of the Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount (the “Reduced Amount”) such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Employee and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

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(b)Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Deloitte & Touche LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm’s determination.  Any determination by the Accounting Firm shall be binding upon the Company and the Employee.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder.  In the event that the Company exhausts its remedies pursuant to Section 5(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee.

(c)The Employee shall notify the Company in writing of any claim by the Internal Revenue Service (the “IRS”) that, if successful, would require the payment by the Company of the Gross-Up Payment (or an additional Gross-Up Payment) in the event the IRS seeks higher payment.  Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:

(i)give the Company any information reasonably requested by the Company relating to such claim,

(ii)take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time,

8

including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii)cooperate with the Company in good faith in order to effectively contest such claim, and

(iv)permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.  Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the IRS or any other taxing authority.

(d)If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 5(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).  If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 5(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such

9

denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

6.Restrictions and Obligations of the Employee.

(a)Consideration for Restrictions and Covenants.  The Company and Employee agree that the principal consideration for the agreement to make the payments provided in this Agreement by the Company to Employee is the Employee’s compliance with the undertakings set forth in this Section 6.  Notwithstanding any other provision of this Agreement to the contrary, the Employee agrees to comply with the provisions of this Section 6 only if the Employee actually receives any such payments from the Company pursuant to this Agreement.

(b)Confidentiality.  The confidential and proprietary information and, in any material respect, trade secrets of the Company are among its most valuable assets, including but not limited to, its customer and vendor lists, database, engineering, computer programs, frameworks, models, its marketing programs, its sales, financial, marketing, training and technical information, and any other information, whether communicated orally, electronically, in writing or in other tangible forms concerning how the Company creates, develops, acquires or maintains its products and marketing plans, targets its potential customers and operates its retail and other businesses.  The Company invested, and continues to invest, considerable amounts of time and money in its process, technology, know-how, obtaining and developing the goodwill of its customers, its other external relationships, its data systems and data bases, and all the information described above (hereinafter collectively referred to as “Confidential Information”), and any misappropriation or unauthorized disclosure of Confidential Information in any form would irreparably harm the Company.  The Employee shall hold in a fiduciary capacity for the benefit of the Company all Confidential Information relating to the Company and its business, which shall have been obtained by the Employee during the Employee’s employment by the Company and which shall not be or become public knowledge (other than by acts by the Employee or representatives of the Employee in violation of this Agreement).  After termination of the Employee’s employment with the Company, the Employee shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate, divulge or use any such information, knowledge or data to anyone other than the Company and those designated by it.

(c)Non-Solicitation or Hire.  During the term of Employee’s employment with the Company, or any affiliate thereof and for a two-year period following the termination of the Employee’s employment for any reason, the Employee shall not, directly or indirectly (i) employ or seek to employ any person who is at the date of termination, or was at any time within the six-month period

10

preceding the date of termination, an officer, general manager or director or equivalent or more senior level employee of the Company or any of its subsidiaries or otherwise solicit, encourage, cause or induce any such employee of the Company or any of its subsidiaries to terminate such employee’s employment with the Company or such subsidiary for the employment of another company (including for this purpose the contracting with any person who was an independent contractor (excluding consultant) of the Company during such period) or (ii) take any action that would interfere with the relationship of the Company or its subsidiaries with their suppliers or customers without, in either case, the prior written consent of the Company’s Board of Directors, or engage in any other action or business that would have a material adverse effect on the Company.

(d)Non-Competition.  (i) During the term of Employee’s employment with the Company, or any affiliate thereof and for a one-year period following the termination of the Employee’s employment for any reason, the Employee shall not, directly or indirectly:

(i)engage in any managerial, administrative, advisory, consulting, operational or sales activities in Restricted Business anywhere in the Restricted Area, including, without limitation, as a director or partner of such Restricted Business, and/or

(ii)organize, establish, operate, own, manage, control or have a direct or indirect investment: or ownership interest in a Restricted Business or in any corporation, partnership (limited or general), limited liability company enterprise or other business entity that engages in a Restricted Business anywhere in the Restricted Area; and

Nothing contained in this Section 6 shall prohibit or otherwise restrict the Employee from acquiring or owning, directly or indirectly, for passive investment purposes not intended to circumvent this Agreement, securities of any entity engaged, directly or indirectly, in a Restricted Business if either (i) such entity is a public entity and the Employee (A) is not a controlling Person of, or a member of a group that controls, such entity and (B) owns, directly or indirectly, no more than 3% of any class of equity securities of such entity or (ii) such entity is not a public entity and the Employee (A) is not a controlling Person of, or a member of a group that controls, such entity and (B) does not own, directly or indirectly, more than 1% of any class of equity securities of such entity.

(e)Definitions.  For purposes of this Section 6:

(i)“Restricted Business” means the business of designing, manufacturing, servicing, operating, marketing, assembling, renting or leasing of air or gas compressors or devices using comparable technologies or other business in which the Company or its subsidiaries may be engaged during the term of Employee’s employment with the

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Company.  To the extent that any entity is primarily engaged in a business other than a Restricted Business, the term “Restricted Business” shall mean the operations, division, segment or subsidiary of such entity that is engaged in any Restricted Business.

(ii)“Restricted Area” means any state in the United States, or any country in which the Company or its subsidiaries engages in any Restricted Business at any time during the term of Employee’s employment with the Company.

(f)The Employee acknowledges that monetary damages for any breach of Paragraphs 6(b), (c), and (d) above will not be an adequate remedy and that irreparable injury will result to the Company, its business and property, in the event of such a breach.  For that reason, the Employee agrees that in the event of a breach in addition to recovering legal damages, the Company is entitled to proceed in equity for specific performance or to enjoin the Employee from violating such provisions.

7.Successors.

(a)This Agreement is personal to the Employee and shall not be assignable by the Employee otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Employee’s legal representatives.

(b)This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

8.Miscellaneous.

(a)THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives that specifically refers to this Agreement.

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(b)All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Employee:
If to the Company:	Universal Compression Holdings, Inc. 4444 Brittmoore Road Houston, Texas 77041 Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notices and communications shall be effective when actually received by the addressee.

(c)The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(d)The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(e)The Employee’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Employee or the Company may have hereunder, including without limitation, the right of the Employee to terminate employment for Good Reason shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(f)This Agreement constitutes the entire agreement and understanding between the parties relating to the subject matter hereof and supersedes all prior agreements between the parties relating to the subject matter hereof.

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IN WITNESS WHEREOF, the Employee has hereunto set the Employee’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name and on its behalf, all as of the day and year first above written.

EMPLOYEE:
Name:
UNIVERSAL COMPRESSION HOLDINGS, INC.
By:
Name:	Stephen A. Snider
Title:	President and Chief Executive Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Stephen A. Snider, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of Universal Compression Holdings, Inc. (the “registrant”);

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2005		/s/ Stephen A. Snider
		Name:	Stephen A. Snider
		Title:	Chief Executive Officer

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EX-31.2

Exhibit 31.2

CERTIFICATION

I, J. Michael Anderson, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of Universal Compression Holdings, Inc. (the “registrant”);

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2005		/s/ J. Michael Anderson
		Name:	J. Michael Anderson
		Title:	Chief Financial Officer

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EX-31.3

Exhibit 31.3

CERTIFICATION

I, Stephen A. Snider, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of Universal Compression, Inc. (the “registrant”);

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  [RESERVED]

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2005		/s/ Stephen A. Snider
		Name:	Stephen A. Snider
		Title:	Chief Executive Officer

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EX-31.4

Exhibit 31.4

CERTIFICATION

I, J. Michael Anderson, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of Universal Compression, Inc. (the “registrant”);

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  [RESERVED]

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.             The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 3, 2005		/s/ J. Michael Anderson
		Name:	J. Michael Anderson
		Title:	Chief Financial Officer

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EX-32.1

Exhibit 32.1

UNIVERSAL COMPRESSION HOLDINGS, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Universal Compression Holdings, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2005 (the “Report”), I, Stephen A. Snider, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ STEPHEN A. SNIDER

Stephen A. Snider

Chief Executive Officer

November 3, 2005

In connection with the Quarterly Report of Universal Compression Holdings, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2005 (the “Report”), I, J. Michael Anderson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ J. MICHAEL ANDERSON

J. Michael Anderson

Chief Financial Officer

November 3, 2005

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EX-32.2

Exhibit 32.2

UNIVERSAL COMPRESSION, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Universal Compression, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2005 (the “Report”), I, Stephen A. Snider, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ STEPHEN A. SNIDER

Stephen A. Snider

Chief Executive Officer

November 3, 2005

In connection with the Quarterly Report of Universal Compression, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2005 (the “Report”), I, J. Michael Anderson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ J. MICHAEL ANDERSON

J. Michael Anderson

Chief Financial Officer

November 3, 2005

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