6. Partners’ Equity, Allocations and Cash Distributions

Units Outstanding

In March 2012, we sold, pursuant to a public underwritten offering, 4,965,000 common units representing limited partner interests in us, including 465,000 common units sold pursuant to an over-allotment option. The net proceeds from this offering of $114.5 million were used to repay borrowings outstanding under the revolving credit facility. In connection with this sale and as permitted under our partnership agreement, we issued approximately 101,000 general partner units to our general partner in consideration of the continuation of its approximate 2.0% general partner interest in us. Our general partner made a capital contribution to us in the amount of $2.4 million as consideration for such units.

All of our subordinated units were owned by a wholly-owned subsidiary of Exterran Holdings. As of each June 30, 2011 and 2010, we met the requirements under our partnership agreement for early conversion of 1,581,250 of these subordinated units into common units. Accordingly, in each of August 2011 and 2010, 1,581,250 subordinated units owned by Exterran Holdings converted into common units. As of September 30, 2011, we met the requirements under our partnership agreement for the end of the subordination period and, therefore, our remaining 3,162,500 subordinated units converted into common units in November 2011.

In June 2011, we completed the June 2011 Contract Operations Acquisition from Exterran Holdings. In connection with this acquisition, we issued approximately 51,000 general partner units to our general partner.

In May 2011, we sold, pursuant to a public underwritten offering, 5,134,175 common units representing limited partner interests in us, including 134,175 common units sold pursuant to an over-allotment option. The net proceeds from this offering of $127.7 million were used (i) to repay approximately $64.8 million of borrowings outstanding under the revolving credit facility and (ii) for general partnership purposes, including to fund a portion of the consideration for the June 2011 Contract Operations Acquisition from Exterran Holdings. In connection with this sale and as permitted under our partnership agreement, we issued approximately 53,000 general partner units to our general partner in consideration of the continuation of its approximate 2.0% general partner interest in us. Our general partner made a capital contribution to us in the amount of $1.3 million as consideration for such units.

In March 2011, Exterran Holdings sold, pursuant to a public underwritten offering, 5,914,466 common units representing limited partner interests in us, including 664,466 common units sold pursuant to an over-allotment option. We did not sell any common units in this offering and did not receive any proceeds from the sale of the common units by Exterran Holdings. In connection with our initial issuance of these units to Exterran Holdings, we agreed to pay certain costs relating to their future public sale. These costs have been recorded as a reduction to partners’ capital.

In September 2010, Exterran Holdings sold, pursuant to a public underwritten offering, 5,290,000 common units representing limited partner interests in us, including 690,000 common units sold pursuant to an over-allotment option. We did not sell any common units in this offering and did not receive any proceeds from the sale of the common units by Exterran Holdings. In connection with our initial issuance of units to Exterran Holdings, we agreed to pay certain costs relating to their future public sale. These costs have been recorded as a reduction to partners’ capital.

In August 2010, we completed the August 2010 Contract Operations Acquisition from Exterran Holdings. In connection with this acquisition, we issued approximately 8.2 million common units and 167,000 general partner units to Exterran Holdings’ wholly-owned subsidiaries.

Partners’ capital at December 31, 2012 consists of 42,270,101 common units outstanding representing a 98% effective ownership interest in us, and 858,583 general partner units representing a 2% general partner interest in us.

As of December 31, 2012, Exterran Holdings owned 12,495,391 common units and 858,583 general partner units, collectively representing a 31% interest in us.

Common Units

For quarters during the subordination period, which ended September 30, 2011, the common units had the right to receive distributions of available cash (as defined in our partnership agreement) from operating surplus in an amount equal to the minimum quarterly distribution of $0.35 per quarter, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus were made on the subordinated units. The purpose of the subordinated units was to increase the likelihood that during the subordination period there was available cash to be distributed on the common units. At the end of the subordination period, the common units were not due any arrearages and all subordinated units had received full distributions.

For quarters following the end of the subordination period, the common units have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.35 per quarter, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters.

The common units have limited voting rights as set forth in our partnership agreement.

Subordinated Units

For quarters during the subordination period, the subordinated units had no right to receive distributions of available cash from operating surplus until the common units received distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.35 per quarter, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters. No arrearages were to be paid to subordinated units.

General Partner Units

The general partner units have the same rights to receive distributions of available cash from operating surplus as the common units for each quarter. The general partner units also have the right to receive incentive distributions of cash in excess of the minimum quarterly distributions.

The general partner units have the management rights set forth in our partnership agreement.

Cash Distributions

For quarters during the subordination period, which ended on September 30, 2011, we made distributions of available cash (as defined in our partnership agreement) from operating surplus in the following manner:

· first, 98% to the common unitholders, pro rata, and 2% to our general partner, until we distributed for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter;

· second, 98% to the common unitholders, pro rata, and 2% to our general partner, until we distributed for each outstanding common unit an amount equal to any arrearages in payment of the minimum quarterly distribution for that quarter;

· third, 98% to the subordinated unitholders, pro rata, and 2% to our general partner, until we distributed for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter;

· fourth, 98% to all common and subordinated unitholders, pro rata, and 2% to our general partner, until each unit had received a distribution of $0.4025;

· fifth, 85% to all common and subordinated unitholders, pro rata, and 15% to our general partner, until each unit had received a distribution of $0.4375;

· sixth, 75% to all common and subordinated unitholders, pro rata, and 25% to our general partner, until each unit had received a total of $0.525; and

· thereafter, 50% to all common and subordinated unitholders, pro rata, and 50% to our general partner.

For quarters following the end of the subordination period, which ended on September 30, 2011, we make distributions of available cash (as defined in our partnership agreement) from operating surplus in the following manner:

· first, 98% to the common unitholders, pro rata, and 2% to our general partner, until we distribute for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter;

· second, 98% to common unitholders, pro rata, and 2% to our general partner, until each unit has received a distribution of $0.4025;

· third, 85% to all common unitholders, pro rata, and 15% to our general partner, until each unit has received a distribution of $0.4375;

· fourth, 75% to all common unitholders, pro rata, and 25% to our general partner, until each unit has received a total of $0.525; and

· thereafter, 50% to all common unitholders, pro rata, and 50% to our general partner.

The following table summarizes our distributions per unit for 2010, 2011 and 2012:

Period Covering	Payment Date	Distribution per Limited Partner Unit		Total Distribution (1)
1/1/2010 — 3/31/2010	May 14, 2010	$	0.4625	$	11.6 million
4/1/2010 — 6/30/2010	August 13, 2010	0.4625		11.6 million
7/1/2010 — 9/30/2010	November 12, 2010	0.4675		15.7 million
10/1/2010 — 12/31/2010	February 14, 2011	0.4725		16.0 million
1/1/2011 — 3/31/2011	May 13, 2011	0.4775		16.2 million
4/1/2011 — 6/30/2011	August 12, 2011	0.4825		19.1 million
7/1/2011 — 9/30/2011	November 14, 2011	0.4875		19.3 million
10/1/2011 — 12/31/2011	February 14, 2012	0.4925		19.6 million
1/1/2012 — 3/31/2012	May 15, 2012	0.4975		22.5 million
4/1/2012 — 6/30/2012	August 14, 2012	0.5025		22.8 million
7/1/2012 — 9/30/2012	November 14, 2012	0.5075		23.0 million
10/1/2012 — 12/31/2012	February 14, 2013	0.5125		23.3 million

(1) Includes distributions to our general partner on its incentive distribution rights.