EX-99.1 2 a2226294zex-99_1.htm EX-99.1

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Exhibit 99.1

(Subject to Completion, dated October 19, 2015)

LOGO

16666 Northchase Drive
Houston, Texas 77060
                        , 2015

Dear Fellow Shareholders:

        I am pleased to inform you that Exterran Holdings, Inc. intends to effect the spin-off of Exterran Corporation, a wholly owned subsidiary of Exterran Holdings, through a pro rata stock distribution to holders of Exterran Holdings common stock. Exterran Corporation will own the assets and liabilities associated with Exterran Holdings' international services and global fabrication businesses. In connection with the spin-off, Exterran Holdings will change its name to "Archrock, Inc." and will be traded on the New York Stock Exchange under the symbol "AROC." References to "Archrock" or "Exterran Holdings" before the spin-off refer to Exterran Holdings, Inc. and after the spin-off refer to Archrock, Inc. Upon the completion of the spin-off, Archrock shareholders will own 100% of the outstanding shares of common stock of Exterran Corporation.

        The separation will be completed by way of a pro rata distribution of all of the outstanding shares of Exterran Corporation's common stock to Exterran Holdings' shareholders of record as of 5:00 p.m., New York City time, on October 27, 2015, the record date for the distribution. Each Exterran Holdings shareholder of record will receive one share of Exterran Corporation's common stock for every two shares of Exterran Holdings common stock held on the record date. The distribution date of Exterran Corporation shares is expected to be November 3, 2015. Shareholder approval of the spin-off is not required, and you do not need to take any action to receive shares of Exterran Corporation's common stock in the spin-off.

        The distribution, which is subject to several customary conditions, will be issued in book-entry form only, which means that no physical stock certificates representing interests in Exterran Corporation will be issued. A book-entry account statement reflecting your ownership of shares of Exterran Corporation's common stock will be mailed to you, or your brokerage account will be credited for the shares on or about the distribution date. No fractional shares of Exterran Corporation's common stock will be issued. Instead, the transfer agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing rates and distribute the net cash proceeds pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution.

        We intend for the spin-off to be tax-free to our shareholders (other than with respect to any cash received in lieu of fractional shares) and to us for U.S. federal income tax purposes. To that end, we expect to obtain an opinion of counsel substantially to the effect that, among other things and subject to certain qualifications and limitations, the distribution, together with certain other transactions, should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended, for U.S. federal income tax purposes. You should consult your own tax advisor as to the particular consequences of the spin-off to you, including the applicability and effect of any state, local and non-U.S. tax laws, which may result in the spin-off being taxable to you.

        If you sell or otherwise transfer your shares of Exterran Holdings common stock on or prior to the distribution date, you will also be selling your right to receive shares of Exterran Corporation's common stock. You are encouraged to consult with your broker or financial advisor regarding the specific implications of transferring your Exterran Holdings common stock on or prior to the distribution date.


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        Exterran Corporation's common stock is expected to be traded on the New York Stock Exchange under the symbol "EXTN." You do not need to take any action to receive your shares of Exterran Corporation's common stock. You do not need to pay any consideration for your shares of Exterran Corporation's common stock or surrender or exchange your shares of Exterran Holdings common stock.

        I encourage you to read the enclosed information statement, which is being mailed to all Exterran Holdings shareholders. It describes the spin-off in detail and contains important information about Exterran Corporation, including financial statements.

        I believe the spin-off is a positive event for our shareholders, and I look forward to your continued support as a shareholder of Archrock. We remain committed to working on your behalf to build long-term shareholder value.

Sincerely,    

 

D. Bradley Childers
President and Chief Executive Officer
Exterran Holdings, Inc.

 

 

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LOGO

4444 Brittmoore Road
Houston, Texas 77041

                        , 2015

To Shareholders of Exterran Corporation:

        It is my pleasure to welcome you as a shareholder of Exterran Corporation. While we will be a new company upon our separation from Exterran Holdings, Inc., our business has a history of strong financial and operational performance providing global product sales and international energy infrastructure services in Latin America and parts of the Eastern Hemisphere.

        We believe operating these businesses as a separate company will: position us to benefit from the continued build-out of the global energy infrastructure and the redevelopment currently underway in North America; create financial flexibility enabling us to continue investing in value-creating contract operations projects; and expand our potential product sales customer base. Accordingly, we believe we can more effectively focus on our global product sales business and our international services businesses as an independent company, and bring more value to you as a shareholder, than we could as a subsidiary of Exterran Holdings.

        We currently employ approximately 7,000 people worldwide. We expect to list our common stock on the New York Stock Exchange under the symbol "EXTN."

        We thank you in advance for your support as a shareholder of our common stock, and I invite you to learn more about us by reviewing the enclosed information statement.

Sincerely,    

 

Andrew J. Way
President and Chief Executive Officer
Exterran Corporation

 

 

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Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

SUBJECT TO COMPLETION, DATED OCTOBER 19, 2015

INFORMATION STATEMENT

Exterran Corporation

Common Stock

(par value $0.01 per share)

        This information statement is being furnished in connection with the distribution by Exterran Holdings, Inc. to its shareholders of all of the outstanding shares of common stock of Exterran Corporation. In connection with such distribution and the related spin-off transactions, Exterran Holdings, Inc. will change its name to "Archrock, Inc.," or Archrock. As of the date of this information statement, Exterran Holdings owns all of Exterran Corporation's outstanding common stock.

        To implement the distribution, Exterran Holdings will distribute shares of Exterran Corporation common stock on a pro rata basis to the holders of Exterran Holdings common stock. You, as a holder of Exterran Holdings common stock, will be entitled to receive one share of our common stock for every two shares of Exterran Holdings common stock held as of 5:00 p.m., New York City time, on October 27, 2015, the record date for the distribution. The distribution will be issued in book-entry form only without the delivery of any physical share certificates. No fractional shares of our common stock will be issued. Instead, the transfer agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing rates and distribute the net cash proceeds pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution. The distribution date for the spin-off will be November 3, 2015.

        You will not be required to pay any cash or other consideration for the shares of our common stock that will be distributed to you or to surrender or exchange your shares of Exterran Holdings common stock in order to receive shares of our common stock in the spin-off. The distribution will not affect the number of shares of Exterran Holdings common stock that you hold. Immediately after the distribution is completed, Exterran Corporation will be an independent, publicly traded company. It is expected that the distribution should generally be tax-free to Exterran Holdings and its shareholders for United States of America ("U.S.") federal income tax purposes, except to the extent that cash is received in lieu of fractional shares.

        No approval by Exterran Holdings shareholders of the spin-off is required or being sought. You are not being asked for a proxy and you are requested not to send a proxy.

        As discussed under "The Spin-Off—Trading of Exterran Holdings Common Stock After the Record Date and Prior to the Distribution," if you sell your shares of Exterran Holdings common stock in the "regular way" market after the record date and on or prior to the distribution date, you also will be selling your right to receive shares of our common stock in connection with the spin-off. You are encouraged to consult with your broker or financial advisor regarding the specific implications of selling your shares of Exterran Holdings common stock on or prior to the spin-off.

        There currently is no trading market for our common stock. However, we expect that a limited market, commonly known as a "when-issued" trading market, for our common stock will begin on or shortly before the record date and will continue up to and including the spin-off date, and we expect that "regular way" trading of our common stock will begin the first day of trading following the spin-off. Subject to completion of the spin-off, we expect our common stock to be traded on the New York Stock Exchange under the symbol "EXTN."

        In reviewing this information statement, you should carefully consider the matters described under the caption "Risk Factors" beginning on page 23.



        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.



        This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

        Exterran Holdings first mailed this information statement to its shareholders on or about                        , 2015.

The date of this information statement is                        , 2015.


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CONTENTS

 
  Page  

QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF

    1  

SUMMARY

   
8
 

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

   
21
 

RISK FACTORS

   
23
 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

   
46
 

THE SPIN-OFF

   
48
 

CAPITALIZATION

   
61
 

DIVIDEND POLICY

   
62
 

SELECTED HISTORICAL COMBINED FINANCIAL DATA

   
63
 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

   
67
 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   
75
 

BUSINESS

   
106
 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   
116
 

RELATIONSHIP WITH ARCHROCK AFTER THE SPIN-OFF

   
117
 

MANAGEMENT

   
124
 

EXECUTIVE COMPENSATION

   
131
 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   
165
 

DESCRIPTION OF CAPITAL STOCK

   
167
 

DESCRIPTION OF MATERIAL INDEBTEDNESS

   
173
 

WHERE YOU CAN FIND MORE INFORMATION

   
175
 

INDEX TO FINANCIAL STATEMENTS

   
F-1
 

        This information statement is being furnished solely to provide information to Exterran Holdings shareholders who will receive shares of our common stock in the spin-off. It is not provided as an inducement or encouragement to buy or sell any securities of Exterran Holdings or Exterran Corporation. This information statement describes our business, our relationship with Exterran Holdings and how the spin-off affects Exterran Holdings and its shareholders, and provides other information to assist you in evaluating the benefits and risks of holding or disposing of our common stock that you will receive in the spin-off. You should be aware of certain risks relating to our business, the spin-off and ownership of our common stock, which are described under the heading "Risk Factors." You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the front cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information contained in this information statement, unless we are required by applicable securities laws to do so.

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Note Regarding the Use of Certain Terms

        In this information statement, unless the context requires otherwise or we specifically indicate otherwise, the terms "our company," "we," "our" and "us" when used in a historical context refers to the international services and global fabrication businesses of Exterran Holdings, Inc. and its subsidiaries and when used in the present or future tense refer to Exterran Corporation and its subsidiaries after giving effect to the spin-off. In connection with the spin-off, Exterran Holdings, Inc. will change its name to "Archrock, Inc." and will be traded on the New York Stock Exchange under the symbol "AROC." The terms "Exterran Holdings" and "Archrock," when used in a historical context, refer to Exterran Holdings, Inc. and its subsidiaries (including us and all of our subsidiaries) and, when used in the future tense, refer to Archrock, Inc. and its subsidiaries after giving effect to the spin-off (excluding us and all of our subsidiaries). In connection with the spin-off, Exterran Partners, L.P., a Delaware limited partnership controlled and partially owned by Exterran Holdings that provides natural gas contract operations services to customers throughout the U.S. and that is publicly traded on the NASDAQ Global Select Market under the symbol "EXLP," will change its name to "Archrock Partners, L.P." and will be traded on the NASDAQ Global Select Market under the symbol "APLP." The terms "Exterran Partners" and "Archrock Partners," when used in a historical context, refer to Exterran Partners, L.P. and its subsidiaries and, when used in the future tense, refer to Archrock Partners, L.P. and its subsidiaries after giving effect to the spin-off. The term "EESLP" refers to Exterran Energy Solutions, L.P., a Delaware limited partnership. Following the completion of the spin-off, EESLP will be a wholly owned subsidiary of Exterran Corporation. References to Exterran Holdings' "international services businesses" refers to the international contract operations and international aftermarket services businesses of Exterran Holdings conducted outside of the United States. References to Exterran Holdings' "global fabrication business" refers to the fabrication and manufacturing business currently operated by Exterran Holdings worldwide, which Exterran Corporation will operate after the completion of the spin-off as its product sales business.

        The separation of our businesses from Exterran Holdings' businesses will be accomplished through a series of transactions in which the assets, liabilities and operations of Exterran Holdings' existing U.S. contract operations and U.S. aftermarket services businesses will be transferred to a newly formed entity indirectly owned by Exterran Holdings (referred to herein as the "first contribution"), and such entity's stock will be distributed in an internal spin-off to Exterran Holdings (referred to herein, together with the first contribution, as the "internal distribution"). Exterran Holdings' existing international contract operations, international aftermarket services and global fabrication businesses will be transferred to us (referred to herein as the "second contribution"), and our common stock will be distributed pro rata to Exterran Holdings' shareholders as of the record date (referred to herein, together with the second contribution, as the "distribution"). We refer to these transactions globally as the "spin-off."


Industry and Market Data

        The market data and certain other statistical information used throughout this information statement are based on independent industry publications, government publications and other published independent sources, as well as on our good faith estimates. Although we believe the third-party sources are reliable as of their respective dates, we have not independently verified the accuracy or completeness of this information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled "Risk Factors." These and other factors could cause results to differ materially from those expressed in these publications.

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Basis of Presentation

        Certain monetary amounts, percentages and other figures included in this information statement have been subject to rounding adjustments. Percentage amounts included in this information statement have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this information statement may vary from those obtained by performing the same calculations using the figures in our combined financial statements. Certain other amounts that appear in this information statement may not sum due to rounding.

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QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF

Q:    What is the spin-off?

A:
The spin-off will be accomplished through a series of transactions in which the assets, liabilities and operations of Exterran Holdings' existing U.S. contract operations and U.S. aftermarket services businesses will be transferred to a newly formed entity indirectly owned by Exterran Holdings (referred to herein as the "first contribution"), and such entity's stock will be distributed in an internal spin-off to Exterran Holdings (referred to herein, together with the first contribution, as the "internal distribution"). Exterran Holdings' existing international contract operations, international aftermarket services and global fabrication businesses will be transferred to us (referred to herein as the "second contribution"), and our common stock will be distributed pro rata to Exterran Holdings' shareholders as of the record date (referred to herein, together with the second contribution, as the "distribution"). We refer to these transactions globally as the "spin-off."

Q:    Who are Archrock and Archrock Partners?

A:
In connection with the spin-off, Exterran Holdings, Inc. will change its name to "Archrock, Inc." and will be traded on the New York Stock Exchange, or NYSE, under the symbol "AROC," and Exterran Partners, L.P. will change its name to "Archrock Partners, L.P." and will be traded on the NASDAQ Global Select Market under the symbol "APLP." References in this information statement to "Exterran Holdings" or "Archrock," when used in a historical context, refer to "Exterran Holdings, Inc." and its subsidiaries (including us and our subsidiaries), and, when used in the future tense, refer to "Archrock, Inc." and its subsidiaries after giving effect to the spin-off (excluding us and our subsidiaries). In addition, references in this information statement to "Exterran Partners" or "Archrock Partners," when used in a historical context, refer to "Exterran Partners, L.P." and its subsidiaries and, when used in the future tense, refer to "Archrock Partners, L.P." and its subsidiaries after giving effect to the spin-off.

Q:    Why is Exterran Holdings separating our business from Exterran Holdings' business?

A:
Exterran Holdings' board and management team believe that there are significant expected benefits to the simplified, separate companies resulting from this transaction, including:

with respect to Archrock:

a focus on growing the U.S. services businesses, including organic growth, third party acquisitions and the sale by Archrock of additional U.S. contract operations assets to Archrock Partners;

relatively stable cash flows and a focus on its fee-based natural gas contract compression business;

the opportunity for Archrock to return a high percentage of cash flow to its shareholders in the form of a dividend;

a pure-play investment opportunity with significant exposure to the U.S. energy infrastructure redevelopment;

opportunities to pursue acquisitions with potentially more highly valued equity currency;

a narrowing of industry focus that may potentially provide more extensive and more specialized equity research coverage; and

the ability to be valued on a dividend yield basis, consistent with other publicly traded general partners, unlocking value for shareholders.

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    with respect to us:

    a focus on profitable growth in strategic markets and positioning us and our shareholders to benefit from the continued build-out of the global energy infrastructure and the redevelopment currently underway in North America;

    in our international services businesses, relatively stable cash flows due to our exposure to the production phase of oil and gas development, as compared to drilling and completion related energy service and product providers;

    limited capital expenditures in our product sales business;

    financial flexibility to enable investment in value-creating contract operations projects; and

    the opportunity to expand our potential product sales customer base to include companies in the U.S. contract compression business that have historically been Exterran Holdings' competitors.

        For more information, please read "The Spin-Off—Reasons for the Spin-Off."

Q:    What is being distributed in the spin-off?

        

A:
Exterran Holdings will distribute one share of our common stock for every two shares of Exterran Holdings common stock outstanding as of the record date for the distribution. Approximately 34.7 million shares of our common stock will be distributed in the spin-off, based upon the number of shares of Exterran Holdings common stock outstanding on June 30, 2015 and that we expect will remain outstanding on October 27, 2015, the record date for the spin-off. The shares of our common stock to be distributed by Exterran Holdings will constitute all of the issued and outstanding shares of our common stock at the closing of the spin-off. For more information on the shares being distributed in the spin-off, please read "Description of Capital Stock."

Q:    What is the record date for the spin-off, and when will the spin-off occur?

        

A:
The record date is October 27, 2015, and ownership is determined as of 5:00 p.m., New York City time, on that date. Shares of our common stock will be distributed on November 3, 2015, which we refer to as the distribution date.

Q:    As a holder of shares of Exterran Holdings common stock as of the record date, what do I have to do to participate in the spin-off?

A:
Nothing. You will receive one share of our common stock for every two shares of Exterran Holdings common stock held as of the record date and retained through the distribution date. You may also participate in the spin-off if you purchase Exterran Holdings common stock in the "regular way" market and retain your Exterran Holdings shares through the distribution date. Please read "The Spin-Off—Trading of Exterran Holdings Common Stock After the Record Date and Prior to the Distribution."

Q:    If I sell my shares of Exterran Holdings common stock before or on the distribution date, will I still be entitled to receive shares of Exterran Corporation common stock in the spin-off?

A:
If you sell your shares of Exterran Holdings common stock prior to or on the distribution date, you will also be selling your right to receive shares of our common stock. See "The Spin-Off—Trading of Exterran Holdings Common Stock After the Record Date and Prior to the Distribution." You are encouraged to consult with your broker or financial advisor regarding the specific implications of selling your Exterran Holdings common stock prior to or on the distribution date.

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Q:    How will fractional shares be treated in the spin-off?

A:
Exterran Holdings will not distribute any fractional shares of our common stock to its shareholders. Instead, the transfer agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing rates and distribute the net cash proceeds pro rata to each holder who would otherwise have been entitled to receive fractional shares in the distribution. For an explanation of how the cash payments for fractional shares will be determined, please read "The Spin-Off—Treatment of Fractional Shares."

Q:    Will the spin-off affect the number of shares of Exterran Holdings I currently hold?

A:
No. The number of shares of Exterran Holdings common stock held by a shareholder will be unchanged. The market value of each such share, however, is expected to decline to reflect the impact of the distribution.

Q:    What are the U.S. federal income tax consequences of the spin-off to me?

A:
Exterran Holdings expects to obtain an opinion of Latham & Watkins LLP (the "Tax Opinion") substantially to the effect that, for U.S. federal income tax purposes, (i) the internal distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, subject to certain qualifications and limitations. Accordingly, for U.S. federal income tax purposes, Exterran Holdings should not recognize any material gain or loss and you generally should recognize no gain or loss or include any amount in taxable income (other than with respect to cash received in lieu of fractional shares) as a result of the spin-off. The material U.S. federal income tax consequences of the spin-off are described in more detail under "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off." Information regarding tax matters in this information statement is for general information purposes only and does not constitute tax advice. SHAREHOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES OF THE SPIN-OFF TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY U.S. FEDERAL, STATE AND LOCAL TAX LAWS, AS WELL AS FOREIGN TAX LAWS.

Q:    How will I determine the tax basis I will have in the shares of stock I receive in the spin-off?

A:
Assuming that the distribution is tax-free to Exterran Holdings' shareholders, the tax basis in Exterran Holdings' common stock that you hold immediately prior will be allocated between such Exterran Holdings common stock and shares of our common stock received in the distribution in proportion to the relative fair market values of each immediately following the distribution. You should consult your tax advisor about how this allocation will work in your situation (including a situation where you have purchased Exterran Holdings shares at different times or for different amounts) and regarding any particular consequences of the spin-off to you, including the application of state, local and non-U.S. tax laws. The material U.S. federal income tax consequences of the spin-off are described in more detail under "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off."

Q:    Will I receive a stock certificate for Exterran Corporation shares distributed as a result of the spin-off?

A:
No. Registered holders of Exterran Holdings common stock who are entitled to participate in the spin-off will receive a book-entry account statement reflecting their ownership of our common stock. Following the spin-off, however, you may request physical stock certificates if you are a

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    holder of record. For additional information, registered shareholders in the United States should contact Exterran Holdings' transfer agent, American Stock Transfer & Trust Co., LLC, through its website at www.amstock.com. From outside the United States, shareholders may call (800) 937-5449. Please read "The Spin-Off—When and How You Will Receive Exterran Corporation Shares."

Q:    What if I hold my shares through a broker, bank or other nominee?

A:
Exterran Holdings shareholders who hold their shares through a broker, bank or other nominee will have their brokerage account credited with shares of our common stock. For additional information, those shareholders are encouraged to contact their broker, bank or nominee directly.

Q:    What if I have stock certificates reflecting my shares of Exterran Holdings' common stock? Should I send them to the transfer agent or to Exterran Holdings?

A:
No. You should not send your stock certificates to the transfer agent or to Exterran Holdings. You should retain your Exterran Holdings stock certificates.

Q:    What are the conditions to the spin-off?

A:
The spin-off is subject to a number of conditions, including, among others: (1) the continued effectiveness of an opinion of counsel substantially to the effect that, for U.S. federal income tax purposes, (i) the internal distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, and (ii) the distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, subject to certain qualifications and limitations; (2) the SEC's declaring effective the Registration Statement of which this information statement forms a part; (3) availability under the new $680.0 million revolving credit facility and the new $245.0 million term loan facility (collectively, the "new credit facility") of Exterran Energy Solutions, L.P., a Delaware limited partnership ("EESLP"), which will become our wholly owned subsidiary and the owner of all our operating subsidiaries following the spin-off; and (4) receipt and continued effectiveness of all material consents necessary to consummate the spin-off. However, even if all of the conditions have been satisfied, Exterran Holdings may amend, modify or abandon any and all terms of the spin-off and the related transactions at any time prior to the distribution date. Please read "The Spin-Off—Spin-Off Conditions and Termination."

Q:    Will Exterran Corporation incur any debt prior to or at the time of the spin-off?

A:
Exterran Holdings currently has in place a $900 million senior secured revolving credit facility (the "existing credit facility"). As of June 30, 2015, there was approximately $449.1 million of available borrowing capacity under the existing credit facility.

    On July 10, 2015, Exterran Corporation and EESLP entered into a $750.0 million credit agreement among Exterran Corporation, EESLP, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. On October 5, 2015, the parties entered into an amended and restated credit agreement (the "credit agreement"), evidencing the new credit facility consisting of a new $680.0 million revolving credit facility and a new $245.0 million term loan facility. Availability under the new credit facility is conditioned upon the consummation of the spin-off on or prior to January 4, 2016. Upon the consummation of the spin-off, Exterran Corporation will guarantee EESLP's obligations under the credit facility. As of June 30, 2015, on a pro forma basis after giving effect to the spin-off, the related financing transactions and approximately $91.4 million of outstanding letters of credit, we would have had approximately $281.8 million in available borrowing capacity under the new credit facility.

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    We intend to transfer the net proceeds from the borrowings under the new credit facility to Exterran Holdings to allow it to repay a portion of its indebtedness prior to the internal distribution. As of June 30, 2015, on a pro forma basis after giving effect to the spin-off, we would have borrowed and transferred to Exterran Holdings approximately $539.0 million. Subsequent to June 30, 2015 and prior to the completion of the spin-off, Exterran Holdings expects to incur additional borrowings under its existing credit facility of between $40 million and $50 million to finance expenses related to the completion of the spin-off and related financing transactions, which will increase the amount we borrow under our new credit facility and transfer to Exterran Holdings.

    For more information on our new credit facility, please read "Capitalization" and "Description of Material Indebtedness."

Q:    Are there risks to owning shares of our common stock?

A:
Yes. Our business is subject both to general and specific business risks relating to its operations, business, industry and common stock. In addition, the spin-off involves specific risks, including risks relating to us being an independent, publicly traded company. Please read "Risk Factors."

Q:    Does Exterran Corporation plan to pay cash dividends?

A:
We do not currently anticipate paying cash dividends on our common stock. The declaration and amount of future dividends, if any, will be determined by our board of directors and will depend on our financial condition, earnings, capital requirements, financial covenants, industry practice, applicable law and other factors our board of directors deems relevant. Our ability to pay dividends on our common stock may be limited by the covenants of our credit agreement and may be further restricted by the terms of any future debt or preferred securities. See "Dividend Policy" and "Description of Material Indebtedness."

Q:    Will our common stock trade on a stock market?

A:
Currently, there is no public market for our common stock. We expect to list our common stock on the NYSE under the symbol "EXTN." We anticipate that limited trading in shares of our common stock will begin on a "when-issued" basis on or shortly before the record date and will continue up to and including the distribution date and that "regular-way" trading in shares of our common stock will begin on the first trading day following the distribution date. The "when-issued" trading market will be a market for shares of our common stock that will be distributed to Exterran Holdings shareholders on the distribution date. If you owned shares of Exterran Holdings common stock at the close of business on the record date, you would be entitled to shares of our common stock distributed pursuant to the spin-off. You may trade this entitlement to shares of our common stock, without the shares of Exterran Holdings common stock you own, on the "when-issued" market. We cannot predict the trading prices or volume for our common stock before, on or after the distribution date. Please read "Risk Factors—Risks Relating to Ownership of Our Common Stock."

Q:    What will happen to Exterran Holdings stock options, restricted stock, restricted stock units and performance units?

A:
In connection with the distribution, subject to approval by the compensation committee of the board of directors of Exterran Holdings, Exterran Holdings stock options, restricted stock, restricted stock units and performance units will generally be treated as follows:

Pre-2015 Awards.  Immediately prior to the distribution, each outstanding Exterran Holdings stock option, restricted stock award, restricted stock unit award and performance unit award

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      granted prior to calendar year 2015, whether vested or unvested, will be split into two awards, consisting of an Archrock award and an Exterran Corporation award.

    2015 Awards.  Each Exterran Holdings stock option, restricted stock award, restricted stock unit award and performance unit award that is (i) granted in calendar year 2015 and (ii) held by an individual who will be employed or engaged by Exterran Corporation or its affiliates following the distribution will be converted solely into an Exterran Corporation award. Each Exterran Holdings stock option, restricted stock award, restricted stock unit award and performance unit award that is (i) granted in calendar year 2015 and (ii) held by an individual who will be employed or engaged by Archrock or its affiliates following the distribution will be adjusted to cover Archrock shares.

    Incentive Stock Options.  Notwithstanding the above, Exterran Holdings "incentive stock options" (within the meaning of Section 422 of the Code), whether granted during or prior to 2015, will be converted solely into options denominated in shares of common stock of the applicable holder's post-distribution employer if the holder thereof elected, prior to the spin-off, to preserve the tax treatment of their Exterran Holdings incentive stock options. Exterran Holdings incentive stock options held by an individual who does not elect, prior to the spin-off, to preserve the tax treatment of his or her Exterran Holdings incentive stock options will be adjusted as otherwise described herein—that is, each such option will either be split into two awards, consisting of an Archrock option and an Exterran Corporation option, or converted solely into an option denominated in shares of common stock of the applicable holder's post-distribution employer, depending on whether the option was granted prior to or during calendar year 2015.

    Awards Held by Non-Continuing Service Providers.  In addition, notwithstanding the foregoing, each Exterran Holdings stock option held by an individual who will not be employed or engaged with either Archrock or Exterran Corporation (or their respective affiliates) following the distribution will be adjusted solely into an Archrock option covering Archrock shares.

    General Terms.  Equity awards that are adjusted as described above will generally be subject to the same vesting, expiration, performance conditions and other terms and conditions as applied to the underlying Archrock awards immediately prior to the distribution.

Q:    What will be the relationship between Archrock and Exterran Corporation following the spin-off?

A:
After the spin-off, Archrock will not own any shares of our common stock. We and Archrock will each be an independent, publicly traded company with its own board of directors and management team. In connection with the spin-off, we are entering into a number of agreements with Archrock that will govern the spin-off and allocate responsibilities for obligations arising before and after the spin-off, including, among others, obligations relating to our employees and taxes. For example, we expect that the separation and distribution agreement we will enter into with Archrock will contain certain noncompetition provisions addressing restrictions for a limited period of time after the spin-off on our ability to provide contract operations services in the United States and on Archrock's ability to provide contract operations services outside of the United States and product sales to customers worldwide, subject to certain exceptions. In addition, we expect to enter into a supply agreement and related storage agreements with Archrock and Archrock Partners on arm's length terms that, among other things, will set forth the terms under which we will provide Archrock and Archrock Partners with fabricated equipment. We also expect to enter into services agreements with Archrock on arm's length terms that will set forth the terms under which the parties will provide each other with installation, start-up, commissioning and other services. Please read "Relationship with Archrock After the Spin-Off."

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Q:    Will I have appraisal rights in connection with the spin-off?

A:
No. Holders of shares of Exterran Holdings common stock are not entitled to appraisal rights in connection with the spin-off.

Q:    Who is the transfer agent for your common stock?

A:
American Stock Transfer & Trust Co., LLC
Operations Center
6201 15th Avenue
Brooklyn, New York 11219
www.amstock.com

Q:    Who is the distribution agent for the spin-off?

A:
American Stock Transfer & Trust Co., LLC
Operations Center
6201 15th Avenue
Brooklyn, New York 11219
www.amstock.com

Q:    Whom can I contact for more information?

A:
If you have questions relating to the mechanics of the distribution of shares of our common stock, you should contact the distribution agent.

    Before the spin-off, if you have questions relating to the spin-off, you should contact Exterran Holdings' Senior Vice President, General Counsel and Secretary at:

    Exterran Holdings, Inc.
    16666 Northchase Drive
    Houston, Texas 77060
    Attention: Donald Wayne, Senior Vice President, General Counsel and Secretary
    Telephone: (281) 836-7000

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SUMMARY

        The following is a summary of some of the information contained in this information statement. It does not contain all the details concerning us or the spin-off, including information that may be important to you. We urge you to read this entire document carefully, including the risk factors, our historical and pro forma financial statements and the notes to those financial statements.

        References in this document to our historical assets, liabilities, business or activities generally refer to the historical assets, liabilities, business or activities of our business as it was conducted as part of Exterran Holdings and its subsidiaries before giving effect to the spin-off. Our historical financial results contained in this information statement may not be indicative of our financial results in the future as an independent company or reflect what our financial results would have been had we been an independent company during the periods presented. Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement assumes the completion of the spin-off.

Our Company

        We are currently a wholly owned subsidiary of Exterran Holdings, Inc. In connection with the spin-off, Exterran Holdings, Inc. will change its name to "Archrock, Inc." Following the completion of our spin-off from Exterran Holdings, we will be an independent, publicly traded company operating under the name "Exterran Corporation," and we will own the assets and liabilities associated with Exterran Holdings' international services and global fabrication businesses. We refer to the global fabrication business currently operated by Exterran Holdings as our product sales business. Archrock will not retain any ownership interest in us or our business.

        We are a market leader in the provision of compression, production and processing products and services that support the production and transportation of oil and natural gas throughout the world. We provide these products and services to a global customer base consisting of companies engaged in all aspects of the oil and natural gas industry, including large integrated oil and natural gas companies, national oil and natural gas companies, independent oil and natural gas producers and oil and natural gas processors, gatherers and pipeline operators. We report our results of operations in the following three reporting business segments: contract operations, aftermarket services and product sales.

        In our contract operations business, which accounted for 23% of our revenue and 52% of our gross margin in 2014, we own and operate natural gas compression equipment and crude oil and natural gas production and processing equipment on behalf of our customers outside of the United States. These services can include engineering, design, procurement, on-site construction and operation of natural gas compression and crude oil or natural gas production and processing facilities for our customers. Our contract operations business is underpinned by long-term commercial contracts with large customers, including several national oil and natural gas companies, which we believe provides us with relatively stable cash flows due to our exposure to the production phase of oil and gas development, compared to drilling and completion related energy service and product providers. We believe our contract operations services generally allow our customers that outsource their compression or production and processing needs to achieve higher production rates than they would achieve with their own operations, resulting in increased revenue for our customers. In addition, outsourcing allows our customers flexibility for their compression and production and processing needs while limiting their capital requirements. These contracts generally involve initial terms ranging from three to five years, and in some cases in excess of 10 years. In many instances, we are able to renew those contracts prior to the expiration of the initial term; in some cases, we may sell the underlying assets to our customers pursuant to purchase options.

        In our aftermarket services business, which accounted for 7% of our revenue and 7% of our gross margin in 2014, we provide operations, maintenance, overhaul and reconfiguration services outside of the United States to support our customers who own their own compression, production, processing, treating and related equipment. Our services range from routine maintenance services and parts sales to the full operation and maintenance of customer-owned assets. We both seek to couple aftermarket

 

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services with our product sales business to provide ongoing services to customers who buy equipment from us and to sell those services to customers who have bought equipment from other companies.

        In our product sales business, which accounted for approximately 70% of our revenue and 41% of our gross margin in 2014, we design, engineer, manufacture, install and sell natural gas compression packages, as well as equipment used in the production, treating and processing of crude oil and natural gas to customers both in the United States and internationally. We also design, engineer, manufacture and install this equipment for use in our contract operations business. In addition, we combine our products into an integrated solution that we design, engineer, procure and, in certain cases, construct on-site for sale to our customers. We believe the expansive range of products we sell through our global platform enables us to take advantage of the ongoing, worldwide energy infrastructure build-out.

Competitive Strengths

        We believe the following key competitive strengths will allow us to create shareholder value:

        Global platform and expansive service and product offerings poised to capitalize on the global energy infrastructure build-out.    Despite the recent decline in oil and natural gas prices and the impact on demand for our services and products, we expect that global oil and natural gas infrastructure will continue to be built out and provide us with opportunities for growth as we believe our global customer base will continue to invest in infrastructure projects based on longer-term fundamentals that are less tied to near-term commodity prices. We believe our size, geographic scope and broad customer base provide us with a unique advantage in meeting our customers' needs, particularly with regard to large-scale project construction and development which will allow us to capture those growth opportunities. We provide our customers a broad variety of products and services in approximately 30 countries worldwide, including outsourced compression, production and processing services, as well as the sale of a large portfolio of natural gas compression and oil and natural gas production and processing equipment and installation services. We believe our contract operations services generally allow our customers that outsource their compression or production and processing needs to achieve higher production rates than they would achieve with their own operations, resulting in increased revenue for our customers. In addition, outsourcing allows our customers flexibility for their compression and production and processing needs while limiting their capital requirements. By offering a broad range of services and products that leverage our core strengths, we believe we provide unique integrated solutions that meet our customers' needs. We believe the breadth and quality of our products and services, the depth of our customer relationships and our presence in many major oil and natural gas-producing regions place us in a position to capture additional business on a global basis.

        High-quality products and services.    We have built a network of high-quality energy infrastructure assets that are strategically deployed across our global platform. Through our history of operating a wide variety of products in many energy-producing markets around the world, we have developed the technical expertise and experience required to understand the needs of our customers and meet those needs through a range of products and services. These products and services include both highly customized compression, production and processing solutions as well as standard products based on our expertise, in support of a range of projects, from those requiring quick completion to those that may take several years to fully develop. Additionally, this experience has allowed us to develop efficient systems and processes and a skilled workforce that allow us to provide high-quality services throughout international markets. We utilize this technical expertise and long history of developing and operating projects for our customers to continually improve our products and services, which enables us to provide our customers with high-quality, comprehensive oil and natural gas infrastructure support worldwide.

        Complementary businesses enable us to offer customers integrated infrastructure solutions.    We aim to provide our customers with a single source to meet their energy infrastructure needs, and we believe we have the ability to serve our customers' changing needs in a variety of ways. For customers that seek

 

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to limit capital spending on energy infrastructure projects, we offer our full operations services through our contract operations business. Alternatively, for customers that prefer to develop and acquire their own infrastructure assets, we are able to sell equipment and facilities for their operation In addition, in those cases, we can also provide operations, maintenance, overhaul and reconfiguration services following the sale through our aftermarket services business. Finally, we also provide aftermarket services to customers that own compression, production, processing and treating equipment that was not purchased from us. Because of the breadth of our products and our ability to deliver those products through our different delivery models, we believe we are able to provide the solution that is most suitable to our customers in the markets in which they operate. We believe this ability to provide our customers with a variety of products and services provides us with greater stability, as we are able to adjust the products and services we provide to reflect our customers' changing needs.

        Cash flows from contract operations business supported by long-term contracts with diverse customer base.    We provide contract operations services to customers located in approximately 15 countries. Within our contract operations business, we seek to enter into long-term contracts with a diverse collection of customers, including large integrated oil and natural gas companies and national energy companies. These contracts generally involve initial terms ranging from three to five years, and in some cases can be in excess of 10 years, and typically require our customers to pay our monthly service fee even during periods of limited or disrupted natural gas flows. In addition, our large, international customer base provides a diversified revenue stream, which we believe reduces customer and geographic concentration risk. Furthermore, our customer base includes several companies that are among the largest and most well-known companies within their respective regions throughout our global platform.

        Experienced management team.    We have an experienced and skilled management team with a long track record of driving growth through organic expansion and selective acquisitions. The members of our management team have strong relationships in the oil and gas industry and have operated through numerous commodity price cycles throughout our areas of operations. Members of our management team have spent a significant portion of their respective careers at highly regarded energy and manufacturing companies, such as Exterran Holdings, and have accumulated an average of over 25 years of industry experience.

        Well-balanced capital structure with sufficient liquidity.    We intend to maintain a capital structure with an appropriate amount of leverage and the financial flexibility to invest in our operations and pursue attractive growth opportunities that we believe will increase the overall earnings and cash flow generated by our business. As of June 30, 2015, on a pro forma basis after giving effect to the spin-off, the related financing transactions and approximately $91.4 million of outstanding letters of credit, we would have had access to approximately $281.8 million of available borrowings under our new credit facility. In addition, as of June 30, 2015, we would have had approximately $23.0 million of cash and cash equivalents on hand on a pro forma basis.

Business Strategies

        We intend to continue to capitalize on our competitive strengths to meet our customers' needs through the following key strategies:

        Strategically grow our business to generate attractive returns to our shareholders.    Our primary strategic focus involves the growth of our business through expanding our product and services offerings and growing our customer base, as well as targeting redevelopment opportunities in the U.S. energy market and expansions into new international markets benefiting from the global energy infrastructure build-out. Our diverse product and service portfolio allows us to readily respond to changes in industry and economic conditions. We believe our global footprint allows us to provide the prompt product availability our customers require, and we can construct projects in new locations as needed to meet customer demand. We have the ability to readily deploy our capital to construct new or

 

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supplemental projects that we build, own and operate on behalf of our customers through our contract operations business. In addition, we seek to provide our customers with integrated infrastructure solutions by combining product and service offerings across our businesses. As an independent company, we plan to supplement our organic growth with select acquisitions in key markets to further enhance our geographic reach, product offerings and other capabilities. We believe acquisitions of this nature will allow us to generate incremental revenues from existing and new customers and obtain greater market share.

        Expand customer base and deepen relationships with existing customers.    We believe the uniquely broad range of services we offer, the quality of our products and services and our diverse geographic footprint positions us well to attract new customers and cross-sell our products and services to existing customers. In addition, we have a long history of providing the products and services we offer to our customers, which we couple with the technical expertise of our experienced engineering personnel to understand and meet our customers' needs, particularly as those needs develop and change over time. We intend to devote significant business development resources to market our products and services, leverage existing relationships and expedite our growth potential. We also seek to provide supplemental projects and services to our customers as their needs evolve over time. Finally, we expect to be able to offer certain of our products, including fabricated compressors, to prospective customers that are competitors of Archrock, which increases our prospective customer base and provides us with the opportunity to diversify our revenue sources.

        Continue our industry-leading safety performance.    Because of our emphasis on training and safety protocols for our employees, we have delivered industry-leading safety performance, which has resulted in our achieving a strong reputation for safety. We believe this safety performance and reputation helps us to attract and retain customers and employees. We have adopted rigorous processes and procedures to facilitate our compliance with safety regulations and policies. We work diligently to meet or exceed applicable safety regulations, and we intend to continue to focus on our safety monitoring function as our business grows and operating conditions change.

        Continue to optimize our global platform, products and services and enhance our profitability.    We regularly review and evaluate the quality of our operations, products and services. This process includes customer review programs to assess the quality of our performance. In addition, we intend to use our global platform to reach a wide variety of customers, which we believe can enable us to achieve cost savings in our operations. We believe our ongoing focus on improving the quality of our operations, products and services results in greater satisfaction among our customers, which we believe results in greater profitability and value for our shareholders.

The Spin-Off and Our Relationship with Archrock After the Spin-Off

    The Spin-Off

        The board of directors of Exterran Holdings regularly reviews the various operations conducted by Exterran Holdings to ensure that resources are deployed and activities are pursued in the best interest of its shareholders. On November 17, 2014, Exterran Holdings announced that its board of directors had approved in principle a plan involving the pro rata distribution of all of our shares of common stock to Exterran Holdings' shareholders in a distribution intended to be tax-free to us and such shareholders for U.S. federal income tax purposes (other than with respect to any cash received in lieu of fractional shares). The spin-off is subject to, among other things, final approval by the Exterran Holdings board of directors and the conditions described below under "The Spin-Off—Spin-Off Conditions and Termination." We expect to complete the spin-off on or about November 3, 2015. However, we cannot assure you that the spin-off will be completed on the anticipated timeline, or at all, or that the terms of the spin-off will not change.

        We are currently a wholly owned subsidiary of Exterran Holdings. In connection with the spin-off, Exterran Holdings will change its name to "Archrock, Inc." Following the completion of the spin-off,

 

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we expect to own the assets and to be obligated on the liabilities comprising Exterran Holdings' international services and global fabrication businesses.

        On or before the distribution date, we and Archrock will enter into agreements to define various post-spin-off relationships between Archrock and us in various contexts. For example, we expect that the separation and distribution agreement we will enter into with Archrock will contain certain noncompetition provisions addressing restrictions for a limited period of time after the spin-off on our ability to provide contract operations services in the United States and on Archrock's ability to provide contract operations services outside of the United States and product sales to customers worldwide, subject to certain exceptions. In addition, we will enter into the transition services agreement with Archrock under which the parties will provide one another with certain transition services on an interim basis. We and Archrock will also enter into a tax matters agreement that will govern the respective rights, responsibilities and obligations of Archrock and us after the spin-off with respect to taxes, tax attributes, the preparation and filing of tax returns, the control of tax audits and other tax proceedings and assistance and cooperation in respect of tax matters. The tax matters agreement will contain certain restrictions on our ability to take, or fail to take, actions that could cause the distribution to fail to qualify as tax-free. Moreover, we expect to enter into a supply agreement and related storage agreements with Archrock and Archrock Partners on arm's length terms that, among other things, will set forth the terms under which we will provide Archrock and Archrock Partners with fabricated equipment. We also expect to enter into service agreements with Archrock on arm's length terms that will set forth the terms under which the parties will provide each other with installation, start-up, commissioning and other services. See "Risk Factors—Risks Relating to the Spin-Off." For more information regarding these agreements, see "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us" and the historical and pro forma financial statements and the notes thereto included elsewhere in this information statement.

Recent Developments

        On July 10, 2015, Exterran Corporation and EESLP entered into a $750.0 million revolving credit facility. On October 5, 2015, Exterran Corporation and EESLP amended and restated the terms of the $750.0 million credit agreement to provide for a new $680.0 million revolving credit facility and a new $245.0 million term loan facility (collectively, the "new credit facility"). Upon the availability of the new credit facility, Exterran Corporation will guarantee EESLP's obligations under the new credit facility. As of June 30, 2015, on a pro forma basis after giving effect to the spin-off, the related financing transactions and approximately $91.4 million of outstanding letters of credit, we would have had approximately $281.8 million in available borrowing capacity under the new credit facility. In connection with the spin-off, we intend to transfer borrowings under the new credit facility to Exterran Holdings to allow it to repay a portion of its indebtedness.

        As of June 30, 2015, Exterran Holdings and its subsidiaries (other than Exterran Partners and its subsidiaries) had approximately $707 million of debt outstanding, including approximately $357 million of outstanding borrowings under Exterran Holdings' existing credit facility.

        We intend to transfer the net proceeds from the borrowings under the new credit facility to Exterran Holdings to allow it to repay a portion of its indebtedness in connection with the spin-off. As of June 30, 2015, on a pro forma basis after giving effect to the spin-off, we would have borrowed and transferred to Exterran Holdings approximately $539.0 million. Subsequent to June 30, 2015 and prior to the completion of the spin-off, Exterran Holdings expects to incur additional borrowings under its existing credit facility of between $40 million and $50 million to finance expenses related to the completion of the spin-off and related financing transactions, which will increase the amount we borrow under our new credit facility and transfer to Exterran Holdings.

        For more information about our new credit facility, please read "Description of Material Indebtedness."

 

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Risk Factors

        Our business is subject to a number of risks, including risks related to the spin-off. The following list of risk factors is not exhaustive. Please read "Risk Factors" carefully for a more thorough description of these and other risks.

    Risks Relating to Our Business

    Continued low oil and natural gas prices could continue to depress or further decrease demand or pricing for our natural gas compression and oil and natural gas production and processing equipment and services and, as a result, adversely affect our business.

    The erosion of the financial condition of our customers could adversely affect our business.

    Failure to timely and cost-effectively execute on larger projects could adversely affect our business.

    We may incur losses on fixed-price contracts, which constitute a significant portion of our product sales business.

    There are many risks associated with conducting operations in international markets, including our largest international markets for contract operations, which include Mexico, Brazil and Argentina.

    We are due to receive a substantial amount in installment payments from the purchaser of our previously nationalized Venezuelan assets, the nonpayment of which would render us unable to contribute amounts corresponding to those funds to Archrock or its subsidiaries.

    We are exposed to exchange rate fluctuations in the international markets in which we operate. A decrease in the value of any of these currencies relative to the U.S. dollar could reduce profits from international operations and the value of our international net assets.

    We will have a substantial amount of debt that could limit our ability to fund future growth and operations and increase our exposure to risk during adverse economic conditions.

    If we are unable to refinance our term loan when due on acceptable terms, we may experience a material adverse effect on our liquidity and financial condition.

    Covenants in our credit agreement may impair our ability to operate our business.

    We may be vulnerable to interest rate increases due to our floating rate debt obligations.

    The termination of or any price reductions under certain of our contract operations services contracts could have a material impact on our business.

    Following the spin-off, we may face challenges as a result of being a smaller, less diversified company than we were as part of Exterran Holdings prior to the spin-off.

    We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, or FCPA, similar worldwide anti-bribery laws and trade control laws. If we are found to have violated the FCPA or other legal requirements, we may be subject to criminal and civil penalties and other remedial measures, which could materially harm our reputation, business, results of operations, financial condition and liquidity.

    Risks Relating to the Spin-Off

    We may not realize some or all of the benefits we expect to achieve from our separation from Exterran Holdings.

    The combined value of Archrock and Exterran Corporation shares after the spin-off may not equal or exceed the value of Exterran Holdings shares prior to the spin-off.

    A large number of our shares are or will be eligible for future sale, which may cause the market price for our common stock to decline.

 

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    Our historical combined and pro forma financial information may not be representative of the results we would have achieved as a stand-alone public company and may not be a reliable indicator of our future results.

    Our costs will increase as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

    Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject following the spin-off and may strain our resources.

    Following the spin-off, we and Archrock will be subject to certain noncompetition restrictions, which may limit our ability to grow our business.

    Following the spin-off, we and Archrock will provide each other with certain services under the transition services agreement that may require us to divert resources from our business, which in turn may negatively impact our business, financial condition and results of operations.

    Following the spin-off, we will provide Archrock and Archrock Partners with certain fabricated products, including compressors, and we will depend on Archrock and Archrock Partners for a significant amount of our product sales revenues.

    Several members of our board and management may have conflicts of interest because of their ownership of shares of common stock of or other equity interests in Exterran Holdings.

    We will be subject to continuing contingent tax liabilities of Exterran Holdings following the spin-off.

    The tax treatment of the distribution is subject to uncertainty. If the distribution does not qualify as a transaction that is tax-free for U.S. federal income tax purposes, we, Archrock and our shareholders could be subject to significant tax liability and, in certain circumstances, we could be required to indemnify Archrock for material taxes pursuant to indemnification obligations under the tax matters agreement.

    Risks Relating to Ownership of Our Common Stock

    No market currently exists for our common stock. We cannot assure you that an active trading market will develop for our common stock.

    The market price and trading volume of our common stock may be volatile and you may not be able to resell your shares at or above the initial market price of our common stock following the spin-off.

Corporate Information

        The address of our principal executive offices is 4444 Brittmoore Road, Houston, Texas 77041. Our main telephone number is (281) 854-3000. Effective upon the completion of the spin-off, our website address will be www.exterran.com. Information contained on our website is not incorporated by reference into this information statement or the registration statement on Form 10 of which this information statement is a part, and you should not consider information on our website as part of this information statement or such registration statement on Form 10.

 

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Summary of the Spin-Off

        The following is a brief summary of the terms of the spin-off. Please see "The Spin-Off" for a more detailed description of the matters described below.

Distributing company

  Exterran Holdings, which is our parent company. After the spin-off, Archrock will not retain any shares of our common stock.

Distributed company

 

Exterran Corporation, which is currently a wholly owned subsidiary of Exterran Holdings. After the spin-off, we will be an independent, publicly traded company.

Distribution ratio

 

Each holder of Exterran Holdings common stock will receive one share of our common stock for every two shares of Exterran Holdings common stock held on the record date. Approximately 34.7 million shares of our common stock will be distributed in the spin-off, based upon the number of shares of Exterran Holdings common stock outstanding on June 30, 2015 and that we expect will remain outstanding on October 27, 2015, the record date for the spin-off. The shares of our common stock to be distributed by Exterran Holdings will constitute all of the issued and outstanding shares of our common stock. For more information on the shares being distributed in the spin-off, see "Description of Capital Stock."

Fractional shares

 

The transfer agent identified below will automatically aggregate fractional shares into whole shares and sell them on behalf of shareholders in the open market at prevailing market prices and distribute the net cash proceeds pro rata to each Exterran Holdings shareholder who otherwise would have been entitled to receive a fractional share in the spin-off. You will not be entitled to any interest on the amount of payment made to you in lieu of a fractional share. See "The Spin-Off—Treatment of Fractional Shares."

Distribution procedures

 

On or about the distribution date, the distribution agent identified below will distribute the shares of our common stock to be distributed by crediting those shares to book-entry accounts established by the transfer agent for persons who were shareholders of Exterran Holdings as of 5:00 p.m., New York City time, on the record date. Shares of our common stock will be issued only in book-entry form. No paper stock certificates will be issued. You will not be required to make any payment or surrender or exchange your shares of Exterran Holdings common stock or take any other action to receive your shares of our common stock. However, as discussed below, if you sell shares of Exterran Holdings common stock in the "regular way" market between the record date and the distribution date, you will be selling your right to receive the associated shares of our common stock in the spin-off. Registered shareholders will receive additional information from the transfer agent shortly after the distribution date. Beneficial shareholders will receive information from their brokerage firms.

 

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Distribution agent, transfer agent and registrar for our shares of common stock

 

American Stock Transfer & Trust Co., LLC.

Record date

 

5:00 p.m., New York City time, on October 27, 2015.

Distribution date

 

November 3, 2015.

Trading prior to or on the distribution date

 

It is anticipated that, beginning on or shortly before the record date, Exterran Holdings' shares will trade in two markets on the NYSE, a "regular way" market and an "ex-distribution" market. Investors will be able to purchase Exterran Holdings shares without the right to receive shares of our common stock in the "ex-distribution" market for Exterran Holdings common stock. Any holder of Exterran Holdings common stock who sells Exterran Holdings shares in the "regular way" market on or before the distribution date will also be selling the right to receive shares of our common stock in the spin-off. You are encouraged to consult with your broker or financial advisor regarding the specific implications of selling Exterran Holdings common stock prior to or on the distribution date.

Assets and liabilities of the distributed company

 

Prior to completion of the spin-off, we and Exterran Holdings will enter into a separation and distribution agreement that contains the key provisions relating to the separation of our business from Exterran Holdings and the distribution of our shares of common stock. The separation and distribution agreement identifies the assets to be transferred, liabilities to be assumed and contracts to be assigned either to us by Exterran Holdings or by us to Exterran Holdings in the spin-off and describe when and how the Transactions will occur. Please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Separation and Distribution Agreement."

 

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Relationship with Archrock after the spin-off

 

On or before the distribution date, we and Archrock will enter into agreements to define various continuing relationships between Archrock and us in various contexts. In particular, we will enter into the transition services agreement with Archrock under which the parties will provide each other with certain transition services on an interim basis. We and Archrock will also enter into a tax matters agreement that will govern the respective rights, responsibilities and obligations of Archrock and us after the spin-off with respect to taxes, tax attributes, the preparation and filing of tax returns, the control of tax audits and other tax proceedings and assistance and cooperation in respect of tax matters. The tax matters agreement will contain certain restrictions on our ability to take, or fail to take, actions that could cause the distribution to fail to qualify as tax-free. In addition, we expect to enter into a supply agreement and related storage agreements with Archrock and Archrock Partners on arm's length terms that, among other things, will set forth the terms under which we will provide Archrock and Archrock Partners with fabricated equipment. We also expect to enter into services agreements with Archrock on arm's length terms that will set forth the terms under which the parties will provide each other with installation, start-up, commissioning and other services. Please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us."

Indemnities

 

Under the terms of the tax matters agreement we will enter into in connection with the spin-off, we generally will be required to indemnify Archrock for all taxes attributable to our business, whether accruing before, on or after the date of the spin-off and for 50% of certain taxes imposed on Archrock or its subsidiaries that do not clearly relate to either our business or Archrock's business. We will also generally be required to indemnify Archrock for any taxes arising from the spin-off or certain related transactions that are imposed on us, Archrock or its other subsidiaries, to the extent such taxes result from certain actions or failures to act by us that occur after the effective date of the tax matters agreement, and for 50% of such taxes to the extent such taxes do not result from certain actions or failures to act by us or Archrock. Please see "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off—Tax Matters Agreement." Please see also "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Tax Matters Agreement." Under the separation and distribution agreement entered into in connection with the spin-off, we will also indemnify Archrock and its remaining subsidiaries against various claims and liabilities relating to the past operation of our business. Please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Separation and Distribution Agreement."

 

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U.S. federal income tax consequences

 

Exterran Holdings expects to obtain an opinion of counsel substantially to the effect that, for U.S. federal income tax purposes, (i) the internal distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, and (ii) the distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, subject to certain qualifications and limitations. Accordingly, for U.S. federal income tax purposes, Exterran Holdings should not recognize any material gain or loss and you generally should recognize no gain or loss or include any amount in taxable income (other than with respect to cash received in lieu of fractional shares) as a result of the spin-off. The material U.S. federal income tax consequences of the spin-off are described in more detail under "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off."

Conditions to the spin-off

 

We expect that the spin-off will be effective on November 3, 2015, provided that the conditions set forth under the caption "The Spin-Off—Spin-Off Conditions and Termination" have been satisfied in Exterran Holdings' sole and absolute discretion. However, even if all of the conditions have been satisfied, Exterran Holdings may amend, modify or abandon any and all terms of the spin-off and the related transactions at any time prior to the distribution date.

Reasons for the spin-off

 

Exterran Holdings' board and management team believe that there are significant expected benefits to the simplified, separate companies resulting from this transaction, including:

 

with respect to Archrock:

 

a focus on growing the U.S. services businesses, including organic growth, third party acquisitions and the sale by Archrock of additional U.S. contract operations assets to Archrock Partners;

 

relatively stable cash flows and a focus on its fee-based natural gas contract compression business;

 

the opportunity for Archrock to return a high percentage of cash flow to shareholders in the form of a dividend;

 

a pure-play investment opportunity with significant exposure to the U.S. energy infrastructure redevelopment;

 

opportunities to pursue acquisitions with potentially more highly valued equity currency;

 

a narrowing of industry focus that may potentially provide more extensive and more specialized equity research coverage; and

 

the ability to be valued on a dividend yield basis, consistent with other publicly traded general partners, unlocking value for shareholders.

 

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with respect to us:

 

a focus on profitable growth in strategic markets and positioning us and our shareholders to benefit from the continued build-out of the global energy infrastructure and the redevelopment currently underway in North America;

 

in our international services businesses, relatively stable cash flows due to our exposure to the production phase of oil and gas development, as compared to drilling and completion related energy service and product providers;

 

limited capital expenditures in our product sales business;

 

financial flexibility to enable investment in value-creating contract operations projects; and

 

the opportunity to expand our potential product sales customer base to include companies in the U.S. contract compression business that have historically been Exterran Holdings' competitors.

 

In addition, we believe the spin-off will enable us to recognize revenue and profit on sales of certain newly fabricated equipment to Archrock and Archrock Partners that for accounting purposes were previously eliminated in the course of consolidating the financial statements of Exterran Holdings. For more information, please read "The Spin-Off—Reasons for the Spin-Off."

Stock exchange listing

 

Currently there is no public market for our common stock. Subject to completion of the spin-off, we expect our common stock to be traded on the NYSE under the symbol "EXTN." We anticipate that limited trading in shares of our common stock will begin on a "when-issued" basis on or shortly before the record date and will continue up to and including through the distribution date and that "regular-way" trading in shares of our common stock will begin on the first trading day following the distribution date. "When-issued" trading refers to a transaction made conditionally because the security has been authorized but not yet issued. On the first trading day following the distribution of our shares of common stock in the spin-off, "when-issued" trading in respect of our common stock will end and "regular way" trading will begin. "Regular way" trading refers to trading after a security has been issued and typically involves a transaction that settles on the third full business day following the date of the transaction. We cannot predict the trading prices or volume of our common stock following the spin-off. In connection with the spin-off, Exterran Holdings, Inc. will change its name to "Archrock, Inc." Following the spin-off, Archrock common stock will remain outstanding and will trade on the NYSE under the symbol "AROC."

 

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Dividend policy

 

We do not currently anticipate paying cash dividends on our common stock. The declaration and amount of future dividends, if any, will be determined by our board of directors and will depend on our financial condition, earnings, capital requirements, financial covenants, industry practice, applicable law and other factors our board of directors deems relevant. Please read "Dividend Policy."

Risk factors

 

You should carefully review the risks relating to our business, the spin-off and ownership of our common stock described in this information statement. Please read "Risk Factors."

 

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

        The following tables present the summary historical and pro forma financial information of Exterran Holdings' historical international operations and global fabrication reporting segments and the international component of Exterran Holdings' aftermarket services reporting segment reflected in its historical financial statements discussed herein and included elsewhere in this information statement. We refer to the global fabrication reporting business currently operated by Exterran Holdings as our product sales business. The balance sheet data as of December 31, 2014 and 2013 and the statements of operations and cash flows data for each of the years ended December 31, 2014, 2013 and 2012 are derived from our audited combined financial statements included elsewhere in this information statement. The balance sheet data as of June 30, 2015 and the statements of operations and cash flows data for each of the six months ended June 30, 2015 and 2014 are derived from our unaudited combined financial statements included elsewhere in this information statement. The balance sheet data as of June 30, 2014 and December 31, 2012 are derived from our unaudited combined financial statements, which are not included in this information statement. Management believes that the unaudited combined financial statements have been prepared on the same basis as the audited combined financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the information for the periods presented. Results for the interim periods may not necessarily be indicative of results for the full year. The results from continuing operations for all periods presented exclude the results of our Venezuelan contract operations business and Canadian contract operations and aftermarket services businesses, or Canadian Operations. Those results are reflected in discontinued operations for all periods presented.

        The unaudited pro forma condensed combined financial statements as of and for the six months ended June 30, 2015 and for the year ended December 31, 2014 have been derived from Exterran Holdings' financial statements and adjusted to give effect to the spin-off and the other transactions described under "Unaudited Pro Forma Condensed Combined Financial Statements." The summary historical and pro forma financial information presented below should be read in conjunction with our financial statements and accompanying notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Unaudited Pro Forma Condensed Combined Financial Statements" included elsewhere in this information statement. The financial information may not be indicative of our future performance and does not necessarily reflect what the financial position and results of operations would have been had we operated as a separate, stand-alone entity during the periods presented, including changes that will occur in our operations as a result of our spin-off from Exterran Holdings.

 

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  Historical   Pro Forma  
 
  Years Ended December 31,   Six Months
Ended June 30,
  Six Months
Ended
June 30,
  Year Ended
December 31,
 
 
  2014   2013   2012   2015   2014   2015   2014  

(in thousands)

                                           

Statement of Operations Data:

                                           

Revenues

  $ 2,172,754   $ 2,415,473   $ 2,068,724   $ 1,014,691   $ 1,023,826   $ 1,042,892   $ 2,237,031  

Gross margin(1)

    596,869     583,516     484,606     267,219     287,701     269,475     602,011  

Selling, general and administrative

    267,493     264,890     269,812     114,330     134,691     114,330     267,493  

Depreciation and amortization

    173,803     140,029     167,499     75,581     95,157     75,581     173,803  

Long-lived asset impairment(2)

    3,851     11,941     5,197     10,489         10,489     3,851  

Restructuring and other charges(2)

            3,892     10,547         10,547      

Interest expense

    1,905     3,551     5,318     826     848     17,369     35,021  

Equity in income of non-consolidated affiliates(2)

    (14,553 )   (19,000 )   (51,483 )   (10,068 )   (9,602 )   (10,068 )   (14,553 )

Other (income) expense, net

    7,222     (1,966 )   5,638     11,878     (4,966 )   11,878     7,222  

Provision for income taxes

    77,833     97,367     26,226     26,802     39,641     21,802     68,042  

Income from continuing operations

    79,315     86,704     52,507     26,834     31,932     17,547     61,132  

Income from discontinued operations, net of tax(2)

    73,198     66,149     66,843     19,122     36,597     19,122     73,198  

Net income

    152,513     152,853     119,350     45,956     68,529     36,669     134,330  

Balance Sheet Data (at period end):

                                           

Cash and cash equivalents

  $ 39,361   $ 35,194   $ 34,167   $ 23,049   $ 53,762   $ 23,049        

Working capital(3)

    481,596     372,186     347,762     533,495     469,062     518,617        

Total assets

    2,032,823     1,999,211     2,133,502     1,979,273     2,037,196     2,010,905        

Long-term debt(4)

    1,107     1,539         891     1,332     552,703        

Total equity

    1,451,822     1,373,904     1,407,394     1,493,038     1,466,809     972,858        

Cash Flow Data:

                                           

Net cash flows provided by (used in):

                                           

Operating activities

  $ 150,942   $ 170,286   $ 168,433   $ 47,654   $ 32,000              

Investing activities

    (63,577 )   14,913     41,700     (45,600 )   (16,309 )            

Financing activities

    (79,273 )   (182,685 )   (196,934 )   (17,583 )   6,877              

Other Financial Data:

                                           

EBITDA, as adjusted(1)

  $ 326,729   $ 324,905   $ 216,562   $ 149,010   $ 155,094   $ 151,266   $ 331,871  

Capital expenditures:

                                           

Contract Operations Equipment:

                                           

Growth(5)

  $ 97,931   $ 36,468   $ 107,658   $ 53,811   $ 41,331              

Maintenance(6)

    24,377     21,591     22,530     14,586     9,507              

Other

    35,546     42,136     34,602     14,274     16,129              

(1)
Gross margin and EBITDA, as adjusted are non-GAAP financial measures. Gross margin and EBITDA, as adjusted are defined, reconciled to net income (loss) and discussed further under "Selected Historical Combined Financial Data—Non-GAAP Financial Measures."

(2)
See notes to the Combined Financial Statements included elsewhere in this information statement for further discussion regarding these line items.

(3)
Working capital is defined as current assets minus current liabilities.

(4)
Long-term debt for each of the periods presented represents our capital lease obligations.

(5)
Growth capital expenditures are made to expand or to replace partially or fully depreciated assets or to expand the operating capacity or revenue of existing or new assets, whether through construction, acquisition or modification. The majority of our growth capital expenditures are related to the acquisition cost of new compressor units and processing and treating equipment that we add to our fleet and installation costs on integrated projects. In addition, growth capital expenditures can also include the upgrading of major components on an existing compressor unit where the current configuration of the compressor unit is no longer in demand and the compressor unit is not likely to return to an operating status without the capital expenditures. These latter expenditures substantially modify the operating parameters of the compressor unit such that it can be used for previously unsuitable applications.

(6)
Maintenance capital expenditures are made to maintain the existing operating capacity of our assets and related cash flows further extending the useful lives of the assets. Maintenance capital expenditures are related to the major overhauls of significant components of a compressor unit, such as the engine, compressor and cooler, that return the components to a "like-new" condition, but do not modify the applications for which the compressor unit was designed.

 

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RISK FACTORS

        You should carefully consider the risks and uncertainties described below in addition to the other information contained in this information statement. Some of these risks relate principally to our spin-off from Exterran Holdings, while others relate principally to our business and the industry in which we operate or to the securities markets generally and ownership of our common stock. Specifically, please see "Cautionary Statement Concerning Forward-Looking Statements" for a discussion of events that may affect our business. Our business, financial condition and results of operations could be materially adversely affected by any of these risks, and, as a result, the trading price of our common stock could materially decline.

Risks Relating to Our Business

Continued low oil and natural gas prices could continue to depress or further decrease demand or pricing for our natural gas compression and oil and natural gas production and processing equipment and services and, as a result, adversely affect our business.

        Our results of operations depend upon the level of activity in the global energy market, including oil and natural gas development, production, processing and transportation. Oil and natural gas prices and the level of drilling and exploration activity can be volatile. For example, oil and natural gas exploration and development activity and the number of well completions typically decline when there is a sustained reduction in oil or natural gas prices or significant instability in energy markets. Even the perception of longer-term lower oil or natural gas prices by oil and natural gas exploration, development and production companies can result in their decision to cancel, reduce or postpone major expenditures or to reduce or shut in well production.

        Global oil prices have declined recently. For example, West Texas Intermediate crude oil spot prices as of June 30, 2015 were approximately 44% lower than prices at June 30, 2014. In addition, natural gas prices in North America can be volatile. For example, the Henry Hub spot price for natural gas at June 30, 2015 was approximately 11% and 36% lower than the price at December 31, 2014 and June 30, 2014, respectively. If oil or natural gas exploration and development activities continue to decline in North America or other parts of the world, the level of production activity and the demand for our contract operations services, natural gas compression equipment and oil and natural gas production and processing equipment could continue to remain depressed or could further decrease, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. A reduction in demand for our products and services could also force us to reduce our pricing substantially, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Moreover, a reduction in demand for our products and services could result in our customers seeking to preserve capital by canceling contracts, canceling or delaying scheduled maintenance of their existing natural gas compression and oil and natural gas production and processing equipment, determining not to enter into new contract operations service contracts or purchase new compression and oil and natural gas production and processing equipment, or canceling or delaying orders for our products and services, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows. For example, third party booking activity levels for our fabricated products in each of our North America and international markets during the three months ended June 30, 2015 have decreased by approximately 76% and 55%, respectively, compared to the three months ended December 31, 2014, and each of our North America and international markets product sales backlog as of June 30, 2015 decreased by approximately 46% and 25%, respectively, compared to December 31, 2014. In periods of volatile commodity prices, the timing of any change in activity levels by our customers is difficult to predict. As a result, our ability to project the anticipated activity level for our business, and particularly our product sales segment, in the second half of 2015 and beyond is limited. If these reduced booking levels persist for a sustained

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period, we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.

The erosion of the financial condition of our customers could adversely affect our business.

        Many of our customers finance their exploration and development activities through cash flow from operations, the incurrence of debt or the issuance of equity. During times when the oil or natural gas markets weaken, our customers are more likely to experience a downturn in their financial condition. A reduction in borrowing bases under reserve-based credit facilities, the lack of availability of debt or equity financing or other factors that negatively impact our customers' financial condition could result in our customers seeking to preserve capital by reducing prices under or cancelling contracts with us, determining not to renew contracts with us, cancelling or delaying scheduled maintenance of their existing natural gas compression and oil and natural gas production and processing equipment, determining not to enter into contract operations agreements or not to purchase new compression and oil and natural gas production and processing equipment, or determining to cancel or delay orders for our products and services. Any such action by our customers would reduce demand for our products and services. Reduced demand for our products and services could adversely affect our business, financial condition, results of operations and cash flows, which may, in turn, reduce any dividends we may pay to our shareholders. In addition, in the event of the financial failure of a customer, we could experience a loss on all or a portion of our outstanding accounts receivable associated with that customer.

Failure to timely and cost-effectively execute on larger projects could adversely affect our business.

        Our international projects typically have a relatively larger size and scope than the majority of Exterran Holdings' projects in the United States, which can translate into more technically challenging conditions or performance specifications for our products and services. Contracts with our customers for these projects typically specify delivery dates, performance criteria and penalties for our failure to perform. Any failure to execute such larger projects in a timely and cost effective manner could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may incur losses on fixed-price contracts, which constitute a significant portion of our product sales business.

        In connection with projects and services performed under fixed-price contracts, we generally bear the risk of cost over-runs, operating cost inflation, labor availability and productivity, and supplier and subcontractor pricing and performance, unless additional costs result from customer-requested change orders. Under both our fixed-price contracts and our cost-reimbursable contracts, we may rely on third parties for many support services, and we could be subject to liability for their failures. For example, we have experienced losses on certain large fabrication or manufacturing projects that have negatively impacted our product sales results. Any failure to accurately estimate our costs and the time required for a fixed-price fabrication or manufacturing project at the time we enter into a contract could have a material adverse effect on our business, financial condition, results of operations and cash flows.

There are many risks associated with conducting operations in international markets.

        Following the spin-off, our contract operations and aftermarket services businesses, and a portion of our product sales business, will be conducted in countries outside the United States. We operate in many countries. The countries with our largest contract operations businesses include Mexico, Brazil and Argentina. We are exposed to risks inherent in doing business in each of the countries where we operate. Our operations are subject to various risks unique to each country that could have a material adverse effect on our business, financial condition, results of operations and cash flows. For example, in

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2009 Petroleos de Venezuela S.A., or PDVSA, the Venezuelan state-owned oil company, assumed control over substantially all of our assets and operations in Venezuela.

        In April 2012, Argentina assumed control over its largest oil and gas producer, Yacimientos Petroliferos Fiscales, or YPF. We had approximately 523,000 horsepower of compression in Argentina as of December 31, 2014, and we generated $172.5 million of revenue in Argentina, including $78.5 million of revenue from YPF, during the year ended December 31, 2014. As of June 30, 2015 and December 31, 2014, $4.4 million and $16.0 million, respectively, of our cash was in Argentina. As is not uncommon during periods of low commodity prices, we have recently been requested to provide modest pricing reductions to YPF for certain of our services and reached a mutually acceptable agreement. This request for pricing reductions was unrelated to the nationalization of YPF, which has not had a direct impact on our business to date. We are unable to predict what further effect, if any, the nationalization of YPF will have on our business in Argentina going forward, or whether Argentina will nationalize additional businesses in the oil and gas industry; however, the nationalization of YPF, the nationalization of additional businesses or the taking of other actions listed below by Argentina could have a material adverse effect on our business, financial condition, results of operations and cash flows.

        More generally in Argentina, the ongoing social, political, economic and legal climate has given rise to significant uncertainties about the country's economic and political future. Since the presidential election in late 2011, the Argentine government has increasingly used foreign-exchange, price, trade and capital controls to attempt to address the country's economic challenges. Argentina's current regulations restrict foreign exchange, including exchanging Argentine pesos for U.S. dollars in certain cases, and we are unable to freely repatriate cash from Argentina. Therefore, the cash flow from our operations in Argentina may not be a reliable source of funding for our operations outside of Argentina, which could limit our ability to grow. Restrictions on our ability to exchange Argentine pesos for U.S. dollars subject us to risk of currency devaluation on future earnings in Argentina. During the six months ended June 30, 2015 and the year ended December 31, 2014, we used Argentine pesos to purchase certain short-term investments in Argentine government issued U.S. dollar denominated bonds. The effective peso to U.S. dollar exchange rate embedded in the purchase price of $15.3 million and $24.3 million of bonds purchased during the six months ended June 30, 2015 and the year ended December 31, 2014, respectively, resulted in our recognition of a loss of $3.9 million and $6.5 million, respectively, which is included in other (income) expense, net, in our combined statements of operations.

        In addition, the Argentine government may adopt additional regulations or policies in the future that may impact, among other things, (i) the timing of and our ability to repatriate cash from Argentina to the U.S. and other jurisdictions, (ii) the value of our assets and business in Argentina and (iii) our ability to import into Argentina the materials necessary for our operations. Any such changes could have a material adverse effect on our operations in Argentina and may negatively impact our business, results of operations, financial condition and cash flows.

        We generate a significant portion of our revenue in Mexico from Petroleos Mexicanos, or Pemex. Pemex is a decentralized public entity of the Mexican government, and, therefore, the Mexican government controls Pemex, as well as its annual budget, which is approved by the Mexican Congress. The Mexican government may cut spending in the future. These cuts could adversely affect Pemex's annual budget and its ability to engage us in the future or compensate us for our services. Recently, the Mexican government implemented an energy industry reform that will allow the government to grant non-Mexican companies the opportunity to enter into contracts and licenses to explore and drill for oil and natural gas in Mexico. Any impact from this reform on our business in Mexico is uncertain.

        Also, during the past several years, incidents of security disruptions in many regions of Mexico have increased, including drug-related gang activity. Certain incidents of violence have occurred in

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regions we serve and have resulted in the temporary disruption of our operations. These disruptions could continue or increase in the future. To the extent that such security disruptions continue or increase, our operations will continue to be affected, and the levels of revenue and operating cash flow from our Mexican operations could be reduced.

        We generate a significant portion of our revenue in Brazil from Petroleos Brasileiro, or Petrobras, a government-controlled energy company. Recently, a significant number of senior executives at Petrobras have resigned their positions in connection with a widely publicized corruption investigation. In addition, Petrobras recently announced further reductions to its long-term capital expenditures budget. We expect these developments to disrupt Petrobras' operations in the near term, which could in turn adversely affect our business and results of operations in Brazil.

        With respect to any particular country in which we operate, the risks inherent in our activities may include the following, the occurrence of any of which could have a material adverse effect on our business, financial condition, results of operations and cash flows:

    difficulties in managing international operations, including our ability to timely and cost effectively execute projects;

    unexpected changes in regulatory requirements, laws or policies by foreign agencies or governments;

    work stoppages;

    training and retaining qualified personnel in international markets;

    the burden of complying with multiple and potentially conflicting laws and regulations;

    tariffs and other trade barriers;

    actions by governments or national oil companies that result in the nullification or renegotiation on less than favorable terms of existing contracts, or otherwise result in the deprivation of contractual rights, and other difficulties in enforcing contractual obligations;

    governmental actions that: result in restricting the movement of property or that impede our ability to import or export parts or equipment; require a certain percentage of equipment to contain local or domestic content; or require certain local or domestic ownership, control or employee ratios in order to do business in or obtain special incentives or treatment in certain jurisdictions;

    foreign currency exchange rate risks, including the risk of currency devaluations by foreign governments;

    difficulty in collecting international accounts receivable;

    potentially longer receipt of payment cycles;

    changes in political and economic conditions in the countries in which we operate, including general political unrest, the nationalization of energy related assets, civil uprisings, riots, kidnappings, violence associated with drug cartels and terrorist acts;

    potentially adverse tax consequences or tax law changes;

    currency controls or restrictions on repatriation of earnings;

    expropriation, confiscation or nationalization of property without fair compensation;

    the risk that our international customers may have reduced access to credit because of higher interest rates, reduced bank lending or a deterioration in our customers' or their lenders' financial condition;

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    complications associated with installing, operating and repairing equipment in remote locations;

    limitations on insurance coverage;

    inflation;

    the geographic, time zone, language and cultural differences among personnel in different areas of the world; and

    difficulties in establishing new international offices and the risks inherent in establishing new relationships in foreign countries.

        In addition, we may expand our business in international markets where we have not previously conducted business. The risks inherent in establishing new business ventures, especially in international markets where local customs, laws and business procedures present special challenges, may affect our ability to be successful in these ventures or avoid losses that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are due to receive a substantial amount in installment payments from the purchaser of our previously nationalized Venezuelan assets, the nonpayment of which would render us unable to contribute amounts corresponding to those funds to Archrock or its subsidiaries.

        In March 2012 and August 2012, we sold our previously nationalized Venezuelan joint venture assets and Venezuelan subsidiary assets, respectively, to PDVSA Gas, S.A., or PDVSA Gas, a subsidiary of PDVSA, for aggregate consideration of approximately $550 million. As of September 30, 2015, we have received payments, including annual charges, of approximately $474 million ($50 million of which was used to repay insurance proceeds previously collected under the policy we maintained for the risk of expropriation) and are due to receive the remaining principal amount as of September 30, 2015 of approximately $96 million in installments through the third quarter of 2016. As these remaining proceeds are received, we intend to contribute an amount equal to such proceeds to Archrock or its subsidiaries pursuant to the terms of the separation and distribution agreement until Archrock and its subsidiaries have received an aggregate amount of such contributions equal to the lesser of (x) $150.0 million, less the aggregate amount of installment payments received from PDVSA Gas by Exterran Holdings and its subsidiaries after August 31, 2015 but before the completion of the spin-off, plus the aggregate amount of all reimbursable expenses incurred by Archrock and its subsidiaries in connection with recovering any default installment payments directly from PDVSA Gas following the completion of the spin-off or (y) $150.0 million. Please read "Relationship with Archrock After the Spin-off—Separation and Distribution Agreement."

        PDVSA's payments to many of its suppliers and partners are currently significantly in arrears, and PDVSA's payments to us have been in arrears from time to time in the past. The ongoing social, political, economic and legal climate has given rise to significant uncertainties about the country's economic and political stability. Since the presidential election in the first half of 2013, the Venezuelan government has increasingly used foreign-exchange, price and capital controls to attempt to address the country's economic challenges. If current political unrest were to develop into a prolonged period of governmental or economic instability, or if PDVSA becomes increasingly unable to pay its suppliers and partners due to the detrimental effect of recent commodity price declines on Venezuela's economy or for other reasons, our ability to recover in full the remaining proceeds from PDVSA Gas could be adversely impacted.

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We are exposed to exchange rate fluctuations in the international markets in which we operate. A decrease in the value of any of these currencies relative to the U.S. dollar could reduce profits from international operations and the value of our international net assets.

        We operate in many international countries. We anticipate that there will be instances in which costs and revenues will not be exactly matched with respect to currency denomination. We generally do not hedge exchange rate exposures, which exposes us to the risk of exchange rate losses. Gains and losses from the remeasurement of assets and liabilities that are receivable or payable in currency other than our subsidiaries' functional currency are included in our combined statements of operations. In addition, currency fluctuations cause the U.S. dollar value of our international results of operations and net assets to vary with exchange rate fluctuations. This could have a negative impact on our business, financial condition or results of operations. In addition, fluctuations in currencies relative to currencies in which the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations. Our material exchange rate exposure relates to intercompany loans denominated in U.S. dollars to subsidiaries whose functional currencies are the Brazilian Real and the Euro, which loans carried balances of $84.0 million and $31.9 million U.S. dollars, respectively, as of June 30, 2015. In addition, Argentina's current regulations restrict foreign exchange, including exchanging Argentine pesos for U.S. dollars in certain cases. Restrictions on our ability to exchange Argentine pesos for U.S. dollars subject us to risk of currency devaluation on future earnings in Argentina. As of June 30, 2015, $4.4 million of our cash was in Argentina. As we expand geographically, we may experience economic loss and a negative impact on earnings or net assets solely as a result of foreign currency exchange rate fluctuations. Further, the markets in which we operate could restrict the removal or conversion of the local or foreign currency, resulting in our inability to hedge against these risks.

We will have a substantial amount of debt that could limit our ability to fund future growth and operations and increase our exposure to risk during adverse economic conditions.

        As of June 30, 2015, on a pro forma basis after giving effect to the spin-off, we would have had approximately $552.7 million in outstanding debt obligations, including outstanding borrowings under the new credit facility. Many factors, including factors beyond our control, may affect our ability to make payments on our outstanding indebtedness. These factors include those discussed elsewhere in these Risk Factors and those listed under "Cautionary Statement Concerning Forward-Looking Statements."

        As of June 30, 2015, Exterran Holdings and its subsidiaries (other than Exterran Partners and its subsidiaries) had approximately $707 million of debt outstanding, including approximately $357 million of outstanding borrowings under its existing credit facility. Subsequent to June 30, 2015 and prior to the completion of the spin-off, Exterran Holdings expects to incur additional borrowings under its existing credit facility of between $40 million and $50 million to finance expenses related to the completion of the spin-off and related financing transactions, which will increase the amount we borrow under our new credit facility and transfer to Exterran Holdings.

        Our substantial debt and associated commitments could have important adverse consequences. For example, these commitments could:

    make it more difficult for us to satisfy our contractual obligations;

    increase our vulnerability to general adverse economic and industry conditions;

    limit our ability to fund future working capital, capital expenditures, acquisitions or other corporate requirements;

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    increase our vulnerability to interest rate fluctuations because the interest payments on a portion of our debt will be based upon variable interest rates and a portion will adjust based upon our credit statistics;

    limit our flexibility in planning for, or reacting to, changes in our business and our industry;

    limit our ability to pay dividends to our shareholders;

    place us at a disadvantage compared to our competitors that have less debt or less restrictive covenants in such debt; and

    limit our ability to refinance our debt in the future or borrow additional funds.

If we are unable to refinance our term loan when due on acceptable terms, we may experience a material adverse effect on our liquidity and financial condition.

        In October 2015, we entered into a new $245.0 million term loan, which will mature two years after the initial availability date, as described under "Description of Material Indebtedness." At or prior to the time the term loan matures, we will be required to refinance it by entering into one or more new facilities, which could result in higher borrowing costs, issuing equity, which would dilute our existing shareholders, or otherwise raising the funds necessary to repay the outstanding principal amount under the term loan. In the event that we refinance the term loan with the proceeds of a qualified capital raise, EESLP will contribute to a subsidiary of Archrock the right to receive, promptly following the occurrence of such qualified capital raise, a $25.0 million cash payment. No assurance can be given that we will be able to enter into new facilities or issue equity in the future on attractive terms or at all. If we are unable to obtain financing on acceptable terms, or at all, to refinance the remaining principal amount outstanding under our term loan, we would need to take other actions, including selling assets or seeking strategic investments from third parties, potentially on unfavorable terms, and deferring capital expenditures or other discretionary uses of cash. To the extent that were are unable to refinance our term loan or are required to take any such other action, we would experience a material adverse effect on our liquidity and financial condition.

Covenants in our credit agreement may impair our ability to operate our business.

        The credit agreement related to the new credit facility contains various covenants with which we or certain of our subsidiaries must comply, including, but not limited to, restrictions on the use of proceeds from borrowings and limitations on our ability to incur additional indebtedness, enter into transactions with affiliates, merge or consolidate, sell assets, make certain investments and acquisitions, make loans and pay dividends and distributions. We are also subject to financial covenants under our credit agreement. If we fail to remain in compliance with these restrictions and financial covenants, we would be in default under our credit agreement. In addition, if we experience a material adverse effect on our assets, liabilities, financial condition, business or operations that, taken as a whole, impacts our ability to perform our obligations under our credit agreement, this could lead to a default under our credit agreement. A default under our credit agreement is likely to trigger cross-default provisions under certain other debt agreements we may enter into in the future, which would accelerate our obligation to repay our indebtedness under those agreements. If the repayment obligations on any of our indebtedness were to be accelerated, we may not be able to repay the debt or refinance the debt on acceptable terms, and our financial position would be materially adversely affected.

We may be vulnerable to interest rate increases due to our floating rate debt obligations.

        As of June 30, 2015, on a pro forma basis after giving effect to the completion of the spin-off, we would have had $551.8 million of outstanding indebtedness that is effectively subject to floating interest rates. Changes in economic conditions outside of our control could result in higher interest rates,

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thereby increasing our interest expense and reducing the funds available for capital investment, operations or other purposes. A 1% increase in the effective interest rate on our expected outstanding debt subject to floating interest rates at the time of the spin-off would result in an annual increase in our interest expense of approximately $5.5 million.

The termination of or any price reductions under certain of our contract operations services contracts could have a material impact on our business.

        The termination of or a demand by our customer to reduce prices under certain of our contract operations services contracts may lead to a reduction in our revenues and net income, which could have a material adverse effect upon our business, financial condition, results of operations and cash flows and may reduce our ability to pay dividends to our shareholders. In addition, we may be unable to renew, or enter into new, contracts with customers on favorable commercial terms, if at all. To the extent we are unable to renew our existing contracts or enter into new contracts on terms that are favorable to us or to successfully manage our overall contract mix over time, our business, results of operations and cash flows may be adversely impacted.

From time to time, we are subject to various claims, litigation and other proceedings that could ultimately be resolved against us, requiring material future cash payments or charges, which could impair our financial condition or results of operations.

        The size, nature and complexity of our business make us susceptible to various claims, both in litigation and binding arbitration proceedings. We are currently, and may in the future become, subject to various claims, which, if not resolved within amounts we have accrued, could have a material adverse effect on our financial position, results of operations or cash flows. Similarly, any claims, even if fully indemnified or insured, could negatively impact our reputation among our customers and the public, and make it more difficult for us to compete effectively or obtain adequate insurance in the future.

We depend on particular suppliers and are vulnerable to product shortages and price increases.

        Some of the components used in our products are obtained from a single source or a limited group of suppliers. Our reliance on these suppliers involves several risks, including price increases, inferior component quality and a potential inability to obtain an adequate supply of required components in a timely manner. We do not have long-term contracts with some of these sources, and the partial or complete loss of certain of these sources could have a negative impact on our results of operations and could damage our customer relationships. Further, a significant increase in the price of one or more of these components could have a negative impact on our results of operations.

We face significant competitive pressures that may cause us to lose market share and harm our financial performance.

        Our businesses face intense competition and have low barriers to entry. Our competitors may be able to adapt more quickly to technological changes within our industry and changes in economic and market conditions, more readily take advantage of acquisitions and other opportunities. Our ability to renew or replace existing contract operations service contracts with our customers at rates sufficient to maintain current revenue and cash flows could be adversely affected by the activities of our competitors. If our competitors substantially increase the resources they devote to the development and marketing of competitive products, equipment or services or substantially decrease the price at which they offer their products, equipment or services, we may not be able to compete effectively.

        In addition, we could face significant competition from new entrants into the compression services and product sales businesses. Some of our existing competitors or new entrants may expand or develop new compression units that would create additional competition for the products, equipment or services we provide to our customers.

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        We also may not be able to take advantage of certain opportunities or make certain investments because of our debt levels and our other obligations. As a U.S.-domiciled company, we may also face a higher corporate tax rate than our competitors that are domiciled in other jurisdictions. Any of these competitive pressures could have a material adverse effect on our business, financial condition and results of operations.

Following the spin-off, we may face challenges as a result of being a smaller, less diversified business than we were as part of Exterran Holdings prior to the spin-off.

        Following the spin-off, we will own the assets and liabilities associated with Exterran Holdings' international services and global fabrication businesses. Because our business represents a subset of Exterran Holdings' business immediately prior to the spin-off, we will have access to a smaller pool of assets, fewer personnel, less geographic diversity and less operational diversity, among other challenges, than we did as a part of Exterran Holdings. As a result, we may be unable to attract or retain customers that prefer to contract with more diversified companies that are able to operate on a larger scale than us. Our inability to attract or retain such customers may negatively impact our business and cause our financial condition and results of operations to suffer. In addition, as a smaller and less diversified business we may be more adversely impacted by changes in our business than we would have been had we remained a part of Exterran Holdings.

Our operations entail inherent risks that may result in substantial liability. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities.

        Our operations entail inherent risks, including equipment defects, malfunctions and failures and natural disasters, which could result in uncontrollable flows of natural gas or well fluids, fires and explosions. These risks may expose us, as an equipment operator and developer, to liability for personal injury, wrongful death, property damage, pollution and other environmental damage. The insurance we carry against many of these risks may not be adequate to cover our claims or losses. In addition, we are substantially self-insured for workers' compensation, employer's liability, property, auto liability, general liability and employee group health claims in view of the relatively high per-incident deductibles we absorb under our insurance arrangements for these risks. Further, insurance covering the risks we expect to face or in the amounts we desire may not be available in the future or, if available, the premiums may not be commercially justifiable. If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, financial condition and results of operations could be negatively impacted.

Cyber-attacks or terrorism could affect our business.

        We may be adversely affected by problems such as cyber-attacks, computer viruses or terrorism that may disrupt our operations and harm our operating results. Our industry requires the continued operation of sophisticated information technology systems and network infrastructure. Despite our implementation of security measures, our technology systems are vulnerable to disability or failures due to hacking, viruses, acts of war or terrorism and other causes. If our information technology systems were to fail and we were unable to recover in a timely way, we might be unable to fulfill critical business functions, which could have a material adverse effect on our business, financial condition and results of operations.

        In addition, our assets may be targets of terrorist activities that could disrupt our ability to service our customers. We may be required by our regulators or by the future terrorist threat environment to make investments in security that we cannot currently predict. The implementation of security guidelines and measures and maintenance of insurance, to the extent available, addressing such activities could increase costs. These types of events could materially adversely affect our business and

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results of operations. In addition, these types of events could require significant management attention and resources, and could adversely affect our reputation among customers and the public.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, or FCPA, similar worldwide anti-bribery laws and trade control laws. If we are found to have violated the FCPA or other legal requirements, we may be subject to criminal and civil penalties and other remedial measures, which could materially harm our reputation, business, results of operations, financial condition and liquidity.

        Our international operations require us to comply with U.S. and international laws and regulations, including those involving anti-bribery and anti-corruption. For example, the FCPA and similar laws and regulations prohibit improper payments to foreign officials for the purpose of obtaining or retaining business or gaining any business advantage.

        We operate in many parts of the world that experience high levels of corruption, and our business brings us in frequent contact with foreign officials. Our compliance policies and programs mandate compliance with all applicable anti-corruption laws but may not be completely effective in ensuring our compliance. Our training and compliance program and our internal control policies and procedures may not always protect us from violations committed by our employees or agents. Actual or alleged violations of these laws could disrupt our business and cause us to incur significant legal expenses, and could result in a material adverse effect on our reputation, business, results of operations, financial condition and liquidity. If we are found to be liable for FCPA or other anti-bribery law violations due to our own acts or omissions or due to the acts or omissions of others (including our joint venture partners, agents or other third party representatives), we could suffer from severe civil and criminal penalties or other sanctions, which could materially harm our reputation, business, results of operations financial condition and liquidity. Separately, we may face competitive disadvantages if our competitors are able to secure business, licenses or other advantages by making payments or using other methods that are prohibited by U.S. and international laws and regulations.

        We also are subject to other laws and regulations governing our operations, including regulations administered by the U.S. Department of Treasury's Office of Foreign Asset Control and various non-U.S. government entities, including applicable export control regulations, economic sanctions on countries and persons and customs requirements. Trade control laws are complex and constantly changing. Our compliance policies and programs increase our cost of doing business and may not work effectively to ensure our compliance with trade control laws. If we undergo an investigation of potential violations of trade control laws by U.S. or foreign authorities or if we fail to comply with these laws, we may incur significant legal expenses or be subject to criminal and civil penalties and other sanctions and remedial measures, which could have a material adverse impact on our reputation, business, results of operations, financial condition and liquidity.

Tax legislation and administrative initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.

        We operate in locations throughout the United States and internationally and, as a result, we are subject to the tax laws and regulations of U.S. federal, state, local and foreign governments. From time to time, various legislative or administrative initiatives may be proposed that could adversely affect our tax positions. There can be no assurance that our tax provision or tax payments will not be adversely affected by these initiatives. In addition, international, U.S. federal, state and local tax laws and regulations are extremely complex and subject to varying interpretations. There can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be successful in any such challenge.

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U.S. federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells, and adversely affect demand for our products and services.

        Hydraulic fracturing is an important and common practice that is used to stimulate production of natural gas and/or oil, from dense subsurface rock formations. Hydraulic fracturing involves the injection of water, sand or alternative proppant and chemicals under pressure into target geological formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing is typically regulated by state agencies, but recently, there has been increased public concern regarding an alleged potential for hydraulic fracturing to adversely affect drinking water supplies, and proposals have been made to enact separate U.S. federal, state and local legislation that would increase the regulatory burden imposed on hydraulic fracturing.

        For example, at the U.S. federal level, the EPA issued an Advance Notice of Proposed Rulemaking to collect data on chemicals used in hydraulic fracturing operations under Section 8 of the Toxic Substances Control Act, and proposed regulations under the CWA governing wastewater discharges from hydraulic fracturing and certain other natural gas operations. Also, the U.S. Department of the Interior released a final rule, that updates existing regulation of hydraulic fracturing activities on U.S. federal lands, including requirements for chemical disclosure, wellbore integrity and handling of flowback water. The final rule was expected to be effective on June 24, 2015, but, on September 30, 2015, a federal district court issued a preliminary injunction preventing implementation of the rule. In addition, several governmental reviews are underway that focus on environmental aspects of hydraulic fracturing activities. In June 2015, the EPA released its draft report on the potential impacts of hydraulic fracturing on drinking water resources, which concluded that hydraulic fracturing activities have not led to widespread, systemic impacts on drinking water sources in the United States, although there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water sources. The draft report is expected to be finalized after a public comment period and a formal review by EPA's Science Advisory Board. In addition, the White House Council on Environmental Quality is coordinating an administration-wide review of hydraulic fracturing practices. The results of this study or similar governmental reviews could spur initiatives to further regulate hydraulic fracturing under the Safe Drinking Water Act of 1974 or otherwise.

        At the state level, several states have adopted or are considering legal requirements that could impose more stringent permitting, disclosure, and well construction requirements on hydraulic fracturing activities. For example in May 2013, the Texas Railroad Commission adopted new rules governing well casing, cementing and other standards for ensuring that hydraulic fracturing operations do not contaminate nearby water resources. Local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of, or prohibiting the performance of, drilling activities in general or hydraulic fracturing activities in particular. If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where our natural gas exploration and production customers operate, those customers could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development or production activities and perhaps even be precluded from drilling wells. Any such restrictions could reduce demand for our products and services, and as a result could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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We are subject to a variety of governmental regulations; failure to comply with these regulations may result in administrative, civil and criminal enforcement measures and changes in these regulations could increase our costs or liabilities.

        We are subject to a variety of U.S. federal, state, local and international laws and regulations relating to, for example, export controls, currency exchange, labor and employment and taxation. Many of these laws and regulations are complex, change frequently, are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time. From time to time, as part of our operations, including newly acquired operations, we may be subject to compliance audits by regulatory authorities in the various countries in which we operate. Our failure to comply with these laws and regulations may result in a variety of administrative, civil and criminal enforcement measures, including assessment of monetary penalties, imposition of remedial requirements and issuance of injunctions as to future compliance, any of which may have a negative impact on our financial condition, profitability and results of operations.

We are subject to a variety of environmental, health and safety regulations. Failure to comply with these regulations may result in administrative, civil and criminal enforcement measures and changes in these regulations could increase our costs or liabilities.

        We are subject to a variety of U.S. federal, state, local and international laws and regulations relating to the environment, and worker health and safety. These laws and regulations are complex, change frequently, are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time. Failure to comply with these laws and regulations may result in administrative, civil and criminal enforcement measures, including assessment of monetary penalties, imposition of remedial requirements and issuance of injunctions as to future compliance. Certain of these laws also may impose joint and several and strict liability for environmental contamination, which may render us liable for remediation costs, natural resource damages and other damages as a result of our conduct that may have been lawful at the time it occurred or the conduct of, or conditions caused by, prior owners or operators or other third parties. In addition, where contamination may be present, it is not uncommon for neighboring land owners and other third parties to file claims for personal injury, property damage and recovery of response costs. Remediation costs and other damages arising as a result of environmental laws and regulations, and costs associated with new information, changes in existing environmental laws and regulations or the adoption of new environmental laws and regulations could be substantial and could negatively impact our financial condition, profitability and results of operations.

        We may need to apply for or amend facility permits or licenses from time to time with respect to storm water or wastewater discharges, waste handling, or air emissions relating to manufacturing activities or equipment operations, which subjects us to new or revised permitting conditions. These permits and authorizations may contain numerous compliance requirements, including monitoring and reporting obligations and operational restrictions, such as emission limits, which may be onerous or costly to comply with. In addition, certain of our customer service arrangements may require us to operate, on behalf of a specific customer, petroleum storage units such as underground tanks or pipelines and other regulated units, all of which may impose additional compliance and permitting obligations. Given the large number of facilities in which we operate, and the numerous environmental permits and other authorizations that are applicable to our operations, we may occasionally identify or be notified of technical violations of certain requirements existing in various permits or other authorizations. Occasionally, we have been assessed penalties for our non-compliance, and we could be subject to such penalties in the future.

        The modification or interpretation of existing environmental, health and safety laws or regulations, the more vigorous enforcement of existing laws or regulations, or the adoption of new laws or

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regulations may also negatively impact oil and natural gas exploration and production, gathering and pipeline companies, including our customers, which in turn could have a negative impact on us.

Risks Relating to the Spin-Off

We may not realize some or all of the benefits we expect to achieve from our separation from Exterran Holdings.

        The expected benefits from our separation from Exterran Holdings include the following:

    focusing on profitable growth in strategic markets and positioning us and our shareholders to benefit from the continued build-out of the global energy infrastructure and the redevelopment currently underway in North America;

    in our international services businesses, relatively stable cash flows due to our exposure to the production phase of oil and gas development, as compared to drilling and completion related energy service and product providers;

    limited capital expenditures in our product sales business;

    financial flexibility to enable investment in value-creating contract operations projects; and

    expanding our potential product sales customer base to include companies in the U.S. contract compression business that have historically been Exterran Holdings' competitors.

        We may not achieve the anticipated benefits from our separation for a variety of reasons. For example, we may be unsuccessful in executing our strategy of expanding our product sales customer base to include competitors of Archrock because these prospective customers may have long-standing relationships with existing providers of similar products or services. Moreover, the process of separating our business from Exterran Holdings and operating as an independent public company may distract our management from focusing on our business and strategic priorities. In addition, we may not be able to issue debt or equity on terms acceptable to us or at all. The availability of shares of our common stock for use as consideration for acquisitions also will not ensure that we will be able to successfully pursue acquisitions or that any acquisitions will be successful. Moreover, even with equity compensation tied to our business we may not be able to attract and retain employees as desired. We also may not fully realize the anticipated benefits from our separation if any of the matters identified as risks in this "Risk Factors" section were to occur. If we do not realize the anticipated benefits from our separation for any reason, our business may be materially adversely affected.

The combined value of Archrock and Exterran Corporation shares after the spin-off may not equal or exceed the value of Exterran Holdings shares prior to the spin-off.

        After the spin-off, Exterran Holdings, Inc. will change its name to "Archrock, Inc." and Archrock common stock will be listed and traded on the NYSE under the symbol "AROC." We expect to list our common stock on the NYSE under the symbol "EXTN." We cannot assure you that the combined trading prices of Archrock common stock and our common stock after the spin-off, as adjusted for any changes in the combined capitalization of these companies, will be equal to or greater than the trading price of Exterran Holdings common stock prior to the spin-off. Until the market has fully evaluated the business of Archrock without the international services and product sales businesses, the price at which Archrock common stock trades may fluctuate significantly. Similarly, until the market has fully evaluated our company, the price at which our common stock trades may fluctuate significantly.

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A large number of our shares are or will be eligible for future sale, which may cause the market price for our common stock to decline.

        Upon completion of the spin-off, we expect that we will have an aggregate of approximately 34.7 million shares of our common stock outstanding, based on the number of shares of Exterran Holdings common stock expected to be outstanding as of the record date. All of those shares (other than those held by our "affiliates") will be freely tradable without restriction or registration under the Securities Act of 1933, as amended. Shares held by our affiliates, which include our directors and executive officers, can be sold subject to volume, manner of sale and notice provisions under Rule 144. We estimate that our directors and executive officers, who may be considered "affiliates" for purposes of Rule 144, will beneficially own approximately 300,000 shares of our common stock immediately following the distribution. We are unable to predict whether large amounts of our common stock will be sold in the open market following the spin-off. We are also unable to predict whether a sufficient number of buyers will be in the market at that time. In addition, other Exterran Holdings shareholders may sell the shares of our common stock they receive in the distribution for various reasons. For example, such shareholders may not believe our business profile or level of market capitalization as an independent company fits their investment objectives. A change in the level of analyst coverage following the spin-off could also negatively impact demand for our shares. The sale of significant amounts of our common stock or the perception in the market that this will occur may lower the market price of our common stock.

Our historical combined and pro forma financial information may not be representative of the results we would have achieved as a stand-alone public company and may not be a reliable indicator of our future results.

        The historical combined and pro forma financial information that we have included in this information statement has been derived from Exterran Holdings' accounting records and may not necessarily reflect what our financial position, results of operations or cash flows would have been had we been an independent, stand-alone entity during the periods presented or those that we will achieve in the future. Exterran Holdings did not account for us, and we were not operated, as a separate, stand-alone company for the historical periods presented. The costs and expenses reflected in our historical financial information include an allocation for certain functions historically provided by Exterran Holdings, including expense allocations for: (1) certain functions historically provided by Exterran Holdings, including, but not limited to finance, legal, risk management, tax, treasury, information technology, human resources, and certain other shared services, (2) certain employee benefits and incentives and (3) share-based compensation, that may be different from the comparable expenses that we would have incurred had we operated as a stand-alone company. These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated based on estimated time spent by Exterran Holdings personnel, a pro-rata basis of revenues, headcount or other relevant measures of our business and Exterran Holdings and its subsidiaries. We have not adjusted our historical combined financial information to reflect changes that will occur in our cost structure and operations as a result of our transition to becoming a stand-alone public company, including increased costs associated with an independent board of directors, SEC reporting and the requirements of the NYSE. Therefore, our historical financial information may not necessarily be indicative of what our financial position, results of operations or cash flows will be in the future. We based the pro forma adjustments on available information and assumptions we believe are reasonable; however, our assumptions may prove not to be accurate. In addition, our unaudited pro forma combined financial statements may not give effect to various ongoing additional costs we may incur in connection with being an independent public company. Accordingly, our unaudited pro forma combined financial information does not reflect what our financial condition, results of operations or cash flows would have been as an independent public company and is not necessarily indicative of our future financial condition or future results of operations. For additional information, please read

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"Selected Historical Combined Financial Data," "Unaudited Pro Forma Condensed Combined Financial Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our financial statements and related notes included elsewhere in this information statement.

Our costs will increase as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

        We have historically operated our businesses as part of a public company. As a stand-alone public company, we will incur additional legal, accounting, compliance and other expenses that we have not incurred historically. After the spin-off, we will become obligated to file with the SEC annual and quarterly information and other reports that are specified in Section 13 and other sections of the Exchange Act. We will also be required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. In addition, we will also become subject to other reporting and corporate governance requirements, including certain requirements of the NYSE, and certain provisions of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, and the regulations promulgated thereunder, which will impose significant compliance obligations upon us.

        We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard are likely to result in increased administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. These changes will require a significant commitment of additional resources. We may not be successful in implementing these requirements and implementing them could materially adversely affect our business, results of operations and financial condition. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our operating results on a timely and accurate basis could be impaired. If we do not implement such requirements in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NYSE. Any such action could harm our reputation and the confidence of investors and customers in our company and could materially adversely affect our business and cause our share price to fall.

Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject following the spin-off and may strain our resources.

        Our businesses have historically been operated as part of Exterran Holdings. Therefore, we have not been subject to separate reporting requirements. Following the spin-off, we will utilize our own resources and personnel to meet reporting and other obligations under the Exchange Act, including the requirements of Section 404 of Sarbanes-Oxley, which will require, beginning with the filing of our Annual Report on Form 10-K for the year ending December 31, 2016, annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm expressing an opinion on the effectiveness of our internal control over financial reporting. In addition, we will be required to file periodic reports with the SEC under the Exchange Act. These obligations will place significant demands on our management and administrative and operational resources, including accounting resources.

        To comply with these requirements, we anticipate that we may need to upgrade our systems, including information technology, implement additional financial and management controls, reporting systems and procedures and hire additional accounting and finance staff. We expect to incur additional annual expenses related to these steps and, among other things, directors and officers liability insurance, director fees, SEC reporting, transfer agent fees, increased auditing and legal fees and similar expenses, which expenses may be significant. If we are unable to upgrade our financial and

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management controls, reporting systems, information technology and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired. Any failure to achieve and maintain effective internal controls could have an adverse effect on our business, financial condition and results of operations.

Following the spin-off, we and Archrock will be subject to certain noncompetition restrictions, which may limit our ability to grow our business.

        In connection with the spin-off, we will enter into a separation and distribution agreement with Archrock that we expect will contain certain noncompetition provisions addressing restrictions for a limited period of time after the spin-off on our ability to provide contract operations services in the United States and on Archrock's ability to provide contract operations services outside of the United States and product sales to customers worldwide, subject to certain exceptions. These restrictions limit our ability to attract new contract operations customers in the U.S., which will limit our ability to grow our business.

        In addition, if we are unable to enforce the limitations on Archrock's ability to provide certain contract operations and fabrication services, we may lose prospective customers to Archrock, which could cause our results of operations and cash flows to suffer.

Following the spin-off, we and Archrock will provide one another with certain services under the transition services agreement that may require us to divert resources from our business, which in turn may negatively impact our business, financial condition and results of operations.

        In connection with the completion of the spin-off, we and Archrock will enter into a transition services agreement under which each party will compensate the other for the provision of various administrative services and assets to such other party for specified periods beginning on the distribution date. The personnel performing services for Archrock under the transition services agreement will be employees and/or independent contractors of ours. In the course of performing our obligations under the transition services agreements, we will allocate certain of our resources, including assets, facilities, equipment and the time and attention of our management and personnel for the benefit of Archrock's business and not ours, which may negatively impact our business, financial condition and results of operations. Please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Transition Services Agreement."

Following the spin-off, Archrock will provide installation, start-up, commissioning and other services to us or our customers on our behalf.

        Historically, we have had access to field technicians employed by Exterran Holdings to perform the installation and other services we require. We will, in certain cases, rely on some of Archrock's technicians to provide installation, start-up, commissioning and other services to us or our customers on our behalf pursuant to the services agreement we will enter into with Archrock on arm's length terms in connection with the spin-off. If Archrock is unable to satisfy its obligations to us or on our behalf under our commercial agreements with our customers for any reason, we may be unable to provide services required by our customers who purchase our products and therefore our sales and revenues may decline and our financial condition, results of operations and cash flows may be negatively impacted. In addition, should the services provided by Archrock not meet our standards or the standards of our customers, we may be subject to claims by our customers relating to damages incurred in connection with any such substandard performance. These claims could cause increased expenses and harm our reputation, which could negatively impact our financial condition, results of operations and cash flows. In addition, we expect to provide certain engineering, start-up, commissioning,

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preservation and other services to Archrock or its customers on behalf of Archrock pursuant to a reciprocal services agreement we will enter into with Archrock. The provision of such services under the reciprocal services agreement will require us to allocate certain of our resources, including assets, facilities, equipment and the time and attention of our management and personnel for the benefit of Archrock's business and not ours, which may negatively impact our business, financial condition and results of operations. Please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Services Agreements."

Following the spin-off, we will provide Archrock and Archrock Partners with certain fabricated products, including compressors, and we will depend on Archrock and Archrock Partners for a significant amount of our product sales revenues.

        After completion of the spin-off, Archrock and Archrock Partners will initially be among our largest customers and are expected to generate significant product sales revenues for us. Therefore, we will be indirectly subject to the operational and business risks of Archrock and Archrock Partners. If either Archrock or Archrock Partners is unable to satisfy its obligations or reduces its demand under our commercial agreements for any reason, our revenues would decline and our financial condition, results of operations and cash flows could be adversely affected. Further, we have no control over Archrock or Archrock Partners, and either Archrock or Archrock Partners may elect to pursue a business strategy that does not favor us or our business.

Several members of our board and management may have conflicts of interest because of their ownership of shares of common stock of or other equity interests in Exterran Holdings.

        Following the spin-off, several members of our board and management will continue to own shares of common stock of Archrock and/or hold equity awards covering shares of common stock of Archrock because of their prior relationships with Exterran Holdings. This share and equity award ownership could create, or appear to create, potential conflicts of interest when our directors and executive officers are faced with decisions that could have different implications for our company and Archrock. Please read "Management."

We may increase our debt or raise additional capital in the future, which could affect our financial condition, may decrease our profitability or could dilute our shareholders.

        We may increase our debt or raise additional capital in the future, subject to restrictions in our credit agreement. If our cash flow from operations is less than we anticipate, or if our cash requirements are more than we expect, we may require more financing. However, debt or equity financing may not be available to us on terms acceptable to us, if at all. If we incur additional debt or raise equity through the issuance of preferred stock, the terms of the debt or preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on our operations than we currently have. If we raise funds through the issuance of additional equity, your ownership in us would be diluted. If we are unable to raise additional capital when needed, it could affect our financial health, which could negatively affect your investment in us.

We will be subject to continuing contingent tax liabilities of Exterran Holdings following the spin-off.

        After the spin-off, certain tax liabilities of Exterran Holdings may become our obligations. Under the Code and the related rules and regulations, each corporation that was a member of the Exterran Holdings consolidated United States federal income tax reporting group during any taxable period or portion of any taxable period ending on or before the effective time of the distribution is jointly and severally liable for the United States federal income tax liability of the entire Exterran Holdings consolidated tax reporting group for that taxable period. In connection with the spin-off, we intend to

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enter into a tax matters agreement with Archrock that will allocate the responsibility for prior period taxes of the Exterran Holdings consolidated tax reporting group between us and Archrock. See "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Tax Matters Agreement." If Archrock is unable to pay any prior period taxes for which it is responsible, we could be required to pay the entire amount of such taxes.

The tax treatment of the distribution is subject to uncertainty. If the distribution does not qualify as a transaction that is tax-free for U.S. federal income tax purposes, we, Archrock and our shareholders could be subject to significant tax liability and, in certain circumstances, we could be required to indemnify Archrock for material taxes pursuant to indemnification obligations under the tax matters agreement.

        If the internal distribution and/or the distribution is determined to be taxable for U.S. federal income tax purposes, then we, Archrock and/or our shareholders could be subject to significant tax liability. Exterran Holdings expects to obtain an opinion of Latham & Watkins LLP substantially to the effect that, for U.S. federal income tax purposes, (i) the internal distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, and (ii) the distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, subject to certain qualifications and limitations. Accordingly, for U.S. federal income tax purposes, Exterran Holdings should not recognize any material gain or loss and you generally should recognize no gain or loss or include any amount in taxable income (other than with respect to cash received in lieu of fractional shares) as a result of the spin-off.

        An opinion that the internal distribution and the distribution "should" each qualify as a reorganization within the meaning of Sections 355 and 368(a)(1)(D) of the Code expresses a level of comfort that is stronger than "more likely than not" but less than "will." Counsel is unable to provide a higher degree of certainty because there is no administrative or judicial authority that directly addresses facts similar to those of this transaction. Nonetheless, counsel believes that its opinion is justified based on the existing authorities. In addition, notwithstanding the opinion, the Internal Revenue Service (the "IRS") could determine on audit that the spin-off should be treated as a taxable transaction if it determines that any of the facts, assumptions, representations or undertakings we or Exterran Holdings has made is not correct or has been violated, or that the spin-off should be taxable for other reasons, including as a result of a significant change in stock or asset ownership after the distribution. If the distribution ultimately is determined to be taxable, the distribution could be treated as a taxable dividend or capital gain to you for U.S. federal income tax purposes, and you could incur significant U.S. federal income tax liabilities. In addition, Archrock would recognize gain in an amount equal to the excess of the fair market value of shares of our common stock distributed to Exterran Holdings shareholders on the distribution date over Exterran Holdings' tax basis in such shares of our common stock. Moreover, Archrock could incur significant United States federal income tax liabilities if it is ultimately determined that the internal distribution is taxable.

        Under the terms of the tax matters agreement that we intend to enter into with Archrock in connection with the distribution, if the distribution were determined to be taxable, we may be responsible for all taxes imposed on Archrock as a result thereof if such determination was the result of actions taken after the distribution by or in respect of us, any of our affiliates or our shareholders and we may be responsible for 50% of such taxes imposed on Archrock as a result thereof if such determination was not the result of actions taken by us or Archrock. Our obligations under the tax matters agreement are not limited in amount or subject to any cap. Further, even if we are not responsible for tax liabilities of Archrock and its subsidiaries under the tax matters agreement, we nonetheless could be liable under applicable tax law for such liabilities if Archrock were to fail to pay them. If we are required to pay any liabilities under the circumstances set forth in the tax matters agreement or pursuant to applicable tax law, the amounts may be significant. For a more detailed

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discussion, see "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Tax Matters Agreement."

We might not be able to engage in desirable strategic transactions and equity issuances following the distribution because of certain restrictions relating to requirements for tax-free distributions.

        Our ability to engage in significant equity transactions could be limited or restricted after the distribution in order to preserve, for U.S. federal income tax purposes, the tax-free nature of the distribution. Even if the distribution otherwise qualifies for tax-free treatment under Section 355 of the Code, it may result in corporate-level taxable gain to Exterran Holdings under Section 355(e) of the Code if there is a 50% or greater change in ownership, by vote or value, of shares of our stock, Exterran Holdings' stock or the stock of a successor of either occurring as part of a plan or series of related transactions that includes the distribution. Any acquisitions or issuances of our stock or Archrock's stock within two years after the distribution are generally presumed to be part of such a plan, although we or Archrock may be able to rebut that presumption.

        Under the tax matters agreement that we intend to enter into with Archrock, we will be prohibited from taking or failing to take any action that prevents the distribution from being tax-free. Further, during the two-year period following the distribution, without obtaining the consent of Archrock, a private letter ruling from the IRS or an unqualified opinion of a nationally recognized law firm, we may be prohibited from taking certain specified actions that could impact the treatment of the distribution.

        These restrictions may limit our ability to pursue strategic transactions or engage in new business or other transactions that may maximize the value of our business. Moreover, the tax matters agreement also may provide that we are responsible for any taxes imposed on Exterran Holdings or any of its affiliates as a result of the failure of the distribution to qualify for favorable treatment under the Code if such failure is attributable to certain actions taken after the distribution by or in respect of us, any of our affiliates or our shareholders. See "The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off."

Our prior and continuing relationship with Archrock exposes us to risks attributable to businesses of Archrock.

        Archrock is obligated to indemnify us for losses that third parties may seek to impose upon us or our affiliates for liabilities relating to the business of Archrock that are incurred through a breach of the separation and distribution agreement or any ancillary agreement by Archrock or its affiliates other than us, or losses that are attributable to Archrock in connection with the spin-off or are not expressly assumed by us under our agreements with Archrock. Immediately following the spin-off, any claims made against us that are properly attributable to Archrock in accordance with these arrangements would require us to exercise our rights under our agreements with Archrock to obtain payment from Archrock. We are exposed to the risk that, in these circumstances, Archrock cannot, or will not, make the required payment.

In connection with our separation from Exterran Holdings, Archrock will indemnify us for certain liabilities, and we will indemnify Archrock for certain liabilities. If we are required to act on these indemnities to Archrock, we may need to divert cash to meet those obligations, and our financial results could be negatively impacted. In the case of Archrock's indemnity, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or as to Archrock's ability to satisfy its indemnification obligations.

        Pursuant to the separation and distribution agreement and other agreements with Archrock, Archrock will agree to indemnify us for certain liabilities, and we will agree to indemnify Archrock for

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certain liabilities, in each case for uncapped amounts, as discussed further in "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us." Also pursuant to the separation and distribution agreement, we will agree to use our commercially reasonable efforts to remove Archrock as a party to certain of our contracts with third parties, which may result in a renegotiation of such contracts on terms that are less favorable to us. In the event that Archrock remains as a party, we expect to indemnify Archrock for any liabilities relating to such contracts. Indemnities that we may be required to provide Archrock will not be subject to any cap, may be significant and could negatively impact our business, particularly indemnities relating to our actions that could impact the tax-free nature of the distribution.

        With respect to Archrock's, agreement to indemnify us, there can be no assurance that the indemnity from Archrock will be sufficient to protect us against the full amount of such liabilities, or that Archrock will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Archrock any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, cash flows, results of operations and financial condition.

The spin-off may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.

        The spin-off is subject to review under various state and federal fraudulent conveyance laws. Under these laws, if a court in a lawsuit by an unpaid creditor or an entity vested with the power of such creditor (including without limitation a trustee or debtor-in-possession in a bankruptcy by us or Archrock or any of our respective subsidiaries) were to determine that Archrock or any of its subsidiaries did not receive fair consideration or reasonably equivalent value for distributing our common stock or taking other action as part of the spin-off, or that we or any of our subsidiaries did not receive fair consideration or reasonably equivalent value for incurring indebtedness, including the borrowings incurred by us under the new credit facility in connection with the spin-off, transferring assets or taking other action as part of the spin-off and, at the time of such action, we, Archrock or any of our respective subsidiaries (i) was insolvent or would be rendered insolvent, (ii) lacked reasonably sufficient capital to carry on its business and all business in which it intended to engage or (iii) intended to incur, or believed it would incur, debts beyond its ability to repay such debts as they would mature, then such court could void the spin-off as a constructive fraudulent transfer. If such court made this determination, the court could impose a number of different remedies, including without limitation, voiding our liens and claims against Archrock, or providing Archrock with a claim for money damages against us in an amount equal to the difference between the consideration received by Archrock and the fair market value of our company at the time of the spin-off.

        The measure of insolvency for purposes of the fraudulent conveyance laws will vary depending on which jurisdiction's law is applied. Generally, however, an entity would be considered insolvent if the present fair saleable value of its assets is less than (i) the amount of its liabilities (including contingent liabilities) or (ii) the amount that will be required to pay its probable liabilities on its existing debts as they become absolute and mature. No assurance can be given as to what standard a court would apply to determine insolvency or that a court would determine that we, Archrock or any of our respective subsidiaries were solvent at the time of or after giving effect to the spin-off, including the distribution of our common stock.

        Under the separation and distribution agreement, from and after the spin-off, each of Archrock and we will be responsible for the debts, liabilities and other obligations related to the business or businesses which it owns and operates following the consummation of the spin-off. Although we do not expect to be liable for any such obligations not expressly assumed by us pursuant to the separation and distribution agreement, it is possible that a court would disregard the allocation agreed to between the parties, and require that we assume responsibility for obligations allocated to Archrock, particularly if

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Archrock were to refuse or were unable to pay or perform the subject allocated obligations. Please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Separation and Distribution Agreement."

If the completion of the spin-off is delayed, the new credit facility may not become effective and we may have to enter into a separate credit facility with less favorable terms and conditions.

        In connection with the spin-off, on July 10, 2015, we and EESLP entered into a new $750.0 million credit facility with Wells Fargo Bank, National Association, as the administrative agent, and various financial institutions as lenders. On October 5, 2015, the parties entered into an amended and restated credit agreement, evidencing our new $680.0 million revolving credit facility and our new $245.0 million term loan facility, which we refer to collectively as our new credit facility. Our ability to borrow under the new credit facility is subject to the satisfaction of certain conditions, including the consummation of the spin-off, on or before January 4, 2016. If we are unable to complete the spin-off by that date, the new credit facility will terminate.

        Additionally, if the new credit facility is terminated, it may be necessary to enter into a separate credit facility with less favorable terms and conditions. As a result, we may incur higher borrowing costs and could be subject to more stringent covenants that have the impact of reducing our liquidity and additional restrictions on our business, which may in turn adversely impact our financial condition and operations.

        Further, pursuant to the separation and distribution agreement, EESLP will use its commercially reasonable efforts to complete one or more unsecured debt offerings or equity issuances resulting in aggregate gross cash proceeds of at least $250.0 million on the terms described in the credit agreement (such transaction, a "qualified capital raise") on or before the maturity date of our $245.0 million term loan facility, which is currently expected to be the second anniversary of the completion of the spin-off or as soon as practicable thereafter. In connection with the internal distribution, EESLP will contribute to a subsidiary of Archrock the right to receive, promptly following the occurrence of a qualified capital raise, a $25.0 million cash payment.

Risks Relating to Ownership of Our Common Stock

No market currently exists for our common stock. We cannot assure you that an active trading market will develop for our common stock.

        Prior to the completion of the spin-off, there has been no public market for shares of our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the NYSE or otherwise, or how liquid that market might become. If an active market does not develop, you may have difficulty selling any shares of our common stock that you receive in the spin-off.

The market price and trading volume of our common stock may be volatile and you may not be able to resell your shares at or above the initial market price of our common stock following the spin-off.

        The market price of our stock may be influenced by many factors, some of which are beyond our control, including those described above in "—Risks Relating to Our Business" and the following:

    the failure of securities analysts to cover our common stock after the spin-off or changes in financial estimates by analysts;

    the inability to meet the financial estimates of analysts who follow our common stock;

    strategic actions by us or our competitors;

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    announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;

    variations in our quarterly operating results and those of our competitors;

    general economic and stock market conditions;

    risks relating to our business and our industry, including those discussed above;

    changes in conditions or trends in our industry, markets or customers;

    cyber-attacks or terrorist acts;

    future sales of our common stock or other securities; and

    investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives.

        As a result of these factors, holders of our common stock may not be able to resell their shares at or above the initial market price following the spin-off or may not be able to resell them at all. These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low. For these reasons, investors should not rely on recent trends in the price of Exterran Holdings' common stock to predict the future price of our common stock or our financial results.

The trading market for our common stock and our stock price will be influenced from coverage by, and the recommendations of, securities or industry analysts, and unfavorable or insufficient coverage could cause our stock price to decline.

        The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. In addition, if we fail to meet the expectations of these analysts or if one or more of these analysts change their recommendations regarding our stock or our business, our stock price may decline.

Although Exterran Holdings has paid dividends on its common stock in the past, we cannot assure you that we will pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock.

        We do not currently anticipate paying cash dividends on our common stock. The declaration and amount of future dividends to holders of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants contained in our debt agreements, legal requirements, regulatory constraints, industry practice and other factors the board of directors deems relevant. In addition, our ability to pay dividends on our common stock may be limited by covenants in our debt agreements. Future agreements may also limit our ability to pay dividends, and we may incur incremental taxes in the U.S. if we repatriate foreign earnings to pay such dividends. Please read "Dividend Policy," "Description of Material Indebtedness." "Management's Discussion and Analysis of Financial Condition and Results of Operations—Income Taxes" and "Risk Factors—Risks Relating to Our Business—We are due to receive a substantial amount in installment payments from the purchaser of our previously nationalized Venezuelan assets, the nonpayment of which would render us unable to contribute amounts corresponding to those funds to Archrock or its subsidiaries." We cannot provide assurance that we will declare or pay dividends in any particular amounts or at all in the future. A

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decision not to pay dividends or a reduction in our dividend payments in the future could have a negative effect on our stock price.

Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to choose the judicial forum for disputes with us or our directors, officers or other employees.

        Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternate forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the "DGCL"), our amended and restated certificate of incorporation or our bylaws, in each case, as amended from time to time, or (iv) any action asserting a claim governed by the internal affairs doctrine, shall be the Court of Chancery of the State of Delaware, in all cases subject to the court's having personal jurisdiction over the indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provision. This forum selection provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable or cost-effective for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

        Certain statements contained in this information statement constitute forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact contained in this information statement may be and include, without limitation, statements regarding our business growth strategy and projected costs; 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 margin and other financial or operational measures related to our business and our primary business segments; the future value of our equipment; and plans and objectives of our management for our future operations. You can identify many of these statements by looking for words such as "believe," "expect," "intend," "project," "anticipate," "estimate," "will continue" or similar words or the negative thereof.

        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 information statement. 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. Known material factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include the factors discussed in "Risk Factors" included elsewhere in this information statement, as well as the following risks and uncertainties:

    conditions in the oil and natural gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas, which could continue to depress or further decrease the demand or pricing for our natural gas compression and oil and natural gas production and processing equipment and services;

    our reduced profit margins or the loss of market share resulting from competition or the introduction of competing technologies by other companies;

    our reliance on Archrock for a significant amount of our product sales revenues and our ability to secure new product sales customers;

    changes in economic or political conditions in the countries in which we do business, including civil uprisings, riots, terrorism, kidnappings, violence associated with drug cartels, legislative changes and the expropriation, confiscation or nationalization of property without fair compensation;

    changes in currency exchange rates, including the risk of currency devaluations by foreign governments, and restrictions on currency repatriation;

    the inherent risks associated with our operations, such as equipment defects, malfunctions and natural disasters;

    the risk that counterparties will not perform their obligations under our financial instruments;

    the financial condition of our customers;

    our ability to timely and cost-effectively obtain components necessary to conduct our business;

    employment and workforce factors, including our ability to hire, train and retain key employees;

    our ability to implement certain business and financial objectives, such as:

    winning profitable new business;

    timely and cost-effective execution of projects;

    enhancing our asset utilization, particularly with respect to our fleet of compressors;

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      integrating acquired businesses;

      generating sufficient cash; and

      accessing the capital markets at an acceptable cost;

    liability related to the use of our products and services;

    changes in governmental safety, health, environmental and other regulations, which could require us to make significant expenditures;

    our level of indebtedness and ability to fund our business;

    the completion of the spin-off more fully described in "The Spin-Off"; and

    the agreements related thereto and the anticipated effects of restructuring our business.

        All forward-looking statements included in this information statement are based on information available to us on the date of this information statement. Neither we nor Exterran Holdings undertake any 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 information statement.

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THE SPIN-OFF

General

        The board of directors of Exterran Holdings regularly reviews the various operations conducted by Exterran Holdings to ensure that resources are deployed and activities are pursued in the best interest of its shareholders. On November 17, 2014, Exterran Holdings announced that its board of directors had approved in principle a plan involving the pro rata distribution of all of our shares of common stock to Exterran Holdings' shareholders in a distribution intended to be tax-free to us and such shareholders for U.S. federal income tax purposes (other than with respect to any cash received in lieu of fractional shares). The spin-off is subject to, among other things, final approval by the Exterran Holdings board of directors and the conditions described below under "—Spin-Off Conditions and Termination." In connection with the spin-off, Exterran Holdings will change its name to "Archrock, Inc." and will trade on the NYSE under the symbol "AROC."

        We are currently a wholly owned subsidiary of Exterran Holdings. Following the completion of the spin-off, we expect to own the assets and be obligated on the liabilities comprising Exterran Holdings' international services and product sales businesses.

        Exterran Holdings will accomplish our separation through a pro rata distribution of 100% of our outstanding common stock to Exterran Holdings' shareholders, which we refer to as the distribution, on November 3, 2015, the distribution date. As a result of the spin-off, each holder of Exterran Holdings common stock as of 5:00 p.m., New York City time, on October 27, 2015, the record date, will be entitled to:

    receive one share of our common stock for every two shares of Exterran Holdings common stock owned by such holder; and

    retain such holder's shares of Archrock common stock.

        Exterran Holdings shareholders will not be required to pay for shares of our common stock received in the spin-off or to surrender or exchange shares of Exterran Holdings common stock in order to receive our common stock or to take any other action in connection with the spin-off. No vote of Exterran Holdings shareholders will be required or sought in connection with the spin-off, and Exterran Holdings shareholders will have no appraisal rights in connection with the spin-off.

Reasons for the Spin-Off

        Exterran Holdings' board and management team believe that there are significant expected benefits to the simplified, separate companies resulting from this transaction, including:

    with respect to Archrock:

    a focus on growing the U.S. services businesses, including organic growth, third party acquisitions and the sale by Archrock of additional U.S. contract operations assets to Archrock Partners;

    relatively stable cash flows and a focus on its fee-based natural gas contract compression business;

    the opportunity for Archrock to return a high percentage of cash flow to shareholders in the form of a dividend;

    a pure-play investment opportunity with significant exposure to the U.S. energy infrastructure redevelopment;

    opportunities to pursue acquisitions with potentially more highly valued equity currency;

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      a narrowing of industry focus that may potentially provide more extensive and more specialized equity research coverage; and

      the ability to be valued on a dividend yield basis, consistent with other publicly traded general partners, unlocking value for shareholders.

    with respect to us:

    a focus on profitable growth in strategic markets and positioning us and our shareholders to benefit from the continued build-out of the global energy infrastructure and the redevelopment currently underway in the U.S.;

    in our international services businesses relatively stable cash flows due to our exposure to the production phase of oil and gas development, as compared to drilling and completion related energy service and product providers;

    limited capital expenditures in our product sales business;

    financial flexibility to enable investment in value-creating contract operations projects; and

    the opportunity to expand our potential product sales customer base to include companies in the U.S. contract compression business that have historically been Exterran Holdings' competitors.

Results of the Spin-Off

        After the spin-off, we will be an independent public company. Immediately following the spin-off, we expect that approximately 34.7 million shares of our common stock will be issued and outstanding, based on the number of shares of Exterran Holdings common stock outstanding on June 30, 2015 and that we expect will remain outstanding on October 27, 2015, the record date for the spin-off. The actual number of shares of our common stock to be distributed will be determined based on the number of shares of Exterran Holdings common stock outstanding as of the record date. We also expect to have approximately 1,295 shareholders of record, based on the number of shareholders of record of Exterran Holdings common stock on June 30, 2015.

        We and Archrock will enter into a number of agreements that govern the spin-off and our future relationship. For a more detailed description of these agreements, please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us."

        You will not be required to make any payment for the shares of our common stock you receive, nor will you be required to surrender or exchange your shares of Exterran Holdings common stock or take any other action in order to receive the shares of our common stock to which you are entitled. The spin-off will not affect the number of outstanding shares of Exterran Holdings common stock or any rights of Exterran Holdings shareholders, although it will affect the market value of the outstanding Archrock common stock.

Manner of Effecting the Spin-Off

        The general terms and conditions relating to the spin-off will be set forth in a separation and distribution agreement between Archrock and us. For a description of the expected terms of that agreement, please read "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Separation and Distribution Agreement." Under the separation and distribution agreement, the spin-off will be effective on the distribution date. As a result of the spin-off, each Exterran Holdings shareholder will be entitled to receive one share of our common stock for every two shares of Exterran Holdings common stock owned on the record date. As discussed under "—Trading of Exterran Holdings Common Stock After the Record Date and Prior to the Distribution," if a holder

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of record of Exterran Holdings common stock sells those shares in the "regular way" market after the record date and on or prior to the distribution date, that shareholder also will be selling the right to receive shares of our common stock in the spin-off. The distribution will be made in book-entry form. For registered Exterran Holdings shareholders, our transfer agent will credit their shares of our common stock to book-entry accounts established to hold their shares of our common stock. Book-entry refers to a method of recording stock ownership in our records in which no physical certificates are issued. For shareholders who own Exterran Holdings common stock through a bank or brokerage firm, their shares of our common stock will be credited to their accounts by the bank or broker. Please read "—When and How You Will Receive Exterran Corporation Shares" below. Each share of our common stock that is distributed will be validly issued, fully paid and nonassessable. Holders of shares of our common stock will not be entitled to preemptive rights. Please read "Description of Capital Stock."

When and How You Will Receive Exterran Corporation Shares

        On the distribution date, Exterran Holdings will release approximately 34.7 million shares of our common stock for distribution by American Stock Transfer & Trust Co., LLC, the distribution agent. The distribution agent will cause the shares of our common stock to which you are entitled to be registered in your name or in the "street name" of your bank or brokerage firm.

        "Street Name" Holders.    Many Exterran Holdings shareholders hold Exterran Holdings common stock through an account with a bank or brokerage firm. If this applies to you, that bank or brokerage firm is the registered holder that holds the shares on your behalf. For shareholders who hold their shares of Exterran Holdings common stock in an account with a bank or brokerage firm, our common stock distributed to you will be registered in the "street name" of your bank or broker, who in turn will electronically credit your account with the shares of our common stock that you are entitled to receive in the spin-off. We anticipate that banks and brokers will generally credit their customers' accounts with our common stock on or shortly after the distribution date. We encourage you to contact your bank or broker if you have any questions regarding the mechanics of having shares of our common stock credited to your account.

        Registered Holders.    If you are the registered holder of shares of Exterran Holdings common stock and hold your shares of Exterran Holdings common stock either in physical form or in book-entry form, the shares of our common stock distributed to you will be registered in your name and you will become the holder of record of that number of shares of our common stock. Our distribution agent will send you a statement reflecting your ownership of our common stock.

        Exterran Corporation Direct Registration System.    As part of the spin-off, we will be adopting a direct registration system for book-entry share registration and transfer of our common stock. The shares of our common stock to be distributed in the spin-off will be distributed as uncertificated shares registered in book-entry form through the direct registration system. No certificates representing your shares will be mailed to you in connection with the spin-off. Under the direct registration system, instead of receiving stock certificates, you will receive a statement reflecting your ownership interest in our shares. Following the spin-off, however, holders of record may request physical stock certificates. Contact information for our transfer agent and registrar is provided under "Questions and Answers About the Spin-Off." The distribution agent will begin mailing book-entry account statements reflecting your ownership of shares promptly after the distribution date. You can obtain more information regarding the direct registration system by contacting our transfer agent and registrar.

Treatment of Fractional Shares

        The transfer agent will not deliver any fractional shares of our common stock in connection with the spin-off. Instead, the transfer agent will aggregate all fractional shares and sell them on behalf of

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those holders who otherwise would be entitled to receive a fractional share. We anticipate that these sales will occur as soon as practicable after the distribution date. Those holders will then receive a cash payment in the form of a check in an amount equal to their pro rata share of the total net proceeds of those sales. If you physically hold Exterran Holdings stock certificates, your check for any cash that you may be entitled to receive instead of fractional shares of our common stock will be mailed to you separately. We expect that checks will generally be distributed to shareholders within one to two weeks after the distribution date. Broker selling expenses in connection with these sales will be paid by Exterran Holdings.

        It is expected that all fractional shares held in street name will be aggregated and sold by brokers or other nominees according to their standard procedures. You should contact your broker or other nominee for additional details.

        None of Exterran Holdings, our company or the transfer agent will guarantee any minimum sale price for the fractional shares of our common stock. Neither we nor Exterran Holdings will pay any interest on the proceeds from the sale of fractional shares. The receipt of cash in lieu of fractional shares will generally be taxable to the recipient shareholders. Please read "—Material U.S. Federal Income Tax Consequences of the Spin-Off."

Market for Our Common Stock

        There is currently no public market for our common stock. A condition to the spin-off is the listing of our common stock on the NYSE. We expect to list our common stock on the NYSE under the symbol "EXTN." We anticipate that trading of our common stock will commence on a when-issued basis on or shortly before the record date. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. On the first trading day following the distribution date, when-issued trading with respect to our common stock will end and regular way trading will begin. Regular way trading refers to trading after a security has been issued and typically involves a transaction that settles on the third full business day following the date of the transaction. Neither we nor Exterran Holdings can assure you as to the trading price of our common stock after the spin-off or as to whether the trading price of a share of Archrock common stock after the spin-off plus half of the trading price of a share of our common stock will equal or exceed the trading price of a share of Exterran Holdings common stock before the spin-off. The trading price of our common stock is likely to fluctuate significantly, particularly until an orderly market develops. See "Risk Factors—Risks Relating to Ownership of Our Common Stock." In addition, we cannot predict any change that may occur in the trading price or volume of Archrock's common stock as a result of the spin-off.

Trading of Exterran Holdings Common Stock After the Record Date and Prior to the Distribution

        Beginning on or shortly before the record date and through the distribution date, there will be two concurrent markets in which to trade Exterran Holdings common stock: a regular way market and an ex-distribution market. Shares of Exterran Holdings common stock that trade in the regular way market will trade with an entitlement to shares of our common stock distributed in connection with the spin-off. Shares that trade in the ex-distribution market will trade without an entitlement to shares of our common stock distributed in connection with the spin-off. Therefore, if you owned shares of Exterran Holdings common stock at 5:00 p.m., New York City time, on the record date and sell those shares in the regular way market on or prior to the distribution date, you also will be selling your right to receive the shares of our common stock that would have been distributed to you in connection with the spin-off. If you sell those shares of Exterran Holdings common stock in the ex-distribution market prior to or on the distribution date, you will still receive the shares of our common stock that were to be distributed to you in connection with the spin-off as a result of your ownership of the shares of Exterran Holdings common stock.

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        We expect to have approximately 34.7 million shares of our common stock outstanding immediately after the spin-off, based upon the number of shares of Exterran Holdings common stock outstanding on June 30, 2015 and that we expect will remain outstanding on October 27, 2015, the record date for the spin-off. The shares of our common stock distributed to Exterran Holdings shareholders will be freely transferable, except for shares received by persons who may be deemed to be our "affiliates" under the Securities Act of 1933, as amended, or the Securities Act, and except for shares issued as restricted stock under our incentive plan. Persons who may be deemed to be our affiliates after the spin-off generally include individuals or entities that control, are controlled by, or are under common control with us, and may include some or all of our directors and executive officers. Our affiliates will be permitted to sell their shares of our common stock only pursuant to an effective Registration Statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144.

Treatment of Stock-Based Awards

Treatment of Exterran Holdings Stock Options

        Options to purchase common stock of Exterran Holdings ("Archrock Options") will generally be adjusted as described below based on (i) the date on which the Archrock Option was granted and (ii) whether the optionholder will be employed or engaged by Archrock or Exterran Corporation (or their respective affiliates) following the distribution. References to "Archrock" in this section mean Exterran Holdings prior to the spin-off.

    Archrock Options Granted Prior to 2015

        Each Archrock Option that was granted prior to calendar year 2015 and that is outstanding as of the distribution date, whether vested or unvested, will be adjusted through conversion into an adjusted Archrock Option and an option to purchase shares of Exterran Corporation common stock (an "Exterran Corporation Option"). The number of shares of Exterran Corporation common stock and Archrock common stock subject to the new Exterran Corporation Option and the adjusted Archrock Option, respectively, as well as the exercise prices applicable to these options, will be determined based on the value of Exterran Corporation's common stock on the when-issued market and Archrock's common stock on the ex-dividend market, in each case, relative to the value of Archrock's common stock on the NYSE, based on their respective closing prices on the distribution date. Specifically, (i) the number of shares of common stock subject to each adjusted option will equal (a) the number of Archrock shares of common stock subject to the Archrock Option immediately prior to the adjustment multiplied by (b) a fraction, the numerator of which equals the value of the Archrock common stock (based on its closing price on the NYSE on the distribution date) and the denominator of which equals (x) the value of Exterran Corporation's common stock (based on its closing price on the when-issued market on the distribution date) or (y) the value of Archrock's common stock (based on its closing price on the ex-dividend market on the distribution date), as applicable, (such fraction, the "Conversion Ratio"), and further multiplied by (c) a fraction, the numerator of which equals (x) the value of Archrock's common stock (based on its closing price on the ex-dividend market on the distribution date) or (y) the value of Exterran Corporation's common stock (based on its closing price on the when-issued market on the distribution date) multiplied by the number of Exterran Corporation shares distributed for each share of Archrock on the distribution date (the "Distribution Ratio"), as applicable, and the denominator of which is the sum of such values and (ii) the exercise price of each adjusted option will equal the exercise price of the Archrock Option divided by the applicable Conversion Ratio.

        The number of vested and unvested shares subject to each adjusted option following the adjustment will be proportionate to the number of vested and unvested shares of Archrock common stock subject to the corresponding Archrock Option immediately prior to the adjustment.

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    Archrock Options Granted During 2015

        Archrock has not granted any Archrock Options during calendar year 2015, and does not currently expect to grant any Archrock Options during calendar year 2015 prior to the distribution date. However, if Archrock does make grants of Archrock Options during calendar year 2015 prior to the distribution date, such options will be adjusted as described below.

    Archrock Options Granted During 2015 to Exterran Corporation Employees

        Each Archrock Option that was granted during calendar year 2015 and that is outstanding as of the distribution date (whether vested or unvested) and which is held by an individual who will be employed or engaged, as applicable, by Exterran Corporation or its affiliates immediately following the distribution ("Exterran Corporation Employees") will be adjusted through conversion solely into an Exterran Corporation Option. The number of shares of common stock subject to each Exterran Corporation Option will equal the product of (i) the number of shares of Archrock's common stock subject to the Archrock Option immediately prior to the adjustment and (ii) the Exterran Corporation Conversion Ratio. The exercise price of each Exterran Corporation Option will equal the exercise price of the Archrock Option immediately prior to the distribution divided by the same ratio.

        The number of vested and unvested shares subject to each Exterran Corporation Option following the adjustment will be proportionate to the number of vested and unvested shares of Archrock common stock subject to the corresponding Archrock Option immediately prior to the adjustment.

    Archrock Options Granted During 2015 to Archrock Employees

        Each Archrock Option that was granted in calendar year 2015 and that is outstanding as of the distribution date (whether vested or unvested) and which is held by an individual who will be employed or engaged, as applicable, by Archrock or its affiliates immediately following the distribution ("Archrock Employees") will be adjusted to cover a number of Archrock shares. The number of shares of common stock subject to each adjusted Archrock Option will equal the product of (i) the number of shares of Archrock's common stock subject to the Archrock Option immediately prior to the adjustment and (ii) the Archrock Conversion Ratio. The exercise price of each adjusted Archrock Option will equal the exercise price of the Archrock Option immediately prior to the adjustment divided by the same ratio.

        The number of vested and unvested shares subject to each adjusted Archrock Option following the adjustment will be proportionate to the number of vested and unvested shares of Archrock common stock subject to the corresponding Archrock Option immediately prior to the adjustment.

    Archrock Incentive Stock Options

        Notwithstanding the treatment described above, each Archrock Option that is intended to qualify as an "incentive stock option" (within the meaning of Section 422 of the Code) and that is held by an Archrock Employee or Exterran Corporation Employee who elected, prior to the distribution, to preserve the tax treatment of their Archrock incentive stock options will be converted solely into an option denominated in shares of the common stock of such employee's post-distribution employer in accordance with the adjustments described above under "Archrock Options Granted During 2015 to Exterran Corporation Employees" (if such employee is an Exterran Corporation Employee) or "Archrock Options Granted During 2015 to Archrock Employees" (if such employee is an Archrock Employee). Archrock incentive stock options held by an Archrock Employee or Exterran Corporation Employee who does not elect, prior to the spin-off, to preserve the tax treatment of his or her Archrock incentive stock options will be adjusted as otherwise described above, based on (i) the date on which the option was granted and (ii) whether the optionholder will be an Exterran Corporation Employee or an Archrock Employee following the distribution.

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    Archrock Options Held by Non-Continuing Employees

        In addition, notwithstanding the treatment described above, each Archrock Option held by an individual who, as of the effective time of the distribution, is a former employee or other service provider of Exterran Corporation or Archrock (or their respective affiliates) will be adjusted solely into an Archrock Option in accordance with the adjustments described above under "Archrock Options Granted During 2015 to Archrock Employees".

Treatment of Exterran Holdings Restricted Stock, Restricted Stock Unit and Performance Unit Awards

        Restricted stock, restricted stock unit and performance unit awards denominated in shares of Exterran Holdings common stock (each, an "Archrock Stock Award") will be adjusted as described below based on (i) the date on which the Archrock Stock Award was granted and (ii) whether the holder will be employed or engaged by Archrock or Exterran Corporation (or their respective affiliates) following the distribution.

    Archrock Stock Awards Granted Prior to 2015

        Each Archrock Stock Award that was granted prior to calendar year 2015 and that is outstanding as of the distribution date will be adjusted through conversion into an adjusted Archrock Stock Award and a restricted stock, restricted stock unit or performance unit award, as applicable, denominated in shares of Exterran Corporation common stock (an "Exterran Corporation Stock Award"). The number of shares of Archrock's common stock subject to the adjusted Archrock Stock Award will equal the number of shares of Archrock's common stock subject to the Archrock Stock Award immediately prior to the adjustment. The number of shares of Exterran Corporation's common stock subject to the new Exterran Corporation Stock Award will equal (i) the number of shares of Archrock's common stock subject to the Archrock Stock Award immediately prior to the adjustment multiplied by (ii) the Distribution Ratio.

    Archrock Stock Awards Granted During 2015 to Exterran Corporation Employees

        Each Archrock Stock Award that was granted in calendar year 2015 and that is outstanding as of the distribution date and which is held by an Exterran Corporation Employee will be adjusted through conversion into an Exterran Corporation Stock Award. The number of shares of common stock subject to each Exterran Corporation Stock Award will equal the product of (i) the number of shares of Archrock's common stock subject to the Archrock Stock Award immediately prior to the adjustment and (ii) the Exterran Corporation Conversion Ratio.

    Archrock Stock Awards Granted During 2015 to Archrock Employees

        Each Archrock Stock Award that was granted in calendar year 2015 and that is outstanding as of the distribution date and which is held by an Archrock Employee will be adjusted to cover a number of Archrock shares equal to the product of (i) the number of shares of Archrock common stock subject to the Archrock Stock Award immediately prior to the adjustment and (ii) the Archrock Conversion Ratio.

    General Terms of Post-Distribution Stock Options and Stock Awards

        The adjusted Archrock Stock Awards and Archrock Options (collectively, "Archrock Awards") and the Exterran Corporation Stock Awards and Exterran Corporations Options (collectively, "Exterran Corporation Awards") generally will be subject to the same terms and conditions, including the same vesting provisions (including any accelerated vesting) and, if applicable, performance conditions, as applied to the corresponding Archrock Awards, as applicable, immediately prior to the adjustment. Following the adjustment, in the case of Archrock Awards that are converted into both adjusted

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Archrock Awards and Exterran Corporation Awards, continued employment with or service to Archrock or its affiliates will be treated as employment or other continued service with Exterran Corporation and its affiliates with respect to Exterran Corporation Awards held by Archrock Employees, and continued employment with or other service to Exterran Corporation and its affiliates will be treated as employment or other continued service with Archrock and its affiliates with respect to Archrock Awards held by Exterran Corporation Employees.

        Notwithstanding the foregoing, with respect to any unvested Exterran Corporation Award or unvested Archrock Award granted or adjusted, as applicable, in connection with the distribution, if the original Archrock Award was subject to accelerated vesting provisions in connection with a termination of service with Archrock and/or a "Corporate Change" (as defined in the applicable award agreements or equity plan) of Archrock, then the Exterran Corporation Award or Archrock Award, as applicable, will be subject to the same acceleration provisions in connection with the holder's termination of service with his or her post-spin employer, Archrock or Exterran Corporation, as applicable, and/or Corporate Change of such entity. In addition, any unvested Exterran Corporation Award granted to an Archrock Employee in connection with the distribution will vest in full upon a Corporate Change of Exterran Corporation, and any unvested Archrock Award held by an Exterran Corporation Employee that is adjusted in connection with the distribution will vest in full upon a Corporate Change of Archrock. Additionally, if, following the distribution, the board of directors of Exterran Corporation or Archrock, as applicable, determines to accelerate in full the vesting of all of such entity's equity awards that are held by its current and former service providers, then such board of directors shall also accelerate in full the vesting of all of its equity awards that are held by current and former service providers of the other entity, Exterran Corporation or Archrock, as applicable.

Spin-Off Conditions and Termination

        We expect that the spin-off will be effective on November 3, 2015, provided that, among other things:

    the SEC has declared effective our Registration Statement on Form 10, of which this information statement is a part, under the Exchange Act, with no stop order in effect with respect to the Form 10, and this information statement has been mailed to Exterran Holdings' shareholders;

    the actions and filings necessary under securities and blue sky laws of the states of the U.S. and any comparable laws under any foreign jurisdictions have been taken and become effective;

    no order, injunction, decree or regulation issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the completion of the spin-off is in effect and no other event outside Exterran Holdings' control has occurred or failed to occur that prevents the completion of the spin-off;

    our common stock has been approved for listing on the NYSE, subject to official notice of issuance;

    Exterran Holdings has received an opinion from its tax counsel regarding the tax treatment of the spin-off as of the distribution date (see "—Material U.S. Federal Income Tax Consequences of the Spin-Off" for more information regarding the opinion of tax counsel);

    the separation and distribution agreement and each of the ancillary agreements related to the spin-off have been entered into before the spin-off and have not been materially breached by any party thereto;

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    the separation and distribution agreement and each of the ancillary agreements entered into before the spin-off have not been terminated and will not violate, conflict with or result in a breach of any law or any material agreements of Exterran Holdings;

    EESLP has entered into the new credit facility;

    the contribution of EESLP to Exterran Corporation will have been completed and be effective;

    all material governmental approvals and material consents to be received by Exterran Holdings necessary to consummate the spin-off have been received and continue to be in full force and effect; and

    no other events or developments have occurred that, in the judgment of the board of directors of Exterran Holdings, in its sole and absolute discretion, would result in the spin-off having a material adverse effect on Exterran Holdings or its shareholders.

        Exterran Holdings may waive one or more of these conditions in its sole and absolute discretion, and the determination by Exterran Holdings regarding the satisfaction of these conditions will be conclusive. The fulfillment of these conditions will not create any obligation on Exterran Holdings' part to effect the distribution, and Exterran Holdings has reserved the right to amend, modify or abandon any and all terms of the distribution and the related transactions at any time prior to the distribution date.

        In the event Exterran Holdings waives or modifies any of the conditions to the consummation of the spin-off in a manner that would have a material effect on the recipients of our common stock in the spin-off, we will amend and redistribute this information statement to disclose such modification or waiver and any material effect on the recipients of our common stock. We currently anticipate that if any of the conditions to the spin-off are not met or waived by Exterran Holdings, the spin-off will not take place.

Material U.S. Federal Income Tax Consequences of the Spin-Off

        The following is a summary of the material U.S. federal income tax consequences to Exterran Holdings and to U.S. Holders (as defined below) of shares of Exterran Holdings common stock in connection with the spin-off. This summary is based on the Code, the U.S. Treasury Regulations promulgated thereunder and judicial and administrative interpretations thereof, in effect as of the date hereof, and all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below. References to "Exterran Holdings" in this section means Archrock following the spin-off.

        For purposes of this discussion, a U.S. Holder is a beneficial owner of Exterran Holdings common stock that is, for U.S. federal income tax purposes:

    an individual who is a citizen or resident of the United States;

    a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

    a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more United States persons (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.

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        This summary also does not discuss all tax considerations that may be relevant to holders in light of their particular circumstances, nor does it address the consequences to holders subject to special treatment under the U.S. federal income tax laws, such as:

    dealers or brokers in securities, commodities or currencies;

    tax-exempt organizations;

    banks, insurance companies or other financial institutions;

    mutual funds;

    regulated investment companies and real estate investment trusts;

    a corporation that accumulates earnings to avoid U.S. federal income tax;

    holders who hold individual retirement or other tax-deferred accounts;

    holders who acquired shares of Exterran Holdings common stock pursuant to the exercise of stock options or otherwise as compensation;

    holders who own, or are deemed to own, at least 10% or more, by voting power or value, of Exterran Holdings equity;

    holders who hold Exterran Holdings common stock as part of a hedge, appreciated financial position, straddle, constructive sale, conversion transaction or other risk reduction transaction;

    traders in securities who elect to apply a mark-to-market method of accounting;

    holders who have a functional currency other than the U.S. dollar;

    holders who are subject to the alternative minimum tax; or

    partnerships or other pass-through entities or investors in such entities.

        This summary does not address the U.S. federal income tax consequences to Exterran Holdings shareholders who do not hold shares of Exterran Holdings common stock as a capital asset or to Exterran Holdings shareholders who are not U.S. Holders. Moreover, this summary does not address any state, local or foreign tax consequences or any estate, gift or other non-income tax consequences.

        If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds shares of Exterran Holdings common stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. Partners in a partnership holding Exterran Holdings common stock should consult their own tax advisors regarding the tax consequences of the distribution.

        EXTERRAN HOLDINGS SHAREHOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE DISTRIBUTION.

    Distribution

        Exterran Holdings expects to obtain an opinion of Latham & Watkins LLP substantially to the effect that, for U.S. federal income tax purposes, (i) the internal distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, and (ii) the distribution should qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, subject to certain qualifications and limitations. Accordingly, for U.S. federal income tax purposes:

    no material gain or loss should be recognized by Exterran Holdings as a result of the internal distribution or the distribution;

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    no gain or loss should be recognized by, or be includible in the income of, a U.S. Holder of Exterran Holdings common stock, solely as a result of the receipt of Exterran Corporation common stock in the distribution;

    the aggregate tax basis of the shares of Exterran Holdings common stock and shares of Exterran Corporation common stock in the hands of a U.S. Holder of Exterran Holdings common stock immediately after the distribution should be the same as the aggregate tax basis of the shares of Exterran Holdings common stock held by the holder immediately before the distribution, allocated between the shares of Exterran Holdings common stock and shares of Exterran Corporation common stock, including any fractional share interest for which cash is received, in proportion to their relative fair market values on the date of the distribution;

    the holding period with respect to shares of Exterran Corporation common stock received by a U.S. Holder of Exterran Holdings common stock should include the holding period of its shares of Exterran Holdings common stock; and

    a U.S. Holder of Exterran Holdings common stock who receives cash in lieu of a fractional share of Exterran Corporation common stock in the distribution will be treated as having sold such fractional share for cash and generally should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and such holder's adjusted tax basis in the fractional share. That gain or loss should be long-term capital gain or loss if the holder's holding period for its shares of Exterran Holdings common stock exceeds one year.

        U.S. Treasury regulations generally provide that if a U.S. Holder of Exterran Holdings common stock holds different blocks of Exterran Holdings common stock (generally shares of Exterran Holdings common stock purchased or acquired on different dates or at different prices), the aggregate basis for each block of Exterran Holdings common stock purchased or acquired on the same date and at the same price will be allocated, to the greatest extent possible, between the shares of Exterran Corporation common stock received in the distribution in respect of such block of Exterran Holdings common stock and such block of Exterran Holdings common stock, in proportion to their respective fair market values, and the holding period of the shares of Exterran Corporation common stock received in the distribution in respect of such block of Exterran Holdings common stock will include the holding period of such block of Exterran Holdings common stock, provided that such block of Exterran Holdings common stock was held as a capital asset on the distribution date. If a U.S. Holder of Exterran Holdings common stock is not able to identify which particular shares of Exterran Corporation common stock are received in the distribution with respect to a particular block of Exterran Holdings common stock, for purposes of applying the rules described above, the U.S. Holder may designate which shares of Exterran Corporation common stock are received in the distribution in respect of a particular block of Exterran Holdings common stock, provided that such designation is consistent with the terms of the distribution. Holders of Exterran Holdings common stock are encouraged to consult their own tax advisors regarding the application of these rules to their particular circumstances.

        The application of Sections 355 and 368 of the Code to transactions substantially similar to the internal distribution and distribution is highly complex. In addition, there are no court decisions or other authorities directly bearing on the tax treatment of the internal distribution or the distribution under our specific facts, and, as a result, the tax consequences of the internal distribution and the distribution are not free from doubt. The lack of authority and resulting uncertainty described above renders counsel unable to reach a more definitive conclusion than "should" in its opinion. Moreover, holders should note that the opinion that Exterran Holdings expects to receive from Latham & Watkins LLP will be based on certain facts and assumptions, and certain representations and undertakings, from us and Exterran Holdings, and is not binding on the IRS or the courts. If any of the facts, representations, assumptions or undertakings relied upon in the opinion is not correct, is

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incomplete or has been violated, our ability to rely on the opinion of counsel could be jeopardized. However, we are not aware of any facts or circumstances that would cause these facts, representations or assumptions to be untrue or incomplete, or that would cause any of these undertakings to fail to be complied with, in any material respect.

        If, notwithstanding the conclusions that we expect to be included in the opinion, the distribution is ultimately determined to not qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, Exterran Holdings would recognize a gain in an amount equal to the excess of the fair market value of Exterran Corporation common stock distributed to Exterran Holdings shareholders on the distribution date over Exterran Holdings' tax basis in such shares. In addition, each U.S. Holder who receives shares of Exterran Corporation common stock in the distribution would be treated as receiving a taxable distribution in an amount equal to the fair market value of our common stock that was distributed to the holder. Specifically, the full value of our common stock distributed to a U.S. Holder generally would be treated first as a taxable dividend to the extent of the holder's pro rata share of Exterran Holdings' current and accumulated earnings and profits, then as a non-taxable return of capital to the extent of the holder's basis in the Exterran Holdings stock, and finally as capital gain from the sale or exchange of Exterran Holdings stock with respect to any remaining value.

        Moreover, Exterran Holdings could incur significant United States federal income tax liabilities if it is ultimately determined that the internal distribution does not qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the Code.

        Even if the internal distribution and distribution each otherwise qualifies as a reorganization under Sections 355 and 368(a)(1)(D) of the Code, the spin-off may result in corporate-level taxable gain to Exterran Holdings under Section 355(e) of the Code if there is a 50% or greater change in ownership, by vote or value, of our stock, Exterran Holdings' stock or stock of a successor of either occurring as part of a plan or series of related transactions that includes the distribution. For this purpose, any acquisitions or issuances of Exterran Holdings' stock within two years before the distribution, and any acquisitions or issuances of Exterran Corporation's stock or Exterran Holdings' stock within two years after the distribution, are generally presumed to be part of such a plan, although we or Exterran Holdings may be able to rebut that presumption. If an acquisition or issuance of our stock or Exterran Holdings stock triggers the application of Section 355(e) of the Code, Exterran Holdings would recognize taxable gain as described above and such gain would be subject to U.S. federal income tax.

    Tax Matters Agreement

        In connection with the distribution, we and Exterran Holdings will enter into a tax matters agreement pursuant to which we will agree to be responsible for certain liabilities and obligations following the distribution. In general, under the terms of the tax matters agreement, in the event the distribution were to fail to qualify as a transaction that is tax-free under Section 355 of the Code (including as a result of Section 355(e) of the Code) and if such failure were the result of actions taken after the distribution by Archrock or us, the party responsible for such failure would be responsible for all taxes imposed on Exterran Holdings to the extent such taxes result from such actions. If such failure were not the result of actions taken after the distribution by Archrock or us, the parties would each be responsible for 50% of the taxes imposed on Exterran Holdings as a result of such failure. For a more detailed discussion, see "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Tax Matters Agreement." If we are required to indemnify Archrock and its subsidiaries under the circumstances set forth in the tax matters agreement, we may be subject to substantial liabilities.

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    Information Reporting and Backup Withholding

        U.S. Treasury regulations require certain shareholders who receive stock in a distribution to attach to their U.S. federal income tax return for the year in which the distribution occurs a detailed statement setting forth certain information relating to the tax-free nature of the distribution. In addition, payments of cash to an Exterran Holdings shareholder in lieu of fractional shares of Exterran Corporation common stock in the distribution may be subject to information reporting and backup withholding (currently at a rate of 28 percent), unless the shareholder provides proof of an applicable exemption or a correct taxpayer identification number and otherwise complies with the requirements of the backup withholding rules. Backup withholding does not constitute an additional tax, but merely an advance payment, which may be refunded or credited against a shareholder's U.S. federal income tax liability, provided the required information is timely supplied to the IRS.

        THE FOREGOING IS A SUMMARY OF THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW. THE FOREGOING DOES NOT PURPORT TO ADDRESS ALL U.S. FEDERAL INCOME TAX CONSEQUENCES OR TAX CONSEQUENCES THAT MAY ARISE UNDER THE TAX LAWS OR THAT MAY APPLY TO PARTICULAR CATEGORIES OF SHAREHOLDERS. EACH EXTERRAN HOLDINGS SHAREHOLDER IS ENCOURAGED TO CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO SUCH SHAREHOLDER, INCLUDING THE APPLICATION OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS, AND THE EFFECT OF POSSIBLE CHANGES IN TAX LAWS THAT MAY AFFECT THE TAX CONSEQUENCES DESCRIBED ABOVE.

Reason for Furnishing this Information Statement

        This information statement is being furnished solely to provide information to Exterran Holdings shareholders who will receive shares of our common stock in the spin-off. It is not to be construed as an inducement or encouragement to buy or sell any of our securities or any Exterran Holdings securities. We believe that the information contained in this information statement is accurate as of the date set forth on the front cover. Changes may occur after that date and neither Exterran Holdings nor we undertake any obligation to update the information, except to the extent applicable securities laws require us to do so.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2015 (1) on a historical basis, and (2) on an as adjusted basis to reflect the spin-off and other transactions, including entry into the new credit facility, described under "Unaudited Pro Forma Condensed Combined Financial Statements." This table should be read in conjunction with "Selected Historical Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Condensed Combined Financial Statements" and our combined financial statements and corresponding notes included elsewhere in this information statement.

        We are providing the capitalization table below for information purposes only. The capitalization table below may not reflect the capitalization or financial condition that would have resulted had we been operating as a separate, independent entity on June 30, 2015 and is not necessarily indicative of our future capitalization or financial condition.

 
  June 30, 2015  
(in thousands)
  Historical   As Adjusted  

Cash and cash equivalents

  $ 23,049   $ 23,049  

Long-term debt:

             

New Revolving Credit Facility

        306,812  

New Term Loan

        245,000  

Capital lease obligations

    891     891  

Total long-term debt (including current maturities)

  $ 891   $ 552,703  

Equity(1):

             

Common stock, par value $0.01 per share; 250,000,000 shares authorized pro forma; 34,722,737 shares issued and outstanding pro forma

  $   $ 347  

Preferred stock, par value $0.01 per share; 50,000,000 shares authorized pro forma, no shares issued and outstanding

         

Additional paid-in-capital

        962,438  

Parent equity

    1,482,965      

Accumulated other comprehensive income

    10,073     10,073  

Total equity

  $ 1,493,038   $ 972,858  

Total capitalization

  $ 1,493,929   $ 1,525,561  

(1)
Represents the expected distribution of approximately 34.7 million shares of our common stock to holders of Exterran Holdings common stock based on the number of shares of Exterran Holdings common stock outstanding on June 30, 2015. The actual record date is October 27, 2015.

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DIVIDEND POLICY

        We do not currently anticipate paying cash dividends on our common stock. We currently intend to retain our future earnings to support the growth and development of our business. The declaration of any future cash dividends and, if declared, the amount of any such dividends, will be subject to our financial condition, earnings, capital requirements, financial covenants, applicable law and other factors our board of directors deems relevant. In addition, the credit agreement relating to the new credit facility includes restrictions on our ability to pay dividends. Our board of directors may take into account such matters as general business conditions, industry practice, our financial condition and performance, our future prospects, our cash needs and capital investment plans, income tax consequences, applicable law and such other factors as our board of directors may deem relevant. See "Risk Factors—Risks Relating to Ownership of Our Common Stock—Although Archrock has paid dividends on its common stock in the past, we do not currently anticipate paying cash dividends on our common stock and cannot assure you that we will pay dividends on our common stock in the future, and our indebtedness could limit our ability to pay dividends on our common stock." For a discussion of the covenants contained in the credit agreement, please see "Description of Material Indebtedness."

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SELECTED HISTORICAL COMBINED FINANCIAL DATA

        The following tables present the selected financial information of Exterran Holdings' historical international contract operations and global fabrication reporting segments and the international component of Exterran Holdings' aftermarket services reporting segment reflected in its historical financial statements discussed herein and included elsewhere in this information statement. We refer to the global fabrication business currently operated by Exterran Holdings as our product sales business. The balance sheet data as of December 31, 2014 and 2013 and the statements of operations data for each of the years ended December 31, 2014, 2013 and 2012 are derived from our audited combined financial statements included elsewhere in this information statement. The balance sheet data as of December 31, 2012, 2011 and 2010 and the statements of operations data for each of the years ended December 31, 2011 and 2010 are derived from our unaudited combined financial statements that are not included in this information statement. The balance sheet data as of June 30, 2015 and the statements of operations data for each of the six months ended June 30, 2015 and 2014 are derived from our unaudited combined financial statements included elsewhere in this information statement. The balance sheet data as of June 30, 2014 is derived from our unaudited combined financial statements that are not included in this information statement. Management believes that the unaudited combined financial statements have been prepared on the same basis as the audited combined financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the information for the periods presented. Results for the interim periods may not necessarily be indicative of results for the full year. The results from continuing operations for all periods presented exclude the results of our Venezuelan contract operations business and our Canadian Operations. Those results are reflected in discontinued operations for all periods presented.

        The selected historical combined financial information presented below should be read in conjunction with our combined financial statements and accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this information statement. The financial information may not be indicative of our future performance and does not necessarily reflect the financial position and results of operations we would have realized had we operated as a separate, stand-alone entity during the periods presented, including changes that will occur in our operations as a result of our spin-off from Exterran Holdings.

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  Years Ended December 31,   Six Months
Ended June 30,
 
 
  2014   2013   2012   2011   2010   2015   2014  

(in thousands)

                                           

Statement of Operations Data:

                                           

Revenues

  $ 2,172,754   $ 2,415,473   $ 2,068,724   $ 1,840,357   $ 1,661,735   $ 1,014,691   $ 1,023,826  

Gross margin(1)

    596,869     583,516     484,606     416,631     475,158     267,219     287,701  

Selling, general and administrative

    267,493     264,890     269,812     259,562     246,888     114,330     134,691  

Depreciation and amortization

    173,803     140,029     167,499     171,301     200,734     75,581     95,157  

Long-lived asset impairment

    3,851     11,941     5,197     352     12,286     10,489      

Restructuring and other charges

            3,892     7,131         10,547      

Goodwill impairment

                164,813              

Interest expense

    1,905     3,551     5,318     4,373     7,397     826     848  

Equity in (income) loss of non-consolidated affiliates

    (14,553 )   (19,000 )   (51,483 )   471     609     (10,068 )   (9,602 )

Other (income) expense, net

    7,222     (1,966 )   5,638     (313 )   (10,328 )   11,878     (4,966 )

Provision for income taxes

    77,833     97,367     26,226     31,148     19,936     26,802     39,641  

Income (loss) from continuing operations

    79,315     86,704     52,507     (222,207 )   (2,364 )   26,834     31,932  

Income (loss) from discontinued operations, net of tax

    73,198     66,149     66,843     (10,105 )   40,739     19,122     36,597  

Net income (loss)

    152,513     152,853     119,350     (232,312 )   38,375     45,956     68,529  

Other Financial Data:

                                           

EBITDA, as adjusted(1)

  $ 326,729   $ 324,905   $ 216,562   $ 171,556   $ 227,480   $ 149,010   $ 155,094  

Capital expenditures:

                                           

Contract Operations Equipment:

                                           

Growth

  $ 97,931   $ 36,468   $ 107,658   $ 35,846   $ 83,641   $ 53,811   $ 41,331  

Maintenance

    24,377     21,591     22,530     14,369     15,002     14,586     9,507  

Other

    35,546     42,136     34,602     32,332     21,901     14,274     16,129  

Balance Sheet Data:

                                           

Cash and cash equivalents

  $ 39,361   $ 35,194   $ 34,167   $ 21,454   $ 43,752   $ 23,049   $ 53,762  

Working capital

    481,596     372,186     347,762     356,898     324,395     533,495     469,062  

Property, plant and equipment, net

    954,811     965,196     1,031,928     1,007,685     1,099,685     952,385     957,812  

Total assets

    2,032,823     1,999,211     2,133,502     2,153,944     2,457,704     1,979,273     2,037,196  

Long-term debt

    1,107     1,539         140     55     891     1,332  

Total equity

    1,451,822     1,373,904     1,407,394     1,450,828     1,648,095     1,493,038     1,466,809  

(1)
Gross margin and EBITDA, as adjusted, are non-GAAP financial measures. Each of these Non-GAAP financial measures is defined, reconciled to net income (loss) and discussed further below under "Non-GAAP Financial Measures."

Non-GAAP Financial Measures

        We define gross margin as total revenue less cost of sales (excluding depreciation and amortization expense). Gross margin is included as a supplemental disclosure because it is a primary measure used by our management to evaluate the results of revenue and cost of sales (excluding depreciation and amortization expense), which are key components of our operations. We believe gross margin is important because it focuses on the current operating performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations, the indirect costs associated with our selling, general and administrative, or SG&A activities, the impact of our financing methods and income taxes. Depreciation and amortization expense may not accurately reflect the costs required to maintain and replenish the operational usage of our assets and therefore may not portray the costs from current operating activity. As an indicator of our operating performance, gross margin should not be considered an alternative to, or more meaningful than, net income (loss) as determined in accordance with accounting principles generally accepted in the U.S., or GAAP. Our gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate gross margin in the same manner.

        Gross margin has certain material limitations associated with its use as compared to net income (loss). These limitations are primarily due to the exclusion of interest expense, depreciation and

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amortization expense, SG&A expense, impairments and restructuring and other charges. Each of these excluded expenses is material to our combined statements of operations. Because we intend to finance a portion of our operations through borrowings, interest expense is a necessary element of our costs and our ability to generate revenue. Additionally, because we use capital assets, depreciation expense is a necessary element of our costs and our ability to generate revenue, and SG&A expenses are necessary to support our operations and required corporate activities. To compensate for these limitations, management uses this non-GAAP measure as a supplemental measure to other GAAP results to provide a more complete understanding of our performance.

        The following table reconciles our net income (loss) to gross margin (in thousands):

 
   
   
   
   
   
   
   
  Pro Forma  
 
  Years Ended December 31,   Six Months
Ended June 30,
  Six Months
Ended June 30,
  Year
Ended
December 31,
 
 
  2014   2013   2012   2011   2010   2015   2014   2015   2014  

Net income (loss)

  $ 152,513   $ 152,853   $ 119,350   $ (232,312 ) $ 38,375   $ 45,956   $ 68,529   $ 36,669   $ 134,330  

Selling, general and administrative

    267,493     264,890     269,812     259,562     246,888     114,330     134,691     114,330     267,493  

Depreciation and amortization

    173,803     140,029     167,499     171,301     200,734     75,581     95,157     75,581     173,803  

Long-lived asset impairment

    3,851     11,941     5,197     352     12,286     10,489         10,489     3,851  

Restructuring and other charges

            3,892     7,131         10,547         10,547      

Goodwill impairment

                164,813                      

Interest expense

    1,905     3,551     5,318     4,373     7,397     826     848     17,369     35,021  

Equity in (income) loss of non-consolidated affiliates

    (14,553 )   (19,000 )   (51,483 )   471     609     (10,068 )   (9,602 )   (10,068 )   (14,553 )

Other (income) expense, net

    7,222     (1,966 )   5,638     (313 )   (10,328 )   11,878     (4,966 )   11,878     7,222  

Provision for income taxes

    77,833     97,367     26,226     31,148     19,936     26,802     39,641     21,802     68,042  

(Income) loss from discontinued operations, net of tax

    (73,198 )   (66,149 )   (66,843 )   10,105     (40,739 )   (19,122 )   (36,597 )   (19,122 )   (73,198 )

Gross margin

  $ 596,869   $ 583,516   $ 484,606   $ 416,631   $ 475,158   $ 267,219   $ 287,701   $ 269,475   $ 602,011  

        We define EBITDA, as adjusted, as net income (loss) excluding income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), income taxes, interest expense (including debt extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, restructuring and other charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, expensed acquisition costs and other items. We believe EBITDA, as adjusted, is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), our subsidiaries' capital structure (non-cash gains or losses from foreign currency exchange rate changes on intercompany obligations), tax consequences, impairment charges, restructuring and other charges, expensed acquisition costs and other items. Management uses EBITDA, as adjusted, as a supplemental measure to review current period operating performance, comparability measures and performance measures for period to period comparisons. Our EBITDA, as adjusted, may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.

        EBITDA, as adjusted, is not a measure of financial performance under GAAP, and should not be considered in isolation or as an alternative to net income (loss), cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from EBITDA, as adjusted,

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are significant and necessary components to the operations of our business, and, therefore, EBITDA, as adjusted, should only be used as a supplemental measure of our operating performance.

        The following table reconciles our net income (loss) to EBITDA, as adjusted (in thousands):

 
   
   
   
   
   
   
   
  Pro Forma  
 
  Years Ended December 31,   Six Months
Ended June 30,
  Six Months Ended June 30,   Year
Ended
December 31,
 
 
  2014   2013   2012   2011   2010   2015   2014   2015   2014  

Net income (loss)

  $ 152,513   $ 152,853   $ 119,350   $ (232,312 ) $ 38,375   $ 45,956   $ 68,529   $ 36,669   $ 134,330  

(Income) loss from discontinued operations, net of tax

    (73,198 )   (66,149 )   (66,843 )   10,105     (40,739 )   (19,122 )   (36,597 )   (19,122 )   (73,198 )

Depreciation and amortization

    173,803     140,029     167,499     171,301     200,734     75,581     95,157     75,581     173,803  

Long-lived asset impairment

    3,851     11,941     5,197     352     12,286     10,489         10,489     3,851  

Restructuring and other charges

            3,892     7,131         10,547         10,547      

Goodwill impairment

                164,813                      

Investment in non-consolidated affiliates impairment

    197         224     471     609         197         197  

Proceeds from sale of joint venture assets

    (14,750 )   (19,000 )   (51,707 )           (10,068 )   (9,799 )   (10,068 )   (14,750 )

Interest expense

    1,905     3,551     5,318     4,373     7,397     826     848     17,369     35,021  

(Gain) loss on currency exchange rate remeasurement of intercompany balances

    3,614     4,313     7,406     14,174     (6,255 )   7,999     (2,882 )   7,999     3,614  

Gain on sale of our investment in the subsidiary that owns the barge mounted processing plant and other related assets used on the Cawthorne Channel Project

                    (4,863 )                

Loss on sale of businesses

    961                                 961  

Provision for income taxes

    77,833     97,367     26,226     31,148     19,936     26,802     39,641     21,802     68,042  

EBITDA, as adjusted

  $ 326,729   $ 324,905   $ 216,562   $ 171,556   $ 227,480   $ 149,010   $ 155,094   $ 151,266   $ 331,871  

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

        The unaudited pro forma condensed combined financial statements have been derived from our historical combined financial statements included in this information statement and are not intended to be a complete presentation of our financial position or results of operations had the transactions contemplated by the spin-off and related agreements occurred as of and for the periods indicated. In addition, the unaudited pro forma condensed combined financial statements are provided for illustrative and informational purposes only and are not necessarily indicative of our future results of operations or financial condition as an independent, publicly traded company. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable, that reflect the expected impacts of events directly attributable to the spin-off and related transaction agreements and that are factually supportable, and for purposes of the statement of operations, are expected to have a continuing impact on us. However, such adjustments are subject to change based on the finalization of the terms of the spin-off and related agreements.

        The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2015 and for the year ended December 31, 2014 reflects our results as if the spin-off and related transactions described below had occurred on January 1, 2014. The unaudited pro forma condensed combined balance sheet as of June 30, 2015 reflects our financial position as if the spin-off and related transactions described below had occurred as of such date.

        The unaudited pro forma condensed combined financial statements should be read in conjunction with "Capitalization," "Selected Historical Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Certain Relationships and Related Transactions" and the combined financial statements and accompanying notes included elsewhere in this information statement.

        The unaudited pro forma condensed combined financial statements give effect to the following:

    the incurrence of $306.8 million of borrowings under the new revolving credit facility, the incurrence of $245.0 million in indebtedness in the form of the new term loan and a transfer of $539.0 million of the proceeds from such borrowings to Exterran Holdings;

    the impact of the separation and distribution agreement, supply agreement, services agreement, employee matters agreement, tax matters agreement and transition services agreement between Archrock and us and the provisions contained therein; and

    the distribution of approximately 34.7 million shares of our common stock to Exterran Holdings' shareholders (based on the number of shares of Exterran Holdings common stock outstanding as of June 30, 2015).

        As of June 30, 2015, Exterran Holdings and its subsidiaries (other than Exterran Partners and its subsidiaries) had approximately $707 million of debt outstanding, including approximately $357 million of outstanding borrowings under its existing credit facility. Subsequent to June 30, 2015 and prior to the completion of the spin-off, Exterran Holdings expects to incur additional borrowings under its existing credit facility of between $40 million and $50 million to finance expenses related to the completion of the spin-off and related financing transactions, which will increase the amount we borrow under our new credit facility and transfer to Exterran Holdings.

        Pursuant to the separation and distribution agreement, in connection with the internal distribution, EESLP will contribute to a subsidiary of Archrock the right to receive payments based on a notional amount corresponding to payments received by our subsidiaries from PDVSA Gas in respect of the sale of our previously nationalized assets promptly after our subsidiaries collect such amounts until Archrock's subsidiary has received an aggregate amount of such payments equal to the lesser of (x) $150.0 million, less the aggregate amount of installment payments received from PDVSA Gas by

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Exterran Holdings and its subsidiaries after August 31, 2015 but before the completion of the spin-off, plus the aggregate amount of all reimbursable expenses incurred by Archrock and its subsidiaries in connection with recovering any default installment payments directly from PDVSA Gas following the completion of the spin-off or (y) $150.0 million. The unaudited pro forma condensed combined balance sheet does not reflect this contingent liability to Archrock.

        In addition, pursuant to the separation and distribution agreement, EESLP will use its commercially reasonable efforts to complete one or more unsecured debt offerings or equity issuances resulting in aggregate gross cash proceeds of at least $250.0 million on the terms described in the credit agreement (such transaction, a "qualified capital raise") on or before the maturity date of our $245.0 million term loan facility, which is currently expected to be the second anniversary of the completion of the spin-off or as soon as practicable thereafter. In connection with the internal distribution, EESLP will contribute to a subsidiary of Archrock the right to receive, promptly following the occurrence of a qualified capital raise, a $25.0 million cash payment. The unaudited pro forma condensed combined balance sheet does not reflect this contingent liability to Archrock.

        Following the completion of the spin-off, we expect to incur one-time expenditures ranging from approximately $10.0 million to $15.0 million consisting primarily of costs to start up certain stand-alone functions and other one-time transaction related costs. The unaudited pro forma condensed combined financial statements may also not reflect all of the costs of operating as a stand-alone public company, including potentially increased expenses related to, among others, internal audit, treasury, risk management, investor relations, tax, legal and corporate secretary functions as well as the annual expenses associated with running an independent publicly traded company including listing fees, compensation of non-employee directors and related board of director fees, and other fees and expenses related to insurance, legal and external audit. Only costs that management has determined are factually supportable and recurring are included as pro forma adjustments, including items described above. Incremental costs and expenses associated with operating as a stand-alone company are not reflected in the accompanying pro forma condensed combined statements of income. However, our efforts to reduce SG&A costs in 2015 in response to market conditions are expected to result in lower SG&A expenses and the savings from these initiatives are expected to offset the increase in costs due to being a stand-alone public company.

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(in thousands)

 
  June 30, 2015  
 
  Historical   Pro Forma
Adjustments
   
  Pro Forma  

ASSETS

                       

Current assets:

                       

Cash and cash equivalents

  $ 23,049   $   (A)   $ 23,049  

Restricted cash

    1,490               1,490  

Accounts receivable, net

    353,803               353,803  

Inventory, net

    288,124               288,124  

Costs and estimated earnings in excess of billings on uncompleted contracts

    128,261               128,261  

Current deferred income taxes

    49,417     (14,878 ) (B)     34,539  

Other current assets

    58,632               58,632  

Current assets associated with discontinued operations

    397               397  

Total current assets

    903,173     (14,878 )       888,295  

Property, plant and equipment, net

    952,385               952,385  

Intangible and other assets, net

    123,715     46,510   (B)(C)     170,225  

Total assets

  $ 1,979,273   $ 31,632       $ 2,010,905  

LIABILITIES AND EQUITY

                       

Current liabilities:

                       

Accounts payable, trade

  $ 123,095   $         $ 123,095  

Accrued liabilities

    131,471               131,471  

Deferred revenue

    53,333               53,333  

Billings on uncompleted contracts in excess of costs and estimated earnings

    61,010               61,010  

Current liabilities associated with discontinued operations

    769               769  

Total current liabilities

    369,678               369,678  

Long-term debt

    891     551,812   (C)     552,703  

Deferred income taxes

    38,697               38,697  

Long-term deferred revenue

    49,070               49,070  

Other long-term liabilities

    27,745               27,745  

Long-term liabilities associated with discontinued operations

    154               154  

Total liabilities

    486,235     551,812         1,038,047  

Commitments and contingencies

                       

Equity:

                       

Parent equity

    1,482,965     (1,482,965 ) (D)(E)      

Accumulated other comprehensive income

    10,073               10,073  

Common stock

        347   (E)     347  

Additional paid-in capital

        962,438   (E)     962,438  

Total equity

    1,493,038     (520,180 )       972,858  

Total liabilities and equity

  $ 1,979,273   $ 31,632       $ 2,010,905  

   

See accompanying notes to unaudited pro forma condensed combined financial statements.

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)

 
  Six Months Ended June 30, 2015  
 
  Historical   Pro Forma
Adjustments
   
  Pro Forma  

Revenues:

                       

Contract operations

  $ 235,941   $         $ 235,941  

Aftermarket services

    70,275               70,275  

Product sales

    708,475     28,201   (F)     736,676  

Total revenues

  $ 1,014,691   $ 28,201       $ 1,042,892  

Costs and expenses:

                       

Cost of sales (excluding depreciation and amortization expense):

                       

Contract operations

    89,084               89,084  

Aftermarket services

    49,484               49,484  

Product sales

    608,904     25,945   (F)     634,849  

Selling, general and administrative

    114,330               114,330  

Depreciation and amortization

    75,581               75,581  

Long-lived asset impairment

    10,489               10,489  

Restructuring and other charges

    10,547               10,547  

Interest expense

    826     16,543   (G)     17,369  

Equity in income of non-consolidated affiliates

    (10,068 )             (10,068 )

Other (income) expense, net

    11,878               11,878  

    961,055     42,488         1,003,543  

Income before income taxes

    53,636     (14,287 )       39,349  

Provision for income taxes

    26,802     (5,000 ) (H)     21,802  

Income from continuing operations

  $ 26,834   $ (9,287 )     $ 17,547  

Basic income per common share:

                       

Income from continuing operations

              (I)   $ 0.51  

Diluted income per common share:

                       

Income from continuing operations

              (J)   $ 0.51  

Weighted average common shares outstanding used in income per common share:

                       

Basic

              (I)     34,191  

Diluted

              (J)     34,334  

   

See accompanying notes to unaudited pro forma condensed combined financial statements.

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)

 
  Year Ended December 31, 2014  
 
  Historical   Pro Forma
Adjustments
   
  Pro Forma  

Revenues:

                       

Contract operations

  $ 493,853   $                    $ 493,853  

Aftermarket services

    162,724               162,724  

Product sales

    1,516,177     64,277   (F)     1,580,454  

Total revenues

  $ 2,172,754   $ 64,277       $ 2,237,031  

Costs and expenses:

                       

Cost of sales (excluding depreciation and amortization expense):

                       

Contract operations

    185,408               185,408  

Aftermarket services

    120,181               120,181  

Product sales

    1,270,296     59,135   (F)     1,329,431  

Selling, general and administrative

    267,493               267,493  

Depreciation and amortization

    173,803               173,803  

Long-lived asset impairment

    3,851               3,851  

Interest expense

    1,905     33,116   (G)     35,021  

Equity in income of non-consolidated affiliates

    (14,553 )             (14,553 )

Other (income) expense, net

    7,222               7,222  

    2,015,606     92,251         2,107,857  

Income before income taxes

    157,148     (27,974 )       129,174  

Provision for income taxes

    77,833     (9,791 ) (H)     68,042  

Income from continuing operations

  $ 79,315   $ (18,183 )     $ 61,132  

Basic income per common share:

                       

Income from continuing operations

                         (I)   $ 1.85  

Diluted income per common share:

   
 
   
 
 

 

   
 
 

Income from continuing operations

                         (J)   $ 1.77  

Weighted average common shares outstanding used in income per common share:

   
 
   
 
 

 

   
 
 

Basic

                         (I)     33,117  

Diluted

                         (J)     34,545  

   

See accompanying notes to unaudited pro forma condensed combined financial statements.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(A)
Reflects the following adjustments to cash and cash equivalents (in thousands):

Cash received from incurrence of indebtedness under our new credit facility (see note (C))

  $ 538,993  

Cash transferred to Exterran Holdings (see note (D))

    (538,993 )

Cash pro forma adjustment

  $  
(B)
Reflects the impact of changes in both current and long-term deferred tax assets related to foreign tax credits and U.S. net operating losses allocated from Archrock as a result of the spin-off. An adjustment of $116.7 million was made to increase gross deferred tax assets to account for changing from the separate return, stand-alone basis, where we had no U.S. net operating losses and were utilizing foreign tax credits, to the actual June 30, 2015 balance of Exterran Holdings that would have transferred to us if the spin-off had occurred on such date.

An adjustment was made to reflect a valuation allowance against the increased gross foreign tax credit deferred tax assets of $97.9 million as we do not consider it to be more-likely-than-not that we will generate sufficient overall U.S. taxable income and foreign source taxable income in the future to allow us to use the foreign tax credits before they ultimately expire. The negative evidence considered was lower forecasted overall U.S. taxable income and lower foreign source taxable income due to overall domestic losses predominantly allocated to Archrock and virtually all of the overall foreign losses allocated to us pursuant to the consolidated return regulations.

The valuation allowance associated with foreign tax credit deferred tax assets has been allocated between current and long-term deferred tax assets on a pro rata basis. The net $18.8 million adjustment is reflected as a decrease to current deferred tax assets of $14.9 million and an increase to long-term deferred tax assets of $33.7 million which is reflected in intangible and other assets, net, in our unaudited pro forma condensed combined balance sheet.

(C)
In connection with the spin-off, we expect that EESLP will incur approximately $245.0 million in indebtedness in the form of the new term loan and $306.8 million in indebtedness under the new revolving credit facility. If the spin-off had occurred on June 30, 2015, we would have received approximately $539.0 million of net proceeds from borrowings under our new credit facility, net of approximately $12.8 million in financing fees and expenses incurred in connection with these borrowings.

(D)
Reflects the use of proceeds of the new term loan and borrowings under the new revolving credit facility in connection with the spin-off (see note (C)), approximately $539.0 million of which would have been transferred to Exterran Holdings, had the spin-off occurred on June 30, 2015, to allow it to repay a portion of its indebtedness.

(E)
Represents the reclassification of the net investment of Exterran Holdings in us, which was recorded in parent company equity, into shares of our common stock and additional paid-in capital and the balancing entry to reflect approximately 34.7 million outstanding shares of common stock at a par value of $0.01 per share. We have assumed shares being distributed to holders of Exterran Holdings common shares, based on approximately 69.4 million outstanding shares of Exterran Holdings common shares outstanding at June 30, 2015, at a distribution ratio of one share of our

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    common stock for every two shares of Exterran Holdings common stock. The components of the adjustment are listed below (in thousands):

Parent equity at June 30, 2015

  $ 1,482,965  

Tax adjustment (see note (B))

    18,813  

Cash transferred to Exterran Holdings

    (538,993 )

Adjustment for par value of common stock

    (347 )

Adjustment to additional paid-in capital

  $ 962,438  
(F)
Reflects the effect of the supply agreement that we will enter into with Archrock in connection with the spin-off. The revenue adjustment reflects the additional revenue, including a contractual margin provided within the supply agreement, that we would have recorded for products fabricated and sold to Exterran Holdings during the six months ended June 30, 2015 and the year ended December 31, 2014 under the supply agreement, if it were in effect on January 1, 2014. The cost of sales adjustment reflects the amounts that have been presented in historical periods as a reduction of parent equity in balance sheet and a distribution to parent in the statement of cash flows.

(G)
Represents the incremental interest expense, including amortization of deferred financing costs, related to the borrowings expected to be incurred under our new credit facility in connection with the spin-off. The incremental interest expense attributable to the new term loan assumes an annual interest rate of 6.75% on total indebtedness of $245.0 million, and the new revolving credit facility, with an expected borrowing capacity of $680.0 million, assumes a LIBOR rate of approximately 0.2%, an applicable margin of 2.75% and commitment fees of 0.3% on indebtedness of $306.8 million and letters of credit outstanding of $91.4 million. The interest rates for pro forma purposes are based on assumptions of the rates to be effective on the completion of the spin-off. A one-eighth percent change in assumed interest rates for our new credit facility would have a pro forma impact of $0.7 million annually. Amortization of deferred financing costs assumes the capitalization of debt issuance costs of $12.8 million which will be amortized on a straight-line basis over the terms of our new credit facility, which approximates the effective interest method. The components of the adjustment to interest expense are listed below (in thousands):

 
  Six
Months Ended
June 30, 2015
  Year Ended
December 31, 2014
 

Interest expense on the new term loan

  $ 8,269   $ 16,538  

Interest expense on the new revolving credit facility

    6,141     12,313  

Amortization of deferred financing costs under new credit facility

    2,133     4,265  

Interest expense adjustment

  $ 16,543   $ 33,116  
(H)
Represents the tax effect of pro forma adjustments to income before income taxes, adjusted for nondeductible spin-off costs, using the U.S. federal statutory rate of 35% for the period presented.

(I)
The pro forma weighted-average number of approximately 34,191,000 shares and 33,117,000 shares used to compute pro forma basic net income per share for the six months ended June 30, 2015 and for the year ended December 31, 2014, respectively, are based on the weighted-average number of Exterran Holdings shares outstanding for the six months ended June 30, 2015 and for the year ended December 31, 2014, respectively, applying a distribution ratio of one share of our common stock for every two shares of Exterran Holdings common stock outstanding.

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(J)
The pro forma weighted-average number of shares of our common stock used to compute pro forma diluted net income per share is based on the weighted average number of basic shares of our common stock as described in note (I) above, plus incremental shares assuming exercise of dilutive outstanding options and restricted stock awards granted to our employees under Exterran Holdings' stock-based compensation plans. The actual effect of the dilution following the completion of the spin-off will depend on various factors, including the employment of our personnel in one company or the other and the value of the equity awards at the time of distribution, and accordingly we cannot fully estimate the dilutive effects at this time.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Combined Financial Statements, the notes thereto, and the other financial information appearing elsewhere in this information statement. The following discussion includes forward-looking statements that involve certain risks and uncertainties. See "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in this information statement.

Spin-off from Exterran Holdings

        On November 17, 2014, Exterran Holdings announced a plan to separate its international services and global fabrication businesses into an independent, publicly traded company ("Exterran Corporation", "our", "we" or "us"). We refer to the global fabrication business currently operated by Exterran Holdings as our product sales business. The spin-off is expected to be completed in accordance with a separation and distribution agreement between Archrock and Exterran Corporation. See "Relationship with Archrock After the Spin-Off—Agreements Between Archrock and Us—Separation and Distribution Agreement." To effect the spin-off, Exterran Holdings intends to distribute, on a pro rata basis, all of the shares of Exterran Corporation common stock to Exterran Holdings' stockholders as of the record date for the spin-off. The spin-off is subject to certain conditions, including general economic and market conditions, the receipt of an opinion of counsel as to the tax treatment of the transaction and final approval of the Exterran Holdings' board of directors. See "The Spin-Off—Spin-Off Conditions and Termination." The spin-off will not be subject to a shareholder vote. Upon completion of the spin-off, Archrock and Exterran Corporation will each be independent, publicly traded companies and will have separate public ownership, boards of directors and management. We expect to complete the spin-off on or about November 3, 2015. However, we cannot assure you that the spin-off will be completed on the anticipated timeline, or at all, or that the terms of the spin-off will not change.

        In connection with the separation and distribution agreement, Exterran Corporation will enter into several other agreements with Archrock that will govern the relationship between Exterran Corporation and Archrock after completion of the distribution and provide for the allocation between Exterran Corporation and Archrock of various assets, liabilities, rights and obligations (including employee benefits, insurance and tax-related assets and liabilities). These agreements will also include arrangements with respect to certain services to be provided between Exterran Corporation and Archrock. See "Certain Relationships and Related Transactions" and "Relationship with Archrock After the Spin-off."

        Following the completion of the spin-off, we expect to incur one-time expenditures ranging from approximately $10.0 million to $15.0 million consisting primarily of costs to start up certain stand-alone functions and other one-time transaction related costs. Recurring costs of operating as a stand-alone public company include potentially increased expenses related to, among others, internal audit, treasury, risk management, investor relations, tax, legal and corporate secretary functions as well as the annual expenses associated with running an independent publicly traded company including listing fees, compensation of non-employee directors and related board of director fees, and other fees and expenses related to insurance, legal and external audit. Costs of operating as a stand-alone public company that differ from historical allocations may have an impact on our profitability and operating cash flows. However, our efforts to reduce SG&A costs in 2015 in response to market conditions are expected to result in lower SG&A expenses and the savings from these initiatives are expected to offset the increase in costs due to being a stand-alone public company.

Overview

        We are a market leader in the provision of compression, production and processing products and services that support the production and transportation of oil and natural gas throughout the world. We provide these products and services to a global customer base consisting of companies engaged in all

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aspects of the oil and natural gas industry, including large integrated oil and natural gas companies, national oil and natural gas companies, independent oil and natural gas producers and oil and natural gas processors, gatherers and pipeline operators. We report our results of operations in the following three reporting business segments: contract operations, aftermarket services and product sales.

        In our contract operations business we own and operate our fleet of natural gas compression equipment and crude oil and natural gas production and processing equipment on behalf of our customers outside of the United States. These services can include engineering, design, procurement, on-site construction and operation of natural gas compression and crude oil or natural gas production and processing facilities for our customers. Our contract operations business is underpinned by long-term commercial contracts with large customers, including several national oil and natural gas companies, which we believe provides us with relatively stable cash flows due to our exposure to the production phase of oil and gas development, compared to drilling and completion related energy service and product providers. We believe our contract operations services generally allow our customers that outsource their compression or production and processing needs to achieve higher production rates than they would achieve with their own operations, resulting in increased revenue for our customers. In addition, outsourcing allows our customers flexibility for their compression and production and processing needs while limiting their capital requirements. These contracts generally involve initial terms ranging from three to five years, and in some cases in excess of 10 years. In many instances, we are able to renew these contracts prior to the expiration of the initial term; in some cases, we may sell the underlying assets to our customers pursuant to purchase options.

        In our aftermarket services business we provide operations, maintenance, overhaul and reconfiguration services outside of the United States to support our customers who own their own compression, production, processing, treating and related equipment. Our services range from routine maintenance services and parts sales to the full operation and maintenance of customer-owned assets. We both seek to couple aftermarket services with our product sales business to provide ongoing services to customers who buy equipment from us and to sell those services to customers who have bought equipment from other companies.

        In our product sales business we design, engineer, manufacture, install and sell natural gas compression packages, as well as equipment used in the production, treating and processing of crude oil and natural gas to customers both in the United States and internationally. We also design, engineer, manufacture and install this equipment for use in our contract operations business. In addition, we combine our products into an integrated solution that we design, engineer, procure and, in certain cases, construct on-site for sale to our customers. We believe the expansive range of products we sell through our global platform enables us to take advantage of the ongoing, worldwide energy infrastructure build-out.

Industry Conditions and Trends

        Our business environment and corresponding operating results are affected by the level of energy industry spending for the exploration, development and production of oil and natural gas reserves. Spending by oil and natural gas exploration and production companies is dependent upon these companies' forecasts regarding the expected future supply, demand and pricing of oil and natural gas products as well as their estimates of risk-adjusted costs to find, develop and produce reserves. Although we believe our contract operations business is typically less impacted by commodity prices than certain other energy products and service providers, changes in oil and natural gas exploration and production spending normally result in changes in demand for our products and services.

        As reported in the BP Energy Outlook 2035, February 2015 edition, global liquids and natural gas consumption are expected to grow annually by approximately 1.2% and 2.6%, respectively, between 2015 and 2020. Global liquids and natural gas consumption are forecast to increase annually by approximately 0.7% and 1.5%, respectively, between 2020 and 2035.

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        In addition, according to the BP Energy Outlook 2035, February 2015 edition, global liquids and natural gas production are forecast to grow annually by approximately 1.0% and 2.5%, respectively, between 2015 and 2020. Global liquids and natural gas production are forecast to increase annually by approximately 0.6% and 1.5%, respectively, between 2020 and 2035. The largest growth in liquids production is forecast to come from North America, the Middle East and South and Central America. The largest growth in natural gas production is forecast to come from North America, Asia Pacific and the Middle East.

Our Performance Trends and Outlook

        Our revenue, earnings and financial position are affected by, among other things, market conditions that impact demand and pricing for natural gas compression and oil and natural gas production and processing and our customers' decisions among using our products and services, using our competitors' products and services or owning and operating the equipment themselves.

        Historically, oil and natural gas prices in North America have been volatile. Global oil prices have fallen significantly since the third quarter of 2014. For example, West Texas Intermediate crude oil spot prices as of June 30, 2015 were approximately 44% lower than prices at June 30, 2014. In addition, the Henry Hub spot price for natural gas was $2.80 per MMBtu at June 30, 2015, which was approximately 11% and 36% lower than prices at December 31, 2014 and June 30, 2014, respectively, and the U.S. natural gas liquid composite price was approximately $5.25 per MMBtu for the month of May 2015, which was approximately 7% and 48% lower than prices for the months of December 2014 and June 2014, respectively. During periods of lower oil or natural gas prices, our customers typically decrease their capital expenditures, which generally results in lower activity levels, and as a result the demand or pricing for our contract operations services, natural gas compression equipment and oil and natural gas production and processing equipment could be adversely affected. As a result of the low oil and natural gas price environment in North America, third party booking activity levels for our fabricated products in North America during the three months ended June 30, 2015 were $77.3 million, which represents a decrease of approximately 76% and 72% compared to the three months ended December 31, 2014 and June 30, 2014, respectively, and our North America product sales backlog as of June 30, 2015 was $290.2 million, which represents a decrease of approximately 46% compared to December 31, 2014. We believe these booking levels reflect both our customers' reduced activity levels in response to the decline in commodity prices and caution on the part of our customers as they reset capital budgets and seek to reduce costs.

        Similarly, in international markets, lower oil and gas prices may have a negative impact on the amount of capital investment by our customers in new projects. However, we believe the impact will be less than we expect to experience in North America for two reasons: first, the longer-term fundamentals influencing our international customers' demand and, second, the long-term contracts we have in place with some of those international customers, including for our contract operations services. Growth in our international markets depends in part on international infrastructure projects, many of which are based on longer-term plans of our customers that can be driven by their local market demand and local pricing for natural gas. As a result, we believe our international customers make decisions based on longer-term fundamentals that can be less tied to near term commodity prices than our North American customers. Therefore, we believe the demand for our services and products in international markets will continue, and we expect to have opportunities to grow our international businesses over the long term. In the short term, however, our customers have sought to reduce their capital and operating expenditure requirements due to lower oil and natural gas prices. As a result, the demand and pricing for our services and products in international markets have been adversely impacted. Third party booking activity levels for our fabricated products in international markets during the three months ended June 30, 2015 were $72.3 million, which represents a decrease of approximately 55% and 63% compared to the three months ended December 31, 2014 and June 30, 2014, respectively, and our international market product sales backlog as of June 30, 2015 was $310.3 million, which represents a decrease of approximately 25% compared to December 31, 2014.

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        Aggregate third party booking activity levels for our fabricated products in North America and international markets during the three months ended June 30, 2015 were $149.6 million, which represents a decrease of approximately 68% compared to each of the three months ended December 31, 2014 and June 30, 2014. The aggregate product sales backlog for our fabricated products in North America and international markets as of June 30, 2015 was $600.5 million, which represents a decrease of approximately 37% and 27% compared to December 31, 2014 and June 30, 2014, respectively.

        The timing of any change in activity levels by our customers is difficult to predict. As a result, our ability to project the anticipated activity level for our business, and particularly our product sales segment, is limited. If capital spending by our customers remains low, we expect bookings in our product sales business in 2016 to be comparable to or lower than our bookings in 2015. If these reduced booking levels persist for a sustained period, we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.

        Our level of capital spending depends on our forecast for the demand for our products and services and the equipment required to provide services to our customers. We anticipate investing more capital in our contract operations business in 2015 than we did in 2014. The increased investment in our contract operations business during 2015 is driven by large multi-year projects contracted in 2014 that are scheduled to start earning revenue in 2015 and 2016.

Certain Key Challenges and Uncertainties

        Market conditions and competition in the oil and natural gas industry and the risks inherent in international markets continue to represent key challenges and uncertainties. In addition to these challenges, we believe the following represent some of the key challenges and uncertainties we will face in the future:

        Global Energy Markets and Oil and Natural Gas Pricing.    Our results of operations depend upon the level of activity in the global energy markets, including oil and natural gas development, production, processing and transportation. Oil and natural gas prices and the level of drilling and exploration activity can be volatile and have fallen significantly recently. As a result, many producers in the U.S. and other parts of the world, including our customers, have announced reduced capital budgets for this year. If oil and natural gas exploration and development activity and the number of well completions continue to decline due to the reduction in oil and natural gas prices or significant instability in energy markets, we would anticipate a continued decrease in demand and potentially pricing for our natural gas compression and oil and natural gas production and processing equipment and services. For example, unfavorable market conditions or financial difficulties experienced by our customers may result in cancellation of contracts or the delay or abandonment of projects, which could cause our cash flows generated by our products sales and international services to decline and have a material adverse effect on our results of operations and financial condition.

        Execution on Larger Contract Operations and Product Sales Projects.    Some of our projects have a relatively larger size and scope than the majority of our projects, which can translate into more technically challenging conditions or performance specifications for our products and services. Contracts with our customers generally specify delivery dates, performance criteria and penalties for our failure to perform. Any failure to execute such larger projects in a timely and cost effective manner could have a material adverse effect on our business, financial condition, results of operations and cash flows.

        Completion of the Spin-off.    Execution of the spin-off will require significant expense and the time and attention of our management. The spin-off could distract management from the operation of our business and the execution of our other strategic initiatives. Our employees may also be uncertain about their future roles within Exterran Corporation pending the completion of the spin-off, which could lead to departures. Further, if the spin-off is completed, we may not realize the benefits we expect to realize. Any such difficulties could have an adverse effect on our business, results of

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operations and financial condition. If completed, the spin-off may also expose us to certain risks that could have an adverse effect on our results of operations and financial condition. The spin-off is contingent upon the final approval of Exterran Holdings' board of directors and other conditions, some of which are beyond our control. For this and other reasons, the spin-off may not be completed in the expected timeframe or at all.

        Personnel, Hiring, Training and Retention.    Both in North America and internationally, we believe our ability to grow may be challenged by our ability to hire, train and retain qualified personnel. Although we have been able to satisfy our personnel needs thus far, retaining employees in our industry continues to be a challenge. Our ability to continue our growth will depend in part on our success in hiring, training and retaining these employees.

For the Six Months Ended June 30, 2015 and 2014

Summary of Results

        As discussed in Note 2 to the Condensed Combined Financial Statements, the results from continuing operations for all periods presented exclude the results of our Venezuelan contract operations business. Those results are reflected in discontinued operations for all periods presented.

        Net Income and EBITDA, as adjusted.    We generated net income of $46.0 million and $68.5 million during the six months ended June 30, 2015 and 2014, respectively. The decrease in net income was primarily due to a decrease in gross margin in our contract operations and product sales segments, a $17.2 million decrease in proceeds received from the sale of our Venezuelan subsidiary's assets to PDVSA Gas, an increase in foreign currency losses of $13.3 million, an increase in restructuring and other charges and an increase in long-lived asset impairment. These activities were partially offset by a decrease in selling, general and administrative ("SG&A") expense, a decrease in depreciation and amortization expense and a decrease in income tax expense. Our EBITDA, as adjusted, was $149.0 million and $155.1 million during the six months ended June 30, 2015 and 2014, respectively. EBITDA, as adjusted, decreased primarily due to a decrease in gross margin in our contract operations and product sales segments and an increase of $2.4 million in foreign currency losses excluding the remeasurement of intercompany balances, partially offset by a decrease in SG&A expense. For a reconciliation of EBITDA, as adjusted, to net income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP, please read "Selected Historical Combined Financial Data—Non-GAAP Financial Measures" of this information statement.

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        Results by Business Segment.    The following table summarizes revenue, gross margin and gross margin percentages for each of our business segments (dollars in thousands):

 
  For the Six Months
Ended June 30,
 
 
  2015   2014  

Revenue:

             

Contract Operations

  $ 235,941   $ 245,432  

Aftermarket Services

    70,275     77,979  

Product Sales

    708,475     700,415  

  $ 1,014,691   $ 1,023,826  

Gross Margin(1):

             

Contract Operations

  $ 146,857   $ 157,898  

Aftermarket Services

    20,791     20,782  

Product Sales

    99,571     109,021  

  $ 267,219   $ 287,701  

Gross Margin Percentage(2):

             

Contract Operations

    62 %   64 %

Aftermarket Services

    30 %   27 %

Product Sales

    14 %   16 %

(1)
Defined as revenue less cost of sales, excluding depreciation and amortization expense. Gross margin, a non-GAAP financial measure, is reconciled, in total, to net income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP in "Selected Historical Combined Financial Data—Non-GAAP Financial Measures" of this information statement.

(2)
Defined as gross margin divided by revenue.

Operating Highlights

        The following tables summarize our total available horsepower, total operating horsepower, average operating horsepower, horsepower utilization percentages and product sales backlog (in thousands, except percentages):

 
  For the Six
Months Ended
June 30,
 
 
  2015   2014  

Total Available Horsepower (at period end)

    1,216     1,248  

Total Operating Horsepower (at period end)

    938     959  

Average Operating Horsepower

    959     974  

Horsepower Utilization (at period end)

    77 %   77 %

 

 
  June 30, 2015   June 30, 2014  

Product Sales Backlog(1):

             

Compressor and Accessory

  $ 150,981   $ 192,692  

Production and Processing

    389,037     532,117  

Installation

    60,479     93,305  

Product Sales Backlog

  $ 600,497   $ 818,114  

(1)
Our product sales backlog consists of unfilled orders based on signed contracts and does not include potential product sales pursuant to letters of intent received from customers. We expect that $27.9 million of our product sales backlog as of June 30, 2015 will be recognized after June 30, 2016.

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The Six Months Ended June 30, 2015 Compared to the Six Months Ended June 30, 2014

Contract Operations
(dollars in thousands)

 
  Six Months
Ended June 30,
   
 
 
  Increase
(Decrease)
 
 
  2015   2014  

Revenue

  $ 235,941   $ 245,432     (4 )%

Cost of sales (excluding depreciation and amortization expense)

    89,084     87,534     2 %

Gross margin

  $ 146,857   $ 157,898     (7 )%

Gross margin percentage

    62 %   64 %   (2 )%

        The decrease in revenue during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 was primarily due to a $17.8 million decrease in revenue in Brazil primarily related to a project which had little incremental costs that commenced and terminated operations in 2014 and a $4.4 million decrease in revenue in the Eastern Hemisphere primarily driven by revenue decreases in Nigeria and Indonesia. These decreases were partially offset by a $8.3 million increase in revenue in Mexico primarily driven by contracts that commenced or were expanded in scope in 2014 and 2015 and a $6.5 million increase in revenue in Argentina primarily due to higher rates and inflationary cost recoveries billed to customers in the current year period partially offset by the devaluation of the Argentine peso in the current year period. Gross margin and gross margin percentage decreased during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 primarily due to the revenue decrease explained above, excluding the devaluation of the Argentine peso in the current year as the impact on gross margin and gross margin percentage was insignificant. While our gross margin during the six months ended June 30, 2014 benefited from the start-up of a Brazilian project, our contract operations business is capital intensive, and as such, we did have additional incremental costs in the form of depreciation expense, which is excluded from gross margin. Gross margin, a non-GAAP financial measure, is reconciled, in total, to net income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP in "Selected Historical Combined Financial Data—Non-GAAP Financial Measures" of this information statement.


Aftermarket Services
(dollars in thousands)

 
  Six Months
Ended June 30,
   
 
 
  Increase
(Decrease)
 
 
  2015   2014  

Revenue

  $ 70,275   $ 77,979     (10 )%

Cost of sales (excluding depreciation and amortization expense)

    49,484     57,197     (13 )%

Gross margin

  $ 20,791   $ 20,782     0 %

Gross margin percentage

    30 %   27 %   3 %

        The decrease in revenue during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 was due to decreases in revenue in the Eastern Hemisphere and Latin America of $6.2 million and $1.5 million, respectively. The decrease in revenue in the Eastern Hemisphere was impacted by the sale of our Australian business in December 2014, which resulted in a decrease of $2.4 million in revenue during the six months ended June 30, 2015 compared to the six months ended June 30, 2014. Gross margin remained flat during the six months ended June 30, 2015 compared to the six months ended June 30, 2014. The increase in gross margin percentage during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 was primarily due to the receipt of a settlement from a customer in the Eastern Hemisphere during the six months ended June 30, 2015, which positively impacted revenue and gross margin by $3.7 million and $2.2 million, respectively.

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Product Sales
(dollars in thousands)

 
  Six Months
Ended June 30,
   
 
 
  Increase
(Decrease)
 
 
  2015   2014  

Revenue

  $ 708,475   $ 700,415     1 %

Cost of sales (excluding depreciation and amortization expense)

    608,904     591,394     3 %

Gross margin

  $ 99,571   $ 109,021     (9 )%

Gross margin percentage

    14 %   16 %   (2 )%

        The increase in revenue during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 was due to an increase in revenue in North America and Latin America of $20.7 million and $16.3 million, respectively, partially offset by a decrease in revenue in the Eastern Hemisphere of $28.9 million. The increase in revenue in North America was primarily due to an increase of $32.1 million in installation revenue, partially offset by a decrease of $10.5 million in production and processing equipment revenue. The increase in Latin America revenue was due to an increase of $24.7 million in compression equipment revenue, partially offset by decreases of $4.7 million and $3.7 million in production and processing equipment revenue and installation revenue, respectively. The decrease in Eastern Hemisphere revenue was due to decreases of $23.9 million and $16.9 million in installation revenue and compression equipment revenue, respectively, partially offset by an increase of $11.9 million in production and processing equipment revenue. The decreases in gross margin and gross margin percentage were primarily caused by subcontractor delays during the six months ended June 30, 2015 resulting in schedule extensions and additional costs of $4.3 million associated with projects in the Eastern Hemisphere, an increase of $4.3 million in expense for inventory reserves during the current year period and a shift in product mix in North America during the current year period. These decreases were partially offset by costs charged to one project in North America related to a warranty expense accrual of approximately $11.0 million during the six months ended June 30, 2014.


Costs and Expenses
(dollars in thousands)

 
  Six Months
Ended June 30,
   
 
 
  Increase
(Decrease)
 
 
  2015   2014  

Selling, general and administrative

  $ 114,330   $ 134,691     (15 )%

Depreciation and amortization

    75,581     95,157     (21 )%

Long-lived asset impairment

    10,489         n/a  

Restructuring and other charges

    10,547         n/a  

Interest expense

    826     848     (3 )%

Equity in income of non-consolidated affiliates

    (10,068 )   (9,602 )   5 %

Other (income) expense, net

    11,878     (4,966 )   (339 )%

        SG&A expense includes expense allocations for certain functions, including allocations of expenses related to executive oversight, accounting, treasury, tax, legal, procurement and information technology services performed by Exterran Holdings on a centralized basis that historically have not been recorded at the segment level. These costs were allocated to us systematically based on specific department function and revenue. Included in SG&A expense during the six months ended June 30, 2015 and 2014 were $28.1 million and $32.0 million, respectively, of corporate expenses incurred by Exterran Holdings. The actual costs we would have incurred if we had been a stand-alone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. The decrease in SG&A expense during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 was attributable to a $4.8 million decrease in compensation and benefits costs in Latin America and the Eastern

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Hemisphere, a $4.0 million decrease in selling expenses relating to our product sales business in North America, a $3.9 million decrease in corporate expenses allocated to us as discussed above and a $1.8 million decrease in local taxes in Brazil. SG&A as a percentage of revenue was 11% and 13% during the six months ended June 30, 2015 and 2014, respectively.

        Depreciation and amortization expense during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 decreased due to $19.6 million in depreciation of installation costs recognized during the six months ended June 30, 2014 on a contract operations project in Brazil that commenced and terminated operations in 2014. Prior to the start-up of this project, we capitalized $1.9 million and $24.5 million of installation costs during the years ended December 31, 2014 and 2013, respectively. Capitalized installation costs included, among other things, civil engineering, piping, electrical instrumentation and project management costs. Installation costs capitalized on contract operations projects are depreciated over the life of the underlying contract.

        During the six months ended June 30, 2015, we reviewed the future deployment of our idle compression assets used in our contract operations segment for units that were not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. Based on this review, we determined that 29 idle compression units totaling approximately 24,000 horsepower would be retired from the active fleet. The retirement of these units from the active fleet triggered a review of these assets for impairment. As a result, we recorded a $9.1 million asset impairment to reduce the book value of each unit to its estimated fair value. The fair value of each unit was estimated based on either the expected net sale proceeds compared to other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment on each compressor unit that we plan to use.

        During the first quarter of 2015, we evaluated a long-term note receivable from the purchaser of our Canadian Operations for impairment. This review was triggered by an offer from the purchaser of our Canadian Operations to prepay the note receivable at a discount to its current book value. The fair value of the note receivable as of March 31, 2015 was based on the amount offered by the purchaser of our Canadian Operations to prepay the note receivable. The difference between the book value of the note receivable at March 31, 2015 and its fair value resulted in the recording of an impairment of long-lived assets of $1.4 million during the six months ended June 30, 2015. In April 2015, we accepted the offer to early settle this note receivable.

        During the six months ended June 30, 2015, we incurred charges of $4.7 million related to non-cash inventory write-downs associated with the spin-off, of which approximately $4.2 million related to our international contract operations segment and $0.5 million related to our product sales segment. Non-cash inventory write-downs primarily related to the decentralization of shared inventory components between Exterran Holdings' North America contract operations business and our international contract operations business. Additionally, in the second quarter of 2015 we announced a cost reduction plan primarily focused on workforce reductions and the reorganization of certain product sales facilities. These actions were in response to the current market conditions in North America combined with the impact of lower international activity due to customer budget cuts driven by lower oil prices. During the six months ended June 30, 2015, we incurred $5.8 million of restructuring and other charges as a result of this plan, of which $4.0 million related to non-cash write-downs of inventory and $1.8 million related to termination benefits. The non-cash inventory write-downs were the result of our decision to exit the manufacturing of cold weather packages, which had historically been performed at a product sales facility in North America we recently decided to close. The charges incurred in conjunction with the spin-off and cost reduction plan are included in restructuring and other charges in our condensed combined statements of operations. See Note 8 to the Condensed Combined Financial Statements for further discussion of these charges.

        In March 2012, our Venezuelan joint ventures sold their assets to PDVSA Gas. We received payments, including an annual charge, of $10.1 million and $9.8 million during the six months ended June 30, 2015 and 2014, respectively. The remaining principal amount due to us of approximately

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$17 million as of June 30, 2015, is payable in quarterly cash installments through the first quarter of 2016. Payments we receive from the sale will be recognized as equity in (income) loss of non-consolidated affiliates in our combined statements of operations in the periods such payments are received.

        The change in other (income) expense, net, was primarily due to a foreign currency loss of $11.1 million during the six months ended June 30, 2015 compared to a gain of $2.2 million during the six months ended June 30, 2014. Our foreign currency losses and gains included a translation loss of $8.0 million during the six months ended June 30, 2015 compared to a translation gain of $2.9 million during the six months ended June 30, 2014, related to the functional currency remeasurement of our foreign subsidiaries' U.S. dollar denominated intercompany obligations. The change in other (income) expense, net, was also due to a $1.5 million increase in losses recognized during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 on short-term investments related to the purchase of $15.3 million and $12.3 million, respectively, of Argentine government issued U.S. dollar denominated bonds using Argentine pesos.


Income Taxes
(dollars in thousands)

 
  Six Months
Ended June 30,
   
 
 
  Increase
(Decrease)
 
 
  2015   2014  

Provision for income taxes

  $ 26,802   $ 39,641     (32 )%

Effective tax rate

    50.0 %   55.4 %   (5.4 )%

        The decrease in our income tax expense during the six months ended June 30, 2015 compared to the six months ended June 30, 2014 was primarily attributable to a $17.9 million decrease in pre-tax income and a $4.5 million charge for valuation allowances recorded against net operating losses and withholding tax credits in certain foreign jurisdictions during the six months ended June 30, 2014.


Discontinued Operations
(dollars in thousands)

 
  Six Months
Ended June 30,
   
 
 
  Increase
(Decrease)
 
 
  2015   2014  

Income from discontinued operations, net of tax

  $ 19,122   $ 36,597     (48 )%

        Income from discontinued operations, net of tax, during the six months ended June 30, 2015 and 2014 includes our operations in Venezuela that were expropriated in June 2009, including compensation for expropriation and costs associated with our arbitration proceeding.

        As discussed in Note 2 to the Condensed Combined Financial Statements, in August 2012, our Venezuelan subsidiary sold its previously nationalized assets to PDVSA Gas. We received installment payments, including an annual charge, totaling $18.7 million and $35.9 million during the six months ended June 30, 2015 and 2014, respectively. The remaining principal amount due to us of approximately $99 million as of June 30, 2015, is payable in quarterly cash installments through the third quarter of 2016. We have not recognized amounts payable to us by PDVSA Gas as a receivable and will therefore recognize quarterly payments received in the future as income from discontinued operations in the periods such payments are received. In July 2015, we received an additional installment payment, including an annual charge, of $18.9 million. The proceeds from the sale of the assets are not subject to Venezuelan national taxes due to an exemption allowed under the Venezuelan Reserve Law applicable to expropriation settlements. In addition, and in connection with the sale, we and the Venezuelan government agreed to waive rights to assert certain claims against each other.

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For the Years Ended December 31, 2014, 2013 and 2012

Summary of Results

        As discussed in Note 3 to the Combined Financial Statements, the results from continuing operations for all periods presented exclude the results of our Venezuelan contract operations business and Canadian Operations. Those results are reflected in discontinued operations for all periods presented.

        Net Income and EBITDA, as adjusted.    We generated net income of $152.5 million, $152.9 million and $119.4 million during the years ended December 31, 2014, 2013 and 2012, respectively. Net income during the year ended December 31, 2014 compared to the year ended December 31, 2013 was impacted by an increase in depreciation and amortization expense and a $6.5 million loss on short-term investments related to the purchase of Argentine government issued U.S. dollar denominated bonds using Argentine pesos in the current year period, offset by a decrease in income tax expense, an increase in gross margin and a decrease in long-lived asset impairment. The increase in net income during the year ended December 31, 2013 compared to the year ended December 31, 2012 was primarily due to an increase in gross margin in our product sales segment and a decrease in depreciation and amortization expenses, partially offset by an increase in income tax expense and a decrease of $32.7 million in cash payments received from the sale of our Venezuelan joint ventures' assets. Our EBITDA, as adjusted, was $326.7 million, $324.9 million and $216.6 million during the years ended December 31, 2014, 2013 and 2012, respectively. EBITDA, as adjusted, during the year ended December 31, 2014 compared to the year ended December 31, 2013 increased primarily due to higher gross margin as discussed above, partially offset by a $6.5 million loss on short-term investments related to the purchase of Argentine government issued U.S. dollar denominated bonds using Argentine pesos as discussed above. EBITDA, as adjusted, during the year ended December 31, 2013 compared to the year ended December 31, 2012, increased primarily due to higher gross margin in our product sales segment. For a reconciliation of EBITDA, as adjusted, to net income (loss), its most directly comparable financial measure calculated and presented in accordance with GAAP, please read "Selected Historical Combined Financial Data—Non-GAAP Financial Measures" of this information statement.

        Results by Business Segment.    The following table summarizes revenue, gross margin and gross margin percentages for each of our business segments (dollars in thousands):

 
  Years Ended
December 31,
 
 
  2014   2013   2012  

Revenue:

                   

Contract Operations

  $ 493,853   $ 476,016   $ 463,957  

Aftermarket Services

    162,724     160,672     145,048  

Product Sales

    1,516,177     1,778,785     1,459,719  

  $ 2,172,754   $ 2,415,473   $ 2,068,724  

Gross Margin(1):