<PAGE>

                                                                    EXHIBIT 10.2

                           PIGAP SETTLEMENT AGREEMENT

         This PIGAP Settlement Agreement (this "Agreement") is made as of May
14, 2003 by and among Schlumberger Technology Corporation ("STC"), Schlumberger
Oilfield Holdings Limited ("SOHL"), Schlumberger Surenco S.A. ("Surenco"),
Hanover Compressor Company ("Hanover") and Hanover Compression Limited
Partnership ("Purchaser").

         WHEREAS, the parties hereto are parties to that certain Purchase
Agreement dated as of June 28, 2001, as amended by that certain Amendment No. 1
to Purchase Agreement dated as of August 30, 2001 (together, the "Purchase
Agreement").

         WHEREAS, Camco International Inc. ("Camco") has been merged with and
into STC.

         WHEREAS, any capitalized terms used and not defined herein (including
Annex A hereto) shall have the meanings ascribed to them in the Purchase
Agreement.

         WHEREAS, the WilPro Interest was transferred by Surenco to Hanover
Cayman, Limited ("Hanover Cayman") at the Closing under the Purchase Agreement.

         WHEREAS, pursuant to Section 1.7 of the Purchase Agreement, Purchaser
had the option in certain circumstances to put the WilPro Interest back to
Surenco. Purchaser and Surenco desire that Purchaser retain the WilPro Interest
and that the PIGAP Put be terminated and that certain other matters and issues
that have arisen or may arise among the parties be settled.

         WHEREAS, Hanover and certain of its officers and directors are named
defendants in private litigation arising out of or based, inter alia, on the
2002 restatements of Hanover's financial statements and the events giving rise
thereto.

         Now, therefore, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

                                    ARTICLE I
                            TERMINATION AND EXCHANGE

         1.1      PIGAP Put. The PIGAP Put is hereby terminated and neither
Surenco nor any of its Affiliates shall have any obligation to purchase or to
assume the WilPro Interest and from this day forward Surenco and its Affiliates
shall have no obligations or liabilities to Purchaser and its Affiliates with
respect to the WilPro Interest, including, without limitation, with respect to
the PIGAP Put and any provision of the Purchase Agreement relating thereto.

         1.2      Hanover Note. The Hanover Note is hereby amended, modified and
re-issued as the security (the "Security") representing the Zero Coupon
Subordinated Notes due March 31, 2007 in the form of Exhibit A issued pursuant
to the Indenture dated the date hereof between Hanover and Wachovia Bank, as
Trustee, attached hereto as Exhibit B (the "Indenture"). In connection with the
execution and delivery of this Agreement, Hanover shall execute and deliver

<PAGE>

to STC (i) the Indenture and (ii) the Security. In addition, each of STC and
Hanover shall execute and deliver the offset rights agreement attached hereto as
Exhibit C.

         1.3      Consent and Agreement. Each of Surenco, Hanover Cayman,
Williams International PIGAP Limited and WilPro Energy Services (PIGAP) Limited
shall execute and deliver the Consent and Agreement attached hereto as Exhibit
D.

         1.4      Registration Rights Agreement. Each of STC and Hanover shall
execute and deliver the Registration Rights Agreement dated the date hereof
attached hereto as Exhibit E with respect to the Zero Coupon Subordinated Notes
due 2007 issuable by Hanover pursuant to the Indenture (the "Registration Rights
Agreement").

         1.5      Financing Obligation. Any and all obligations of Hanover to
pay Surenco and its Affiliates up to Fifty Eight Million Dollars ($58,000,000)
pursuant to Section 1.2(a)(ii) of the Purchase Agreement are hereby terminated
and replaced with the non-recourse promissory note (the "Non-Recourse Note")
attached hereto as Exhibit F. Each of Hanover Cayman and Surenco shall execute
and deliver the Assignment and Security Agreement dated the date hereof attached
hereto as Exhibit G.

         1.6      Credit Support for WilPro. The obligation of Surenco and its
Affiliates to provide any additional funding, credit support or involvement in
connection with the refinancing of the WilPro Interest by Overseas Private
Investment Corporation and ABN AMRO N.V., as SACE Facility Agent and
Administrative Agent, is hereby terminated as set forth in Exhibit H hereto.

         1.7      Indemnification Agreement. Hanover shall execute and deliver
the Indemnification Agreement dated the date hereof attached hereto as Exhibit
I.

         1.8      Changes to Credit Agreement. The parties hereto agree that if,
prior to the Shelf Registration Statement (as such term is defined in the
Registration Rights Agreement) being declared effective by the Securities and
Exchange Commission (the "SEC"), (a) the definition of "Consolidated EBITDA"
contained in the Credit Agreement (as defined in the Indenture), as in effect on
the date hereof, is amended to add back expenses and losses resulting from the
settlement of litigation or the settlement with a Governmental Authority (as
defined in the Indenture) due to inquiries or investigations by one or more
Governmental Authorities (collectively, the "Settlements"), the definition of
"Consolidated EBITDA" contained in the Indenture shall be amended in the same
manner and (b) the definition of "Consolidated Indebtedness" contained in the
Credit Agreement, as in effect on the date hereof, is amended to exclude from
Consolidated Indebtedness any Indebtedness incurred as a result of the
Settlements, the definition of "Consolidated Indebtedness" contained in the
Indenture shall be amended in the same manner; provided that (i) any such
amendment to the Credit Agreement shall not effect the calculation of the
Consolidated Leverage Ratio under the Credit Agreement (other than such effects
caused by the changes to the definitions resulting from the amendments described
above), (ii) Hanover's efforts to effect the above amendments to the Credit
Agreement shall not effect or delay its efforts or obligations to file the Shelf
Registration Statement with the SEC and to cause the Shelf Registration
Statement to be declared effective by the SEC as provided in the Registration
Rights Agreement and (iii) all costs and expenses associated with

                                        2

<PAGE>

preparing any amendment or supplement to the Shelf Registration Statement and
filing the same with the SEC to effect the above amendments shall be borne by
Hanover.

         1.9      Accredited Investor.

                  (a)      STC is acquiring the Security under this Agreement
         for its own account and not with a view to any distribution of the
         Security in violation of the federal securities laws.

                  (b)      STC understands that the Security has not been
         registered under the Securities Act of 1933, as amended (the
         "Securities Act"), or any federal or state law by reason of specific
         exemptions under the provisions thereof, the availability of which
         depend in part upon the accuracy of its representations made in this
         Section 1.9.

                  (c)      STC is an "accredited investor" as defined in Rule
         501(a) of Regulation D under the Securities Act.

                  (d)      STC understands that the Security is a "restricted
         security" under applicable federal securities laws and that the
         Securities Act and the rules of the SEC thereunder provide in substance
         that it may dispose of the Security only pursuant to an effective
         registration statement under the Securities Act or an exemption
         therefrom, and it understands that Hanover has no obligation to
         register the Security except as contemplated by the Registration Rights
         Agreement.

                  (e)      Surenco is acquiring the Non-Recourse Note under this
         Agreement for its own account and not with a view to any distribution
         of the Non-Recourse in violation of the federal securities laws.

                  (f)      Surenco understands that the Non-Recourse Note has
         not been registered under the Securities Act or any federal or state
         law by reason of specific exemptions under the provisions thereof, the
         availability of which depend in part upon the accuracy of its
         representations made in this Section 1.9.

                  (g)      Surenco is an "accredited investor" as defined in
         Rule 501(a) of Regulation D under the Securities Act.

                  (h)      Surenco understands that the Non-Recourse Note is a
         "restricted security" under applicable federal securities laws and that
         the Securities Act and the rules of the SEC thereunder provide in
         substance that it may dispose of the Non-Recourse Note only pursuant to
         an effective registration statement under the Securities Act or an
         exemption therefrom, and it understands that Hanover has no obligation
         to register the Non-Recourse Note.

                                   ARTICLE II
                                     RELEASE

         2.1      Release by Schlumberger Parties. As partial consideration for
the agreement by Hanover and Purchaser (collectively, the "Hanover Parties") to
enter into this Agreement, each

                                        3

<PAGE>

of STC, SOHL and Surenco (collectively, the "Schlumberger Parties"), for itself
and for its past, present and future divisions, subsidiaries and Affiliates
(which includes Schlumberger Limited and its direct and indirect subsidiaries)
and each of their respective predecessors, successors, assigns and legal
representatives, officers, directors, agents and employees, and each of their
respective heirs, legal representatives, insurers and assigns (the "Schlumberger
Releasing Parties"), does hereby fully, finally and forever remise, release,
acquit and discharge each of the Hanover Parties, and each of their respective
past, present and future divisions, subsidiaries (including, without limitation,
Hanover Cayman) and Affiliates, and each of their respective predecessors,
successors, assigns and past and present legal representatives, officers,
directors, agents (other than PricewaterhouseCoopers, LLP) and employees, and
each of their respective heirs, legal representatives, insurers and assigns and
GKH (the "Hanover Released Parties") of and from all Released Claims, and hereby
quit-claims, waives any right to, and covenants not to sue any Hanover Released
Party with respect to any Released Claim, that any Schlumberger Releasing Party
has, had or may, can or shall have, hold, own or claim to have, own or hold,
upon or by reason of any matter, cause or thing whatsoever from the beginning of
the world to the day of the date of this Agreement. Notwithstanding anything
herein to the contrary, the Schlumberger Releasing Parties are not releasing any
Claims against PricewaterhouseCoopers, LLP, including without limitation Claims
asserted in the January 24, 2003 complaint captioned Plumbers & Steamfitters,
Local 137 Pension Fund and John Petti v. PricewaterhouseCoopers, LLP, Case No.
H-03-0300.

         2.2      Release by Hanover Parties. As partial consideration for the
agreement by the Schlumberger Parties to enter into this Agreement, each of the
Hanover Parties, for itself and for its past, present and future divisions,
subsidiaries (including, without limitation, Hanover Cayman) and Affiliates and
each of their respective predecessors, successors, assigns and past and present
legal representatives, officers, directors, agents and employees, and each of
their respective heirs, legal representatives, insurers and assigns (the
"Hanover Releasing Parties"), does hereby fully, finally and forever remise,
release, acquit and discharge each of the Schlumberger Parties, and each of
their respective past, present and future divisions, subsidiaries and Affiliates
(including Schlumberger Limited and its direct and indirect subsidiaries), and
each of their respective predecessors, successors, assigns and legal
representatives, officers, directors, agents and employees, and each of their
respective heirs, legal representatives, insurers and assigns (the "Schlumberger
Released Parties") of and from all Released Claims, and hereby quit-claims,
waives any right to, and covenants not to sue any Schlumberger Released Party
with respect to any Released Claim, that any Hanover Releasing Party has, had or
may, can or shall have, hold, own or claim to have, own or hold, upon or by
reason of any matter, cause or thing whatsoever from the beginning of the world
to the day of the date of this Agreement.

         2.3      Complete Defense. Each of the Schlumberger Parties and the
Hanover Parties further understands and agrees that the releases included in
this Agreement shall be treated as a full and complete defense to, and will
forever be a complete bar to the commencement or prosecution of any and all
Released Claims arising out of any matter, cause or thing whatsoever from the
beginning of the world to the day of the date of this Agreement, which may be
brought, instituted or taken by any Schlumberger Releasing Party against any
Hanover Released Party or by any Hanover Releasing Party against any
Schlumberger Released Party.

                                        4

<PAGE>

         2.4      Unknown Claims. Each of the Schlumberger Parties and the
Hanover Parties understands and agrees that there is a risk that, subsequent to
the execution of this Agreement and the releases and indemnification included
herein, a Schlumberger Releasing Party or a Hanover Releasing Party will
discover, incur or suffer Released Claims which were unknown or unanticipated at
the time this Agreement was executed which, if known by a Schlumberger Releasing
Party or a Hanover Releasing Party on the date this Agreement is executed, may
have materially affected the decision of a Schlumberger Party or a Hanover Party
to execute this Agreement. Each of the Schlumberger Parties and the Hanover
Parties understands and agrees that, by reason of the releases and
indemnification agreed to by it herein, it is assuming the risk of such unknown
Released Claims and agrees that its release and indemnification of the persons
and entities referred to in this Article II applies to any and all such Released
Claims.

         2.5      No Admission. Each of the Schlumberger Parties and the Hanover
Parties further understands and agrees that entering into the Agreement (and the
releases and indemnification included herein) is not to be construed as an
admission of liability, or violation of any law or regulation or contract by any
Schlumberger Released Party or any Hanover Released Party.

         2.6      Full and Complete Settlement. The Schlumberger Parties and the
Hanover Parties each intend that the releases and indemnification agreed to by
it herein be complete and not subject to a claim of mistake of fact and that it
expresses a FULL AND COMPLETE SETTLEMENT of the Released Claims. Regardless of
the adequacy or inadequacy of the consideration paid, the release and
indemnification included herein is intended to settle or avoid litigation and/or
settle the Released Claims, and to be final and complete.

         2.7      Definitions. For purposes of this Article II and Annex A
hereto, the following terms shall have the meanings set forth below:

                  (a)      "Claims" shall mean any and all claims,
         counterclaims, demands, suits, proceedings, actions, causes of action,
         charges, losses, costs, debts, dues, attorneys' fees, sums of money,
         accounts, personal injuries, reckoning, bonds, bills, specialties,
         covenants, contracts, obligations, guarantees, liens, variances,
         trespasses, judgments, extents, executions, damages, controversies,
         liabilities, promises, agreements, acts or omissions, in each case of
         any kind or nature, at law or in equity, whether known or unknown,
         whether suspected or unsuspected, whether accrued or contingent,
         whether presently existing or having existed in the past or arising in
         the future.

                  (b)      "GKH" shall mean GKH Partners, L.P., GKH Investments,
         L.P., GKH Private Limited, HGW Associates, L.P., DWL Lumber Corp. and
         JAKK Holding Corp., each of their respective present and former
         parents, subsidiaries and affiliates, the present and former trustees,
         directors, officers, shareholders, general partners, limited partners,
         employees, agents, attorneys and representatives of each of the
         foregoing and the predecessors, successors and assigns of each of the
         foregoing.

                  (c)      "Hanover Litigation" shall mean the private
         litigation against Hanover (and any other party or parties) arising out
         of or based on the Hanover Restatements, including without limitation
         litigation brought under federal or state securities laws, the

                                        5

<PAGE>

         Employee Retirement Security Act, or as shareholder derivative suits
         and the litigation set forth on Annex B.

                  (d)      "Hanover Restatements" shall mean the restatements of
         Hanover's financial statements, which restatements were made and filed
         with the SEC during calendar year 2002, the press reports related
         thereto made prior to the date hereof and the events giving rise
         thereto that were expressly publicly disclosed in such filings and
         press releases prior to the date hereof.

                  (e)      "Released Claims" shall mean any and all Claims
         listed on Annex A.

         2.8      Indemnification.

                  (a)      General. The Hanover Parties hereby agree to jointly
and severally indemnify, defend and hold harmless the Schlumberger Released
Parties, including without limitation Rene Huck, with respect to all Losses (as
defined in the Purchase Agreement) suffered by any of the Schlumberger Released
Parties as a result of the assertion of any Claim by a person other than (i) a
Schlumberger Released Party or (ii) PricewaterhouseCoopers, LLP, against a
Schlumberger Released Party relating to, arising out of or in connection with
the Hanover Restatements, including a Claim made in connection with the Hanover
Litigation.

                  (b)      Process for Third Party Claims. The Schlumberger
Released Party seeking indemnification pursuant to Section 2.8(a) shall notify
Hanover of the assertion of any Claim by a person other than a Schlumberger
Released Party in respect of which indemnity may be sought under Section 2.8(a);
provided that the failure to notify Hanover will not relieve Hanover or the
Purchaser of any liability under Section 2.8(a) except to the extent that
Hanover demonstrates that its defense of such Claim is materially prejudiced by
its failure to receive timely notice. Hanover shall assume the defense of any
such Claim. The Schlumberger Released Party seeking indemnification may, at its
own expense: (a) participate in the defense of any such Claim, and (b) upon
notice to Hanover, at any time during the course of any such Claim, assume the
defense thereof with counsel of its own choice and in the event of such
assumption, shall have the exclusive right, subject to Section 2.8(c), to settle
or compromise such Claim. If the Schlumberger Released Party assumes such
defense, Hanover shall have the right (but not the duty) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Schlumberger Released Party.

                  (c)      Settlement or Compromise. Any settlement or
compromise made or caused to be made by Hanover, Purchaser or any Schlumberger
Released Party, as the case may be, of any Claim referred to in Section 2.8(b)
shall also be binding upon Hanover, Purchaser or the Schlumberger Released
Party, as the case may be, in the same manner as if a final judgment or decree
had been entered by a court of competent jurisdiction in the amount of such
settlement or compromise; provided, that: (a) no obligation, restriction or Loss
(as defined in the Purchase Agreement) shall be imposed on any Schlumberger
Released Party as a result of such settlement or compromise by Hanover or
Purchaser without its prior written consent, and (b) no obligation, restriction
or Loss shall be imposed on Hanover or Purchaser as a result of such settlement
or compromise by any Schlumberger Released Party without its prior written
consent, which consent shall not be unreasonably withheld.

                                        6

<PAGE>

                                   ARTICLE III
                                  MISCELLANEOUS

         3.1      Amendment. Each of the Schlumberger Parties and the Hanover
Parties understands and agrees that this Agreement (including the releases
included herein) is irrevocable and may not be amended, modified, changes or
rescinded except in a writing agreed to by all parties to this Agreement.

         3.2      Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument. Facsimile signatures will be deemed to
be original signatures for all applicable purposes.

         3.3      Assignment. This Agreement may not be assigned (and any
purported assignment shall be null and void) without the prior written consent
of the non-assigning party.

         3.4      Successors and Assigns. Except as otherwise expressly provided
herein, all agreements contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective successors
and assigns of the parties hereto.

         3.5      Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of and shall not be utilized in interpreting this Agreement.

         3.6      Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the conflicts of laws principles thereof, except that if it is
necessary in any other jurisdiction to have the law of such other jurisdiction
govern this Agreement in order for this Agreement to be effective in any
respect, then the laws of such other jurisdiction shall govern this Agreement to
such extent.

         3.7      Consent to Jurisdiction. Each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any federal court
located in the Borough of Manhattan in the City of New York or any New York
state court in the event any dispute arises out of this Agreement or any of the
transactions contemplated hereby, (ii) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court, and (iii) agrees that it will not bring any action relating to
this Agreement in any court other than a federal court sitting in the Borough of
Manhattan in the City of New York or a New York state court.

         3.8      WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY PERMITTED CLAIM OR CAUSE OF ACTION
ARISING OUT OF THIS AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, OR
ANY DEALINGS BETWEEN ANY OF THE PARTIES HERETO RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS,

                                        7

<PAGE>

AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR OTHER MODIFICATIONS TO
THIS AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR TO ANY OTHER
DOCUMENT OR AGREEMENT RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY.

         3.9      Service of Process. Each of the parties hereto irrevocably
consents to the service of any process, pleading, notices or other papers by the
mailing of copies thereof by registered, certified or first class mail, postage
prepaid, to such party at such party's address set forth herein, or by any other
method provided or permitted under New York law; provided that if either party
hereto effects such service of process by any method other than transmittal
thereof via overnight courier, charges prepaid, such party shall simultaneously
transmit a copy thereof via overnight courier, charges prepaid.

         3.10     Reproduction of Documents. This Agreement and all documents
relating hereto, including, but not limited to, (a) consents, waivers,
amendments and modifications which may hereafter be executed and (b)
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, optical disk,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

         3.11     Remedies. Each of the parties to this Agreement will be
entitled to enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party shall be entitled to
immediate injunctive relief or specific performance without bond or the
necessity of showing actual monetary damages in order to enforce or prevent any
violations of the provisions of this Agreement.

         3.12     Complete Agreement. This Agreement and the Exhibits hereto
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supercedes all prior and contemporaneous negotiations
and agreements, oral or written. All prior or contemporaneous negotiations or
agreements are deemed incorporated and merged into this Agreement and are deemed
to have been abandoned if not so incorporated. Each of the parties hereto
represents that no promises or inducements not herein expressed have been made
to any party or have caused any party to sign this Agreement (or agree to the
releases included herein). No representations, oral or written, are being relied
upon by any party in executing this Agreement other than the express
representations of this Agreement. All parties to this Agreement have negotiated
and participated in its drafting (including the releases included herein) and
the Agreement and terms hereof shall not be construed in favor of or against any
party as the drafter of the Agreement.

                                        8

<PAGE>

         3.13     Severability. If any provision or term of this Agreement is
held to be illegal, invalid, or unenforceable, such provision or term shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of each such illegal, invalid, or unenforceable provision or term there
shall be added automatically as a part of this Agreement another provision or
term as similar to the illegal, invalid, or unenforceable provision as may be
possible and that is legal, valid, and enforceable.

         3.14     Investigation. Each of the Schlumberger Parties and the
Hanover Parties, through and by signature of an authorized officer below,
represents that it has read this Agreement (including the releases included
herein) and fully understands all of its and their terms; that it has conferred
with its attorney prior to signing the same, or that it knowingly and
voluntarily has chosen not to confer with its attorney; and that it understands
any rights that it may have and signs this Agreement (and agrees to the releases
included herein) with full knowledge of any such rights.

         3.15     Notices. Any notices required or permitted to be sent
hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, or delivered by overnight courier service to the following
addresses, or such other address as STC designates by written notice to Hanover,
and shall be deemed to have been given upon delivery, if delivered personally,
two (2) business days after mailing, if mailed, or one (1) business day after
delivery to the courier, if delivered by overnight courier service:

         If to Hanover, to:

         Hanover Compressor Company
         12001 North Houston Rosslyn Road
         Houston, Texas 77086
         Attn: General Counsel
         Fax: (281) 405-6203

         If to STC, to:

         Schlumberger Technology Corporation
         300 Schlumberger Drive MD:23
         Sugar Land, Texas 77478
         Attn: General Counsel
         Fax: (281) 285-6952

         with a copy to (which shall not constitute notice):

                                        9

<PAGE>

         Gray Cary Ware & Freidenrich
         1221 South MoPac, Suite 400
         Austin, Texas 78746-6875
         Attn: Brian P. Fenske, Esq.
         Fax: (512) 457-7001

Delivery of notice to Hanover in compliance with this Section 3.15 shall
constitute valid notice to the Hanover Parties and delivery of notice to STC in
compliance with this Section 3.15 shall constitute valid notice to the
Schlumberger Parties.

               [The rest of this page is intentionally left blank.]

                                       10

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.

                                    SCHLUMBERGER TECHNOLOGY
                                    CORPORATION

                                    By: /s/ Dean Ferris
                                        ----------------------------------------
                                    Name: Dean Ferris
                                    Title: Assistant Secretary


                                    SCHLUMBERGER OILFIELD HOLDINGS
                                    LIMITED

                                    By: /s/ Johnson O. Afllaka
                                        ----------------------------------------
                                    Name: Johnson O. Afllaka
                                    Title: President

                                    SCHLUMBERGER SURENCO S.A.

                                    By: /s/ [illegible]
                                        ----------------------------------------
                                    Name: [illegible]
                                    Title: President


                                    HANOVER COMPRESSOR COMPANY

                                    By: /s/ John E. Jackson
                                        ----------------------------------------
                                    Name: John E. Jackson
                                    Title: Senior Vice President and
                                           Chief Financial Officer


                                    HANOVER COMPRESSION LIMITED
                                    PARTNERSHIP

                                    By: /s/ John E. Jackson
                                        ----------------------------------------
                                    Name: John E. Jackson
                                    Title: Senior Vice President and
                                           Chief Financial Officer


                                 SIGNATURE PAGE
                           PIGAP SETTLEMENT AGREEMENT

<PAGE>

                                                                         ANNEX A

                                 RELEASED CLAIMS

The following Claims shall constitute Released Claims for purposes of this
Agreement:

-        Any Claim under Section 1.2(a)(ii) of the Purchase Agreement.

-        Any Claim under Section 1.7 of the Purchase Agreement.

-        Any Claim under Section 5.11 of the Purchase Agreement.

-        Any Claim under Article IX of the Purchase Agreement to the extent such
         Claim relates to Sections 1.2(a)(ii), 1.7 or 5.11 of the Purchase
         Agreement.

-        Any Claim under the Letter Agreement dated August 7, 2001 from STC to
         Hanover relating to a delay or failure by PDVSA Petroleo y Gas, S.A. to
         consent to the transfer of the WilPro Interest (as defined in the
         Purchase Agreement).

-        Any Claim under the form of the Hanover Note immediately prior to its
         amendment, modification and re-issuance in connection with this
         Agreement.

-        Any Claims by the Hanover Releasing Parties against the Schlumberger
         Released Parties relating to, arising out of or in connection with
         WilPro, the WilPro Interest or the WilPro Companies (each as defined in
         the Purchase Agreement) other than pursuant to the agreements
         referenced herein entered into on or after the date hereof.

-        Any Claims relating to, arising out of or in connection with the
         Hanover Restatements or the Hanover Litigation that have or could be
         asserted by the Hanover Releasing Parties against the Schlumberger
         Released Parties or by the Schlumberger Releasing Parties against the
         Hanover Released Parties.

                                       A-1

<PAGE>

                                                                         ANNEX B

                               HANOVER LITIGATION

HANOVER CLASS ACTION LITIGATION:

<TABLE>
<S>      <C>
1        Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Hanover Compressor Co., et. al., No. H-02-0410 (S.D.
         Tex. Filed Feb. 4, 2002).

2        McBride v. Hanover Compressor Co., et. al., No. H-02-0431 (S.D. Tex. Filed Feb. 5, 2002).

3        Koch v. Hanover Compressor Co., et. al., No. H-02-0441 (S.D. Tex. Filed Feb. 6, 2002).

4        Schneider v. Hanover Compressor Co., et. al., No. H-02-0491 (S.D. Tex. Filed Feb. 7, 2002).

5        Goldstein v. Hanover Compressor Co., et. al., H-02-0526 (S.D. Tex. Filed Feb. 11, 2002)

6        Noyes v. Hanover Compressor Co., et. al., H-02-0574 (S.D. Tex. Filed Feb. 14, 2002).

7        Rocha v. Hanover Compressor Co. et. al., H-02-0594 (S.D. Tex. Filed Feb. 19, 2002).

8        Peck v. Hanover Compressor Co., et. al., H-02-0627 (S.D. Tex. Filed Feb. 20, 2002).

9        Mueller v. Hanover Compressor Co., et. al., H-02-0652 (S.D. Tex. Filed Feb. 21, 2002).

10       Langhoff v. Hanover Compressor Co., et. al., H-02-0764 (S.D. Tex. Filed Mar. 1, 2002).

11       Fox v. Hanover Compressor Co., et. al., H-02-0815 (S.D. Tex. Filed Mar. 5, 2002).

12       Rosen v. Goldberg, et. al., H-02-0959 (S.D. Tex. Filed Mar. 12, 2002).

13       Detectives Endowment Ass'n Annuity Fund v. Hanover Compressor Co., et. al., H-02-1016 (S.D. Tex. Filed Mar. 14,
         2002).

14       Montag v. Hanover Compressor Co., et. al., H-02-1030 (S.D. Tex. Filed Mar. 15, 2002).

15       Anderson v. Hanover Compressor Co., et. al., H-02-2306 (S.D. Tex. June 20, 2002).
</TABLE>

HANOVER DERIVATIVE LITIGATION:

<TABLE>
<S>      <C>
1        Coffelt Family, LLC v. O'Connor, et. al., 19410 NC (Del. Ch. Filed Feb. 15, 2002).

2        Harbor Fin. Partners v. McGhan, et. al., H-02-0761 (S.D. Tex. Filed Mar. 1, 2002).

3        Carranza v. O'Connor, et. al., H-02-1430 (S.D. Tex. Filed Apr. 18, 2002).

4        Steves v. O'Connor, et. al., 02-1527 (S.D. Tex. Filed Apr. 24, 2002).
</TABLE>

                                       B-1

<PAGE>

<TABLE>
<S>      <C>
5        Koch v. O'Connor, et. al., H-02-1332 (S.D. Tex. Filed Apr. 10, 2002).

6        Hensley v. McGhan, et. al., 2002-30987 (Tex. Dist. Ct. (Harris Co.) Filed June 20, 2002)).
</TABLE>

ERISA COMPLAINTS:

<TABLE>
<S>      <C>
1        Angleopoulos v. Hanover Compressor Co., et. al., H-03-1064 (S.D. Tex. Filed Mar. 26, 2003).

2        Freeman v. Hanover Compressor Co. et. al., H-03-1095 (S.D. Tex. Filed Mar. 31, 2003).

3        Kirkley v. Hanover Cos., et. al., H-03-1155 (S.D. Tex. Filed Apr. 4, 2003).
</TABLE>

                                       B-1