<PAGE>
 
                                   FORM 10-Q
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

(Mark One)

/X/    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999

   OR

/ /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
       FOR THE TRANSITION PERIOD FROM _________ TO __________



Commission File Number                                                1-13071

                          HANOVER COMPRESSOR COMPANY
            (Exact name of registrant as specified in its charter)


                       Delaware                            75-2344249
           (State or other jurisdiction of              (I.R.S. Employer
           incorporation or organization)              Identification No.)

                          12001 North Houston Rosslyn
                        Houston, Texas           77086
                   (Address of principal executive offices)

                                (281) 447-8787
             (Registrant's telephone number, including area code)


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

Yes  X
No


As of May 10, 1999 there were 28,639,557 shares of the Company's common stock,
$0.001 par value, outstanding.
<PAGE>
 
                          HANOVER COMPRESSOR COMPANY
                     CONDENSED CONSOLIDATED BALANCE SHEET
                                  (unaudited)
       (in thousands of dollars, except for par value and share amounts)

<TABLE> 
<CAPTION> 
                                                                                          March 31,            December 31,
                                                                                             1999                  1998
                                                                                             ----                  ----
                                        ASSETS                                         
<S>                                                                                <C>                    <C> 
   Current assets:
      Cash and cash equivalents                                                       $            7,694     $          11,503
      Accounts receivable:
           Trade, net                                                                             64,407                70,205
           Other                                                                                  13,626                    -
      Inventory                                                                                   65,547                63,044
      Costs and estimated earnings in excess of billings
           on uncompleted contracts                                                                6,171                 7,871
      Prepaid taxes                                                                                9,239                 9,466
      Other current assets                                                                         4,397                 2,967
                                                                                      -------------------    ------------------
           Total current assets                                                                  171,081               165,056
                                                                                      -------------------    ------------------
   Property, plant and equipment:
      Compression equipment and facilities                                                       463,586               422,896
      Land and buildings                                                                          16,705                15,044
      Transportation and shop equipment                                                           22,642                21,667
      Other                                                                                       14,689                11,119
                                                                                      -------------------    ------------------
                                                                                                 517,622               470,726
      Accumulated depreciation                                                                   (83,773)              (78,228)
                                                                                      -------------------    ------------------
           Net property, plant and equipment                                                     433,849               392,498
                                                                                      -------------------    ------------------
   Intangible and other assets                                                                    56,339                57,036
                                                                                      -------------------    ------------------
                                                                                      $          661,269     $         614,590
                                                                                      ===================    ==================

           LIABILITIES AND STOCKHOLDERS' EQUITY

   Current liabilities:
      Current maturities of long-term debt                                            $              445     $             444
      Accounts payable, trade                                                                     24,070                23,361
      Accrued liabilities                                                                         16,358                17,599
      Advance billings                                                                             9,093                 9,694
      Billings on uncompleted contracts in excess of
              costs and estimated earnings                                                           756                   694
                                                                                      -------------------    ------------------
           Total current liabilities                                                              50,722                51,792

   Long-term debt                                                                                193,063               156,943
   Other liabilities                                                                              42,854                42,858
   Deferred income taxes                                                                          49,502                46,284
                                                                                      -------------------    ------------------
           Total liabilities                                                                     336,141               297,877
                                                                                      -------------------    ------------------

   Common stockholders' equity:
      Common stock, $.001 par value; 100 million shares authorized; 
           28,639,557 and 28,590,472 shares issued and
           outstanding, respectively                                                                  29                    29
      Additional paid-in capital                                                                 269,809               269,005
      Notes receivable - employee stockholders                                                   (10,865)              (10,146)
      Accumulated other comprehensive income (loss)                                                 (157)                   152
      Retained earnings                                                                           69,637                60,998
      Treasury stock - 175,547 common shares, at cost                                             (3,325)               (3,325)
                                                                                      -------------------    ------------------
           Total common stockholders' equity                                                     325,128               316,713
                                                                                      -------------------    ------------------
                                                                                      $          661,269     $         614,590
                                                                                      ===================    ==================
</TABLE> 
                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.

<PAGE>
 


                          HANOVER COMPRESSOR COMPANY
      CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
                                  (unaudited)
              (in thousands of dollars, except per share amounts)

<TABLE> 
<CAPTION> 
                                                                     Three months
                                                                    ended March 31,
                                                                  ------------------- 
                                                                  1999           1998
                                                                  ----           ----
<S>                                                         <C>             <C> 
   Revenues:
      Rentals                                                 $     42,434    $    31,928
      Parts and service                                              4,631          3,244
      Compressor fabrication                                         7,241         16,284
      Production equipment fabrication                               5,886          8,958
      Gain on sale of assets                                         3,467            747
      Other                                                            785            288
                                                              -------------   ------------
                                                                    64,444         61,449
                                                              -------------   ------------
   Expenses:
      Rentals                                                       13,974         11,186
      Parts and service                                              3,424          2,098
      Compressor fabrication                                         5,657         13,733
      Production equipment fabrication                               4,442          6,021
      Selling, general and administrative                            7,397          6,048
      Depreciation and amortization                                  9,213          9,114
      Leasing expense                                                3,510             -
      Interest expense                                               3,114          3,085
                                                              -------------   ------------
                                                                    50,731         51,285
                                                              -------------   ------------
   Income before income taxes                                       13,713         10,164
   Provision for income taxes                                        5,074          3,913
                                                              -------------   ------------
   Net income                                                 $      8,639    $     6,251
                                                              -------------   ------------

   Other comprehensive income (loss), net of tax:
      Foreign currency translation adjustment                        (309)             -
                                                              -------------   ------------
   Comprehensive income                                       $      8,330    $     6,251
                                                              =============   ============

    Net income available to common stockholders               $      8,639    $     6,251
                                                              =============   ============

   Weighted average common and common equivalent 
      shares outstanding:
            Basic                                                   28,436         28,462
                                                              -------------   ------------
            Diluted                                                 30,197         30,003
                                                              -------------   ------------
   Earnings per common share:
            Basic                                             $       0.30    $      0.22
                                                              -------------   ------------
            Diluted                                           $       0.29    $      0.21
                                                              -------------   ------------
</TABLE> 

                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.



<PAGE>

                          HANOVER COMPRESSOR COMPANY
                CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (unaudited)
                           (in thousands of dollars)
<TABLE> 
<CAPTION> 
                                                                                     Three Months
                                                                                   ended March 31,
                                                                                   ---------------
                                                                             1999                    1998
                                                                             ----                    ----
<S>                                                               <C>                          <C> 
   Cash flows from operating activities:
     Net income                                                          $       8,639           $       6,251
     Adjustments:
         Depreciation and amortization                                           9,213                   9,114
         Amortization of debt issuance costs and debt discount                     181                     182
         Bad debt expense                                                          154                      93
         Gain on sale of assets                                                 (3,467)                   (747)
         Equity in income of nonconsolidated affiliates                           (475)                    (17)
         Deferred income taxes                                                   3,218                   3,513
         Changes in assets and liabilities:
              Accounts receivable                                               (7,982)                 (5,660)
              Inventory                                                         (2,503)                 (3,632)
              Costs and estimated earnings in excess of billings on
                  uncompleted contracts                                          1,762                   1,370
              Accounts payable and other liabilities                              (536)                  3,933
              Advance billings                                                    (601)                    601 
              Other                                                               (885)                 (4,541)
                                                                         --------------          --------------
   Net cash provided by operating activities                                     6,718                  10,460
                                                                         --------------          --------------
   Cash flows from investing activities:
     Capital expenditures                                                      (62,905)                (33,598)
     Proceeds from sale of fixed assets                                         16,294                   1,830
                                                                         --------------          --------------
   Net cash used in investing activities                                       (46,611)                (31,768)
                                                                         --------------          --------------
  Cash flows from financing activities:
     Net borrowings on revolving credit facility                                36,120                  32,000
     Repayments of shareholder notes                                                34                      13
     Equity issuance costs                                                           -                    (161)
     Proceeds from warrant conversions and stock option exercises                   51                       5
     Debt issuance costs                                                             -                     (27)
     Repayment of long-term debt                                                  (105)                   (530)
                                                                         --------------          --------------
   Net cash provided by financing activities                                    36,100                  31,300
                                                                         --------------          --------------

   Effect of exchange rate changes on cash and equivalents                         (16)                    -
                                                                         --------------          --------------
   Net increase(decrease) in cash and cash equivalents                          (3,809)                  9,992
   Cash and cash equivalents at beginning of period
                                                                                11,503                   4,561
                                                                         --------------          --------------
   Cash and cash equivalents at end of period                            $       7,694           $      14,553
                                                                         ==============          ==============


   Supplemental disclosure of cash flow information:
     Common stock issued in exchange for note receivable                 $         753
     Property sold in exchange for note receivable                       $         765
</TABLE> 

                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.

<PAGE>
 
                          HANOVER COMPRESSOR COMPANY
             Notes to Condensed Consolidated Financial Statements


1.  BASIS OF PRESENTATION

    The accompanying unaudited condensed consolidated financial statements of
Hanover Compressor Company (the "Company") included herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is the opinion of
management that the information furnished includes all adjustments, consisting
only of normal recurring adjustments, which are necessary to present fairly the
financial position, results of operations, and cash flows of the Company for the
periods indicated. The financial statement information included herein should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1998. These interim results are not necessarily indicative of
results for a full year.

    EARNINGS PER COMMON SHARE

    Basic earnings per common share is computed using the weighted average
number of shares outstanding for the period. Diluted earnings per common share
is computed using the weighted average number of shares outstanding adjusted for
the incremental shares attributed to outstanding options and warrants to
purchase common stock. Included in diluted shares are common stock equivalents
relating to options of 1,390,000 and 1,098,000 and warrants of 370,000 and
443,000 for the three months ended March 31, 1999 and 1998, respectively.


2.  INVENTORIES

    Inventory consisted of the following amounts (in thousands):
 
                              March 31,       December 31,
                                1999              1998
                                ----              ---- 
     Parts and supplies         $34,775         $32,808
     Work in progress            21,226          19,962
     Finished goods               9,546          10,274
                                -------         -------
                                $65,547         $63,044
                                =======         =======
<PAGE>
 
3.  SALES AND LEASE BACK OF EQUIPMENT
 
    In July, 1998, the Company completed a $200 million sale and lease back of 
certain compression equipment. The lease back of the equipment is recorded as an
operating lease. Under the agreement, the equipment was sold and leased back by 
the Company for a 5 year period and will continue to be deployed by the Company 
under its normal operating procedures. At any time, the Company has the option 
to repurchase the equipment at fair market value.

    The lease agreement calls for variable quarterly rental payments that vary
with the London Interbank Borrowing Rate.  The following provides future minimum
lease payments under the leasing arrangement exclusive of any guarantee payments
(in thousands): 1999 -- $10,500;  2000 -- $14,000;  2001 -- $14,000;  2002 --
$14,000;   2003 -- $7,900.

    In July, 1998 and in connection with the leasing transaction, the Company
entered into two-year swap transactions to manage lease rental exposure with
notional amounts of $75,000,000 and $125,000,000 and strike rates of 5.51% and
5.56%, respectively.  The differential paid or received on the swap transactions
is recognized as an adjustment to leasing expense.  The counterparty to this
contractual arrangement is a major financial institution with which the Company
also has other financial relationships.  The Company is exposed to credit loss
in the event of nonperformance by this counterparty.  However, the Company does
not anticipate nonperformance by this party and no material loss would be
expected from their nonperformance.  The fair market value of these interest
rate swaps is based on market quotes and is approximately $2.4 million at March
31, 1999.
 
4.  COMMITMENTS AND CONTINGENCIES

    In the ordinary course of business the Company is involved in various
pending or threatened legal actions. While management is unable to predict the
ultimate outcome of these actions, it believes that any ultimate liability
arising from these actions will not have a material adverse effect on the
Company's consolidated financial position, results of operations or cash flows.


5.  INDUSTRY SEGMENTS

    The Company manages its business segments primarily on the type of product
or service provided. The Company has four principal industry segments: Rentals -
Domestic, Rentals - International, Compressor Fabrication and Production
Equipment Fabrication. The Rental segments provide natural gas compression
rental and maintenance services to meet specific customer requirements. The
Compressor Fabrication segment involves the design, fabrication and sale of
natural gas compression units to meet unique customer specifications. The
Production Equipment Fabrication segment designs, fabricates and sells equipment
utilized in the production of crude oil and natural gas.
 
    The Company evaluates the performance of its segments based on segment gross
profit. Segment gross profit for each segment includes direct operating
expenses. Costs excluded from segment gross profit include selling, general and
administrative, depreciation and amortization, leasing, interest and income
taxes. Amounts defined as "Other" include sales of assets, results of other
insignificant operations, corporate related items primarily related to cash
management activities and parts and service operations which are not separately
managed. Revenues include sales to external customers and intersegment sales.
Intersegment sales are accounted for at cost and are eliminated in
consolidation. Identifiable assets are tangible and intangible assets that are
identified with the operations of a particular industry segment or which are
allocated when used jointly.

    The following table presents sales and other financial information by
industry segment for the quarter ended March 31, 1999 and 1998 (in thousands).

<PAGE>
 
<TABLE>
<CAPTION>
                                                                         PRODUCTION
                     DOMESTIC      INTERNATIONAL        COMPRESSOR        EQUIPMENT                
                      RENTALS         RENTALS           FABRICATION      FABRICATION      OTHER    ELIMINATIONS   CONSOLIDATED
                     --------      -------------        -----------      -----------      -----    ------------   ------------
<S>                  <C>           <C>                  <C>              <C>              <C>      <C>            <C> 
March 31,1999:
Revenues from
   external
   customers         $ 30,200        $ 12,234            $ 7,241          $ 5,886         $ 8,883                    $ 64,444
Intersegment sales                        300             18,919              598           6,641     $(26,458)
                     --------        --------            -------          -------         -------     --------       --------
  Total revenues       30,200          12,534             26,160            6,484          15,524      (26,458)        64,444
Gross Profit           20,477           7,983              1,584            1,444           5,459                      36,947
 
Identifiable assets   470,751         127,904             35,295           19,625           7,694                     661,269
 
March 31,1998:
Revenues from
   external
   customers         $ 24,409        $  7,519            $16,284          $ 8,958         $ 4,279                    $ 61,449
Intersegment sales                        300             13,602            1,415           1,495     $(16,812)
                     --------        --------            -------          -------         -------     --------       --------
  Total revenues       24,409           7,819             29,886           10,373           5,774      (16,812)        61,449
Gross Profit           15,696           5,046              2,551            2,937           2,181                      28,411
 
</TABLE>
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Special note regarding forward-looking statements

  Certain matters discussed in this document are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995.  These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes", "anticipates",
"expects", "estimates" or words of similar import.  Similarly, statements that
describe the Company's future plans, objectives or goals are also forward-
looking statements.  Such forward-looking statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from those anticipated as of the date of this report.  The risks and
uncertainties include (1) the loss of market share through competition, (2) the
introduction of competing technologies by other companies, (3) a prolonged
substantial reduction in natural gas prices which would cause a decline in the
demand for the Company's compression and oil and gas production equipment, (4)
new governmental safety, health and environmental regulations which could
require significant capital expenditures by the Company and (5) changes in
economic or political conditions in the countries in which the Company operates.
The forward-looking statements included herein are only made as of the date of
this report and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.

GENERAL

  The Company is the market leader in full service natural gas compression and a
leading provider of service, financing, fabrication and equipment for contract
natural gas handling applications.  Hanover provides this equipment on a rental,
contract compression, maintenance and acquisition leaseback basis. Founded in
1990 and publicly held since 1997, the Company's customers include premier
independent and major natural gas production, processing and transportation
companies thoughout the Western Hemisphere.  As of March 31, 1999, the Company
operated a fleet of 2,999 compression rental units with an aggregate capacity of
approximately 1,146,000 horsepower.
 
RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

REVENUES

  The Company's total revenues increased by $3.0 million, or 5%, to $64.4
million during the three months ended March 31, 1999 from $61.4 million during
the three months ended March 31, 1998. The increase resulted primarily from
growth of the Company's natural gas compressor rental fleet but was offset by
decreases in compressor fabrication and production equipment fabrication
revenues.


<PAGE>
 
  Revenues from rentals increased by $10.5 million, or 33%, to $42.4 million
during the three months ended March 31, 1999 from $31.9 million during the three
months ended March 31, 1998. Domestic revenues from rentals increased by $5.8
million, or 24%, to $30.2 million during the three months ended March 31, 1999
from $24.4 million during the three months ended March 31, 1998.  International
rental revenues increased by $4.7 million, or 63%, to $12.2 million during the
three months ended March 31, 1999 from $7.5 million during the three months
ended March 31, 1998.  The increase in both domestic and international rental
revenue resulted from expansion of the Company's rental fleet. Domestic
horsepower in the rental fleet increased by 43% from approximately 676,000
horsepower at March 31, 1998 to approximately 970,000 horsepower at March 31,
1999.  In addition, international horsepower increased by 20% from approximately
147,000 horsepower at March 31, 1998 to approximately 176,000 horsepower at
March 31, 1999.  Revenue from parts and service increased by $1.4 million, or
43% to $4.6 million during the three months ended March 31, 1999 from $3.2
million during the three months ended March 31, 1998 as a result of increased
marketing focus on parts and service.

  Revenues from the fabrication and sale of compressor equipment to third
parties decreased by $9.1 million, or 56%, to $7.2 million during the three
months ended March 31, 1999 from $16.3 million during the three months ended
March 31, 1998. During the three months ended March 31, 1999, an aggregate of
approximately 54,000 horsepower of compression equipment was fabricated, 58% of
which was placed in the rental fleet and 42% of which was sold to third party
customers.  During the three months ended March 31, 1998, approximately 55,000
horsepower was fabricated, 43% of which was placed in the Company's rental fleet
and 57% of which was sold to third party customers. The Company believes the
revenue decrease is reflective of lower energy prices in the energy industry.

  Revenues from the fabrication and sale of production equipment decreased by
$3.1 million, or 34%, to $5.9 million during the three months ended March 31,
1999 from $9.0 million during the three months ended March 31, 1998 primarily
due to the decline in well completions resulting from lower energy prices.

  The Company recognized gains on sales of assets of $3.5 million during the
three months ended March 31, 1999 compared to $0.7 million during the three
months ended March 31, 1998. The increase is primarily due to the increase in
horsepower sold from the rental fleet to a major international customer 
<PAGE>
 
which exercised its option to purchase equipment it previously rented. During
the quarter, the Company sold approximately 17,000 horsepower compared to 3,000
horsepower for the first quarter of 1998.

EXPENSES

  Rentals operating expenses increased by $2.8 million, or 25%, to $14.0 million
during the three months ended March 31, 1999 from $11.2 million during the three
months ended March 31, 1998.  The increase resulted primarily from the
corresponding 33% increase in revenues from rentals over the corresponding
period in 1998. Operating expense of parts and service increased by $1.3
million, or 63% to $3.4 million due to the corresponding increase in parts and
service revenue. Operating expenses of compressor fabrication decreased by $8.1
million, or 59%, to $5.7 million during the three months ended March 31, 1999
from $13.8 million during the three months ended March 31, 1998 commensurate
with the corresponding decrease in compressor fabrication revenue. The operating
expenses attributable to production equipment fabrication decreased by $1.6
million, or 26%, to $4.4 million during the three months ended March 31, 1999
from $6.0 million during the three months ended March 31, 1998, resulting from
the decrease in revenue from the production equipment fabrication as previously
discussed.

  Selling, general and administrative expenses increased $1.4 million, or 22%,
to $7.4 million during the three months ended March 31, 1999 from $6.0 million
during the three months ended March 31, 1998.  The increase resulted from the
increased activity in the Company's rentals and parts and service business
segments as described above.

  The Company believes that earnings before interest, leasing expense, taxes,
depreciation and amortization (EBITDA) is a standard measure of financial
performance used for valuing companies in the compression rental industry.
EBITDA is a useful common yardstick as it measures the capacity of companies to
generate cash without reference to how they are capitalized, how they account
for significant non-cash charges for depreciation and amortization associated
with assets used in the business (the bulk of which are long-lived assets in the
compression industry), or what their tax attributes may be. Additionally, since
EBITDA is a basic source of funds not only for growth but to service
indebtedness, lenders use EBITDA as a primary determinant of borrowing capacity.
EBITDA for the three months ended March 31, 1999 increased 32% to $29.6 million
from $22.4 million for the three months ended March 31, 1998.

  Depreciation and amortization increased by $0.1 million to $9.2 million during
the three months ended March 31, 1999 compared to $9.1 million during the three
months ended March 31, 1998.

  Interest expense was $3.1 million during the three months ended March 31, 1999
and 1998.  The Company incurred leasing expense of $ 3.5 million during the
three months ended March 31, 1999, resulting from the Equipment Lease entered
into July, 1998.

INCOME TAXES

  The provision for income taxes increased by $1.2 million, or 30%, to $5.1
million during the three months ended March 31, 1999 from $3.9 million during
the three months ended March 31, 1998.  The increase resulted primarily from the
corresponding increase in income before taxes.  The average effective income tax
rates during the three months ended March 31, 1999 and 1998 were 37% and 38%,
respectively.

NET INCOME

  Net income increased $2.3 million, or 38%, to $8.6 million during the three
months ended March 31, 1999 from $6.3 million during the three months ended
March 31, 1998 for the reasons discussed above.

LIQUIDITY AND CAPITAL RESOURCES

  The Company has historically utilized internally generated funds and equity
and debt financing to finance the growth of its compressor fleet and maintain
sufficient compression and production equipment inventory. Capital expenditures
for property, plant and equipment were $62.9 million for the three months 
<PAGE>
 
ended March 31, 1999 as compared to $33.6 million for the three-month period
ended March 31, 1998. Bank borrowings were $36.1 million for the three months
ended March 31, 1999 as compared to $32.0 million for the three months ended
March 31, 1998, and were used to finance rental fleet expansion.

  In 1996, the Company issued Subordinated Notes in the aggregate principal
amount of $23.5 million in 1996, bearing interest at 7%, payable semi-annually,
with principal due on December 31, 2000. As of March 31, 1999 the Company had
approximately $37 million of credit capacity remaining on its $200 million Bank
Credit Agreement. The Company anticipates arranging additional sources of debt
financing during 1999 to fund the anticipated level of capital expenditures.

Impact of the Year 2000

  Many computer systems, software products and other equipment utilize
microprocessors in which the year is represented by only two digit entries, as
"19" is inferred to be the century.  Date sensitive software may interpret a
date using "00" as the year 1900 rather than the year 2000, which could disrupt
operations due to systems failures or software miscalculations. These date
fields need to accept four digit entries to distinguish dates beginning in the
year 2000. Issues related to this situation are commonly referred to as "Year
2000 issues".

  Primarily to accommodate its growth, the Company has installed or plans to
install various modifications or upgrade existing computer software and hardware
which include, among others things, an accommodation of Year 2000 issues. The
costs associated with the software modifications are being incurred in the
ordinary course of business and are not expected to be material in relation to
either future operating results, cash flows or financial condition. The Company
expects that all hardware and software upgrades will be completed in mid-1999.

  The Company has reviewed its machinery and equipment operation and believes
that none of its significant machinery and equipment is dependent on
microprocessors which may be materially affected by Year 2000 issues.

  The Company has initiated communications with all of its significant
customers, suppliers and vendors to ensure that those parties have appropriate
plans to address Year 2000 issues where they may otherwise impact the operations
of the Company. There is inherent uncertainty related to Year 2000 issues due to
the possibility of failures by third party customers, suppliers and vendors,
which cannot be anticipated. The Company cannot guarantee the systems of other
companies on which it relies will be converted timely and will not have a
material adverse effect on the Company's operations, cash flows or financial
position. The Company has not developed contingency plans to address any
possible operation disruptions resulting from third party failures but will do
so by the end of 1999.

 
<PAGE>
 
PART II.     OTHER INFORMATION

Item 6: Exhibits and reports on Form 8-K

(a)     Exhibits
27      Financial Data Schedule

(b)     Reports submitted on Form 8-K; none.

All other items specified by Part II of this report are inapplicable and have
been omitted.
<PAGE>
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

HANOVER COMPRESSOR COMPANY
Date:  May 14, 1999
By:

/s/ Michael J. McGhan
-------------------------
Michael J. McGhan
President and Chief Executive Officer

Date:  May 14, 1999
By:

/s/ Curtis A. Bedrich
------------------------- 
Curtis A. Bedrich
Chief Financial Officer