##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED March 31, 2011
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO.
 Commission File No. 001-33078
 EXTERRAN
PARTNERS, L.P.
 (Exact name of registrant as specified in its charter)
 Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    22-3935108
(I.R.S. Employer
Identification No.)
 16666 Northchase Drive 
Houston, Texas
(Address of principal executive offices)
    
    77060
(Zip Code)
 (281) 836-7000
(Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    

Accelerated filer þ
    

Non-accelerated
filer o(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Comprehensive Income
    
    
    5Condensed Consolidated Statements of Partners Capital
    
    
    6Condensed Consolidated Statements of Cash Flows
    
    
    7Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    28PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 6. Exhibits
    
    
    30SIGNATURES
    
    
    31EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 EXTERRAN PARTNERS, L.P.


CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31, 2011
    
    
    December 31, 2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    15
    
    
    $
    50Accounts receivable, trade, net of allowance of $1,007 and $1,232, respectively
    
    
    25,128
    
    
    
    24,550Due from affiliates, net
    
    
    7,553
    
    
    
    3,759Total current assets
    
    
    32,696
    
    
    
    28,359Compression equipment
    
    
    925,319
    
    
    
    953,759Accumulated depreciation
    
    
    (296,065
    )
    
    
    (316,806
    )Net compression equipment
    
    
    629,254
    
    
    
    636,953Goodwill
    
    
    124,019
    
    
    
    124,019Interest rate swaps
    
    
    7,304
    
    
    
    5,769Intangibles and other assets, net
    
    
    18,532
    
    
    
    18,245Total assets
    
    $
    811,805
    
    
    $
    813,345LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable, trade
    
    $
    175
    
    
    $
    166Accrued liabilities
    
    
    8,812
    
    
    
    9,347Accrued interest
    
    
    842
    
    
    
    983Current portion of interest rate swaps
    
    
    3,284
    
    
    
    3,112Total current liabilities
    
    
    13,113
    
    
    
    13,608Long-term debt
    
    
    450,000
    
    
    
    449,000Total liabilities
    
    
    463,113
    
    
    
    462,608Commitments and contingencies (Note 11)Partners capital:Limited partner units:Common units, 27,407,215 and 27,363,451 units issued and outstanding, respectively
    
    
    373,519
    
    
    
    379,748Subordinated units, 4,743,750 units issued and outstanding
    
    
    (30,269
    )
    
    
    (30,702
    )General partner units, 2% interest with 653,318 equivalent units issued and outstanding
    
    
    10,733
    
    
    
    10,638Accumulated other comprehensive loss
    
    
    (4,736
    )
    
    
    (8,673
    )Treasury units, 25,601 and 15,756 common units, respectively
    
    
    (555
    )
    
    
    (274
    )Total partners capital
    
    
    348,692
    
    
    
    350,737Total liabilities and partners capital
    
    $
    811,805
    
    
    $
    813,345
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EXTERRAN PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended March 31,2011
    
    
    2010Revenue
    
    $
    68,729
    
    
    $
    52,710Costs and expenses:Cost of sales (excluding depreciation and amortization expense)
    
    
    37,052
    
    
    
    25,851Depreciation and amortization
    
    
    14,149
    
    
    
    11,878Long-lived asset impairment
    
    
    
    
    
    
    231Selling, general and administrative
    
    
    10,216
    
    
    
    7,695Interest expense
    
    
    7,075
    
    
    
    5,692Other (income) expense, net
    
    
    (221
    )
    
    
    (236
    )Total costs and expenses
    
    
    68,271
    
    
    
    51,111Income before income taxes
    
    
    458
    
    
    
    1,599Income tax expense
    
    
    235
    
    
    
    173Net income
    
    $
    223
    
    
    $
    1,426General partner interest in net income
    
    $
    572
    
    
    $
    340Common units interest in net income
    
    $
    (297
    )
    
    $
    798Subordinated units interest in net income
    
    $
    (52
    )
    
    $
    288Weighted average common units outstanding:Basic
    
    
    27,363
    
    
    
    17,546Diluted
    
    
    27,363
    
    
    
    17,551Weighted average subordinated units outstanding:Basic
    
    
    4,744
    
    
    
    6,325Diluted
    
    
    4,744
    
    
    
    6,325Earnings (loss) per common unit:Basic
    
    $
    (0.01
    )
    
    $
    0.05Diluted
    
    $
    (0.01
    )
    
    $
    0.05Earnings (loss) per subordinated unit:Basic
    
    $
    (0.01
    )
    
    $
    0.05Diluted
    
    $
    (0.01
    )
    
    $
    0.05
  4




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EXTERRAN PARTNERS, L.P.


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Three Months Ended March 31,2011
    
    
    2010Net income
    
    $
    223
    
    
    $
    1,426Other comprehensive income (loss):Interest rate swap gain (loss)
    
    
    1,363
    
    
    
    (174
    )Amortization of payments to terminate interest rate swaps
    
    
    2,574
    
    
    
    Comprehensive income
    
    $
    4,160
    
    
    $
    1,252
  5




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EXTERRAN PARTNERS, L.P.


CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
 Partners Capital
    
    
    
    
    
    
    
    
    
    
    AccumulatedGeneral Partner
    
    
    
    
    
    
    
    
    
    
    OtherCommon Units
    
    
    Subordinated Units
    
    
    Units
    
    
    Treasury Units
    
    
    Comprehensive$
    
    
    Units
    
    
    $
    
    
    Units
    
    
    $
    
    
    Units
    
    
    $
    
    
    Units
    
    
    Loss
    
    
    TotalBalance, December 31, 2009
    
    $
    298,010
    
    
    
    17,541,965
    
    
    $
    (33,194
    )
    
    
    6,325,000
    
    
    $
    8,457
    
    
    
    486,243
    
    
    $
    (108
    )
    
    
    (8,426
    )
    
    $
    (14,857
    )
    
    $
    258,308Issuance of common units for
vesting of phantom units
    
    
    
    
    
    
    33,373Treasury units purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (166
    )
    
    
    (7,330
    )
    
    
    
    
    
    
    (166
    )Transaction costs for the
public offering of common
units by Exterran Holdings
    
    
    (4
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )Contribution of capital
    
    
    2,914
    
    
    
    
    
    
    
    2,011
    
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,064Cash distributions
    
    
    (8,112
    )
    
    
    
    
    
    
    (2,925
    )
    
    
    
    
    
    
    (543
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,580
    )Unit based compensation expense
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185Interest rate swap loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (174
    )
    
    
    (174
    )Net income
    
    
    798
    
    
    
    
    
    
    
    288
    
    
    
    
    
    
    
    340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,426Balance, March 31, 2010
    
    $
    293,791
    
    
    
    17,575,338
    
    
    $
    (33,822
    )
    
    
    6,325,000
    
    
    $
    8,393
    
    
    
    486,243
    
    
    $
    (274
    )
    
    
    (15,756
    )
    
    $
    (15,031
    )
    
    $
    253,057
 Partners Capital
    
    
    
    
    
    
    
    
    
    
    AccumulatedGeneral Partner
    
    
    
    
    
    
    
    
    
    
    OtherCommon Units
    
    
    Subordinated Units
    
    
    Units
    
    
    Treasury Units
    
    
    Comprehensive$
    
    
    Units
    
    
    $
    
    
    Units
    
    
    $
    
    
    Units
    
    
    $
    
    
    Units
    
    
    Loss
    
    
    TotalBalance, December 31, 2010
    
    $
    379,748
    
    
    
    27,363,451
    
    
    $
    (30,702
    )
    
    
    4,743,750
    
    
    $
    10,638
    
    
    
    653,318
    
    
    $
    (274
    )
    
    
    (15,756
    )
    
    $
    (8,673
    )
    
    $
    350,737Issuance of common units for
vesting of phantom units
    
    
    
    
    
    
    43,764Treasury units purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (281
    )
    
    
    (9,845
    )
    
    
    
    
    
    
    (281
    )Transaction costs for the
public offering of common
units by Exterran Holdings
    
    
    (261
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (261
    )Contribution of capital
    
    
    6,890
    
    
    
    
    
    
    
    2,726
    
    
    
    
    
    
    
    360
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,976Cash distributions
    
    
    (12,925
    )
    
    
    
    
    
    
    (2,241
    )
    
    
    
    
    
    
    (837
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,003
    )Unit based compensation expense
    
    
    364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    364Interest rate swap gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,363
    
    
    
    1,363Amortization of payments to
terminate interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,574
    
    
    
    2,574Net income
    
    
    (297
    )
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    572
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223Balance, March 31, 2011
    
    $
    373,519
    
    
    
    27,407,215
    
    
    $
    (30,269
    )
    
    
    4,743,750
    
    
    $
    10,733
    
    
    
    653,318
    
    
    $
    (555
    )
    
    
    (25,601
    )
    
    $
    (4,736
    )
    
    $
    348,692
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EXTERRAN PARTNERS, L.P.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMarch 31,2011
    
    
    2010Cash flows from operating activities:Net income
    
    $
    223
    
    
    $
    1,426Adjustments to reconcile net income to cash provided by operating activities:Depreciation and amortization
    
    
    14,149
    
    
    
    11,878Long-lived asset impairment
    
    
    
    
    
    
    231Amortization of debt issuance cost
    
    
    294
    
    
    
    235Amortization of fair value of acquired interest rate swaps
    
    
    
    
    
    
    37Amortization of payments to terminate interest rate swaps
    
    
    2,574
    
    
    
    Unit based compensation expense
    
    
    364
    
    
    
    190Provision for doubtful accounts
    
    
    33
    
    
    
    Gain on sale of compression equipment
    
    
    (212
    )
    
    
    (247
    )Changes in assets and liabilities:Accounts receivable, trade
    
    
    (611
    )
    
    
    2,744Accounts payable, trade
    
    
    9
    
    
    
    109Other liabilities
    
    
    (936
    )
    
    
    (830
    )Net cash provided by operating activities
    
    
    15,887
    
    
    
    15,773Cash flows from investing activities:Capital expenditures
    
    
    (6,891
    )
    
    
    (2,570
    )Proceeds from the sale of compression equipment
    
    
    1,036
    
    
    
    530Increase in restricted cash
    
    
    
    
    
    
    (1,111
    )Increase in amounts due from affiliates, net
    
    
    (2,932
    )
    
    
    (444
    )Net cash used in investing activities
    
    
    (8,787
    )
    
    
    (3,595
    )Cash flows from financing activities:Borrowings under long-term debt
    
    
    300,000
    
    
    
    7,000Repayments under long-term debt
    
    
    (299,000
    )
    
    
    (9,000
    )Distributions to unitholders
    
    
    (16,003
    )
    
    
    (11,580
    )Debt issuance costs
    
    
    (980
    )
    
    
    Purchase of treasury units
    
    
    (281
    )
    
    
    (166
    )Capital contribution from limited partners and general partner
    
    
    9,129
    
    
    
    2,794Decrease in amounts due to affiliates, net
    
    
    
    
    
    
    (1,293
    )Net cash used in financing activities
    
    
    (7,135
    )
    
    
    (12,245
    )Net decrease in cash and cash equivalents
    
    
    (35
    )
    
    
    (67
    )Cash and cash equivalents at beginning of period
    
    
    50
    
    
    
    203Cash and cash equivalents at end of period
    
    $
    15
    
    
    $
    136Supplemental disclosure of cash flow information:Non-cash capital contribution from limited and general partner
    
    $
    361
    
    
    $
    428Non-cash capital contribution for contract operations equipment acquired/exchanged, net
    
    $
    486
    
    
    $
    1,842
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EXTERRAN PARTNERS, L.P.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Organization
   Fair Value of Financial Instruments
  Earnings Per Common and Subordinated Unit
    8




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Three Months EndedMarch 31,2011
    
    
    2010Weighted average common units outstanding  used in basic earnings (loss) per common unit
    
    
    27,363
    
    
    
    17,546Net dilutive potential common units issuable:Phantom units
    
    
    **
    
    
    
    5Weighted average common units and dilutive potential common units  used in diluted earnings
(loss) per common unit
    
    
    27,363
    
    
    
    17,551
 
 **
    
    Excluded from diluted earnings (loss) per common unit as the effect would have been
anti-dilutive.  Three Months EndedMarch 31,2011
    
    
    2010Net dilutive potential common units issuable:Phantom units
    
    
    61
    
    
    
    67Net dilutive potential common units issuable
    
    
    61
    
    
    
    67
 2. AUGUST 2010 CONTRACT OPERATIONS ACQUISITION
    9




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Unaudited Pro Forma Financial Information
   
    
    our acquisition in August 2010 of certain contract operations customer service agreements
and compression equipment from Exterran Holdings; and
 
    
    our issuance in connection with the August 2010 Contract Operations Acquisition of
approximately 8.2 million common units and approximately 167,000 general partner units to
Exterran Holdings wholly-owned subsidiaries.
   Three MonthsEndedMarch 31, 2010Revenue
    
    $
    65,857Net income
    
    $
    4,885Basic earnings per common and subordinated limited partner unit
    
    $
    0.14Diluted earnings per common and subordinated limited partner unit
    
    $
    0.14
  3. RELATED PARTY TRANSACTIONS
  
    
    certain agreements not to compete between Exterran Holdings and its affiliates, on the
one hand, and us and our affiliates, on the other hand;
 
    
    Exterran Holdings obligation to provide all operational staff, corporate staff and
support services reasonably necessary to operate our business and our obligation to
reimburse Exterran Holdings for the provision of such services, subject to certain
limitations and the cost caps discussed below;
 
    
    the terms under which we, Exterran Holdings, and our respective affiliates may transfer
compression equipment among one another to meet our respective contract operations services
obligations;
 10




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
    
    the terms under which we may purchase newly-fabricated contract operations equipment from
Exterran Holdings affiliates;
 
    
    Exterran Holdings grant of a license of certain intellectual property to us, including
our logo; and
 
    
    Exterran Holdings obligation to indemnify us for certain liabilities and our obligation
to indemnify Exterran Holdings for certain liabilities.
       11




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4. DEBT
  March 31, 2011
    
    
    December 31, 2010Revolving credit facility due November 2015
    
    $
    300,000
    
    
    $
    299,000Term loan facility due November 2015
    
    
    150,000
    
    
    
    150,000Long-term debt
    
    $
    450,000
    
    
    $
    449,000
   5. CASH DISTRIBUTIONS
  
    
    first, 98% to the common unitholders, pro rata, and 2% to our general partner, until we
distribute for each outstanding common unit an amount equal to the minimum quarterly
distribution for that quarter;
 
    
    second, 98% to the common unitholders, pro rata, and 2% to our general partner, until we
distribute for each outstanding common unit an amount equal to any arrearages in payment of
the minimum quarterly distribution on the common units for any prior quarters during the
subordination period;
 
    
    third, 98% to the subordinated unitholders, pro rata, and 2% to our general partner,
until we distribute for each subordinated unit an amount equal to the minimum quarterly
distribution for that quarter;
 
    
    fourth, 98% to all common and subordinated unitholders, pro rata, and 2% to our general
partner, until each unit has received a distribution of $0.4025;
 12




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
    
    fifth, 85% to all common and subordinated unitholders, pro rata, and 15% to our general
partner, until each unit has received a distribution of $0.4375;
 
    
    sixth, 75% to all common and subordinated unitholders, pro rata, and 25% to our general
partner, until each unit has received a total of $0.525; and
 
    
    thereafter, 50% to all common and subordinated unitholders, pro rata, and 50% to our
general partner.
  Distribution perLimited PartnerPeriod Covering
    
    Payment Date
    
    Unit
    
    Total Distribution (1)1/1/2010  3/31/2010
    
    May 11, 2010
    
    $
    0.4625
    
    
    $   11.6 million4/1/2010  6/30/2010
    
    August 10, 2010
    
    
    0.4625
    
    
    11.6 million7/1/2010  9/30/2010
    
    November 9, 2010
    
    
    0.4675
    
    
    15.7 million10/1/2010  12/31/2010
    
    February 14, 2011
    
    
    0.4725
    
    
    16.0 million
 
 (1)
    
    Including distributions to our general partner on its incentive distribution rights.  6. UNIT-BASED COMPENSATION
 Long-Term Incentive Plan
   Phantom Units
  13




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WeightedAverageGrant-DatePhantom
    
    
    Fair ValueUnits
    
    
    per UnitPhantom units outstanding, December 31, 2010
    
    
    98,537
    
    
    $
    19.23Granted
    
    
    20,851
    
    
    
    28.50Vested
    
    
    (43,764
    )
    
    
    18.90Phantom units outstanding, March 31, 2011
    
    
    75,624
    
    
    $
    21.98
  Unit Options
  7. ACCOUNTING FOR INTEREST RATE SWAP AGREEMENTS
  Interest Rate Risk
   14




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March 31, 2011Fair ValueAssetBalance Sheet Location
    
    
    (Liability)Derivatives designated as hedging instruments:Interest rate hedges
    
    Interest rate swaps
    
    $
    7,304Interest rate hedges
    
    Current portion of interest rate swaps
    
    
    (3,284
    )Total derivatives
    
    
    
    
    
    $
    4,020
 December 31, 2010Fair ValueAssetBalance Sheet Location
    
    
    (Liability)Derivatives designated as hedging instruments:Interest rate hedges
    
    Interest rate swaps
    
    $
    5,769Interest rate hedges
    
    Current portion of interest rate swaps
    
    
    (3,112
    )Total derivatives
    
    
    
    
    
    $
    2,657
 Three Months Ended March 31, 2011Location of Gain
    
    
    Gain (Loss)Gain (Loss)
    
    
    (Loss) Reclassified
    
    
    Reclassified fromRecognized in Other
    
    
    from Accumulated
    
    
    Accumulated OtherComprehensive
    
    
    Other Comprehensive
    
    
    ComprehensiveIncome (Loss) on
    
    
    Income (Loss) into
    
    
    Income (Loss) intoDerivatives
    
    
    Income (Loss)
    
    
    Income (Loss)Derivatives designated as cash flow hedges:Interest rate hedges
    
    $
    589
    
    
    Interest expense
    
    $
    (3,348
    )
 Three Months Ended March 31, 2010Location of Gain
    
    
    Gain (Loss)Gain (Loss)
    
    
    (Loss) Reclassified
    
    
    Reclassified fromRecognized in Other
    
    
    from Accumulated
    
    
    Accumulated OtherComprehensive
    
    
    Other Comprehensive
    
    
    ComprehensiveIncome (Loss) on
    
    
    Income (Loss) into
    
    
    Income (Loss) intoDerivatives
    
    
    Income (Loss)
    
    
    Income (Loss)Derivatives designated as cash flow hedges:Interest rate hedges
    
    $
    (3,079
    )
    
    Interest expense
    
    $
    (2,905
    )
  8. FAIR VALUE MEASUREMENTS
  
    
    Level 1 Quoted unadjusted prices for identical instruments in active markets to which
we have access at the date of measurement.
 
    
    Level 2 Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and model-derived
valuations in which all significant inputs and significant value drivers are observable in
active markets. Level 2 inputs are those in markets for which there are few transactions,
the prices are not current, little public information exists or prices vary substantially
over time or among brokered market makers.
 15




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##### Table of Contents




    
    Level 3 Model derived valuations in which one or more significant inputs or
significant value drivers are unobservable. Unobservable inputs are those inputs that
reflect our own assumptions regarding how market participants would price the asset or
liability based on the best available information.
  QuotedMarket
    
    
    SignificantPrices in
    
    
    Other
    
    
    SignificantActive
    
    
    Observable
    
    
    UnobservableMarkets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Interest rate swaps asset (liability)
    
    $
    4,020
    
    
    $
    
    
    
    $
    4,020
    
    
    $
    
  QuotedMarket
    
    
    SignificantPrices in
    
    
    Other
    
    
    SignificantActive
    
    
    Observable
    
    
    UnobservableMarkets
    
    
    Inputs
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Interest rate swaps asset (liability)
    
    $
    (15,809
    )
    
    $
    
    
    
    $
    (15,809
    )
    
    $
    Impaired long-lived assets
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21
  9. UNIT TRANSACTIONS
   10. RECENT ACCOUNTING DEVELOPMENTS
 , Disclosure of Supplementary Pro Forma
Information for Business Combinations
 16




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##### Table of Contents



11. COMMITMENTS AND CONTINGENCIES
  17




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
  www.exterran.com www.sec.gov .
 
    
    conditions in the oil and natural gas industry, including a sustained decrease in the
level of supply or demand for oil or natural gas and the impact on the price of oil or
natural gas, which could cause a decline in the demand for our natural gas compression
services;
    
    reduced profit margins or the loss of market share resulting from competition or the
introduction of competing technologies by other companies;
    
    our dependence on Exterran Holdings to provide services and compression equipment,
including its ability to hire, train and retain key employees and to timely and cost
effectively obtain compression equipment and components necessary to conduct our business;
    
    our dependence on and the availability of cost caps from Exterran Holdings to generate
sufficient cash to enable us to make cash distributions at our current distribution rate;
    
    changes in economic or political conditions, including terrorism and legislative changes;
    
    the inherent risks associated with our operations, such as equipment defects,
impairments, malfunctions and natural disasters;
    
    an Internal Revenue Service challenge to our valuation methodologies, which may result in
a shift of income, gains, losses and/or deductions between our general partner and our
unitholders;
    
    loss of our status as a partnership for federal income tax
purposes;
    
    the risk that counterparties will not perform their obligations under our financial
instruments;
    
    the financial condition of our customers;
    
    our ability to implement certain business and financial objectives, such as:
 
    
    growing our asset base and asset utilization, particularly for our fleet of
compressors;
    
    integrating acquired businesses;
 18




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##### Table of Contents




    
    generating sufficient cash;
    
    accessing the capital markets at an acceptable cost; and
    
    purchasing additional contract operations contracts and equipment from Exterran
Holdings;
 
    
    liability related to the provision of our services;
    
    changes in governmental safety, health, environmental or other regulations, which could
require us to make significant expenditures; and
    
    our level of indebtedness and ability to fund our business.
  GENERAL
  August 2010 Contract Operations Acquisition
  Omnibus Agreement
  
    
    certain agreements not to compete between Exterran Holdings and its affiliates, on the
one hand, and us and our affiliates, on the other hand;
    
    Exterran Holdings obligation to provide all operational staff, corporate staff and
support services reasonably necessary to operate our business and our obligation to
reimburse Exterran Holdings for the provision of such services, subject to certain
limitations and the cost caps discussed below;
    
    the terms under which we, Exterran Holdings and our respective affiliates may transfer
compression equipment among one another to meet our respective contract operations services
obligations; and
    
    the terms under which we may purchase newly-fabricated contract operations equipment from
Exterran Holdings affiliates.
  19




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##### Table of Contents



OVERVIEW
 Industry Conditions and Trends
   Our Performance Trends and Outlook
     20




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##### Table of Contents



Operating Highlights
  Three Months EndedMarch 31, 2011
    
    December 31, 2010
    
    March 31, 2010Total Available Horsepower (at period end)(1)
    
    
    1,590
    
    
    
    1,572
    
    
    
    1,318Total Operating Horsepower (at period end)(1)
    
    
    1,384
    
    
    
    1,384
    
    
    
    1,060Average Operating Horsepower
    
    
    1,387
    
    
    
    1,364
    
    
    
    1,060Horsepower Utilization:Spot (at period end)
    
    
    87
    %
    
    
    88
    %
    
    
    80
    %Average
    
    
    88
    %
    
    
    82
    %
    
    
    81
    %
 
 (1)
    
    Includes compressor units with an aggregate horsepower of 304 thousand, 278 thousand and 183
thousand leased from Exterran Holdings as of March 31, 2011, December 31, 2010 and March 31,
2010, respectively. Excludes compressor units with an aggregate horsepower of 27 thousand, 18
thousand and 17 thousand leased to Exterran Holdings as of March 31, 2011, December 31, 2010
and March 31, 2010, respectively. Summary of Results
 Net income.
 EBITDA, as further adjusted.
 21




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##### Table of Contents



FINANCIAL RESULTS OF OPERATIONS
 The three months ended March 31, 2011 compared to the three months ended March 31, 2010
  Three Months EndedMarch 31,2011
    
    
    2010Revenue
    
    $
    68,729
    
    
    $
    52,710Gross margin(1)
    
    
    31,677
    
    
    
    26,859Gross margin percentage
    
    
    46
    %
    
    
    51
    %Expenses:Depreciation and amortization
    
    $
    14,149
    
    
    $
    11,878Long-lived asset impairment
    
    
    
    
    
    
    231Selling, general and administrative
    
    
    10,216
    
    
    
    7,695Interest expense
    
    
    7,075
    
    
    
    5,692Other (income) expense, net
    
    
    (221
    )
    
    
    (236
    )Income tax expense
    
    
    235
    
    
    
    173Net income
    
    $
    223
    
    
    $
    1,426
 
 (1)
    
    For a reconciliation of gross margin to net income, its most directly comparable financial
measure, calculated and presented in accordance with GAAP, please read  Non-GAAP Financial
Measures. Revenue.
 Gross Margin.
 Depreciation and Amortization.
 Long-lived Asset Impairment.
 SG&A.
 Interest Expense.
 22




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##### Table of Contents



Other (Income) Expense, Net.
 Income Tax Expense.
 LIQUIDITY AND CAPITAL RESOURCES
  Three Months Ended March 31,2011
    
    
    2010Net cash provided by (used in):Operating activities
    
    $
    15,887
    
    
    $
    15,773Investing activities
    
    
    (8,787
    )
    
    
    (3,595
    )Financing activities
    
    
    (7,135
    )
    
    
    (12,245
    )Net change in cash and cash equivalents
    
    $
    (35
    )
    
    $
    (67
    )
 March 31,
    
    
    December 31,2011
    
    
    2010Cash and cash equivalents
    
    $
    15
    
    
    $
    50Working capital
    
    
    19,583
    
    
    
    14,751
 Operating Activities.
 Investing Activities.
 Financing Activities.
 Capital Requirements.
 
    
    maintenance capital expenditures, which are capital expenditures made to maintain the
existing operating capacity of our assets and related cash flows further extending the
useful lives of the assets; and
    
    expansion capital expenditures, which are capital expenditures made to expand or to
replace partially or fully depreciated assets or to expand the operating capacity or revenue
generating capabilities of existing or new assets, whether through construction, acquisition
or modification.
  23




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##### Table of Contents



Our Ability to Grow Depends on Our Ability to Access External Expansion Capital
  Long-term Debt.
   24




---



##### Table of Contents



Distributions to Unitholders.
  25




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##### Table of Contents



NON-GAAP FINANCIAL MEASURES
    Three Months EndedMarch 31,2011
    
    
    2010Net income
    
    $
    223
    
    
    $
    1,426Depreciation and amortization
    
    
    14,149
    
    
    
    11,878Long-lived asset impairment
    
    
    
    
    
    
    231Selling, general and administrative
    
    
    10,216
    
    
    
    7,695Interest expense
    
    
    7,075
    
    
    
    5,692Other (income) expense, net
    
    
    (221
    )
    
    
    (236
    )Income tax expense
    
    
    235
    
    
    
    173Gross margin
    
    $
    31,677
    
    
    $
    26,859
   26




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##### Table of Contents



Three Months EndedMarch 31,2011
    
    
    2010Net income
    
    $
    223
    
    
    $
    1,426Income tax expense
    
    
    235
    
    
    
    173Depreciation and amortization
    
    
    14,149
    
    
    
    11,878Long-lived asset impairment
    
    
    
    
    
    
    231Cap on operating and selling, general and administrative costs provided by Exterran Holdings
    
    
    9,129
    
    
    
    2,794Non-cash selling, general and administrative costs
    
    
    364
    
    
    
    190Interest expense
    
    
    7,075
    
    
    
    5,692EBITDA, as further adjusted
    
    $
    31,175
    
    
    $
    22,384
    Three Months EndedMarch 31,2011
    
    
    2010Net income
    
    $
    223
    
    
    $
    1,426Depreciation and amortization
    
    
    14,149
    
    
    
    11,878Long-lived asset impairment
    
    
    
    
    
    
    231Cap on operating and selling, general and administrative costs provided by Exterran Holdings
    
    
    9,129
    
    
    
    2,794Non-cash selling, general and administrative costs
    
    
    364
    
    
    
    190Interest expense
    
    
    7,075
    
    
    
    5,692Less: Gain on sale of compression equipment
    
    
    (212
    )
    
    
    (247
    )Less: Cash interest expense
    
    
    (4,207
    )
    
    
    (5,420
    )Less: Maintenance capital expenditures
    
    
    (5,457
    )
    
    
    (2,147
    )Distributable cash flow
    
    $
    21,064
    
    
    $
    14,397
 OFF-BALANCE SHEET ARRANGEMENTS
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Variable Rate Debt
  27




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##### Table of Contents



ITEM 4. Controls and Procedures
 Managements Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  28




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  29




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##### Table of Contents



ITEM 6 Exhibits
 ExhibitNo.


    Description2.1
    

    Contribution, Conveyance and Assumption Agreement, dated
October 2, 2009, by and among Exterran Holdings, Inc.,
Exterran Energy Corp., Exterran General Holdings LLC,
Exterran Energy Solutions, L.P., EES Leasing LLC, EXH GP LP
LLC, Exterran GP LLC, EXH MLP LP LLC, Exterran General
Partner, L.P., EXLP Operating LLC, EXLP Leasing LLC and
Exterran Partners, L.P., incorporated by reference to Exhibit
2.1 to the Registrants Current Report on Form 8-K filed on
October 5, 20092.2
    

    Contribution, Conveyance and Assumption Agreement, dated July
26, 2010, by and among Exterran Holdings, Inc., Exterran
Energy Solutions, L.P., EES Leasing LLC, EXH GP LP LLC,
Exterran GP LLC, EXH MLP LP LLC, Exterran General Partner,
L.P., EXLP Operating LLC, EXLP Leasing LLC and Exterran
Partners, L.P., incorporated by reference to Exhibit 2.1 to
the Registrants Current Report on Form 8-K filed on July 28,
20103.1
    

    Certificate of Limited Partnership of Universal Compression
Partners, L.P., incorporated by reference to Exhibit 3.1 to
the Registrants Registration Statement on Form S-1 filed on
June 27, 20063.2
    

    Certificate of Amendment to Certificate of Limited
Partnership of Universal Compression Partners, L.P. (now
Exterran Partners, L.P.), dated as of August 20, 2007,
incorporated by reference to Exhibit 3.1 to the Registrants
Current Report on Form 8-K filed on August 24, 20073.3
    

    First Amended and Restated Agreement of Limited Partnership
of Exterran Partners, L.P., as amended, incorporated by
reference to Exhibit 3.3 to the Registrants Quarterly Report
on form 10-Q for the quarter ended March 31, 20083.4
    

    Certificate of Partnership of UCO General Partner, LP,
incorporated by reference to Exhibit 3.3 to the Registrants
Registration Statement on Form S-1 filed on June 27, 20063.5
    

    Amended and Restated Limited Partnership Agreement of UCO
General Partner, LP, incorporated by reference to Exhibit 3.2
to the Registrants Current Report on Form 8-K filed on
October 26, 20063.6
    

    Certificate of Formation of UCO GP, LLC, incorporated by
reference to Exhibit 3.5 to the Registrants Registration
Statement on Form S-1 filed June 27, 20063.7
    

    Amended and Restated Limited Liability Company Agreement of
UCO GP, LLC, incorporated by reference to Exhibit 3.3 to the
Registrants Current Report on Form 8-K filed on October 26,
20064.1
    

    Indenture, dated as of October 13, 2009, by and between EXLP
ABS 2009 LLC, as Issuer, EXLP ABS Leasing 2009 LLC and Wells
Fargo Bank, National Association, as Indenture Trustee, with
respect to the $150,000,000 ABS facility consisting of
$150,000,000 of Series 2009-1 Notes, incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K filed on October 19, 20094.2
    

    Series 2009-1 Supplement, dated as of October 13, 2009, to
Indenture dated as of October 13, 2009, by and between EXLP
ABS 2009 LLC, as Issuer, EXLP ABS Leasing 2009 LLC and Wells
Fargo Bank, National Association, as Indenture Trustee, with
respect to the $150,000,000 of Series 2009-1 Notes,
incorporated by reference to Exhibit 4.2 to the Registrants
Current Report on Form 8-K filed on October 19, 200931.1
    *

    Certification of the Chief Executive Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to Rule 13a-14 under the Securities
Exchange Act of 193431.2
    *

    Certification of the Chief Financial Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to Rule 13a-14 under the Securities
Exchange Act of 193432.1
    **

    Certification of the Chief Executive Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.2
    **

    Certification of the Chief Financial Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 
 *
    
    Filed herewith.**
    
    Furnished herewith. 30




---



##### Table of Contents



SIGNATURES
  May 5, 2011
    By:
    EXTERRAN GENERAL PARTNER, L.P.its General PartnerBy:
    EXTERRAN GP LLCits General PartnerBy:
    /s/ MICHAEL J. AARONSONMichael J. AaronsonVice President and Chief Financial Officer
(Principal Financial Officer)By:
    /s/ KENNETH R. BICKETTKenneth R. BickettVice President, Finance and Accounting
(Principal Accounting Officer) 31




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##### Table of Contents



Index to Exhibits
 ExhibitNo.


    Description2.1
    

    Contribution, Conveyance and Assumption Agreement, dated
October 2, 2009, by and among Exterran Holdings, Inc.,
Exterran Energy Corp., Exterran General Holdings LLC,
Exterran Energy Solutions, L.P., EES Leasing LLC, EXH GP LP
LLC, Exterran GP LLC, EXH MLP LP LLC, Exterran General
Partner, L.P., EXLP Operating LLC, EXLP Leasing LLC and
Exterran Partners, L.P., incorporated by reference to Exhibit
2.1 to the Registrants Current Report on Form 8-K filed on
October 5, 20092.2
    

    Contribution, Conveyance and Assumption Agreement, dated July
26, 2010, by and among Exterran Holdings, Inc., Exterran
Energy Solutions, L.P., EES Leasing LLC, EXH GP LP LLC,
Exterran GP LLC, EXH MLP LP LLC, Exterran General Partner,
L.P., EXLP Operating LLC, EXLP Leasing LLC and Exterran
Partners, L.P., incorporated by reference to Exhibit 2.1 to
the Registrants Current Report on Form 8-K filed on July 28,
20103.1
    

    Certificate of Limited Partnership of Universal Compression
Partners, L.P., incorporated by reference to Exhibit 3.1 to
the Registrants Registration Statement on Form S-1 filed on
June 27, 20063.2
    

    Certificate of Amendment to Certificate of Limited
Partnership of Universal Compression Partners, L.P. (now
Exterran Partners, L.P.), dated as of August 20, 2007,
incorporated by reference to Exhibit 3.1 to the Registrants
Current Report on Form 8-K filed on August 24, 20073.3
    

    First Amended and Restated Agreement of Limited Partnership
of Exterran Partners, L.P., as amended, incorporated by
reference to Exhibit 3.3 to the Registrants Quarterly Report
on form 10-Q for the quarter ended March 31, 20083.4
    

    Certificate of Partnership of UCO General Partner, LP,
incorporated by reference to Exhibit 3.3 to the Registrants
Registration Statement on Form S-1 filed on June 27, 20063.5
    

    Amended and Restated Limited Partnership Agreement of UCO
General Partner, LP, incorporated by reference to Exhibit 3.2
to the Registrants Current Report on Form 8-K filed on
October 26, 20063.6
    

    Certificate of Formation of UCO GP, LLC, incorporated by
reference to Exhibit 3.5 to the Registrants Registration
Statement on Form S-1 filed June 27, 20063.7
    

    Amended and Restated Limited Liability Company Agreement of
UCO GP, LLC, incorporated by reference to Exhibit 3.3 to the
Registrants Current Report on Form 8-K filed on October 26,
20064.1
    

    Indenture, dated as of October 13, 2009, by and between EXLP
ABS 2009 LLC, as Issuer, EXLP ABS Leasing 2009 LLC and Wells
Fargo Bank, National Association, as Indenture Trustee, with
respect to the $150,000,000 ABS facility consisting of
$150,000,000 of Series 2009-1 Notes, incorporated by
reference to Exhibit 4.1 to the Registrants Current Report
on Form 8-K filed on October 19, 20094.2
    

    Series 2009-1 Supplement, dated as of October 13, 2009, to
Indenture dated as of October 13, 2009, by and between EXLP
ABS 2009 LLC, as Issuer, EXLP ABS Leasing 2009 LLC and Wells
Fargo Bank, National Association, as Indenture Trustee, with
respect to the $150,000,000 of Series 2009-1 Notes,
incorporated by reference to Exhibit 4.2 to the Registrants
Current Report on Form 8-K filed on October 19, 200931.1
    *

    Certification of the Chief Executive Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to Rule 13a-14 under the Securities
Exchange Act of 193431.2
    *

    Certification of the Chief Financial Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to Rule 13a-14 under the Securities
Exchange Act of 193432.1
    **

    Certification of the Chief Executive Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
200232.2
    **

    Certification of the Chief Financial Officer of Exterran GP
LLC (as general partner of the general partner of Exterran
Partners, L.P.) pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
 
 *
    
    Filed herewith.**
    
    Furnished herewith. 32