Mr. Danner: We are a leading provider of compression and surface production solutions to the energy sector worldwide. Most of our services are centered around surface production and transportation solutions once hydrocarbons are extracted from the ground. Our roots are in the natural gas compression business, and compression is still a large part of what we do. But over time, we have expanded our businesses to include other surface production solutions, such as gas-treating plants and processing facilities. We're generally a niche player in the global energy sector, and our success is tied predominantly to production of natural gas and to a lesser extent oil worldwide. We think of our business in four main categories: North America contract operations, international contract operations, aftermarket services and fabrication. The two contract compression operations and our aftermarket services business provide a relatively stable recurring revenue base that represented about 76% of our gross margins in the first nine months of 2009. Fabrication, where we actually sell product instead of providing contracted services, is the lumpier part of our business and represented the other 24% of gross margins.
We generated about $3.2 billion in revenue in 2008 and own a majority interest in a publicly traded master limited partnership called Exterran Partners. We operate in over 30 countries around the world and have over 10,000 employees.
We focus on the production side of the business. Once the hydrocarbon, particularly natural gas in this case, is found, we help deliver it to market. As a result, we're not as much tied to drilling activity as we are to the production of natural gas.
TWST: Would you care to comment on some of the trends that may be working in the company's favor?
Mr. Danner: The development of the shale plays in North America is greatly enhancing the outlook for natural gas production and creating a significant need for infrastructure development in these areas. As shale plays are developed, they will generate a meaningful need for natural gas compression, and we will be able to meet those needs with both existing compressors that we have in our fleet and sales activities. We believe we are particularly well positioned with existing businesses in all the shale plays, including the Marcellus, Haynesville, Woodford and Eagle Ford. Another trend we believe is benefiting our company is the requirement to reduce flaring of natural gas on a worldwide basis. Oil-producing companies must now reinject natural gas into the well to enhance oil production or deliver the natural gas to market rather than just flaring it. Exterran is a leading provider of these services, and we are seeing the benefits to our business all over the world, from Latin America to West Africa to the Middle East to the Far East.
Tickers included in this excerpt: EXH
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