Good morning. Welcome to the Exterran Holdings Incorporated and Exterran Partners, L.P. Forth Quarter 2008 Earnings Conference Call. (Operator Instructions) Earlier today, Exterran Holdings and Exterran Partners released their financial results for the fourth quarter ended December 31, 2008. If you have not received a copy you can find the information on the company's website at exterran.com. During this call, the companies will discuss some non-GAAP measures in reviewing their performances, such as EBITDA as adjusted, EBITDA as further adjusted, gross margin, gross margin as adjusted and distributable cash flow. You will find a definitions and a reconciliation of these measures to GAAP measures in the summary pages of the earnings release, and on the company's website at exterran.com. During today's call, Exterran Holdings may be referred to as Exterran, or EXH and Exterran Partners as either Exterran Partners or EXLP. Because EXLP's financial results and position are consolidated into Exterran, the discussion of Exterran will include Exterran Partners, unless otherwise noted. I want to remind listeners that the news release issued this morning by Exterran Holdings and Exterran Partners, the company's prepared remarks on this conference call, and the related question-and-answer session, include forward-looking statements. These forward-looking statements include projections and expectations of the company's performance, and represent the company's current beliefs. Various factors could cause results to differ materially from those projected in the forward-looking statements. Information concerning the risk factors, challenges and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, can be found in the company's press release, as well as in the Exterran Holdings annual report on Form 10-K as amended for the year ended December 31, 2007. Exterran Partners annual report on Form 10-K for the year ended December 31, 2007 and those set forth from time-to-time in Exterran Holdings and Exterran Partners filings with the Securities and Exchange Commission, which are currently available at exterran.com. Except as required by law, the companies expressly disclaim any intention or obligation to revise or update any forward-looking statements. Your host for this morning's call is Steve Snider, Chief Executive Officer of Exterran Holdings, and also Chief Executive Officer and Chairman of Exterran Partners. I would now like to turn the call over to Mr. Steve Snider. Mr. Snider you may begin your conference.

Thank you and welcome everyone to the fourth quarter 2008 earnings call for Exterran Holdings and Exterran Partners. Joining me today are Michael Anderson, the Chief Financial Officer of Exterran Holdings; and Daniel Schlanger, the Chief Financial Officer of Exterran Partners. Exterran achieved improved operational performance in the fourth quarter despite difficult economic and energy industry conditions. Highlights include the continued improvement in our North America operations and favorable developments in our international business. In North America operations our working horsepower in the fourth quarter increased sequentially for the first times since the completion of the merger and operating cost decreased for the third consecutive quarter. The performance of this segment improved significantly in the last half of 2008 due to the implementation of various efficiency initiatives and some great work by our filed employees in returning our high quality customer service back to pre-merger levels. We performed well in our international operations, improving contract operations margins. We also benefited from a $14 million cost recovery on a total solutions project in Kazakhstan which allowed us to reverse the loss that was previously booked in the second quarter of 2008. Consequently, we reported a higher than expected gross margin contribution from our fabrication segment in the fourth quarter. Overall I believe that the world wide Exterran team is performing very will as our merger integration challenges are behind us and we continue to reinforce customer service as a top priority. On the other hand, fourth quarter results included a non-cash goodwill impairment of approximately $1.1 billion and an asset impairment of $22 million. These impairment charges have no impact on our business operations, our cash flow, our liquidity or importantly, our compliance with the financial covenants in our credit facilities. With regard to the goodwill impairment, it's helpful to recall…

Okay thanks a lot, Steve and good morning everyone. I'm sure that by now you have had a chance to look at our press release that we issued earlier this morning. As in our third quarter call I believe it's prudent to begin our financial review with the summary of what we believe is our healthy financial position. So first of all we currently maintain debt levels and financial ratios that are well within our credit facility limitations. We expect the cash generated by our operations in 2009 will exceed our maintenance and growth capital expenditures and we believe that we will be cash flow positive after these capital expenditures during 2009 and in addition we have significant unused credit availability of $364 million under our existing credit facilities to fund short-term needs and other activities. We have no significant debt maturities until October 2011 at the EXLP in August of 2012 at Exterran. In terms of debt ratios and the covenants of our primary debt instruments we are limited to a maximum of five times debt-to-EBITDA at both entities and must maintain a minimum EBITDA to interest coverage of 2.25 times at Exterran and 2.5 times at the EXLP. At year end 2008 Exterran had a 3.1 times debt-to-EBITDA ratio and over six times interest coverage while EXLP 4.2 times debt-to-EBITDA ratio and 4.5 times interest coverage. Our debt with the benefit of the interest rate swaps is approximately 65% fixed rate and our average all-in rate was less than 5% at December 31. I would like to repeat that the goodwill and other impairment charges that we had in the fourth quarter do not the affect the calculation of or our compliance with any of the required coverage ratios in our debt covenants. I will now review the…

So in summary, 2009 is expected to be a very challenging year for Exterran. In North America, we are pleased with improved service levels and operating performance in the second quarter of 2008. Unfortunately, activity levels are under pressure due to difficult market conditions. In Latin America, we still see fairly steady order activity. We are however concerned about the situation in Venezuela. In the Eastern Hemisphere [Bolivia] business in our backlog are solid. Our new business activity has slowed. One of the benefits of this merger was enhanced geographic and product diversification. With approximately half of our total company revenues from customers outside of North America, we are much better diversified than during the last industry downturn in the early 2000. We believe our production-oriented business model coupled with our strong balance sheet position us well to navigate the current challenging market conditions. We believe that we have the service network, people and asset base to continue to deliver in difficult economic times. And that our ability to do so is enhanced by our strong position as a market leader in many of the services and regions in which we operate. We overcame operational issues during the course of 2008 and believe we are now better positioned to meet market challenges in 2009. We remain enthusiastic about the long-term prospects for Exterran, but are realistic regarding the challenges we will face in 2009 and 2010. Last fall, we announced the return of Ernie Danner to our company in the role of President and Chief Operating Officer. Ernie is actively engaged in managing our operations and will be part of our Investor discussions in the near future. We continue to expect that Ernie will assume the role of Chief Executive Officer of Exterran Holdings upon my planned retirement at the end of June this year. Ruben, let us open it up for questions.

Thank you, sir. (Operator Instructions). And for our first question, we will go to Brad Handler with Credit Suisse.

Thanks, guys good morning.

Good morning

Good morning, Brad.

Could we please spend a little bit of time in the US? I guess maybe a general question first. Steve, your cautionary comments on the US deal, I guess they make sense. I'm not trying to suggest they don't. But as you have explained to us overtime, you have a production orientation and some of the demand pullback that you are describing, is it seem inconsistent with that at all. Is it happening a little more quickly than you have might, I guess, given that? Can you just give a little color in that perspective?

First of all, I don’t think it is inconsistent. Let me explain what we see as occurring in North America at the present. Certainly, our producer friends have been dealing with all the same issues all businesses are today, trying to decide how best to approach 2009, and I think, most of them have now come out with what their company philosophy is going to be. And for most of them, the common theme is cost containment as it is with us. And to do that, they are trying to find ways to economize whether they can in their operations and their production. One of those areas to economize is compression, and they do first by rationalizing their horsepower. And we are seeing returns of some horsepower due to that rationalization. They need as much horsepower as they currently have on their location. Second issue that we have is that, as we all know gas supply is up considerably year-over-year and demand is somewhat down. So, we have a commodity price issues that’s in play. But we also have customers who are not as actively replacing declining reserves, so there is a natural erosion in horsepower as we get back down to the market demand. And we have some units that will come back due to that. And then the third one that we talked about is that with long lead time deliveries last year, which were in place up till almost the end of last year, many of our customers committed the purchase equipment which they are now receiving, some of which was for productions that they may have delayed, so they will use that to replace some contract units from time to time. Now with all of that in play, we haven't seen enormous amounts of erosion at this point, but we have seen the beginnings and I want to be very upfront with everybody that we will probably have more of that continuing through the year as we try to get this situation in balance. So, I do think that’s consistent and I believe in the long-term that there is a certain amount of gas has to come to market, it's got to be compressed to get there, we will be doing a majority of it in North America. We are very strong about the fact that we will have positive cash flows this year even in spite of some CapEx that we have. So, I think it is still consistent with just a state of the operations right now in North America.

Let me follow-up on just a couple of the points, because I am curious about your visibility beyond 1Q a little bit. It sounds like, perhaps some of the budgeting decisions may have been made and maybe the chunk of some of the longer lead delivery of fabricated ones that you are selling maybe that is already, bracketed out of the way by the first quarter. So, is it plausible that some of the factors that you are describing kind of get out of the way pretty early on in the year and that might suggest stability in '09 borrowing the other issues? Or is it Mike, do you expect to continue with seepage and these issues might still also erupt, if you will?

Yes Brad, it's still unfolding, I think it's too soon to tell when the system will get itself in balance but I don’t think it will be by the end of the first quarter. I think we will continue to see some erosion hopefully to lessen as time goes on.

Okay, fair enough. I will get back in queue, and I will turn it back. Thanks.

And for our next question we go to Kevin Pollard with JP Morgan.

Thanks. Good morning, guys.

Good morning.

I wanted to follow-up on one of the comments you just made, Steve about, E&P rationalizing some of the horsepower. Are you seeing any appetite on the part of customer you own large fleets of some themselves to across monetize and sell it into the market, perhaps recreating something like a sale lease back type opportunity for you?

Yes, let me answer that little bit differently then how you asked it, you asked if there is any large fleet that are interested in that, and the answer to that question is no, but there are some smaller operators with small to mid sized fleets that have approached us with the concept that we were purchasing with the concept. Nothing is really come to fruition of any magnitude but there is some discussion and more interest now as they try to generate some capital absolutely.

And is something like that world has been materialize would you expect to happen at the holdings level or would be in the partners?

We probably depend upon the customer, if they are holdings customers or partners customer, because we have broken our customer base between the two entities. And then our operating procedure here is that it's a brand new customer it will probably go into the partnership.

Okay. And if I switch over to the international side, how much of the 130 million project backlog if any is in Venezuela?

Very little of that I think would be in Venezuela that’s largely eastern hemisphere and the rest of Latin America.

Okay. So you don't have any projects that basically get deferred or cancel there due to lack of payment. Ordinary (inaudible) businesses.

I don't know those backlog numbers that we gave you, no. That’s all came from backlog elsewhere.

Okay, and then last question and I will turn it back. On the margin front you obviously got in a lot of release from some of the fuel price pressure you were seeing in the first half of '08. Is there any more to benefit that to come, we have pretty much seen that backed out at this point.

We got some release and it's probably improved over the last six months sequentially month after month, but we haven’t really seen the benefit yet is our lube oil cost, because lube oil contract has just rolled over into an area where we will have a little bit lower lube oil cost. However, most of the reduction that Michael refer to is efficiency in the field, fewer repairs, less parts consumption, better control of labor hours and most of the improvement in margins and operating efficiency has been just in good from operating practice not the price of the components.

Okay. So, if I think about your cost as you go forward with a little bit lower revenue for the reasons you articulated. Would you expect your cost to stay relatively flat was kind of a Q4 level and then perhaps the margin pressure being from the drop in revenue or we see some further cost reduction as well?

We may see some further cost reductions and maybe massed by the kind of down creep in utilization, but our management team in the field certainly has that cash in front of them to hold their operating cost where they are and not to see them increase as this market changes.

Okay. Thanks a lot. I appreciate it.

Sure.

For our next question we will go to Mike Urban with Deutsche Bank.

Thanks. Good morning.

Good morning.

I want to follow-up on the North America a little bit, how much impact have you seen from customers shutting in production and as kind of follow-on to that. I know in some cases when that has happened, they have often held on to the equipment onto the assumption that they will start backup pretty soon. To the extent you have seen shut in the production and they are now returning that equipment just given the capital situation in the gas price environment?

I don’t think we have yet seen anyone return or cancel their contract or try to get out of their contract, because they are shutting in production. I have not heard of any shut in production in North America that's impacting us. It doesn’t mean there haven’t been some there maybe some out there in small units, but none of the bigger guys have done that. And you are right they do shut in production quite often the unit there, some prices rebound we can start to back-up again, it hasn’t been a piece yet.

Okay, that’s helpful. And on the international side, have you seen additional bookings or continued interest in new total solutions projects or is that something that’s been put on hold given the situation out there?

We have seen some but it’s definitely much more active than it was six or eight or nine months ago. That’s an area that commodity prices definitely will impact because of the gas processing we are dealing with liquids prices to help justify the project. So it is slower, there are projects still live out there and we have a backlog of projects under construction that we will definitely foresee.

And last question, just kind of a housekeeping thing. Do you have the breakdown in the fabrication revenue between compressor fab and another?

On the revenue or the backlog

The revenue side, I said backlog initially I don't remember that, sorry.

Yes, I think (inaudible) was about $110 million and the remaining most of that was compression with production and processing being the smaller part of what’s remained.

Okay. That’s all from me. Thank you

We go next to Chris Gillespie with Simmons & Company. Christopher Gillespie - Simmons & Company: Thanks, good morning

Good morning Christopher Gillespie - Simmons & Company: First question is with the international contract compression project that you expect to startup over the course of the year. Do you see any significant startup cost following through in the next couple of quarters?

No. The startup costs were all worked into the project itself. So, we delivered the running product to the customer with those cost baked in.

Yes. We have, Chris, at times when we startup in the first couple of months, sometimes we have had some problems. Typically that’s been we had some projects perhaps in the past, we took some existing equipment and had some trouble getting it started. A lot of this stuff that we got in the backlog is going to be some new equipment. And so that typically works a lot smoother off the start. So we wouldn’t anticipate those. Christopher Gillespie - Simmons & Company: Okay. And turning to fabrication. Have you seen any cancellations to-date?

Yeah. We have had a handful of cancellations not very many, we have had some handful of delays also. So far we have begun to see a little bit of playing around the edges. Most of with speculative kind of equipment that we haven't cancelled or delayed. Not a big number yet as you can tell by our backlog still being high. Christopher Gillespie - Simmons & Company: And do you have a number on how much of fabrication backlog you expect to flow through in over 2009?

Yes. It's basically, all of it except for about $300 million. Christopher Gillespie - Simmons & Company: Okay. That’s very helpful. Thank you.

Sure.

For our next question, we go to Sharon Lui with Wachovia.

Hi. Good morning.

Good morning, Sharon.

My question relates to EXLP, just wondering if you could provide color on your outlook for operating horsepower at the partnership. Do you expect I guess the deterioration in Q1 revenues to be the same magnitude as the parent?

Proportionally our guess it would be somewhat similar, yes. But with the coverage we have, I don't think that there would be any problem. The other thing I mean if you look historically, EXLP has done a little bit better, and part of that has been boosted by the fact that there was the new customer to the Exterran family that would go to EXLP.

Okay. Also I guess given EXLP's yield and current market condition, what are your thoughts or commitments you did drop down acquisition model?

From a commitment standpoint, you will read in our 10-K. I mean our strategy has not changed. We still believe it's a preferred vehicle over the long-term. Those North American assets, the US assets into the LP, but where market conditions are today and the visibility in cost to capital, we are likely that it, at least in the near-term it would be little bit slower. We still think it's the right thing to do, but we are not going to do something we don’t think makes a lot of sense from a financial standpoint. As we talked about from the cash flow standpoint, in Exterran Holdings we are going to be free cash flow positives. There is not something that really drives our business model generating cash from the LP it's really only a supplement in terms of making the story better. So we will hopefully perform well and weight that out.

Okay. And just one housekeeping item for growth CapEx at the partnership is there a budget for '09.

We certainly have one internally. It's not one that we have provided in terms of guidance.

With the fourth quarter run rate be reasonable?

In terms of growth capital?

In terms of growth CapEx.

On that's probably a reasonable number.

Okay, great. Thank you.

We will go next to Joe Gibney with Capital One.

Thank you. Good morning, everybody.

Good morning.

Just a follow-up question Michael for you on international contract and you picked a 124 to 126 for Q1. You talked about the gradual ramp expectations in revenues throughout the year. Just opening calibrate a little bit more with your backlog there at the 130 million is it lumpy ED we get a more pronounced to start for some projects in Q2 and Q3 or should just view it as sort of a ratable ramp through the year building on some of that backlog?

I think we have given you a pretty strong answer that no leverage coming through the first quarter, but some of the, it’s a gradual ramp up there is some step that is not going to start necessarily or seen much revenue in back in 2009. And the fourth quarter is probably anticipated right now to be a little bigger then the rest, but we will project starting up in every quarter.

Okay, that's helpful. And then one minor item, just curious on the any incremental merger integration related expenses that you would anticipate in your first quarter?

No, we think that is behind us.

Thanks guys, I will turn it back.

We go next to [Randal Martine] with Barclays Capital.

Hi guys, good morning. I am just wondering on the partnership side, are there you seeing any business in contract all over?

No, in the contracts conversion process no its continuing a pace that reminding you that we have down to the smaller customers, so it just takes more time.

Okay.

Any further questions sir?

No, thank you.

And we go next to [Justin Tully with Tully Brothers.

Good morning. Actually this is [Steve Parr], an equity analyst. Thanks for taking my call. Could you elaborate on the fact there is behind the fourth quarter increase in working horsepower. I assume that you gained market share, did you? Does this suggest that your market share losses have now bottom? Does this suggest that the sales and marketing organization consolidation is complete? And then secondly could you discuss the post right of debt-to-cap ratio, what is your target in comfort levels and your ability to act on potential opportunities in light of it? Thank you.

I will talk to the horsepower portion of it. And yes I would say that when we gain horsepower in the fourth quarter that certainly we had either bottom out or had began to recover a little bit of the market share that you asked about. And I think it's a result of the sales force revamp that we went through early in 2008 reaching its stride and I get was partially the fact that we had our equipment in better shape and our service model in better conditions. So, yes all of the things that you need to get your horsepower moving in the right direction occurred in the fourth quarter. Now I think all that same quality of service delivery is still applicable in 2009, but we have a market where our customers are trying to rationalize their horse power and reduce their cost. So, we will see some additional losses of horse power, but I don't think it's going to be out of proportion to the market.

Okay. And you do again suggest that most of the sales and marketing consolidation between the organizations is done and starting to get extract?

Yes.

Okay, thanks. Could you address the balance sheet question?

Yup, post goodwill impairment the debt-to-capital is going from about 42% to 55% that actually is about the same level that the individual companies were prior to the merger it has really no effect it’s not a part of any of our financial covenants and the debt instruments. Those are more cash flow and interest coverage based and those numbers don’t change from any kind of affect for us going forward. It has no effect in terms of capital resources. We've got $364 million of availability under existing credit lines and anticipate that will be capital positive in 2009 after our capital expenditures, so we don't think that that is really much at all of an issue with regard to our financial resources.

Thank you have you established a target level for that ratio or a comfort level?

Our target ratios which we haven’t really changed much has generally been around at three times debt-to-EBITDA cash flow

Right

That test is opposed to the debt-to-capital.

Thanks gentlemen

We go next to Kent Green with Boston American Asset Management.

Hi yes my questions pertain to the partnership I don't know you ran after partnership 89% utilization that was down from mid-90s last year, is that, because of a drop down not fully utilizing their equipment?

No that's from the maturities of partnership. When we initiated the partnership we put all working assets into the partnership. It has nothing idle. And overtime, it will be near more to the Holdings fleet as that partnership has units released. The new customers come in and new units are put to work, so it's just a part of the rationalization process.

And as that happens overtime, it's more a function of it's going to add idle equipment as it matures as opposed to the necessarily that the level of equipment stays the same and operating horsepower would drop, understand my point there.

Yeah. There was a some small equipment sales, that is obsolete equipment that you are selling or what do the sales do? Third party or back to the parent.

No. That was to one of our customers who wanted to buy that equipment. And moving off outsourced compression.

Okay. And then you mentioned earlier is that if you have new customers that want to lease and I assume these are net, net leases. There are no operating expenses involved. The customer takes care of the operating expenses. Then it would go to the partnership, would that be significant and if there is a switch to leasing on dropdowns? Is that a source of revenue for the partnership in the future more so than dropdowns?

First of all, it’s a service business. It's not a leasing business. So, what we provide is a service of moving and compressing natural gas for a fixed fee, and with that we utilize our own equipment and we pay all of our own operating cost.

So there is, I mean, obviously, you have fuel charges, fuel charges are coming down with the commodity prices here.

No the customer supplies the fuel. Being compressed this supply fuels.

Okay. So there is the operating expenses would not be variable with commodity prices.

No. Other than things like lube oil, if the price of oil goes up, we pay more for lubricating oil.

But this is a source of growth having more new customers switch to leasing to free up cash in their balance sheets.

That certainly is a goal.

Is there any product mentioned the partnership like, more pipelines then gathering systems or is it just the normal mix.

No that only thing in our partnership is compression assets that are out there producing gas. They could be producing it as a part of gathering system, could be well headed compression, would not be any pipeline compression in the US business.

Okay is there, is this mostly smaller customers or do you have large customers, large customers have a tendency to buy their own equipment.

No we have a mixture in the partnership, many of whom are the major producers in the US.

Thank you.

Our next question we go to [Glenn Prymake with Broadview Advisors].

Good morning.

Good morning.

Well two quick ones, One has the mix model technology been fully integrated in the company. And if so have you taken the service to other regions?

Yes the first one, [Emid] has been integrated into the company and we have begun to work with some other markets and applying their technology and we are trying to see where they might actually fit with their band of services. So as you can tell from that response we had no success in that area yet, as probably little early we just really started trying to find where else in the world they could be applicable. They continue to do the job they have done in the Northern Rockies and their business continues to move out along the way that we thought it would.

Okay because it seems like in the Marcellus there were issues over there that potentially could take their technology in that market?

Yeah that technology and in the way out of my element here but it’s applicable to certain quality standards and not to other. So we have to determine what is in each one these areas and which one is biding that and which one is down.

Okay and then early in the call you mentioned that during this downturn and the combined entity is in much better shape financially and operationally versus the prior downturn. That said should we expect to see given is more inside or buying during this time period because it seems as all the stock is priced at, in such a way that, that this downturn towards the company is in more shape during this time period versus the prior time period and then I have to agree with you that to much better, stronger combined company to-date versus five years ago?

I think the answer to your question from me personally is, I was not stupid enough to spend all my available capital at $50 share I couldn't wait down to 18. So you may see some more, I can not speak for my co-workers here but I think most of us have invested quite a bit in the company and would love to see this stock rebound. So I am looking seem or not.

Okay thank you.

And with a follow-up question we return to Brad Handler with Credit Suisse.

Hi again.

Hi.

Could you give us a little more color please on, some of I am back to the US contract compression market. I guess I am just trying to understand little bit better maybe some of the weakness, small versatile versus, medium versus large. Did you see more I guess point you have seen a little more turn backs on the small turn?

No, it's pretty much across the board and the way I worked is somebody with 3 1500 horsepower compressors because now they can do it too. Somebody with a 1500 horsepower compressor in terms of they can use 600 horsepower line down the food chain. So we see customers are downsizing the size units or the number of units they have and it kind of rolling effect you get some big units back you get some small units back. We get down at the real small producers; generally there is no way to downsize. If commodity prices stay low they plug and abandon and release little bit compressor, but we have not seen that at this point in time any flood of small equipment coming back.

Could I ask the same question perhaps regionally within the US, if there is some areas in the same way that we can look at rate count and something about how things are pulling back, how you seen some pull backs in some specific regions?

No, there is no real regional difference to this that I have been informed over, I know about it seems like it just kind of a general operating trend amongst the producers across the country.

And then I guess just the last one for me for now. Any sense of, as you try to redeploy those assets. You sort of have a sense that you will be shifting the concentration into the unconventional place, that accelerate and that has been happening anywhere I suppose but does it accelerate over the course of is it almost real time, does it happen through the course of '09, or is that more of a longer term trend?

It's long- term trend. It has been, assets have been shifting into unconventional gas for 10 years now or so. And they are going to continue to shift since that's where all the major drilling now is in unconventional as you know. So, we will continue to see that shift is not going to be a one year thing.

I guess the other way of asking it, I'm trying to ask is, I'm sort of wondering if there is a cost option and there is some efficiency associated with that concentration in some of the shale plays versus having things in some other regions if there are some operating costs offset in that concentration. But I think you are answering the question on that basis. It’s not real time enough to allow you to do that. But you know I'm getting at it does that make any sense?

I think I know what you’re getting at in there are some efficiencies in the big unconventional plays that I guess what happened in the newer unconventional plays over time it seems to keep moving around as we know.

Okay that's fine. We can take it offline.

Okay, if that did not answer your question we can talk about it.

Okay, that's great thank you guys.

Sure

And we go next to [Hemlin Thompson with Westfield].

Yes thank you taking my call. Two questions one can you give me a historical perspective on gross margins on North American contract operations during the down cycles how much swing has there historically been and the second question is related to the growth CapEx in the international markets how long the dollar spent before it starts generating revenues and what type of returns we are looking for?

Sure on the gross margin question in downturns we have historically not seen wide variations in the gross margin dollars to the horsepower as we call it and we generate because we are able to move our variable cost around at the same time we are having reduction in units so the margin percentage or the margin dollar per horsepower is not really impacted too much by a turndown what's impacted versus the revenue because we have less horsepower. On the international question, depending on the type of project, from the time we begin to spend capital, it can be as short as probably 90 days and as long as probably a year that we are spending capital before we start to generate revenue.

That’s helpful. Just a follow-up on the gross margin, for North America. It was my impression, and maybe it was wrong, but it was my impression that target was to get to sort of a normalized flows 50 gross margin in North America and clearly there are operational issues during 2008, which you guys fought hard to fix. In the downturn, can you get back to that target, or was that target wrong, if that sort of a more normalized gross margin for the business?

That target was not correct. Post the merger when you looked at the way that you are looking at the old gross margin percentage performance for Universal which was up in the low 60s. Universal and Hanover accounted differently for gross margin and we normalize it for the way we were accounting post merger. That margin should be in the high 50. And that's roughly where it is right now. The way to improve the margin is to deal the raise in price and cost, but obviously and this is not an environment where we are going to be raising prices any time soon.

But on pricing, I think, its interesting to note that we really haven’t raised pricing for our customers over the past couple of years and have worked really hard on cost management.

Do you think at this point we are lowering pricing at some point during the year?

Its hard to say. We're avoiding that voraciously at this point in time. And most of our producers are aware that we have not raised prices for the last two and half years while their gas prices have gone from $3 to $12. And now it is coming back down, we kind of worked with them on the idea was not fair to ask us to reduce; it did not go up we are not going to reduce. And that's the tact we are taking right now and it seems to be, it's the way we have always done our business at Exterran, well I think the customers are inline with it.

Can you just give me just a sense of the magnitude of lube oil cost in the operations?

Yeah, I mean we have, we talked about North American contract operations, we typically combined lube oil and gasoline as being about 15% of the cost structure, those were more on the commodity based things. Lube oil is the majority of that 15%.

That’s appreciating.

And with that ladies and gentleman we have no further questions on our roster therefore Mr. Snider I will turn the conference back over to you for any closing remarks.

Great, I would like to thank everyone for joining the call today and as always I want to express my appreciation to the employees, customers and financial stakeholders of Exterran for all the efforts they put it in our behalf we look forward to talking with everybody again in about three months. Thank you.

And again ladies and gentlemen this does conclude the Exterran Holdings Incorporated and Exterran Partners LP fourth quarter 2008 earnings conference call. We do appreciate your participation and you may disconnect at this time.