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Universal Compression Reports Fiscal Third Quarter Results

January, 17, 2001

HOUSTON, Jan. 17 /PRNewswire/ -- Universal Compression Holdings, Inc. (NYSE: UCO), a leading provider of natural gas compression services, today reported an increase in total revenue, EBITDA (as defined below) and net income for the fiscal 2001 third quarter ended December 31, 2000.

For the fiscal 2001 third quarter, total revenue increased 77.9 percent to approximately $60.0 million, compared to $33.7 million in the year earlier period. Net income for the quarter was approximately $3.1 million, or $0.21 per diluted share, compared to a loss of $1.3 million in the third quarter of last year. In the first fiscal quarter of this year, Universal completed an initial public offering of its common stock concurrently with a recapitalization and the refinancing of its debt facilities. In the second fiscal quarter, Universal completed the acquisition of Gas Compression Services, Inc.

EBITDA increased 48.8 percent to approximately $21.7 million from $14.6 million for the same period last year. EBITDA is defined as net income plus income taxes, interest expense, leasing expense, management fees, depreciation and amortization.

Rental revenue increased by 42.9 percent, to approximately $36.2 million, from $25.3 million in the third fiscal quarter last year. This revenue growth reflects an increase in Universal's available horsepower from an average of 625,000 during the third quarter a year ago to an average of 828,000 for the quarter just ended. This increase in the horsepower includes additions to the fleet from Universal's capital expenditures and growth program as well as the impact of the GCSI acquisition. During the third fiscal quarter, the Company started its first rental project in Mexico consisting of 10,000 horsepower. The Mexico project also contributed approximately $4.7 million in one-time turn key installation revenue and $0.4 million of margin in the fiscal 2001 third quarter.

Contributing to the growth in rental revenues was an increase in the Company's average horsepower utilization rate from 81.6 percent for the same period a year ago and 86.2 percent for the preceding quarter to 88.6 percent during the quarter just ended. The Company also improved its rental gross margin from 64.3 percent during the third quarter of last year, to 66.1 percent during the recent quarter.

The market for the Company's Engineered Products and parts sales and services continues to be strong as revenues from the segments for the quarter totaled approximately $23.8 million (including the $4.7 million from the Mexico turn key installation project), compared to $8.4 million in the year earlier period. The margin contribution from Engineered Products and sales and services increased from $1.4 million to $2.5 million. Engineered Products backlog increased to $30 million at December 31, 2000 from $11 million at December 31, 1999.

The Company continues to focus on cost management in all areas of its business while growing its revenue base. Its selling, general and administrative expenses for the third fiscal quarter increased from the same period a year ago at a much lower rate than the Company's revenues for such quarter increased.

EBITDA increased 48.8 percent from $14.6 million for the third quarter of fiscal 2000 to $21.7 million for the third quarter of fiscal 2001. EBITDA margin as a percentage of revenue decreased between the third fiscal quarter of 2000 and the third fiscal quarter of 2001, primarily due to a change in revenue composition. Revenues from the Engineered Products and sales and services segments recognized for the recent quarter comprised a much higher percentage of the Company's total revenue and the margin contribution of the Engineered Products and sales and services segments is much lower compared to that of rental revenues primarily due to the lower capital investment requirements of the Engineered Products and sales and services segments.

"The GCSI acquisition, which we closed on September 15, 2000, is working out very well," stated Universal Compression President and Chief Executive Officer, Stephen A. Snider. "We have realized the expected synergies more quickly than anticipated while continuing to grow GCSI's rental base."

International rental revenues totaled $4.4 million in the third quarter of fiscal 2001, compared with $3.9 million in the same quarter last year, an increase of 13.6 percent. International rental represented 7.4 percent of total revenues for the quarter and international rental margin increased from $2.5 million to $3.4 million. At quarter end, Universal had approximately 60,000 horsepower under contract internationally.

"Our performance was strong this quarter," Mr. Snider added. "We increased the size of our rental fleet while increasing rental margin and utilization of our equipment. We have remained focused on our operations while managing activities involved in the pending Weatherford Global acquisition."

On October 24, 2000, the Company announced the signing of an agreement to acquire Weatherford Global Compression (WGC), the gas compression services division of Weatherford International. The combination will create the second largest natural gas compression services provider with an aggregate of approximately 1,800,000 horsepower. Consideration for WGC includes 13.75 million shares of Universal's common stock, which will represent approximately 48% of the outstanding shares of the combined company, and the assumption of WGC's debt and operating leases. The transaction is subject to approval by the Company's stockholders, financing conditions, and other customary closing conditions.

On January 2, 2001, Universal Compression, Inc. commenced a cash tender offer for all of its outstanding 9 7/8% Senior Discount Notes due 2008. In conjunction with the tender offer, the consent of holders of the Notes is being solicited to approve certain amendments to the indenture governing the Notes to eliminate substantially all of the restrictive covenants contained in the indenture. The tender offer and consent solicitation are subject to the terms and conditions in the Offer to Purchase and Consent Solicitation Statement dated January 2, 2001. Receipt of the requisite consents is not required for the Company to effect the acquisition of WGC.

There can be no assurance that the tender offer and consent solicitation or the acquisition of WGC will be consummated.

Universal will host a conference call at 11:00 am Central Time, 12:00 noon Eastern Time, on January 17 to discuss results from the third fiscal quarter as well as updates on the WGC acquisition and other corporate matters. The conference call will be broadcast over the Internet to provide interested persons the opportunity to listen to it live. The call will also be archived for one week to provide an opportunity to those unable to listen to the live broadcast. Both the live broadcast and replay of the archived version are free of charge to the user.

Persons wishing to listen to the conference call live may do so by logging on to ( ) at least 15 minutes prior to the designated start time and following the directions provided there including entering "Universal Compression" or "UCO" in the box located at the top of the web page. This will allow time to install any software needed to access the call.

The entire conference call will be archived at ( ) through January 24.

Statements about Universal's outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Universal's control, which could cause actual results to differ materially from such statements. While Universal believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are successful completion of proposed acquisitions, integration of recent acquisitions and the demand for Universal's products and services. These risk factors are discussed in Universal's filings with the Securities and Exchange Commission, copies of which are available to the public. Universal expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events, or otherwise.

                                (IN THOUSANDS)

                                                            As of December 31,
    Current Assets:
      Cash and cash equivalents                                     $ 7,442
      Accounts receivable, net                                       30,931
      Current portion of notes receivable                             3,190
      Inventories                                                    20,523
      Current deferred tax asset                                        227
      Other                                                           1,451
        Total current assets                                         63,764

    Plant, Property and Equipment:
       Rental Equipment                                             366,182
       Other P P & E                                                 28,085
         Less: accumulated depreciation                             (50,610)
          Net property, plant and equipment                         343,657

    Goodwill, net of accumulated amortization                       130,464
    Notes receivable                                                  5,048
    Other non-current assets, net                                     8,190
    Non-current deferred tax asset                                    7,509


           Total assets                                         $   558,632

    Current liabilities:
      Accounts payable, trade                                   $    20,371
      Accrued liabilities                                            13,180
      Current portion of long-term debt and capital
        lease obligation                                              3,097
          Total current liabilities                                  36,648

    Capital lease obligation                                          4,870
    Other liabilities                                                44,731
    Non-current deferred tax liability                                2,806
    Long-term debt                                                  204,184
          Total liabilities                                         293,239

    Commitments and Contingencies
    Stockholders' Equity:
       Series A preferred stock                                           -
       Common stock                                                     147
       Class A non-voting common stock                                    -
       Treasury stock                                                  (135)
       Additional paid-in capital                                   279,339
       Retained deficit                                             (13,958)

       Total stockholders' equity                                   265,393

       Total liabilities and stockholders' equity                $  558,632



                               Three        Three
                               Months       Months    Nine Months  Nine Months
                               Ended        Ended       Ended         Ended
                               Dec. 31,     Dec. 31,    Dec. 31,      Dec. 31,
                                 2000        1999        2000          1999

      Rentals                 $36,172       $25,311      $91,127       $72,174
      Sales                    23,800         8,349       42,201        30,223
      Other                        42            69          299           128
       Total revenues          60,014        33,729      133,627       102,525

    Costs and expenses:
      Rentals, exclusive
       of depreciation
       and amortization        12,259         9,049       31,132        26,153
      Cost of sales,
       exclusive of
       depreciation and
       amortization            21,332         6,900       36,360        25,650
      Depreciation and
       amortization             7,726         7,001       21,903        18,679
      Selling, general and
       administrative           4,747        4,004        11,971        12,658
      Operating lease           3,539           --         6,223            --
      Interest expense          5,372        8,832        18,597        25,278
      Non-recurring charges        --           --         7,059            --

       Total costs and
        expenses               54,975        5,786       133,245       108,418

    Income (loss) before
     income taxes and
     extraordinary items        5,039        2,057)          382       (5,893)

    Income taxes (benefit)      1,909         (781)          163       (1,801)

    Income (loss) before
     extraordinary items       $3,130       $(1,276)        $219      $(4,092)

    Extraordinary loss, net
     of $3,759
     income tax benefit          --            --        (6,264)            --

    Net income (loss)          $3,130       $(1,276)    $(6,045)      $(4,092)

    Weighted average common
     and common equivalent
     shares outstanding:

       Basic                   14,666            --       12,342            --

       Diluted                 15,052            --       12,714            --

    Earnings per share
     - basic:
      Income before
       extraordinary items      $0.21           $--        $0.02           $--
      Extraordinary loss           --            --        (0.51)           --
      Net income (loss)         $0.21           $--       $(0.49)          $--

    Earnings per share
     - diluted:

      Income before
       extraordinary items      $0.21          $--         $0.02           $--
      Extraordinary loss           --           --         (0.49)           --
      Net income (loss)         $0.21          $--        $(0.47)          $--


                                 (IN THOUSANDS)

                                                   THREE             THREE
                                                   MONTHS            MONTHS
                                                   ENDED             ENDED
                                                DECEMBER 31,      DECEMBER 31,
                                                    2000              1999
              Domestic Rental and
               Maintenance                         $31,747           $21,416
              International Rental and
               Maintenance                           4,425             3,896
              Engineered Products                   17,329             4,977
              Corporate and Other                    6,513             3,440
                  Total                            $60,014           $33,729

    Gross Margins
              Domestic Rental and
               Maintenance                         $20,526           $13,735
              International Rent                     3,387             2,528
              Engineered Products                    1,705               725
              Corporate and Other                      755               713
                  Total                            $26,373           $17,701

    Selling, General, and Administrative            $4,747            $3,215
    SG&A % of Revenue                                 7.9%              9.5%

    EBITDA                                         $21,676           $14,565
    EBITDA % of Revenue                              36.1%             43.2%

    Margin percent
              Domestic Rent                          64.7%             64.1%
              International Rent                     76.5%             64.9%
              Fabrication                             9.8%             14.6%
                  Other                              11.6%             20.7%
              Total                                  43.9%             52.5%

                                (IN THOUSANDS)

    Debt                                          $212,151          $373,481
    Operating Lease Balance                       $154,611               N/A

    Capital Expenditures                           $17,209            $9,672

    Average Horsepower Available
     Domestic                                      768,536           574,570
              International                         59,736            50,451

    Percent Utilized
     Domestic                                        87.9%             80.2%
    International                                    97.1%             98.1%
    Total                                            88.6%             81.6%

    EBITDA is defined as net income plus income taxes, interest expense,
      leasing expense, management fees, depreciation and amortization.

SOURCE Universal Compression Holdings, Inc.
CONTACT: Jeffrey Todd, Manager-Investor Relations of Universal Compression Holdings, 713-335-7464; or General Inquiries, Mike Arneth of The Financial Relations Board, 312-640-6734

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