Exterran Energy Solutions (EXLP) 10-K/A 2005 FY Annual report (amended)

Exhibit 99.5

Financial Statements
WilPro Energy Services (El Furrial) Limited
Years ended December 31, 2005 and 2004

WilPro Energy Services (El Furrial) Limited

Financial Statements

Years ended December 31, 2005 and 2004

Contents

Report of Independent Auditors	1
Audited Financial Statements
Balance Sheets	2
Statements of Income	3
Statements of Shareholders’ Equity	4
Statements of Cash Flows	5
Notes to Financial Statements	6

Report of Independent Auditors

To the Shareholders and Board of Directors
WilPro Energy Services (El Furrial) Limited

We have audited the accompanying balance sheets of WilPro Energy Services (El Furrial) Limited as of December 31, 2005 and 2004, and the related statements of income, shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WilPro Energy Services (El Furrial) Limited at December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

/s/Ernst & Young LLP

Tulsa, Oklahoma
April 24, 2006

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WilPro Energy Services (El Furrial) Limited

Balance Sheets

	December 31
	2005		2004
Assets
Current assets:
Cash and cash equivalents	$	457,933	$	394,973
Restricted cash and cash equivalents		19,440,078		16,817,751
Accounts receivable:
Trade – PDVSA Petroleo, S.A.		26,585,922		28,453,193
Affiliates		79,206		168,182
Other		109,962		102,015
Prepaid expenses		6,001,915		3,720,736
Total current assets		52,675,016		49,656,850
Restricted cash and cash equivalents		10,922,884		11,363,261
Property, plant and equipment, net		139,175,067		150,233,124
Deferred financing costs, net		3,896,015		4,389,425
Other assets		78,270		67,271
Total assets	$	206,747,252	$	215,709,931
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable:
Trade	$	956,880	$	619,050
Affiliates		459,973		418,241
Accrued liabilities		6,534,053		7,362,154
Value-added tax payable		3,040,060		2,991,210
Foreign taxes payable		6,859,804		884,000
Interest payable		1,115,244		1,251,786
Current portion of notes payable		11,868,132		11,868,132
Total current liabilities		30,834,146		25,394,573
Notes payable		83,076,923		94,945,055
Deferred foreign income tax		22,472,000		19,626,000
Shareholders’ equity:
Common stock, class A, $1 par value, 25,000 shares authorized, issued and outstanding		25,000		25,000
Common stock, class B, $1 par value, 12,500 shares authorized, issued and outstanding		12,500		12,500
Additional paid-in capital		60,516,037		60,516,037
Retained earnings		9,810,646		15,190,766
Total shareholders’ equity		70,364,183		75,744,303
Total liabilities and shareholders’ equity	$	206,747,252	$	215,709,931

See accompanying notes.

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WilPro Energy Services (El Furrial) Limited

Statements of Income

	Year ended December 31
	2005			2004
Revenues	$	61,814,039		$	63,231,208
Operating expenses		12,590,226			14,150,862
Depreciation		12,129,857			12,212,632
General and administrative expenses		2,481,862			2,492,277
Total costs and expenses		27,201,945			28,855,771
Operating income		34,612,094			34,375,437
Other (income) expense:
Interest expense		9,504,171			11,118,652
Foreign currency transaction loss		565,288			738,236
Other income, net		(254,245	)		(278,634	)
		9,815,214			11,578,254
Income before foreign income tax		24,796,880			22,797,183
Provision for foreign income tax		9,677,000			4,089,000
Net income	$	15,119,880		$	18,708,183

See accompanying notes.

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WilPro Energy Services (El Furrial) Limited

Statements of Shareholders’ Equity

					Additional
	Common Stock				Paid-In		Retained
	Class A		Class B		Capital		Earnings			Total
Balance, December 31, 2003	$	25,000	$	12,500	$	60,516,037	$	12,482,583		$	73,036,120
Net income		—		—		—		18,708,183			18,708,183
Dividends paid		—		—		—		(16,000,000	)		(16,000,000	)
Balance, December 31, 2004		25,000		12,500		60,516,037		15,190,766			75,744,303
Net income		—		—		—		15,119,880			15,119,880
Dividends paid		—		—		—		(20,500,000	)		(20,500,000	)
Balance, December 31, 2005	$	25,000	$	12,500	$	60,516,037	$	9,810,646		$	70,364,183

See accompanying notes.

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WilPro Energy Services (El Furrial) Limited

Statements of Cash Flows

	Year ended December 31
	2005			2004
Operating Activities
Net income	$	15,119,880		$	18,708,183
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		12,129,857			12,212,632
Amortization of deferred costs		493,410			493,410
Deferred foreign income taxes		2,846,000			3,205,000
Changes in operating assets and liabilities:
Accounts receivable – trade and other		1,859,324			(7,122,428	)
Value-added tax payable		48,850			1,608,348
Foreign taxes payable		5,975,804			(430,134	)
Prepaid expenses		(2,281,179	)		(419,543	)
Other assets		(10,999	)		1,088
Trade accounts payable		337,830			339,213
Receivables/payables with affiliates		130,708			4,491,508
Accrued liabilities		(828,101	)		(1,646,294	)
Interest payable		(136,542	)		(141,641	)
Net cash provided by operating activities		35,684,842			31,299,342
Investing Activities
Purchases of property, plant and equipment		(1,071,800	)		(199,974	)
Net cash used by investing activities		(1,071,800	)		(199,974	)
Financing Activities
Payments of notes payable		(11,868,132	)		(11,868,132	)
Dividends paid		(20,500,000	)		(16,000,000	)
Changes in restricted cash		(2,181,950	)		(3,268,488	)
Net cash used by financing activities		(34,550,082	)		(31,136,620	)
Net increase (decrease) in cash and cash equivalents		62,960			(37,252	)
Cash and cash equivalents, beginning of year		394,973			432,225
Cash and cash equivalents, end of year	$	457,933		$	394,973
Supplemental Disclosures of Cash Flow Information
Foreign income taxes paid	$	3,171,761		$	1,137,527
Interest paid	$	9,640,713		$	10,766,882

See accompanying notes.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements

December 31, 2005 and 2004

1. Organization and Description of Business

WilPro Energy Services (El Furrial) Limited, (the Company) was incorporated in the Cayman Islands in February 1997. The Company provides installation, engineering, procurement and construction services, as well as operation and maintenance services for natural gas compression facilities at El Furrial oil field, property of PDVSA Petróleo, S.A. (PDVSA) in Venezuela. Williams International El Furrial Limited, a subsidiary of Williams International Company, owns all 25,000 outstanding Class A common shares, and Production Operators Cayman, Incorporated, a subsidiary of Hanover Compression Limited Partnership, owns all 12,500 Class B common shares of the Company.

Under the terms of a services contract with PDVSA, the Company designed and built a high pressure and medium pressure natural gas compression plant and renders natural gas compression services on behalf of PDVSA at the Company’s own expense and risk. The contract has a 15-year term for the medium pressure plant and 20-year term for the high pressure plant. The services rendered by the Company generate a service fee from PDVSA, which is the Company’s primary source of revenue. The Company does not require collateral for credit extended to PDVSA. At the end of the contract, PDVSA has the option to 1) renew the current service agreement, allowing the Company to retain ownership of the assets, 2) purchase the El Furrial assets at book value, which is expected to be an insignificant amount, and either retain the Company under an operations and management agreement or terminate its relationship with the Company, or 3) require the Company to dismantle the assets and restore the land to its original condition.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in those financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents include demand and time deposits, certificates of deposit and other marketable securities with maturities of three months or less when acquired.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents within current assets consists primarily of bank accounts restricted under the Company’s loan agreement with Overseas Private Investment Corporation (OPIC) (see Note 6) for receipt of revenue, payment of operating and maintenance expenses, distributions to shareholders and funding for the next quarterly debt principal and interest payment. Restricted cash and cash equivalents within noncurrent assets consists primarily of bank accounts restricted under the loan agreement with OPIC for six months of principal and interest payments and an uninsured loss reserve. The Company does not expect these cash and cash equivalents to be released within the next twelve months.

Accounts Receivable

Accounts receivable are carried on a gross basis, with no discounting, less the allowance for doubtful accounts. No allowance for doubtful accounts is recognized at the time the revenue, which generates the accounts receivable, is recognized. An allowance for doubtful accounts is not common for the Company as it only has one customer. However, management assesses the collectibility of accounts receivable based on existing economic conditions, and contractual terms with its client. Receivables are considered past due if payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for doubtful accounts only after all collection attempts have been exhausted.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Property, Plant and Equipment

Property, plant and equipment is carried at cost. The carrying value of these assets is also based on estimates, assumptions and judgments relative to capitalized costs, useful lives and salvage values. Improvements increasing functionality or useful lives are added to the cost of the corresponding assets, while the cost of repairs and maintenance are charged to expense as incurred. All spare parts inventory items in excess of $2,500 are capitalized and recorded at historical cost and expensed upon usage. Depreciation is recorded using the straight-line method over estimated useful lives. An estimated useful life of 15 to 20 years is used for natural gas compression plant facilities and an estimated useful life of 5 years is used for all other property, plant and equipment.

Statement of Financial Accounting Standards (SFAS) No. 143,Accounting for Asset Retirement Obligations,requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the associated asset retirement costs be capitalized as part of the carrying amount of the long-lived asset. The Company has not recorded an asset retirement obligation based on a 100% probability assessment that PDVSA, under the contract terms, will obtain the El Furrial facility and assume all retirement obligations at the end of the contract term.

Revenue Recognition Policy

The Company recognizes revenue for services in the period they are performed based on contractual terms and associated volumes.

Impairment of Long-lived Assets

The evaluation for impairment of assets is done on an individual asset or asset group basis when events or changes in circumstances indicate, in management’s judgment, that the carrying value of such assets may not be recoverable. When such a determination has been made, management’s estimate of undiscounted future cash flows attributable to the assets is

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

compared to the carrying value of the assets to determine whether impairment has occurred. If an impairment of the carrying value has occurred, the amount of the impairment recognized in the financial statements is determined by estimating the fair value of the assets and recording a loss for the amount that the carrying value exceeds the estimated fair value.

Provision for Severance Benefits

The Company is liable for employee severance benefits, which are a vested right of workers under the Venezuelan Labor Law. These benefits are accrued as service is rendered and transferred monthly to a trust fund on behalf of each worker.

Foreign Currency

The functional currency of the Company is the U.S. dollar. Transactions denominated in currencies other than the U.S. dollar are recorded based on exchange rates at the time such transactions take place. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in the statements of income.

Income Taxes

Deferred foreign income tax is computed using the liability method and is provided on all temporary differences between the financial basis and tax basis of the Company’s assets and liabilities. Management’s judgment and income tax assumptions are used to determine the levels, if any, of valuation allowances associated with deferred foreign tax assets.

3. Risks and Uncertainties

The Company relies on the Venezuelan oil and natural gas industry and is exposed to the operating, geographical and financial risks relevant to this industry. Geographical risks are generated by the political, legal, social and economic conditions of the country. Throughout 2005 and 2004, Venezuela endured abnormal levels of instability in the economic, political, and social environment. On February 4, 2003, the Venezuelan government established a currency exchange control. As a result, there was a 20 percent devaluation of the Venezuelan Bolivar with respect to the U.S. Dollar during 2004 and a 12 percent devaluation in 2005. The exchange rate at December 31, 2005 and 2004 was 2150 and 1920 Venezuelan Bolivars to 1 U.S. dollar, respectively.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

3. Risks and Uncertainties (continued)

Since December 31, 2005, there has been no further devaluation of the Venezuelan Bolivar. The impact of the devaluation on the Company’s financial statements is minimized by the fact that the Company holds most of its cash in U.S. Dollars.

The Venezuelan economy has been considered hyper-inflationary in the past, but has not been considered hyper-inflationary since 2001. The inflation rate for Venezuela was 14 percent in 2005, compared to 19 percent in 2004, and 27 percent in 2003. The impact of inflation on the Company’s financial results is minimized by contractual terms that allow for tariff increases commensurate with inflation.

There is no certainty of the future political and economic conditions or the impact changes in such conditions may have on laws affecting taxes, exchange rates, currency convertibility, environmental and labor regulations, repatriation of profits and capital return. If the current conditions persist, the Company’s economic, financial and operational capacity could be somehow affected, as well as its organizational structure. However, the conditions in the Company’s contract with PDVSA provide for adjustments for inflation, tariffs paid to the Company in U.S. dollars, and minimum tariffs when PDVSA’s volumes are low. As a result, management believes the impact should not be significant.

During 2003 the Company received payment of U.S. $8.1 million in Venezuelan Bolivars related to May and June U.S. Dollar invoices. Under the contract terms with PDVSA, these were required to be paid in U.S. Dollars because of the exchange controls currently in place preventing the exchange of Bolivars into U.S. Dollars. The Company is negotiating the return of the Bolivars to PDVSA in exchange for U.S. Dollars. At December 31, 2005, the Company has an $8.1 million receivable for the U.S. Dollars and a $6.0 million payable for the Bolivars on the balance sheet. The payable has decreased due to devaluation of the Venezuelan Bolivar.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

3. Risks and Uncertainties (continued)

The Company has $9.7 million in accounts receivable at December 31, 2005 due to labor escalation related to April 2004 and November 2004 through December 2005 services. Such amount is based on contractual terms; however, PDVSA is disputing the index used in the calculation of this escalation. The index used has remained the same since the start of the contract. In March 2006, the Company collected 50% of the pending receivables as of November 2005. The Company is negotiating with PDVSA to amend the contract provision regarding the calculation of this escalation factor and to extend the contract. The Company has reduced the receivable balance for amounts offered to PDVSA to complete this contract amendment. The Company believes the remaining receivable will be collected in full.

Our cash equivalents consist of high-quality securities placed with various major financial institutions with credit ratings at or above BBB by Standard & Poor’s or Baa1 by Moody’s Investors Service.

4. Related Party Transactions

The Company reimburses shareholders and affiliated companies (including the following subsidiaries of Williams International Company: WilPro Energy Services (PIGAP II) Limited, Williams International Venezuela Limited, and Williams International Services Company) for expenses incurred on behalf of the Company. These reimbursements totaled $1.7 million and $1.5 million for 2005 and 2004, respectively.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

4. Related Party Transactions (continued)

Receivables and payables with shareholders and other affiliated companies at December 31 are as follows:

	2005		2004
Accounts receivable:
WilPro Energy Services (PIGAP II) Limited	$	79,206	$	168,182
	$	79,206	$	168,182
Accounts payable:
Williams International Services Company	$	108,803	$	298,187
Williams International Venezuela Limited		351,170		120,054
	$	459,973	$	418,241

5. Property, Plant and Equipment

At December 31, property, plant and equipment are as follows:

	2005			2004
Natural gas compression plant facilities	$	221,634,078		$	221,364,248
Spare parts		681,380			443,300
Vehicles		629,112			539,416
Leasehold improvements		842,838			510,411
Computer software and equipment		531,824			505,586
Other		666,740			660,230
		224,985,972			224,023,191
Accumulated depreciation		(85,810,905	)		(73,790,067	)
	$	139,175,067		$	150,233,124

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

6. Notes Payable

At December 31, long-term notes payable are represented as follows:

	2005		2004
Overseas Private Investment Corporation:
9.45% note payable, due in equal quarterly principal payments of $2,678,571 plus interest, maturing November 15, 2013	$	85,714,286	$	96,428,572
9.17% note payable, due in equal quarterly principal payments of $288,462 plus interest, maturing November 15, 2013		9,230,769		10,384,615
		94,945,055		106,813,187
Current portion		11,868,132		11,868,132
	$	83,076,923	$	94,945,055

These notes are secured by the physical assets and common stock of the Company. Under the terms of the agreement, the Company maintains various restricted bank accounts. The use of each account is restricted for a specific use including receipt of revenue, payment of operating and maintenance expenses, debt service, uninsured loss reserve, and distributions to shareholders. The loan agreement with OPIC contains various other restrictive covenants and commitments, including limitations on additional indebtedness, payment of dividends and asset sales.

Aggregate minimum maturities of long-term debt total $11,868,132 for each of the next five years.

During 1999, deferred financing costs of $6.6 million were incurred in connection with the debt issuance. The costs are being amortized on a straight-line basis over the term of the notes. Accumulated amortization of the deferred financing costs is $2.7 million and $2.2 million as of December 31, 2005 and 2004, respectively.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

7. Income Taxes

The Company is subject to Venezuelan corporate income taxes at a 34 percent tax rate on taxable income. Taxable income differs from financial income principally due to adjustments for the difference in reporting currency for book and tax purposes, differences in depreciable lives, and certain permanent differences. Tax losses may be carried forward three years. Venezuelan tax law required a company that had been operational for more than three years to pay the higher of income tax or business asset tax. Business asset tax was assessed at one percent of the average value of the Company’s assets revalued for tax purposes and was repealed as of September 1, 2004.

Significant components of deferred taxes at December 31 are as follows:

	2005		2004
Deferred tax liabilities:
Property, plant and equipment	$	21,146,000	$	17,965,000
Debt financing costs		1,326,000		1,661,000
Total deferred tax liability	$	22,472,000	$	19,626,000

In 2005, the foreign income tax of $9,677,000 consists of foreign income tax of $6,831,000 and deferred provision of $2,846,000. In 2004, the Company’s foreign income tax of $4,089,000 consisted of foreign income tax of $884,000 and deferred provision of $3,205,000. In 2005, the Company’s effective tax rate is more than the expected statutory rate primarily due to inflation adjustments.

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WilPro Energy Services (El Furrial) Limited

Notes to Financial Statements (continued)

8. Financial Instruments

The Company used the following methods and assumptions in estimating its fair-value disclosures for financial instruments:

Cash and cash equivalents and restricted cash and cash equivalents:The carrying amounts reported in the balance sheet approximate fair value due to the short-term maturity of the underlying instruments.

Notes payable:The fair value of the long-term notes was determined based on prices of similar securities with similar terms and credit ratings. The Company used the expertise of an outside investment banking firm to estimate the fair value of the notes.

	2005						2004
	Carrying						Carrying
Asset (liability)	amount			Fair value			amount			Fair value
Cash and cash equivalents	$	457,933		$	457,933		$	394,973		$	394,973
Restricted cash and cash equivalents		30,362,962			30,362,962			28,181,012			28,181,012
Notes payable		(94,945,055	)		(102,370,424	)		(106,813,187	)		(134,285,092	)

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