Hanover Compressor Announces Sale of California Power Generation Assets.

Business Editors

HOUSTON--(BUSINESS WIRE)--May 8, 2003

Hanover Compressor Company (NYSE:HC), the leading provider of outsourced natural gas compression services, announced today that it has entered into an agreement to sell its ownership interests in two power plants located in Fresno County, California.

Hanover has agreed to sell its 49% membership interest in Wellhead Power Panoche, LLC ("Panoche") and its 92.5% membership interest in Wellhead Power (Gates), LLC ("Gates") to Hal Dittmer and Fresno Power Investors Limited Partnership (the "Purchasers"), who currently own the remaining interests in Panoche and Gates. Panoche and Gates own gas fired peaking power plants of 49 megawatts and 46 megawatts, respectively. Total consideration for the transaction is approximately $28 million consisting of approximately $3.1 million for Hanover's membership interests in Panoche and Gates, $6.9 million for loans from Hanover to Panoche and Gates, and the release of Hanover's obligations under a capital lease from GE Capital to Gates that was included on Hanover's December 31, 2002 balance sheet as a liability held for sale and has a current outstanding balance of approximately $18 million.

Hanover will receive approximately $7.2 million in cash and $2.8 million in notes that mature in May 2004. The notes will be secured by the assets and stock of Santa Maria Cogen, Inc., the operator of a 9 megawatt power plant in Santa Maria, California.

In addition, upon closing of the transaction, Hanover will be released from a $12 million letter of credit from the company to General Electric that was provided as additional credit support for the Gates capital lease, thus freeing up $12 million in liquidity under Hanover's revolving credit facility. Hanover expects to close the transaction by mid 2003.

In December 2002, Hanover classified these operations as discontinued operations and will continue to report the financial results from these operations as discontinued operations in its financial statements until the close of this transaction.

About Hanover Compressor

Hanover Compressor Company (www.hanover-co.com) is the global market leader in full service natural gas compression and a leading provider of service, financing, fabrication and equipment for contract natural gas handling applications. Hanover sells and provides this equipment on a rental, contract compression, maintenance and acquisition leaseback basis to natural gas production, processing and transportation companies that are increasingly seeking outsourcing solutions. Founded in 1990 and a public company since 1997, Hanover's customers include premier independent and major producers and distributors throughout the Western Hemisphere.

Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because of the context of the statement and may include words such as "believes," "anticipates," "expects," "estimates," or words of similar import. Similarly, statements that describe Hanover's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those anticipated as of the date of this press release. These risks and uncertainties include: our inability to renew our short-term leases so as to fully recoup the cost of acquiring or fabricating leased equipment; our inability to generate sufficient cash, access capital markets or to incur indebtedness to fund our business; a prolonged, substantial reduction in oil and natural gas prices, which could cause a decline in the demand for our compression and oil and gas production equipment; changes in economic or political conditions in the countries in which we do business; legislative changes in the countries in which we do business; the loss of market share through competition; the introduction of competing technology by other companies; losses due to the inherent risks associated with our operations, including equipment defects, malfunctions and failures and natural disasters; war, terrorists attacks, and/or the responses thereto; government safety, health, environmental and other regulations, which could require us to make significant capital expenditures; our high level of customer concentration which intensifies the negative effect of the loss of one or more of our customers; our inability to comply with loan and lease covenants; the decreased financial flexibility associated with our significant cash requirements and substantial debt and compression equipment lease commitments; reduced profit margins resulting from increased pricing pressure in our businesses; currency fluctuation; our inability to execute our exit and sale strategy with respect to assets classified as discontinued operations and held for sale; adverse results in shareholder or other litigation or regulatory proceedings; and our inability to properly implement new enterprise resource planning systems used for integration of our businesses. With respect to the Panoche and Gates transaction specifically, there is also the risk that certain conditions precedent to closing the transaction may not be achieved and thus the closing may not occur. A discussion of these factors is included in the Company's periodic reports filed with the Securities and Exchange Commission. The forward-looking statements included in this press release are only made as of the date of this press release, and Hanover undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.