MWP Markwest Hydrocarbon,

DENVER, Aug. 7 /PRNewswire-FirstCall/ -- MarkWest Hydrocarbon, Inc. (AMEX:MWP) (the "Company") today reported a net loss of $2.1 million for the three months ended June 30, 2006, or $0.18 per diluted share, compared to a net loss of $1.6 million, or $0.14 per diluted share, for the second quarter of 2005. The Company also reported net income of $0.7 million for the six months ended June 30, 2006, or $0.06 per diluted share, compared to a net loss of less than $0.1 million, or $0.01 per diluted share, for the same period in 2005. The Company reports its operations under two business segments, MarkWest Hydrocarbon Standalone ("Standalone") and MarkWest Energy Partners (the "Partnership"). MarkWest Hydrocarbon's share of net income attributable to MarkWest Energy Partners (net of the eliminating entry for non-controlling interest in net income of consolidated subsidiary) was $3.4 million in the second quarter of 2006, up from $0.4 million in the second quarter of 2005. For the six months ended June 30, 2006 the Company's share was $6.7 million, up from $1.3 million for the same period in 2005. A key element of MarkWest Hydrocarbon's activity is the cash distributions it receives on its ownership interest in MarkWest Energy Partners, L.P., which consists of approximately 2.5 million limited partner units, its 2% general partner interest and its incentive distribution rights. MarkWest Hydrocarbon received $4.3 million in distributions in the second quarter of 2006, which represents a 39% increase over the $3.1 million received in the second quarter of 2005. The Standalone business segment consists of the Company's natural gas liquid (NGL) marketing activities for our NGL's extracted primarily at MarkWest Energy Partners Siloam facility; the management of our keep-whole contracts in Appalachia and a wholesale propane marketing business. For the three months ended June 30, 2006, our Standalone segment reported net losses of $5.5 million, an increase of $3.5 million when compared to the $2.0 million of net losses for the same period in 2005. This result is summarized as follows: * We reported a mark-to-market loss of $6.2 million for our 2006/2007 derivative instruments related to our Standalone operations, consistent with our previous announcements that we would not be applying hedge accounting treatment for these items, compared to none in 2005. The revaluation of our long-term shrink obligation increased revenue by $1.6 million in the second quarter of 2006 compared to a $0.4 million increase in 2005, resulting in a $1.2 million positive impact to the quarter-over-quarter comparison. Both of these items are non-cash adjustments. * Our realized fractionation (frac) spread improved significantly compared to the prior year (approximately $0.42 per gallon in 2006 vs. approximately $0.20 per gallon in 2005). When combined with a 1.9 million gallon reduction in sales, this amounted to a $3.7 million positive impact on segment net income. * Other areas, including SG&A, depreciation, interest and dividend income and our other marketing operations increased these declines by a combined $1.5 million. Non-cash compensation included in SG&A was $1.0 million for the second quarter in 2006 compared to $0.8 million for 2005. * Income tax benefit declined $0.7 million. The Company declared a quarterly cash dividend of $0.24 per share of its common stock for an implied annual rate of $0.96 per share to be paid on August 21, 2006, to shareholders of record as of August 14, 2006. This quarterly cash dividend represents an increase of $0.065 per share over the previous quarter's dividend. "We are pleased with the second quarter performance and the board's decision to increase our quarterly dividend," said Frank Semple, President and Chief Executive Officer. "Our results were driven primarily by MarkWest Energy Partners' distribution growth and strong operating cash flow performance from our NGL marketing business. Contributions to net income from MarkWest Energy Partners was $3.4 million for the quarter and the partnership is very well positioned to achieve its objective of 10 percent annual distribution growth per unit for the foreseeable future. We also experienced a very strong frac spread environment during the second quarter, which provided a positive cash flow contribution even during our slow summer sales period. Approximately 70 percent of the frac spread has been hedged through the first quarter of 2007 at historically high margins. Because of our strong financial performance and the projected growth of MWE we anticipate that MarkWest Hydrocarbon will become a taxpaying entity in 2006. The future tax liability was a consideration in this quarter's dividend increase and will continue to be considered in future dividend decisions." The Company will host a conference call on Wednesday, August 9, 2006, at 2:00 P.M. MDT to review its second quarter 2006 earnings. Interested parties can participate in the call by dialing the following number approximately ten minutes prior to the scheduled start time: 1-866-249-6463. A replay of the call will be available through August 16, 2006 by dialing 1-800-405-2236 and entering the following passcode: 11066684#. To access the webcast, please visit our website at http://www.markwest.com/. MarkWest Hydrocarbon, Inc. (AMEX:MWP) controls and operates MarkWest Energy Partners, L.P. (AMEX:MWE), a publicly traded limited partnership engaged in the gathering, processing and transmission of natural gas; the transportation, fractionation and storage of natural gas liquids; and the gathering and transportation of crude oil. We also market natural gas and NGLs. This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect our operations, financial performance and other factors as discussed in our filings with the Securities and Exchange Commission. Among the factors that could cause results to differ materially are those risks discussed in our Form 10-K for the year ended December 31, 2005 as filed with the SEC. MarkWest Hydrocarbon, Inc. Statement of Operations (in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2006 2005 2006 2005 (in thousands) (in thousands) Revenues $186,590 $141,280 $427,470 $279,540 Derivatives (13,057) (240) (14,316) (147) Total Revenue 173,533 141,040 413,154 279,393 Operating expenses: Purchased product costs 116,858 112,354 298,025 217,053 Facility expenses 14,217 10,985 27,921 20,245 Selling, general and administrative expenses 13,061 9,125 24,437 17,227 Depreciation 7,778 4,995 15,156 9,736 Amortization of intangible assets 4,027 2,095 8,043 4,190 Accretion of asset retirement obligation 26 11 51 21 Total operating expenses 155,967 139,565 373,633 268,472 Income from operations $17,566 $1,475 $39,521 $10,921 Other income (expense): Income (loss) from unconsolidated subsidiary 1,228 989 2,173 990 Interest income 436 321 842 570 Interest expense (10,798) (4,588) (21,842) (8,293) Amortization of deferred financing costs (a component of interest expense) (859) (558) (1,684) (1,094) Dividend income 109 96 215 188 Miscellaneous income (expense) 1,517 148 3,759 235 Income (loss) from continuing operations before non-controlling interest in net income of consolidated subsidiary and income taxes 9,199 (2,117) 22,984 3,517 Income tax (expense) benefit Current (64) -- 429 -- Deferred 6 802 (896) 32 Income tax (expense) benefit (58) 802 (467) 32 Non-controlling interest in net income of consolidated subsidiary (11,273) (294) (21,817) (3,619) Net income (loss) $(2,132) $(1,609) $700 $(70) Net income (loss) per share: Basic $(0.18) $(0.14) $0.06 $(0.01) Diluted $(0.18) $(0.14) $0.06 $(0.01) Weighted average number of outstanding shares of common stock: Basic 11,936 11,861 11,921 11,852 Diluted 11,936 11,861 12,046 11,852 MarkWest Hydrocarbon, Inc. Segment Income (Loss) (in thousands) MarkWest MarkWest Hydrocarbon Energy Consolidating Standalone Partners Entries Total Three months ended June 30, 2006: (in thousands) Revenues: Revenue $62,189 $142,280 $(17,879) $186,590 Derivatives (6,156) (6,901) -- (13,057) Total Revenue 56,033 135,379 (17,879) 173,533 Purchased product costs 52,606 76,178 (11,926) 116,858 Facility expenses 4,705 15,465 (5,953) 14,217 Selling, general and administrative expenses 4,073 8,988 -- 13,061 Depreciation 394 7,384 -- 7,778 Amortization of intangible assets -- 4,027 -- 4,027 Accretion of asset retirement and lease obligations -- 26 -- 26 Operating income (loss) (5,745) 23,311 -- 17,566 Other income (expense): Equity in earnings in unconsolidated affiliates -- 1,228 -- 1,228 Interest income 177 259 -- 436 Interest expense (84) (10,714) -- (10,798) Amortization of deferred financing costs (a component of interest expense) (33) (826) -- (859) Dividend income 109 -- -- 109 Miscellaneous income 2 1,515 -- 1,517 Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes (5,574) 14,773 -- 9,199 Income tax (expense) benefit 78 (679) 543 (58) Non-controlling interest in net income of consolidated subsidiary -- -- (11,273) (11,273) Net income (loss) $(5,496) $14,094 $ (10,730) $(2,132) MarkWest Hydrocarbon, Inc. Segment Income (Loss) (in thousands) MarkWest MarkWest Hydrocarbon Energy Consolidating Standalone Partners Entries Total Three months ended June 30, 2005: (in thousands) Revenues: Revenue $52,786 $103,200 $(14,706) $141,280 Derivatives -- (240) -- (240) Total Revenue 52,786 102,960 (14,706) 141,040 Purchased product costs 47,729 73,862 (9,237) 112,354 Facility expenses 5,094 11,360 (5,469) 10,985 Selling, general and administrative expenses 2,814 6,311 -- 9,125 Depreciation 419 4,576 -- 4,995 Amortization of intangible assets -- 2,095 -- 2,095 Accretion of asset retirement and lease obligations 2 9 -- 11 Operating income (loss) (3,272) 4,747 -- 1,475 Other income (expense): Equity in earnings in unconsolidated affiliates (1) 990 -- 989 Interest income 258 63 -- 321 Interest expense (30) (4,558) -- (4,588) Amortization of deferred financing costs (a component of interest expense) (61) (497) -- (558) Dividend income 96 -- -- 96 Miscellaneous income 222 (74) -- 148 Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes (2,788) 671 -- (2,117) Income tax benefit 802 -- -- 802 Non-controlling interest in net income of consolidated subsidiary -- -- (294) (294) Net income (loss) $(1,986) $671 $(294) $(1,609) MarkWest Hydrocarbon, Inc. Segment Income (Loss) (in thousands) MarkWest MarkWest Hydrocarbon Energy Consolidating Standalone Partners Entries Total Six months ended June 30, 2006: (in thousands) Revenues: Revenue $164,281 $298,783 $(35,594) $427,470 Derivatives (7,655) (6,661) -- (14,316) Total Revenue 156,626 292,122 (35,594) 413,154 Purchased product costs 144,631 176,975 (23,581) 298,025 Facility expenses 10,475 29,459 (12,013) 27,921 Selling, general and administrative expenses 7,111 17,326 -- 24,437 Depreciation 599 14,557 -- 15,156 Amortization of intangible assets -- 8,043 -- 8,043 Accretion of asset retirement and lease obligations -- 51 -- 51 Operating income (loss) (6,190) 45,711 -- 39,521 Other income (expense): Equity in earnings in unconsolidated affiliates -- 2,173 -- 2,173 Interest income 363 479 -- 842 Interest expense (152) (21,690) -- (21,842) Amortization of deferred financing costs (a component of interest expense) (50) (1,634) -- (1,684) Dividend income 215 -- -- 215 Miscellaneous income 152 3,607 -- 3,759 Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes (5,662) 28,646 -- 22,984 Income tax (expense) benefit (331) (679) 543 (467) Non-controlling interest in net income of consolidated subsidiary -- -- (21,817) (21,817) Net income (loss) $(5,993) $27,967 $(21,274) $700 MarkWest Hydrocarbon, Inc. Segment Income (Loss) (in thousands) MarkWest MarkWest Hydrocarbon Energy Consolidating Standalone Partners Entries Total Six months ended June 30, 2005: (in thousands) Revenues: Revenue $117,307 $192,744 $(30,511) $279,540 Derivatives -- (147) -- (147) Total Revenue 117,307 192,597 (30,511) 279,393 Purchased product costs 101,550 134,647 (19,144) 217,053 Facility expenses 10,921 20,691 (11,367) 20,245 Selling, general and administrative expenses 6,277 10,950 -- 17,227 Depreciation 834 8,902 -- 9,736 Amortization of intangible assets -- 4,190 -- 4,190 Accretion of asset retirement and lease obligations 2 19 -- 21 Operating income (loss) (2,277) 13,198 -- 10,921 Other income (expense): Equity in earnings in unconsolidated affiliates -- 990 -- 990 Interest income 440 130 -- 570 Interest expense (61) (8,232) -- (8,293) Amortization of deferred financing costs (a component of interest expense) (122) (972) -- (1,094) Dividend income 188 -- -- 188 Miscellaneous income 413 (178) -- 235 Income (loss) before non-controlling interest in net income of consolidated subsidiary and income taxes (1,419) 4,936 -- 3,517 Income tax benefit 32 -- -- 32 Non-controlling interest in net income of consolidated subsidiary -- -- (3,619) (3,619) Net income (loss) $(1,387) $4,936 $(3,619) $(70) MarkWest Hydrocarbon, Inc. Segment Balance Sheet (in thousands) June 30, 2006 MarkWest MarkWest Hydrocarbon Energy Consolidating Standalone Partners Entries Consolidated ASSETS Current assets: Cash and cash equivalents $5,179 $ 21,093 $-- $26,272 Marketable securities 6,527 -- -- 6,527 Receivables 21,469 75,553 (10,174) 86,848 Inventories 35,804 12,087 -- 47,891 Fair value of derivative instruments 185 1,131 -- 1,316 Other current assets 11,138 10,100 -- 21,238 Total current assets 80,302 119,964 (10,174) 190,092 Property, plant and equipment, net 2,563 503,271 -- 505,834 Investment in and advances to other equity investee 7,738 57,394 (7,738) 57,394 Other long term assets 2,905 358,412 -- 361,317 Total assets $93,508 $1,039,041 $(17,912) $1,114,637 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $29,232 $122,336 $(10,174) $141,394 Fair value of derivative instruments 7,840 7,924 -- 15,764 Deferred income taxes 533 -- -- 533 Current portion of long term debt -- 460 -- 460 Total current liabilities 37,605 130,720 (10,174) 158,151 Long-term debt -- 593,628 -- 593,628 Deferred income taxes 4,247 679 (543) 4,383 Non-controlling interest in consolidated subsidiary 710 -- 304,941 305,651 Fair value of derivative instruments -- 658 -- 658 Other long-term liabilities 12,983 1,220 -- 14,203 Total liabilities 55,545 726,905 294,224 1,076,674 Total stockholders' equity 37,963 312,136 (312,136) 37,963 Total liabilities and stockholders' equity $93,508 $1,039,041 $(17,912) $1,114,637 MarkWest Hydrocarbon, Inc. Segment Balance Sheet (in thousands) December 31, 2005 MarkWest MarkWest Hydrocarbon Energy Eliminating Standalone Partners Entries Consolidated ASSETS Current assets: Cash and cash equivalents $863 $20,105 $-- $20,968 Marketable securities 6,070 -- -- 6,070 Receivables 38,922 117,978 (11,361) 145,539 Inventories 26,946 3,554 -- 30,500 Other 20,020 6,861 -- 26,881 Total current assets 92,821 148,498 (11,361) 229,958 Property, plant and equipment, net 1,737 492,961 494,698 Investment in and advances to other equity investee 6,668 182 (6,668) 182 Other assets 3,014 404,452 -- 407,466 Total assets $104,240 $1,046,093 $(18,029) $1,132,304 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $43,247 $133,088 $(11,361) $164,974 Fair value of derivative instruments -- 728 -- 728 Deferred income taxes 362 -- -- 362 Current portion of long term debt -- 2,738 -- 2,738 Total current liabilities 43,609 136,554 (11,361) 168,802 Long-term debt 7,500 601,262 -- 608,762 Non-controlling interest in consolidated subsidiary 508 -- 300,507 301,015 Other long-term liabilities 12,641 1,102 - 13,743 Total liabilities 64,258 738,918 289,146 1,092,322 Total stockholders' equity 39,982 307,175 (307,175) 39,982 Total liabilities and stockholders' equity $104,240 $1,046,093 $(18,029) $1,132,304 MarkWest Hydrocarbon, Inc. Operating Statistics Three Months Ended June 30, Six Months Ended June 30, 2006 2005 2006 2005 MarkWest Hydrocarbon Standalone: Marketing NGL product sales (gallons) 19,783,000 31,317,000 69,750,000 83,481,000 Wholesale NGL product sales (gallons)(1) 7,867,000 7,087,000 35,063,000 26,759,000 MarkWest Energy Partners: Southwest: East Texas (2) Gathering systems throughput (Mcf/d) 375,000 323,000 360,000 305,000 NGL product sales (gallons) 40,461,000 26,222,000 75,897,000 50,596,000 Oklahoma Foss Lake gathering systems throughput (Mcf/d) 84,500 70,000 86,100 69,000 Arapaho NGL product sales (gallons) 19,615,000 16,457,000 38,032,000 31,674,000 Other Appleby gathering systems throughput (Mcf/d) 33,600 32,000 33,600 30,000 Other gathering systems throughput (Mcf/d) 21,900 16,000 20,500 17,000 Lateral throughput volumes (Mcf/d)(3) 93,600 91,000 71,500 72,000 Appalachia: Natural gas processed for a fee (Mcf/d)(4) 197,000 192,000 201,000 200,000 NGLs fractionated for a fee (Gal/day) 450,000 421,000 450,000 441,000 NGL product sales (gallons) 10,468,000 10,154,000 20,951,000 20,919,000 Michigan: Natural gas processed for a fee (Mcf/d) 5,800 6,800 5,200 6,900 NGL product sales (gallons) 1,394,000 1,493,000 2,843,000 3,056,000 Crude oil transported for a fee (Bbl/d) 14,900 14,200 14,600 14,200 Gulf Coast:(5) Natural gas processed for a fee (Mcf/d) 130,000 NA 125,000 NA NGLs fractionated for a fee (Gal/day) 1,128,000 NA 1,086,000 NA DATASOURCE: MarkWest Hydrocarbon, Inc. CONTACT: Frank Semple, President and CEO, or James Ivey, CFO, or Andy Schroeder, VP Finance & Treasurer, +1-866-858-0482, or fax, +1-303-290-8769, , all of MarkWest Hydrocarbon, Inc. Web site: http://www.markwest.com/

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