8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) May 8, 2006

MARKWEST HYDROCARBON, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-14841	84-1352233
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification Number)

155 Inverness Drive West, Suite 200, Englewood, CO 80112-5000

(Address of principal executive offices)

Registrant’s telephone number, including area code: 303-290-8700

Not Applicable.

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-Commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-Commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Condition

                On May 8, 2006, MarkWest Hydrocarbon, Inc. (the “Company”) announced its consolidated financial results for the three months ended March 31, 2006.  A copy of the Company’s earnings release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

                On May 9, 2006, MarkWest Hydrocarbon, Inc., held a conference call to discuss its first quarter 2006 financial results and other corporate developments. A transcript of the call is attached as Exhibit 99.2.

                This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01.  Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Description of Exhibit
99.1	Press release dated May 8, 2006, announcing first quarter earnings.
99.2	Transcript of First Quarter 2006 Earnings Call of MarkWest Hydrocarbon, Inc. held on May 9, 2006.

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SIGNATURE

                Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		MARKWEST HYDROCARBON, INC.
		(Registrant)
Date: May 9, 2006	By:	/s/ NANCY K. MASTEN
		Nancy K. Masten
		Chief Accounting Officer

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Exhibit Index

Exhibit No.	Description of Exhibit
99.1	Press release dated May 8, 2006, announcing first quarter earnings.
99.2	Transcript of First Quarter 2006 Earnings Call of MarkWest Hydrocarbon, Inc. held on May 9, 2006.

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EX-99.1

Exhibit 99.1

MarkWest Hydrocarbon, Inc.	Contact:	Frank Semple, President and CEO
155 Inverness Drive West, Suite 200		James Ivey, CFO
Englewood, CO 80112-5000		Andy Schroeder, VP of Finance/Treasurer
(800) 730-8388	Phone:	(303) 290-8700
(303) 290-8700	E-mail:	investorrelations@markwest.com
(303) 290-8769 Fax	Website:	www.markwest.com

MarkWest Hydrocarbon Reports 2006 First Quarter Results

DENVER—May 8, 2006—MarkWest Hydrocarbon, Inc. (AMEX: MWP) (the “Company”) today reported net income of $2.8 million for the three months ended March 31, 2006, or $0.26 per diluted share, compared to net income of $1.5 million, or $0.14 per diluted share, for the first quarter of 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 $3.3 million in the first quarter of 2006, up from $0.9 million in the first quarter of 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 $3.6 million in distributions in the first quarter of 2006, which represents a 29% increase over the $2.8 million received in the first 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 March 31, 2006, our Standalone segment reported a net loss of $0.5 million, a decrease of $1.1 million when compared to the $0.6 million of net income for the same period in 2005.  This result is summarized as follows:

•Our realized fractionation (frac) spread declined significantly compared to the prior year (approximately $0.09 per gallon in 2006 vs. approximately $0.25 per gallon in 2005).  When combined with a 1.7 million gallon reduction in sales, this amounted to a $7.5 million negative impact on segment net income.

•The revaluation of our long-term shrink obligation (a non-cash item) increased revenue by $4.1 million in the first quarter of 2006 compared to a $1.2 million decrease in 2005, resulting in a $5.3 million positive impact to the quarter-over-quarter comparison.  Our derivative activity, also a non-cash item, resulted in a negative $1.6 impact on our Standalone operations for the quarter, compared to none in 2005.

•Other areas, including SG&A, depreciation, interest and dividend income and our other marketing operations offset these declines by a combined $2.2 million.

•Non-cash compensation included in SG&A was $0.7 million for the first quarter in 2006 compared to $1.3 million for 2005.

In April 2006, the Company declared a stock dividend of one share of MarkWest’s common stock for each ten shares of common stock held by MarkWest’s common stockholders.  The stock dividend is to be paid on May 23, 2006, to the stockholders of record as of the close of business on May 11, 2006.  The ex-dividend date is May 9, 2006.  The Company also declared a quarterly cash dividend of $0.175 per share of its common stock for an implied annual rate of $0.70 per share to be paid on June 5, 2006, to shareholders of record as of May 26, 2006.  This quarterly cash dividend represents an increase of $0.05 per share over the previous quarter’s dividend.

“Our continued objective is to drive value for our MarkWest Hydrocarbon shareholders through the growth of MarkWest Energy Partners. The partnership had a very strong first quarter and we are very focused on continuing that performance,” said Frank Semple, President and Chief Executive Officer.  “Contributions to MarkWest Hydrocarbon’s net income from MarkWest Energy Partners was $3.3 million.  Additionally, through the ownership of the common units and GP interest, and since we are well into the 50% incentive distributions rights splits, Hydrocarbon’s distributions from the Partnership will continue to grow at a faster rate than the Partnership’s per unit growth rate.  The recent Partnership acquisitions and core assets are performing extremely well and there are significant opportunities for additional growth.  In addition to the strong distributable cash flow performance, we were also pleased with MarkWest Energy Partner’s recent rating as the top midstream service provider by the EnergyPoint Customer Satisfaction Research Survey.  Our frac spread business had a negative impact on MarkWest Hydrocarbon’s financial performance on a standalone basis when compared to the strong first quarter we experienced in 2005, primarily due to the very high cost of natural gas during the last quarter of 2005 and early 2006.  However, the spreads have improved during the last few months and the frac spread indicators look strong through the remainder of the year.  We have hedged in excess of 20 million gallons through the first quarter of 2007 and will continue to evaluate opportunities to lock in favorable margins.”

The Company will host a conference call on Tuesday, May 9, 2006, at 2:00 P.M. MDT to review its first quarter 2006 earnings.  Interested parties can participate in the call by dialing the following number approximately ten minutes prior to the scheduled start time:  1-800-366-3908.  A replay of the call will be available through May 16, 2006by dialing 1-800-405-2236 and entering the following passcode: 11059923#.  To access the webcast, please visit our website at www.markwest.com.

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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 March 31,
	2006			2005
	(in thousands)
Revenues	$	240,880		$	138,260
Derivatives	(1,259		)	93
Total Revenue	239,621			138,353
Operating expenses:
Purchased product costs	181,167			104,699
Facility expenses	13,704			9,260
Selling, general and administrative expenses	11,376			8,102
Depreciation	7,378			4,741
Amortization of intangible assets	4,016			2,095
Accretion of asset retirement obligation	25			10
Impairments	—			—
Total operating expenses	217,666			128,907
Income from operations	21,955			9,446
Other income (expense):
Income from unconsolidated subsidiary	945			—
Interest income	406			249
Interest expense	(11,044		)	(3,704		)
Amortization of deferred financing costs (a component of interest expense)	(825		)	(536		)
Dividend income	106			92
Miscellaneous income (expense)	2,242			87
Income (loss) from continuing operations before non-controlling interest in net income of consolidated subsidiary and income taxes	13,785			5,634
Income tax (expense) benefit
Current	493			—
Deferred	(902		)	(770		)
Income tax (expense) benefit	(409		)	(770		)
Non-controlling interest in net income of consolidated subsidiary	(10,544		)	(3,325		)
Net income	$	2,832		$	1,539
Net income per share:
Basic	$	0.26		$	0.14
Diluted	$	0.26		$	0.14
Weighted average number of outstanding shares of common stock:
Basic	10,821			10,766
Diluted	10,923			10,917

MarkWest Hydrocarbon, Inc.

Segment Income (Loss)

(in thousands)

	MarkWest Hydrocarbon Standalone			MarkWest Energy Partners		Eliminating Entries			Total
	(in thousands)
Three Months Ended March 31, 2006:
Revenues	$	100,593		$	156,743	$	(17,715	)	$	239,621
Purchased product costs	$	92,025		$	100,797	$	(11,655	)	181,167
Net operating margin	8,568			55,946		(6,060		)	58,454
Facility expenses	5,770			13,994		(6,060		)	13,704
Selling, general and administrative expenses	3,038			8,338		—			11,376
Depreciation	205			7,173		—			7,378
Amortization of intangible assets	—			4,016		—			4,016
Accretion of asset retirement and sublease obligations	—			25		—			25
Income (loss) from operations	$	(445	)	$	22,400	$	—		$	21,955
March 31, 2006:
Cash, cash equivalents and restricted cash	$	11,809		$	26,823	$	—		$	38,632
Marketable securities	6,378			—		—			6,378
Current assets	78,222			118,011		(6,707		)	189,526
Total assets	110,779			1,019,322		(34,624		)	1,095,477
Current liabilities	32,601			119,109		(6,706		)	145,004
Total debt	—			592,500		—			592,500
Three Months Ended March 31, 2005:
Revenues	$	64,521		$	89,637	$	(15,805	)	$	138,353
Purchased product costs	53,821			60,785		(9,907		)	104,699
Net operating margin	10,700			28,852		(5,898		)	33,654
Facility expenses	5,827			9,331		(5,898		)	9,260
Selling, general and administrative expenses	3,463			4,639		—			8,102
Depreciation	415			4,326		—			4,741
Amortization of intangible assets	239,621			2,095		—			241,716
Accretion of asset retirement and lease obligations	—			10		—			10
Income from operations	$	(238,626	)	$	8,451	$	—		$	(230,175	)
March 31, 2005:
Cash, cash equivalents and restricted cash	$	21,364		$	15,184	$	—		$	36,548
Marketable securities	20,544			—		—			20,544
Current assets	74,485			51,231		(9,570		)	116,146
Total assets	104,433			557,828		(33,892		)	628,369
Current liabilities	27,410			54,611		(9,570		)	72,451
Total debt	—			265,000		—			265,000

MarkWest Hydrocarbon, Inc.

Segment Balance Sheet

(in thousands)

	MarkWest			MarkWest
	Hydrocarbon			Energy		Eliminating
	Standalone			Partners		Entries			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	11,809		$	26,823	$	—		$	38,632
Marketable securities	6,378			—		—			$	6,378
Receivables	30,255			78,615		(6,707		)	$	102,163
Inventories	10,539			5,517		—			$	16,056
Other	19,241			7,056		—			$	26,297
Total current assets	78,222			118,011		(6,707		)	189,526
Property, plant and equipment, net	1,620			499,315		—			500,935
Investment in and advances to other equity investee	7,191			199		(7,191		)	199
Other assets	3,020			401,797		—			404,817
Total assets	90,053			1,019,322		(13,898		)	1,095,477
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	30,626			114,432		(6,707		)	138,351
Fair value of derivative instruments	1,499			1,027		—			2,526
Deferred income taxes	477			—		—			477
Current portion of long term debt	—			3,650		—			3,650
Total current liabilities	32,602			119,109		(6,707		)	145,004
Long-term debt	—			588,850		—			588,850
Non-controlling interest in consolidated subsidiary	508			—		302,972			303,480
Other long-term liabilities	15,127			1,200		—			16,327
Total liabilities	48,237			709,159		296,265			1,053,661
Total stockholders’ equity	41,816		#	310,163		(310,163		)	41,816
Total liabilities and stockholders’ equity	$	90,053		$	1,019,322	$	(13,898	)	$	1,095,477

MarkWest Hydrocarbon, Inc.

Segment Balance Sheet (continued)

(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 March 31,
	2006	2005
MarkWest Hydrocarbon Standalone:
Marketing
NGL product sales (gallons)	49,967,000	52,164,000
Wholesale
NGL product sales (gallons)(1)	27,196,000	19,672,332
MarkWest Energy Partners:
Southwest:
East Texas (2)
Gathering systems throughput (Mcf/d)	346,000	287,000
NGL product sales (gallons)	35,436,000	27,612,000
Oklahoma
Foss Lake gathering systems throughput (Mcf/d)	87,600	67,000
Arapaho NGL product sales (gallons)	18,417,000	15,217,000
Other
Appleby gathering systems throughput (Mcf/d)	33,500	28,000
Other gathering systems throughput (Mcf/d)	19,100	17,000
Lateral throughput volumes (Mcf/d)(3)	49,700	52,000
Appalachia:
Natural gas processed for a fee (Mcf/d)(4)	205,000	210,000
NGLs fractionated for a fee (Gal/day)	449,000	462,000
NGL product sales (gallons)	10,482,000	10,765,000
Michigan:
Natural gas processed for a fee (Mcf/d)	6,300	6,900
NGL product sales (gallons)	1,449,000	1,563,000
Crude oil transported for a fee (Bbl/d)	14,000	14,100
Gulf Coast:(5)
Natural gas processed for a fee (Mcf/d)	120,000	NA
NGLs fractionated for a fee (Gal/day)	820,000	NA

(1)Represents sales from our wholesale business.  Volumes are for the period since the Company started the line of business in February 2004.

(2)The Partnership acquired its East Texas System in late July 2004.  Volumes are for the periods of time since the facility was acquired in 2004.

(3)The Partnership acquired its Lubbock pipeline (a/k/a the PowerTex Lateral Pipeline) in September 2003 and its Hobbs lateral pipeline in April 2004.  The Lubbock and Hobbs pipelines are the only laterals owned that produce revenue on a per-unit-of-throughput basis.  We receive a flat fee from our other lateral pipelines and, consequently, the throughput data from these lateral pipelines is excluded from this statistic.

(4)Includes throughput from our Kenova, Cobb, and Boldman processing plants.

(5)The Partnership acquired its Javelina gathering system in November 2005.  Volumes are for the periods of time since the facility was acquired in 2005.

EX-99.2

Exhibit 99.2

MARK WEST HYDROCARBON, INC.

First Quarter Results Conference

May 9, 2006, 2:00 p.m. MT

Operator

Good afternoon, ladies and gentlemen, and welcome to MarkWest Hydrocarbon’s conference call regarding their 2006 first quarter earnings. At this time all participants are in a listen-only mode. Following today’s presentation instructions will be given for the question and answer session. If anyone needs assistance during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded on Tuesday, May 9, 2006.

I would now like to turn the conference over to the President and Chief Executive Officer of MarkWest Hydrocarbon, Mr. Frank Semple. Please go ahead sir.

Frank Semple, President and Chief Executive Officer

Thanks, Todd, good afternoon everybody and thanks for joining us this afternoon to review the first quarter results for MarkWest Hydrocarbon. Hopefully you’ve all had a chance to review our earnings release which was issued yesterday.

Joining for the call this afternoon are Nancy Masten, Chief Accounting Officer; Jim Ivey, Chief Financial Officer; Randy Nickerson, Senior Vice President of Corporate Development; and Andy Schroeder, VP of Finance and Investor Relations.

First, let me remind everybody that matters discussed on this call will include forward looking statements which are not guarantees for future performance. Actual results could vary significantly from those expressed or implied and such statements are subject to a number of risks and uncertainties. Factors that could cause our actual results to differ from our expectations are included in our periodic reports that we file with the SEC.

This afternoon I’m going to give you a brief overview of our performance for the first quarter on a consolidated basis including the key points that were covered last week during the MarkWest Energy Partners earnings call. Nancy and I will then review the results of MarkWest Hydrocarbon on a standalone basis and then prior to turning to the questions, I also want to reinforce a few changes to our investor relations program, which are designed to improve our communications and transparency for all our investors and analysts.

Turning now to MarkWest Hydrocarbon on a consolidated basis. In our first quarter 2006 earnings release we reported net income of $2.8 million for the first quarter of ‘06. This is compared to net income of $1.5 million for the same period last year.

Our ownership interest in MarkWest Energy Partners contributed $3.3 million while our standalone operations reported a net loss of a half million dollars.

1

As indicated in the MarkWest Energy Partners earnings release, we had an extremely good quarter primarily as a result of continued strong performance from our Southwest business unit operations, the first full quarter impact of the Javelina plant which we acquired in November of last year and the January 1 startup of our new Carthage gas processing plant and NGL pipeline.

All of our Energy Partner segments reported improved segments, operating income compared to the fourth quarter of ‘05 and we’re also very excited about the growth opportunities for all our business units.

Appalachia continues to generate steady cash flow and we’re evaluating various projects with the customers, which could further expand our volumes. The Southwest business unit which includes our significant presence in western Oklahoma and east Texas has experienced continuous growth over the past year and our strong relationship with our producer customers continues to drive expansion projects required to keep pace with their very aggressive drilling programs.

Javelina is the anchor facility in our Gulf Coast business unit and as indicated in our first quarter results, these assets are performing above our expectations.

Now I’d like to discuss the distribution growth that Hydrocarbon has experienced over the last few years and will continue to experience from its investment in MarkWest Energy Partners.

Over the past 24 months, distribution growth and its impact on our incentive distribution rights have become the primary drivers for MarkWest Hydrocarbon’s value and this will be a continuing trend. Since August ‘04 when the quarterly distribution per unit in MarkWest Energy Partners was 74 cents per unit, just shy of the 50% IDR level through this quarter’s distribution, our share of distributions attributable to our general partner’s interest including IDRs has grown from just under $400,000 to in excess of $2.1 million. This is a 540% increase over a two-year period.

While this growth rate is not sustainable on a percentage basis it is a good indication of the power of the IDRs. It’s also worth noting that $1.9 million of the May distribution is due to the IDRs as compared to $1.3 million from the February 2006 distribution. This is nearly a 50% increase.

This significant growth in cash received from the partnership has allowed us to both strengthen our balance sheet and also establish a durable dividend policy for our shareholders and also strengthen our balance sheet. (That’s a little bit redundant, isn’t it.) But bottom line is that cash that we received in the partnership has brought a tremendous amount of benefit to our balance sheet and I’ll talk about that in a second. Also, it’s allowed us to do what we’ve been trying to do over past couple of years and that’s to put in place a durable dividend policy for our shareholders.

During that same two-year period we’ve increased our quarterly dividend from 2.5 cents per share in May 2004 to the current 17.5 cents per share. We’re also in a much better position to manage our NGL marketing business from a credit, a risk and a margin basis.

I’d also like to address briefly the SG&A situation. We believe the absolute level of our SG&A is too high. There’s no doubt about that. We continue to work to reduce the current level. More importantly, the strength and magnitude of cash flow coming from MarkWest Energy means that our dividend growth in the future will not be affected by the frac spread business or our ongoing level of SG&A.

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With that broad overview, let me now turn the discussion over to Nancy to cover our financials.

Nancy Masten, Senior Vice President and Chief Accounting Officer

Thank you, Frank. Frank’s already touched on the MarkWest Energy Partner’s contribution to our net income for the quarter but just to reiterate, our share of net income was $3.3 million of the partnership’s total net income of $13.9 million.

From a Hydrocarbon standalone perspective, regarding our frac spread. For the first quarter of 2006, our realized frac spread declined significantly compared to the prior year. The realized frac spread in the first quarter of ‘05 was approximately 25 cents per gallon as compared to the approximately 9 cents per gallon realized in the first quarter of ‘06.

Regarding our long-term shrink obligations. As you’ll recall in our last quarter’s call, we discussed our long-term shrink account and its impact on our financial results. Our shrink obligation’s approximately 1 bcf, so $1.00 per mcf movement in natural gas prices has a $1.0 million non-cash impact on revenue. When gas prices are moving up, the result is a decrease in revenue and when gas prices are moving down, the result in an increase in revenue.

For the quarter ended March 31, 2006, this adjustment has increased revenue and resulting net operating income by $4.2 million as gas prices declined from $11.77 on January 1, 2006 to $7.61 per mmbtu on March 31.

Regarding our derivative activity. Our activity reflected $1.5 million of non-cash mark to market loss for the first quarter of 2006. There were no realized gains for the quarter and there was derivative mark to market in the first quarter of ‘05. The cumulative non-cash mark to market effect is therefore the same $1.5 million loss and this amount is reflected in the current liability portion of the standalone segment on our balance sheet as fair value of derivative instruments.

As we’ve previously stated, we no longer have any accounting activity under hedge accounting and we mark all of our positions to market. This treatment does create some volatility in our earnings but this is outlined fully in our financial statements and in our earnings release disclosures.

Turning now to SG&A expense. For the quarter ended March 31, 2006, Hydrocarbon standalone SG&A was $3.0 million, down from $3.5 million for the quarter ended in the comparable period 2005. Non-cash compensation was $0.7 million in 2006 compared to $1.3 million in 2005. Cash SG&A increased by about $100,000 compared to the first quarter of 2005. Our current run-rate, approximately $2.0 million per quarter.

I’d like to wrap up the financial portion with a brief discussion of the balance sheet. As of March 31, MarkWest Hydrocarbon standalone had $18.2 million of cash and marketable securities. The company had no debt outstanding. Our standalone working capital position as of March 31 was $47.1 million compared to $49.2 million at 12/31/05 at which point we also had $7.5 million of debt outstanding not included in this working capital amount.

Total assets have remained consistent at the $1.1 billion level compared to 12/31/05.

3

That’s it for the financial discussion. Frank, I’ll turn it back to you.

Frank Semple, President and Chief Executive Officer

Thanks, Nancy. Now prior to turning to your questions, I also want to mention that we continue to focus on opportunities to capture additional upside and mitigate downside exposure in the execution of an ongoing hedging program. We continued to experience negative impact on our frac spread business during the first quarter primarily due to the high post-hurricane natural gas prices. However, the overall price environment for ‘06 is very positive and we continue to take advantage of the forward market to lock in favorable commodity prices and fractionation margins.

We’ve mitigated approximately 40% to 45% of our next 12 month’s exposure through the restructuring of the producer keep hold agreements that we’ve talked about previously and had the direct frac spread hedges. The hedges have been executed spread north of 30 cents per gallon through the remainder of this year and through the first quarter of next year. The bottom line is that we will continue to execute a proactive hedging program as a part of our ongoing end yield marketing business.

On the investor’s relations front that I mentioned earlier, we are in the process of installing a toll free hotline which will ring directly into Andy’s administrative assistant who will either be able to handle your call directly or be able to refer you to the appropriate individual for a prompt response to your question. Our goal is for you to have same day response to all your questions. The phone number is going to be available on our website within the next several days.

I’m also pleased to announce that we’ll be holding our investor conference in New York during the last week of June, which will allow us to provide you an update of the company’s activities to date. We will continue to have these types of investor forums on a routine basis. We feel that these changes will improve our lines of communications with the investors and analysts so please let us know when you have any questions or suggestions.

That broad overview completes our discussions on Hydrocarbon. Todd, I’ll turn it back to you to manage the questions.

Operator

Thank you, sir. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press the star followed by the one on your touchtone phone. If you would like to decline from the polling process, press the star followed by the two. You will hear a three-tone prompt acknowledging your selection and your questions will be polled in the order they are received. If you are using a speakerphone you will need to lift the handset before pressing the numbers. One moment please for the first question.

At this time there are no questions in the queue. I’ll turn the call back over to management for any closing comments.

Frank Semple, President and Chief Executive Officer

That’s a surprise but again I appreciate all of you participating on today’s call and like I said we look

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forward to getting together with you in June at the investor conference. Thanks a lot for your time today.

Operator

Ladies and gentlemen, this concludes the MarkWest Hydrocarbon 2006 first quarter earnings conference call. We thank you again for your participation. You may now disconnect.

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