8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  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):  August 8, 2006

WESTERN GAS RESOURCES, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-10389	84-1127613
(State of Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)
1099 18th Street, Suite 1200, Denver, Colorado		80202
(Address of Principal Executive Offices)		(Zip Code)
(303) 452-5603
(Registrant’s telephone number, including area code)
N.A.
(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):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-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 August 8, 2006, Western Gas Resources, Inc. issued a press release announcing its results for the quarter ended June 30, 2006. The press release is furnished as Exhibit 99.1 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(c)Exhibits.

A list of exhibits filed herewith is contained on the Exhibit Index which immediately precedes such exhibits and is incorporated herein by reference.

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SIGNATURES

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

		WESTERN GAS RESOURCES, INC.
		(Registrant)
Date:	August 8, 2006	By:	/s/ William J. Krysiak
				Name:  William J. Krysiak
				Title: Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release issued on August 8, 2006, announcing second quarter 2006 results for Western Gas Resources, Inc.

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EX-99.1

Exhibit 99.1

WESTERN GAS RESOURCES, INC.

ANNOUNCES SECOND QUARTER 2006 RESULTS

Denver, August 8, 2006.  Western Gas Resources, Inc. (NYSE:WGR) today announced that for the quarter ended June 30, 2006, net income increased 13 percent to $42.4 million, or earnings of $0.55 per share of common stock.  This compares to net income of $37.6 million, or earnings of $0.50 per share of common stock, for the same period in 2005.

For the six months ended June 30, 2006, net income increased 82 percent to $104.2 million, or earnings of $1.37 per share of common stock.  This compares to net income of $57.3 million, or earnings of $0.76 per share of common stock, for the same period in 2005.  Earnings per share of common stock for all periods are presented on a fully-diluted basis.

For the quarter ended June 30, 2006, revenues were $787.2 million, EBITDA (earnings before interest, taxes, depreciation and amortization) was $109.6 million and cash flow before working capital adjustments was $109.0 million.  For the six months ended June 30, 2006, revenues were $1.8 billion, EBITDA (earnings before interest, taxes, depreciation and amortization) was $244.3 million and cash flow before working capital adjustments was $224.6 million.  See the tables below for a reconciliation of EBITDA and cash flow before working capital adjustments.

The financial results for all periods included the effect of non-cash mark-to-market changes in the value of forward transactions related to the Company’s marketing activities and basis hedges for sales of the Company’s equity natural gas.  Pre-tax earnings for the quarter ended June 30, 2006 include a gain of $1.3 million from such non-cash items and pre-tax earnings for the quarter ended June 30, 2005 include a gain of $11.1 million for similar items.  Pre-tax earnings for the six months ended June 30, 2006 include a gain of $5.5 million from such non-cash items and pre-tax earnings for the six months ended June 30, 2005 include a loss of $17.6 million for similar items. The impact of non-cash mark-to-market changes will vary depending on the change in the forward price of natural gas related to the anticipated withdrawal of inventory from storage or the changes in the relative prices at various delivery points.

Volumes and prices.  Net production was 17.7 billion cubic feet equivalent (“Bcfe”) and averaged 194 million cubic feet equivalent per day (“MMcfed”) in the second quarter of 2006, representing a 17 percent increase compared to the same period in 2005. Gas throughput volumes at the Company’s gathering and processing facilities averaged 1.4 billion cubic feet per day (“Bcfd”) in the second quarter of 2006, representing a three percent increase compared to the same period in 2005.

Total gas sales volumes marketed, including equity gas production, gas purchased under contracts at the Company’s plants and gas purchased from third parties for resale, averaged 1.1 Bcfd in the second quarter of 2006. Average gas prices realized for marketed volumes for the quarter decreased six percent to $5.99 per thousand cubic feet (“Mcf”) compared to $6.38 per Mcf for the same period in 2005.

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Total natural gas liquids (“NGLs”) sales volumes marketed averaged 1.8 million gallons per day in the second quarter of 2006.  Average NGL prices realized for marketed volumes for the quarter increased 30 percent to $1.14 per gallon compared to $0.88 per gallon for the same period in 2005.

The Company’s equity hedging positions increased operating profit by $12.3 million for the second quarter of 2006 compared to a decrease in operating profit of $657,000 in the second quarter of 2005.

Balance sheet.  At June 30, 2006, Western had total assets of $2.5 billion, cash and cash equivalents in short-term investments of $3.9 million, total long-term debt outstanding of $572.0 million and a debt to capitalization ratio, net of cash and cash equivalents of 36 percent.

Powder River Basin.  Net coal bed methane (“CBM”) production volumes increased 19 percent to 12.2 Bcf net in the second quarter of 2006 compared to the same period in 2005 and averaged 134 MMcfd.  In June 2006, the Company’s gross CBM production from the Big George fairway averaged approximately 218 MMcfd, a 123 percent increase from a year ago, from nine development areas.  Industry, including Western, was producing over 368 MMcfd in May 2006 from the Big George coal over a 1,800 square-mile area.

Greater Green River Basin. Production from the Greater Green River Basin, primarily in the Pinedale Anticline and Jonah Field development areas, increased 13 percent to 4.3 Bcfe net in the second quarter of 2006 compared to the same period of 2005 and averaged 47 MMcfed.

Revisions to operational performance guidance for the remainder of 2006.  As a result of the Company’s proposed merger with a wholly-owned subsidiary of Anadarko Petroleum Corporation, announced on June 23, 2006, the Company is not providing updates or modifications to the previous guidance at this time.

Company description.  Western is an independent natural gas explorer, producer, gatherer, processor, transporter and energy marketer.  The Company’s producing properties are located primarily in Wyoming, including the developing Powder River Basin coal bed methane play, where Western is a leading acreage holder and producer, and the rapidly growing Pinedale Anticline.  The Company also owns and operates natural gas gathering, processing and treating facilities in major gas-producing basins in the Rocky Mountain, Mid-Continent and West Texas regions of the United States.  For additional Company information, visit Western’s web site at www.westerngas.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding drilling activity, production, new well locations, gross operating margin and operating expenses.  Although the Company believes that its expectations are based on reasonable assumptions, Western can give no assurances that its goals will be achieved. These statements are subject to numerous risks and uncertainties, which may cause actual results to differ materially.  These risks and uncertainties include, among other things, changes in natural gas and NGL prices, the timeliness of federal and state permitting activity, the drilling budgets and schedules of third parties on the Company’s non-operated properties, government regulation or action, geological risk, environmental risk, weather, rig availability, transportation capacity and other factors as discussed in the Company’s 10-K and 10-Q Reports and other filings with the Securities and Exchange Commission.

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Financial Results:

(Dollars in thousands except share and per share amounts)

	Quarter						Six Months
	Ended June 30,						Ended June 30,
	2006			2005			2006			2005
Revenues:
Sale of gas	$	576,716		$	678,087		$	1,348,377		$	1,374,306
Sale of natural gas liquids	171,986			149,481			339,402			282,450
Gathering, processing and transportation	27,573			27,823			54,273			51,703
Price risk management activities	9,233			11,205			30,213			(9,043		)
Other	1,666			1,430			3,990			2,717
Total Revenues	787,174			868,026			1,776,255			1,702,133
Costs and Expenses:
Product purchases	$	592,861		$	707,516		$	1,368,993		$	1,414,870
Plant and transportation operating expense	29,963			26,831			62,179			54,530
Oil and gas exploration and production expense	35,909			24,059			64,427			48,955
Depreciation, depletion and amortization	35,924			30,799			71,286			59,877
Selling and administrative expense	21,296			17,536			41,144			30,096
(Earnings) from equity investments	(2,440		)	(2,246		)	(4,814		)	(4,380		)
Interest expense	5,419			4,033			8,604			7,553
Total costs and expenses	718,932			808,528			1,611,819			1,611,501
Income before taxes	68,242			59,498			164,436			90,632
Provision for income taxes	25,873			21,869			60,205			33,297
Net Income	$	42,369		$	37,629		$	104,231		$	57,335
Weighted average shares of common stock outstanding	75,459,422			74,234,424			75,269,376			74,191,346
Earnings per share of common stock	$	0.56		$	0.51		$	1.38		$	0.77
Weighted average shares of common stock outstanding - assuming dilution	76,718,838			75,678,389			76,509,330			75,603,310
Earnings per share of common stock - assuming dilution	$	0.55	(1)	$	0.50	(2)	$	1.37	(3)	$	0.76	(4)

(1)Fully-diluted earnings per share for the quarter ended June 30, 2006 include, as potential common shares, the issuance of 1.3 million common shares from the possible exercise of stock options.

(2)Fully-diluted earnings per share for the quarter ended June 30, 2005 include, as potential common shares, the issuance of 1.4 million common shares from the possible exercise of stock options.

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(3)Fully-diluted earnings per share for the six months ended June 30, 2006 include, as potential common shares, the issuance of 1.2 million common shares from the possible exercise of stock options and restricted stock.

(4)Fully-diluted earnings per share for the six months ended June 30, 2005 include, as potential common shares, the issuance of 1.4 million common shares from the possible exercise of stock options.

Condensed Consolidated Balance Sheet:

(Dollars in thousands)

	June 30,		December 31,
	2006		2005
Assets:
Current assets	$	492,955	$	676,193
Property and equipment, net	1,890,203		1,558,321
Other assets	104,445		100,120
Total assets	$	2,487,603	$	2,334,634
Liabilities and Stockholders’ Equity:
Liabilities:
Current liabilities	$	461,885	$	609,658
Long-term debt	572,000		430,000
Other liabilities	427,364		391,517
Total liabilities	1,461,249		1,431,175
Stockholders’ equity	1,026,354		903,459
Total liabilities and stockholders’ equity	$	2,487,603	$	2,334,634

Reconciliation of Net Income to EBITDA:

(Dollars in thousands)

	Quarter				Six Months
	Ended June 30,				Ended June 30,
	2006		2005		2006		2005
Net Income	$	42,369	$	37,629	$	104,231	$	57,335
Add:
Depreciation, depletion and amortization	35,924		30,799		71,286		59,877
Interest expense	5,419		4,033		8,604		7,553
Income taxes	25,873		21,869		60,205		33,297
EBITDA	$	109,585	$	94,330	$	244,326	$	158,062

EBITDA is not a measure determined pursuant to generally accepted accounting principles, or GAAP, nor is it an alternative to GAAP income.  The Company is presenting this information, as it is a measure of financial performance used in the Company’s credit facilities to monitor the Company’s ability to perform under these facilities.

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Reconciliation of Net Income to

Cash Flow before Working Capital Adjustments:

(Dollars in thousands)

	Quarter						Six Months
	Ended June 30,						Ended June 30,
	2006			2005			2006			2005
Net Income	$	42,369		$	37,629		$	104,231		$	57,335
Add income items that do not affect operating cash flows:
Depreciation, depletion and amortization	35,925			30,799			71,286			59,877
Deferred income taxes	22,855			15,697			44,900			19,775
Excess tax benefits from share-based payment awards	(895		)	—			(2,379		)	—
(Gain) loss on sale of assets	(20		)	(1		)	1,024			27
Non-cash change in fair value of derivatives	(1,283		)	(11,063		)	(5,465		)	17,614
Compensation expense from common stock options and restricted stock	6,986			653			11,637			926
Other non-cash items, net	3,043			(312		)	(587		)	(1,532		)
Cash flow before working capital adjustments	$	108,980		$	73,402		$	224,647		$	154,022
Net working capital adjustments	(31,326		)	(30,696		)	41,017			6,080
Net cash provided by operating activities	$	77,654		$	42,706		$	265,664		$	160,102

Cash Flow before Working Capital Adjustments is not a measure determined pursuant to generally accepted accounting principles, or GAAP, nor is it an alternative to GAAP income.  The Company is presenting this information, as it is an important measure of financial performance used by equity analysts.

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Operating Results:

(Dollars in thousands except per MMcfed, per MMcfd and per Mgal amounts)

	Quarter						Six Months
	Ended June 30,						Ended June 30,
	2006			2005			2006			2005
Exploration and Production:
Average gas production - net volumes sold (MMcfed)	197			167			193			165
Average gas price ($/Mcfe) (1)	$	4.92		$	5.37		$	5.53		$	5.17
Gathering and transportation expense ($/Mcfe)	$	0.83		$	0.76		$	0.84		$	0.79
Average wellhead gas price ($/Mcfe) (2)	$	4.09		$	4.61		$	4.69		$	4.38
Production taxes ($/Mcfe)	$	0.78		$	0.59		$	0.72		$	0.53
LOE ($/Mcfe) (3)	$	0.93		$	0.80		$	0.85		$	0.83
Other expense ($/Mcfe) (4)	$	0.19		$	0.12		$	0.16		$	0.18
Effect of equity hedges and other basis swaps	$	11,844		$	378		$	21,483		$	1,604
Non-cash change in fair value of derivatives	$	362		$	—		$	(5,316	)	$	—
Segment - operating profit	$	51,806		$	47,513		$	119,943		$	86,462
Depreciation, depletion and amortization	$	19,745		$	16,899		$	38,881		$	32,528
Gas Gathering and Processing:
Gas throughput volumes (MMcfd)	1,436			1,394			1,410			1,375
Gross operating margin ($/Mcf) (5)	$	0.75		$	0.60		$	0.71		$	0.62
Plant operating expense ($/Mcf) (5)	$	0.22		$	0.20		$	0.24		$	0.21
Effect of equity hedges	$	952		$	(1,035	)	$	2,053		$	(1,774	)
Income from equity investments	$	2,440		$	2,246		$	4,814		$	4,380
Non-cash change in fair value of derivatives	$	(1,630	)	$	(37	)	$	(1,755	)	$	(125	)
Segment - operating profit	$	70,700		$	50,944		$	126,933		$	103,232
Depreciation, depletion and amortization	$	13,472		$	11,594		$	27,076		$	22,872
Gas Transportation:
Gas transportation volumes (MMcfd)	126			139			131			148
Transportation and sales revenue	$	5,505		$	5,431		$	11,687		$	11,368
Operating and product purchase expense	$	1,794		$	2,429		$	3,930		$	5,098
Segment - operating profit	$	3,711		$	3,002		$	7,757		$	6,270
Depreciation, depletion and amortization	$	454		$	436		$	917		$	839
Marketing:
Average gas sales (MMcfd)	1,082			1,162			1,094			1,231
Average NGL sales (Mgald)	1,790			1,876			1,813			1,819
Average gas price ($/Mcf)	$	5.99		$	6.38		$	6.86		$	6.13
Average NGL price ($/Gal)	$	1.14		$	0.88		$	1.07		$	0.86
Average gas sales margin ($/Mcf) (6)	$	(0.008	)	$	(0.025	)	$	0.060		$	0.030
Average NGL sales margin ($/Gal)	$	0.016		$	0.010		$	0.016		$	0.008
Non-cash change in fair value of derivatives	$	2,551		$	11,099		$	12,536		$	(17,488	)
Segment - operating profit	$	4,252		$	10,239		$	29,510		$	(8,164	)
Depreciation, depletion and amortization	$	2		$	35		$	3		$	71

(1)Net of fuel and shrink.

(2)Net of fuel, shrink, gathering and transportation.  Excludes the effect of hedging.

(3)Includes production overhead.

(4)Includes delay rentals, geological and geophysical expense, impairment and unsuccessful well expense.

(5)Per Mcf of throughput.  Gross operating margin is gross revenues less product purchases and joint interest and excludes effect of hedging.

(6)Excludes non-cash change in fair value of derivatives.

Investor Contact:	Ron Wirth, Director of Investor Relations
	(800) 933-5603
	E-mail: rwirth@westerngas.com

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