<PAGE>
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

[X]           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                                       OR

[ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                   FOR THE TRANSITION PERIOD FROM            TO
                                                 ------------  ----------

                        COMMISSION FILE NUMBER 1-11566

                          MARKWEST HYDROCARBON, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                  DELAWARE                                 84-1352233
       (State or other jurisdiction of                 (I.R.S. Employer
       incorporation or organization)                  Identification No.)

             5613 DTC PARKWAY, SUITE 400, ENGLEWOOD, COLORADO 80111
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  303-290-8700



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes  X   No   
    ---    ---

The registrant had 8,484,135 shares of common stock, $.01 per share par value,
outstanding as of August 13, 1997.

--------------------------------------------------------------------------------
<PAGE>
 
<TABLE>
<CAPTION>
 
 
PART I - FINANCIAL INFORMATION                          Page
                                                    ------------
<S>                                                 <C>  
Item 1.  Consolidated Financial Statements
           Consolidated Balance Sheet at June 30, 
             1997 and December 31, 1996.............      1
           Consolidated Statement of Operations for 
             the Three and Six Months Ended June 30, 
             1997 and 1996..........................      2
           Consolidated Statement of Cash Flows for 
             the Three and Six Months Ended June 30, 
             1997 and 1996..........................      3
           Notes to the Consolidated Financial 
             Statements.............................      4
 
Item 2.  Management's Discussion and Analysis of 
           Results of Operations and Financial 
           Condition................................      6
 
PART II - OTHER INFORMATION
 
Item 1.  Legal Proceedings..........................      11
Item 4.  Submission of Matters to a Vote of 
           Security Holders.........................      11
Item 6.  Exhibits and Reports on Form 8-K...........      12
 
SIGNATURES..........................................      13
 
</TABLE>
<PAGE>
 
PART I - FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                          MARKWEST HYDROCARBON, INC.
              (SUCCESSOR TO MARKWEST HYDROCARBON PARTNERS, LTD.)
                          CONSOLIDATED BALANCE SHEET
                           (000S, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>

                                            June 30,
                 ASSETS                       1997      December 31,
                                          (Unaudited)       1996
                                        -------------   ------------
<S>                                         <C>            <C>
Current assets:
    Cash and cash equivalents...........     $    186       $  4,401
    Receivables.........................        8,562          9,755
    Inventories.........................        2,920          5,632
    Prepaid feedstock...................        1,009          1,831
    Other assets........................        1,140            458
                                           ----------     ----------
      Total current assets..............       13,817         22,077
 
Property and equipment:
    Gas processing, gathering, storage         48,319         45,247
     and marketing equipment............
    Oil and gas properties and equipment        8,827          3,731
    Land, buildings and other equipment.        4,445          5,647
    Construction in progress............        7,575          5,831
                                           ----------     ----------
                                               69,166         60,456
    Less: accumulated depreciation,           
     depletion and amortization.........      (13,830)       (12,316)
                                           ----------     ----------
      Total property and equipment, net.       55,336         48,140
 
Intangible assets, net of accumulated
 amortization of $257 and $315 
 respectively...........................          377            380
Note receivable and other assets........        9,548          7,657
                                           ----------     ----------
Total assets............................     $ 79,078       $ 78,254
                                           ==========     ==========
 
   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Trade accounts payable..............     $  2,103       $  5,382
    Accrued liabilities.................        5,417          1,629
    Income taxes payable................           --          3,014
    Current portion of long-term debt...          156            156
                                            ---------      ---------
      Total current liabilities.........        7,676         10,181
 
Deferred income taxes...................        4,253          3,977
Long-term debt..........................       10,026         11,257
 
Minority interest.......................        8,943          9,175
Stockholders' equity:
    Preferred stock, par value $0.01,
     5,000,000 shares authorized, 0                
     shares issued and outstanding......           --             --
    Common stock, par value $0.01,
     20,000,000 shares authorized,                 
     8,506,052 shares issued, 8,484,135
     shares outstanding.................           85             85
    Additional paid-in capital..........       42,471         42,237
    Retained earnings...................        5,924          1,342
    Treasury stock......................         (300)            --
                                           ----------     ----------
       Total stockholders' equity.......       48,180         43,664
                                           ----------     ----------
Total liabilities and stockholders'          
 equity.................................     $ 79,078       $ 78,254
                                           ==========     ==========
</TABLE>
  The accompanying notes are an integral part of these financial statements.

                                       1

<PAGE>
 
                           MARKWEST HYDROCARBON, INC.
              (SUCCESSOR TO MARKWEST HYDROCARBON PARTNERS, LTD. )
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                  (UNAUDITED)
                         (000S, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                     For the               For the
                                              three months ended       six months ended
                                                     June 30,              June 30,
                                                 1997       1996         1997       1996
                                             -----------  --------- ---------- -----------
<S>                                          <C>         <C>        <C>        <C>
 Revenues:
    Plant revenue.......................         $ 9,029    $7,109     $30,287     $18,333
    Terminal and marketing revenue......           1,791     1,415       8,280       9,822
    Oil and gas and other revenue.......             865        96       1,512         163
    Interest income.....................             258        15         348          43
    Other income........................              87       167         298         301
                                             -----------  --------- ---------- -----------  
         Total revenue..................          12,030     8,802      40,725      28,662
                                             -----------  --------- ---------- -----------
 
Costs and expenses:
    Plant feedstock purchases...........           4,292     3,950      14,561       8,538
    Terminal and marketing purchases....           1,784     1,456       8,486       8,683
    Operating expenses..................           2,568     1,127       4,756       2,853
    General and administrative expenses.           1,809     1,063       3,835       2,264
    Depreciation, depletion and                      
     amortization.......................             812       676       1,584       1,328
    Interest expense, net of                         
     capitalized interest...............             312       216         335         509
                                             -----------  --------- ---------- -----------
 
         Total costs and expenses.......          11,577     8,488      33,557      24,175
                                             -----------  --------- ---------- -----------
 
Income before minority interest and                  453       314       7,168       4,487
 income taxes...........................
 
Minority interest in net loss of                      20        --         223          --
 subsidiary.............................
                                             -----------  --------- ---------- -----------
 
Income before income taxes..............             473       314       7,391       4,487
 
Provision for income taxes:
    Current.............................             173        --       2,546          --
    Deferred............................              --        --         263          --
                                             -----------  --------- ---------- -----------
                                                     173        --       2,809          --
                                             -----------  --------- ---------- -----------
 
Net income..............................         $   300    $  314     $ 4,582     $ 4,487
                                             ===========  =========  ========= ===========
 
Earnings per share of common stock (A)..           $0.04     $0.02       $0.54       $0.35
                                             ===========  =========  ========= ===========
Weighted average number of outstanding
 shares of common stock (A).............           8,484     7,908       8,484       7,908
                                             ===========  =========  ========= ===========
 
Pro forma net income (Note 4)
    Historical income before income               N/A       $  314     N/A         $ 4,487
     taxes..............................
    Provision for income taxes..........          N/A          119     N/A           1,704
                                                          ---------            -----------
    Net income..........................          N/A       $  195     N/A         $ 2,783
                                                          =========            ===========
</TABLE>
      (A)  Pro forma for 1996 (see Note 4).

  The accompanying notes are an integral part of these financial statements.

                                       2
<PAGE>
 
                          MARKWEST HYDROCARBON, INC.
              (SUCCESSOR TO MARKWEST HYDROCARBON PARTNERS, LTD.)
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (UNAUDITED)
                                    (000S)

<TABLE>
<CAPTION>
                                          For the three months  For the six  months
                                             ended June 30,        ended June 30,
                                            1997       1996       1997       1996
                                        ----------  ----------  --------  ---------
<S>                                       <C>        <C>        <C>        <C>
Reconciliation of net income to net
 cash provided by operating activities:
     Net income.........................   $   300    $   314   $  4,582   $  4,487
     Add income items that do not
      affect working capital:
        Depreciation, depletion and            
         amortization...................       812        676      1,584      1,328
        Deferred income taxes...........        --         --        263         --
        Gain on sale of assets..........        --         --        (75)        --
                                           -------    -------   --------   -------- 
                                             1,112        990      6,354      5,815
 
     Adjustments to working capital to
      arrive at net cash provided by
      operating activities:
         (Increase) decrease in accounts 
          receivable                        (2,121)     3,775      1,193      5,118
         (Increase) decrease in               
          inventories...................      (546)    (1,769)     2,712       (731)
         (Increase) decrease in prepaid
          feedstock and other assets....    (1,749)    (2,121)       140       (412)
         (Decrease) increase in
          accounts payable and accrued      
          liabilities...................    (1,940)       618     (3,565)       923
                                           -------    -------   --------   --------  
 
           Net cash provided by             
            operating activities........    (5,244)     1,493      6,834     10,713
 
Cash flows from investing activities:
         Capital expenditures...........    (7,125)    (1,014)    (7,720)    (1,945)
         (Increase) in note receivable        
          and other assets..............      (259)      (654)    (1,888)      (588)
         Other..........................       (82)        --       (144)        --
                                           -------    -------   --------   --------  
 
            Net cash used in investing      
             activities.................    (7,466)    (1,668)    (9,752)    (2,533)
 
Cash flows from financing activities:
         Proceeds from long-term debt...     9,920      4,850      9,920      4,850
         Repayment of long-term debt....       (37)    (4,500)   (11,150)   (10,000)
         Partners' distributions........        --     (2,662)        --     (3,219)
         Other..........................       (67)        --        (67)        --
                                           -------    -------   --------   --------  

            Net cash used in financing       
             activities.................     9,816     (2,312)    (1,297)    (8,369)
                                           -------    -------   --------   --------  
 
Net decrease in cash and cash               
 equivalents............................    (2,894)    (2,487)    (4,215)      (189)
 
Cash and cash equivalents at beginning       
 of period..............................     3,080      3,059      4,401        761
                                           -------    -------   --------   --------  
 
Cash and cash equivalents at end of        
 period.................................   $   186    $   572   $    186   $    572
                                           =======    =======   ========   ========  
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>
 
NOTE 1.  GENERAL

The consolidated financial statements include the accounts of MarkWest
Hydrocarbon, Inc. ("MarkWest" or the "Company") and its wholly-owned
subsidiaries, MarkWest Resources, Inc. ("Resources") and MarkWest Michigan, Inc.
("Michigan").  All significant intercompany accounts and transactions have been
eliminated in consolidation.

The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and note disclosures required by generally accepted accounting
principles for complete financial statements. The interim consolidated financial
statements should be read in conjunction with the Consolidated Financial
Statements and Notes thereto for the year ended December 31, 1996 included in
the Company's Form 10-K, as filed with the Securities and Exchange Commission.
In the opinion of management, all adjustments necessary for a fair statement of
the results for the unaudited interim periods have been made.  These adjustments
consist only of normal recurring adjustments.

The effective corporate tax rate for interim periods is based on the estimated
annual effective corporate tax rate, excluding certain nonrecurring or unusual
events.  The effective tax rate varies from statutory rates due primarily to tax
credits and intangible development costs.

Certain prior year amounts have been reclassified to conform to the 1997
presentation.

NOTE 2.  REORGANIZATION

The Company was incorporated in June 1996 to act as the successor to MarkWest
Hydrocarbon Partners, Ltd. (the "Partnership").  Effective October 7, 1996, the
Partnership reorganized (the "Reorganization") and the existing general and
limited partners exchanged 100% of their interests in the Partnership for
5,725,000 common shares of the Company.  An additional 2,400,000 shares of
common stock were offered for public sale, totaling 8,125,000 shares outstanding
as of October 15, 1996.  The over-allotment of 360,000 shares was also exercised
during October, resulting in a total of 8,485,000 shares outstanding at October
31, 1996.  This transaction was a reorganization of entities under common
control, and accordingly, it was accounted for at historical cost.

NOTE 3.  SIGNIFICANT BUSINESS ACQUISITIONS

Prior to July 1, 1996, the Partnership owned 49% of MarkWest Coalseam
Development Company LLC (formerly MarkWest Coalseam Joint Venture) ("Coalseam"),
a natural gas development venture, and MW Gathering LLC ("Gathering"), a natural
gas gathering venture.  Effective July 1, 1996, Gathering was merged into
Coalseam.  Simultaneously, the Partnership formed MarkWest Resources Inc.
("Resources"), and Coalseam distributed 49% of its assets to Resources and 51%
to MAK-J Energy Partners, Ltd. (formerly MarkWest Energy Partners, Ltd.), a
partnership whose general partner is a corporation owned and controlled by the
President of the Company.  The consolidated financial statements reflect
Resources' 49% proportionate share of the underlying oil and gas assets,
liabilities, revenues and expenses.

Effective May 6, 1996, the Partnership acquired the right to earn up to a 60%
interest for $16.8 million in a newly formed venture, West Shore Processing, LLC
("West Shore").  The most significant asset of West Shore is Basin Pipeline LLC,
which was contributed by the Partnership's venture partner, Michigan Energy
Company, LLC.  The West Shore agreement is structured so that the Company's
ownership interest increases as capital expenditures for the benefit of West
Shore are made by the Company.  As of June 30, 1997, through the funding of
capital expenditures, the Company had made contributions of approximately $16.8
million to, and owned a 60% ownership interest in, West Shore.

NOTE 4.  PRO FORMA INFORMATION

Prior to the Reorganization, the Company was organized as a partnership and
consequently, was not subject to income tax.   A pro forma provision for income
taxes and pro forma net income for the three and six months ended 

                                       4
<PAGE>
 
June 30, 1996 have been presented for purposes of comparability as if the
Company had been a taxable entity. In addition, the Company's historical capital
structure is not indicative of its current structure and, accordingly,
historical net income per common share has not been presented. Pro forma net
income per common share for the three and six months ended June 30, 1996 has
been computed using the weighted average number of common and common equivalent
shares outstanding for the fourth quarter of 1996 following the Company's
initial public offering.

NOTE 5.  LONG TERM DEBT

Effective June 20, 1997, the Company replaced its existing financing agreements
with a new credit facility (the "credit facility") with the Bank of Montreal, as
agent, NationsBank and Colorado National Bank.  The credit facility allows the
Company to borrow up to $55 million pursuant to a  revolving loan commitment.
The revolving loan commitment converts to a reducing loan commitment on May 31,
1999.  The reducing loan commitment reduces ratably on a quarterly basis to zero
by May 31, 2003.

Interest rates are based on either the agent bank's prime rate plus 1% or the
London Interbank Offered Rate (LIBOR), plus an applicable margin of between 50
and 150 basis points, based upon the Company's debt to capitalization ratio.  As
of June 30, 1997, approximately $10.0 million was outstanding bearing interest
at 6.1875%.

The debt is secured by a first mortgage on the Company's major assets.  The loan
agreement restricts certain activities and requires the maintenance of certain
financial ratios and other conditions.

As a direct result of entering into a new credit facility, the Company wrote off
previously deferred financing costs associated with the previous credit facility
of approximately $235,000 in the second quarter of 1997.

NOTE 6.  RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement No.
128 ("SFAS 128"), "Earnings Per Share".  This Statement is effective for
financial statements issued for periods ending after December 15, 1997.  Earlier
adoption is not permitted.  SFAS 128 requires dual presentation of basic and
diluted EPS for entities with complex capital structures.  The impact of
adopting SFAS 128 will not have a material effect on the Company's earnings per
share calculation.

  The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

MarkWest Hydrocarbon, Inc. ("MarkWest" or the "Company") provides compression,
gathering, treatment, processing and natural gas liquids ("NGL") extraction
services to natural gas producers and pipeline companies and fractionates NGLs
into marketable products for sale to third parties.  The Company also purchases,
stores and markets natural gas and NGLs.  The majority of the Company's
operating income is derived from gas processing and NGL fractionation.  NGL
prices and the volume of liquids extracted, fractionated, and sold are the
primary determinants of revenues.  Prices of NGLs typically do not vary directly
with natural gas prices, but more closely follow the prices of crude oil.  In
addition to sales of NGLs processed by the Company, the Company generates income
from the purchase and resale of NGLs as part of its terminal and marketing
activities, and provides marketing activities in support of its company-owned
facilities and production.  The Company also currently operates two propane
terminals.

Substantially all of the Company's revenues are derived from the sale of natural
gas liquids (NGLs) particularly propane.  The strongest demand for propane and
the highest propane sales margins generally occur during the winter heating
season.  As a result, the Company realizes the greatest proportion of its annual
income during the first and fourth quarters of the year.

APPALACHIA

At the Siloam plant in Kentucky, NGL production for the second quarter increased
6% over the 1996 quarter, reflecting greater operating time at the Kenova
extraction plant, which supplies feedstock to Siloam.  The new Kenova plant
began operation in January 1996.  Sales volume increased 22% over 1996,
partially from greater demand for normal butane.

As previously announced, in April 1997, the Federal Energy Regulatory Commission
approved Columbia Gas Transmission Corporation's rate case.  As part of this
rate case, MarkWest and Columbia signed a letter agreement ("the agreement")
which will allow the Company to acquire and operate two additional facilities
from Columbia, the Boldman and Cobb NGL Extraction plants.  Boldman is currently
owned by MarkWest and leased to and operated by Columbia. Cobb will be acquired
and operated by MarkWest.  Implementation of the agreement began during the
second quarter.  Definitive agreements are in progress, and MarkWest began
contracting for processing services directly with producers in June 1997.

Upon completion, the financial impact of this transaction for MarkWest will be
that the term of NGLs committed to Siloam from these facilities will be extended
from 2003 to 2009, and the arrangement will provide the opportunity to target
potential NGL production increases at these facilities.  Studies have begun to
evaluate either upgrading or replacing the Cobb facility.

MICHIGAN

The Michigan project began in May 1996, and MarkWest has now completed its earn-
in of a 60% interest in the project's pipeline and NGL plant.  Phase I was
completed in May 1997.  This involved connecting the northern end of the
pipeline system to Shell's treating plant and laying a 30-mile extension to the
existing 31-mile pipeline system, located in western Michigan.  This extension
provides an outlet for sour gas production from previously shut-in wells, as
well as for gas from new wells to be drilled.  Wellhead facilities at a third
party's gas well were completed and up to an additional 8 million cubic feet per
day (mmcfd) of gas from that well was added beginning late in the second quarter
to the previous flows of 4.5 mmcfd through the pipeline.

Phase II, set for completion in mid-fourth quarter 1997, is well underway.  This
includes refurbishing and installing an NGL extraction plant and adding a two-
mile line to carry treated and processed natural gas from the Shell plant to a
transmission line.

                                       6
<PAGE>
 
Drilling activity in the area is progressing and acreage acquisition activity is
up considerably.  Two wells were drilled by a third party, and are expected to
be connected to the pipeline in 1998; two more wells are planned.  Two 3D-
seismic-based programs were completed during the second quarter, one over 27
square-miles, the other over 50 square-miles (MarkWest is earning a 17.5%
interest in the first program).  Drilling is expected to begin in the fourth
quarter in both of these programs.  Drilling success in these three programs
would add significantly to pipeline and NGL throughput in 1998.  Additionally,
in 1998, MarkWest plans to extend the pipeline to connect to other shut-in wells
and other wells to be drilled.  Pipeline route selection and permitting
activities for this extension have begun.  As a result of these developments,
the Company has commenced detailed studies to expand the capacity in the
pipeline and NGL plant to 50 mmcfd from the 35 mmcfd available on completion of
Phase II.

Management's Discussion and Analysis of Financial Condition and Results of
Operations includes forward-looking statements (within the meaning of Section
21E of the Securities Exchange Act of 1934) reflecting the expectations, plans
and objectives of management for operations of the Company.  Such statements are
based on current expectations that involve numerous risks and uncertainties.
Assumptions relating to these expectations involve judgments with respect to,
among other things, future economic, competitive and market conditions,
including the price of natural gas, all of which are difficult or impossible to
predict accurately and many of which are beyond the control of the Company.
Accordingly, there can be no assurance that the forward-looking statements
included in the Form 10-Q will prove to be accurate.  Inclusion of such
information should not be regarded as a representation by the Company or any
other person that the expectations, plans and objectives of the Company will be
realized.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1996

The Company reported net income of $300,000 or $0.04 per share on revenues of
$12.0 million for the second quarter of 1997.  This compares to pro forma net
income of $195,000 or $0.02 per share on revenues of $8.8 million for the same
period in 1996.   Net income for the three months ended June 30, 1997 increased
primarily due to increased sales volumes at the Company's Siloam plant. The 1997
results are after a write-off of previously deferred financing costs of $158,000
or $0.02 per share (after tax).  The write-off was a direct result of MarkWest
entering into a new credit facility (see further discussion below under
Liquidity and Capital Resources).

Revenues

The Company's second quarter 1997 plant revenues increased $1.9 million, or 27%,
to $9.0 million, compared to $7.1 million for the second quarter of 1996.  A 6%
increase in NGL production and a 22% increase in sales volumes accounted for
approximately $1.3 million of the revenue increase, together with a $100,000
increase in unit pricing.  The remaining $500,000 increase was related to
the implementation of the agreement with Columbia.

Terminal and marketing revenue for the second quarter of 1997 increased
approximately $400,000, or 29%, to $1.8 million, compared to $1.4 million for
the second quarter of 1996. This increase was the result of a $100,000 volume
increase at the Company's West Memphis and Church Hill terminals, together with
$300,000 from a unit price increase on propane sales from  the West Memphis
terminal.

                                       7
<PAGE>
 
Oil and gas and other revenue increased to $900,000 for the second quarter
of 1997 as compared to $100,000 for the second quarter of 1996, an increase of
$800,000. This increase was due principally to an additional $30,000 in
revenues from the Company's oil and gas properties and an additional $770,000 in
revenues from the Company's Michigan operations, which began in May 1996.

Interest income

Interest income increased $243,000 from $15,000 for the second quarter of 1996
to $258,000 for the second quarter of 1997.  This increase resulted primarily
from interest income earned in the second quarter of 1997 on long-term notes
receivable, which bears interest at a rate of 5.98%.

Costs and expenses

Plant feedstock costs increased to $4.3 million for the second quarter of 1997,
compared to $4.0 million for the second quarter of 1996, an increase of
$300,000, or 8%.   Of this increase, $800,000 was attributable to greater NGL
production volumes, which was offset by a $500,000 decrease in unit pricing.

Terminal and marketing purchases increased $300,000, from $1.5 million in the
second quarter of 1996, to $1.8 million for the second quarter of 1997, an
increase of 20%.  This increase was primarily a result of a $100,000 volume
increase and a $200,000 increase from propane pricing.

Operating expenses increased $1.5 million or 136% from $1.1 million to $2.6
million for the second quarter of 1997, as compared to the second quarter of
1996. The increase was principally driven by the Company's new operations in
Michigan, which commenced in May 1996.
 
General and administrative expenses increased $0.7 million or 64%, to $1.8
million for the second quarter of 1997 from $1.1 million for the second quarter
of 1996.   The increase was attributable to administrative support activities
related to the new operations in Michigan and to costs incurred in connection
with being a public company in 1997.

Depreciation and amortization increased to $0.8 million from $0.7 million for
the second quarter of 1997 compared to the second quarter of 1996, an increase
of $100,000, or 14%.  This increase was principally due to increased
depreciation attributable to the Company's new Michigan operations.

Interest expense

Interest expense increased $96,000 from $216,000 for the second quarter of 1996
to $312,000 for the second quarter of 1997.  This increase resulted primarily
from the write-off of previously deferred financing costs of approximately
$235,000, which was partially offset by a decrease in average outstanding long-
term debt in the second quarter of 1997 compared to the second quarter of 1996.

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1996

The Company reported net income of $4.6 million or $0.54 per share on revenues
of $40.7 million for the six months ended June 30, 1997.  This compares to pro
forma net income of $2.8 million or $0.35 per share on revenues of $28.7 million
for the same period in 1996.  Net income for the six months ended June 30, 1997
increased primarily due to increased sales margins and volumes at the Company's
Siloam plant.

Revenues

The Company's plant revenues for the six months ended June 30, 1997 increased
$12.0 million, or 65%, to $30.3 million, compared to plant revenues of $18.3
million for the same period in 1996.  A 16% increase in NGL production and a 23%
increase in sales volumes accounted for approximately $3.5 million of the
revenue increase.  An additional $8.1 million of the increase was caused by
higher sales prices for NGLs during the first six months of 

                                       8
<PAGE>
 
1997, as compared to the same period in 1996, and $400,000 was related to the
implementation of the agreement with Columbia.

Terminal and marketing revenue for the six months ended June 30, 1997 decreased
$1.5 million, or 15%, to $8.3 million, compared to terminal and marketing
revenue of $9.8 million for the same period in 1996.  This decrease was
primarily the result of a $1.9 million volume decrease at the Company's
terminals in the first six months of 1997, compared to the same period in 1996.
This volume increase was partially offset by a $400,000 increase due to better
prices of propane.

Oil and gas and other revenue increased $1.3 million  to $1.5 million, compared
to oil and gas revenue of $163,000 for the same period in 1996.  This increase
was due principally to an additional $100,000 in revenue from the Company's oil
and gas properties and additional $1.2 million in revenues from the Company's
new operations in Michigan.

Interest income

Interest income increased $305,000, to $348,000 for the six months ended June
30, 1997, compared to interest income of $43,000 for the six months ended June
30, 1996.  This increase resulted primarily from interest income earned in the
six months ended June 30, 1997 on the long-term note receivable, which bears
interest at a rate of 5.98%.

Costs and expenses

Plant feedstock costs increased $6.1 million, or 72%, to $14.6 million for the
six months ended June 30, 1997, compared to plant feedstock costs of $8.5
million for the same period in 1996.  Of this increase, $1.8 million was
attributable to higher NGL production and sales volumes, and $1.2 million was a
result of higher NGL prices in the first six months of 1997 as compared to the
same period in 1996.  The remaining $3.1 million of the increase was due to NGL
exchange contracts and hedging positions put into place in the fourth quarter of
1996.

Terminal and marketing purchases decreased $200,000, or 2%, to $8.5 million for
the six months ended June 30, 1997, compared to terminal and marketing purchases
of $8.7 million for the six months ended June 30, 1996.  This decrease was a
result of $1.5 million volume decrease, which was partially offset by a $1.3
million increase from propane prices.

Operating expenses increased $1.9 million, or 66%, to $4.8 million for the six
months ended June 30, 1997 as compared to operating expenses of $2.9 million for
the six months ended June 30, 1996.  The increase was principally driven by the
Company's operations in Michigan, which commenced in May 1996.

General and administrative expenses increased $1.5 million  to $3.8 million for
the six months ended June 30, 1997, compared to general and administrative
expenses of $2.3 million for the six months ended June 30, 1996.  This increase
was attributable to administrative support activities related to the new
operations in Michigan and to costs incurred in connection with being a public
company in 1997.

Depreciation and amortization increased $300,000, or 23%, to $1.6 million for
the six months ended June 30, 1997, compared to depreciation and amortization
expense of $1.3 million for the same period in 1996.  This increase was
principally due to increased depreciation attributable to the Company's new
Michigan operations.

Interest Expense

Interest expense decreased $174,000 to $335,000 for the six months ended June
30, 1997, compared to interest expense of $509,000 for the same period in 1996.
This decrease was primarily caused by a decrease in average outstanding long-
term debt for the six months ended June 30, 1997 as compared to the six months
ended June 30,   

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<PAGE>
 
1996. This decrease was partially offset by the write-off of previously deferred
financing costs of approximately $235,000 in the second half of 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of liquidity and capital resources historically have been
net cash provided by operating activities; proceeds from issuance of long-term
debt; and in 1996, an initial public offering of equity.  The Company's
principal uses of cash have been to fund operations, capital expenditures and
acquisitions.

For the six months ended June 30, 1997, net cash provided by operating
activities decreased by $3.9 million, or 36%, to $6.8 million, compared to net
cash provided by operating activities of $10.7 million for the six months ended
June 30, 1996.  This decrease resulted primarily from a decrease in working
capital of only $0.5 million for the six months ended June 30, 1997, compared to
a decrease in working capital of $4.9 million for the six months ended June 30,
1996.

Cash used in investing activities increased $7.3 million for the six months
ended June 30, 1997  to $9.8 million, as compared to cash used in investing
activities of $2.5 million for the six months ended June 30, 1996, mainly due to
capital expenditures funded by the Company during the first half of 1997.

Financing activities during the first quarter of both 1997 and 1996 principally
consisted of borrowings and repayments on long-term debt.

Financing Facilities

New Credit Facility  Effective June 20, 1997, the Company replaced its existing
financing agreement with a new credit facility (the "credit facility") with the
Bank of Montreal, as agent, NationsBank and Colorado National Bank.  The credit
facility allows the Company to borrow up to $55 million pursuant to a revolving
loan commitment.   The revolving loan commitment converts to a reducing loan
commitment on May 31, 1999.  The reducing loan commitment reduces ratably on a
quarterly basis to zero by May 21, 2003.

Interest rates are based on either the agent bank's prime rate plus 1% or the
London Interbank Offered Rate (LIBOR), plus an applicable margin of between 50
and 150 basis points, based upon the Company's debt to capitalization ratio.  As
of June 30, 1997, approximately $10.0 million was outstanding bearing interest
at 6.1875%.

The loan agreement contains affirmative and negative covenants customary in
commercial lending transactions, including maintenance of a specified tangible
net worth, ratio of total funded debt to capitalization, total funded debt to
trailing twelve month EBITDA and current ratio.

Resources Revolver Loan  The Company had a revolving facility with Colorado
National Bank with a maximum borrowing base of $5.8 million as of March 31,
1997.  This facility was canceled by the Company, effective April 25, 1997.

At June 30, 1997, the Company had $45.1 million of available credit and working
capital of $6.1 million.  The Company believes that cash flows generated by its
operations and existing credit facilities will be sufficient to meet its
anticipated cash needs for working capital and capital expenditures for the next
12 months.

Capital Investment Program

On July 1, 1997, the Company closed on the purchase of a 44,000 square-foot
office building in Englewood, Colorado.  The four year old building will serve
as MarkWest's new corporate headquarters.  MarkWest will occupy approximately
half of the building and lease out the remainder to other tenants, with the
objective of reducing the Company's effective office costs.  The cost of the
building and tenant improvement costs will total approximately $5.6
million, to be financed initially from the Company's line of credit, and to be
converted to long-term financing later in 1997.

The Company expects to spend approximately $17 million during 1997, including
approximately $12 million in the Michigan Core Area in order to complete
construction of a pipeline and a new liquids facility, with the balance being
allocated for projects in the Appalachian Core Area and exploration projects.
For the six months ended June 30, 1997, the Company made capital expenditures
totaling approximately $10 million.

                                      10

<PAGE>
 
RISK MANAGEMENT ACTIVITIES

The Company's primary hedging objectives are to meet or exceed budgeted gross
margins by locking in budgeted or above-budgeted prices in the financial
derivatives markets and to protect margins from precipitous declines.  Under
internal guidelines, speculative positions are prohibited.

The Company's hedging activities generally fall into three categories - 1)
contracting for future purchases of natural gas at a predetermined BTU
differential based upon a basket of Gulf Coast NGL prices (or a substitute for
propane such as crude oil), 2) the fixing of margins between propane sales
prices and natural gas reimbursement costs by purchasing natural gas contracts
and simultaneously selling propane contracts of approximately the same BTU
value, and 3) the purchase of propane futures contracts to hedge future sales of
propane at the Company's terminals or gas plants.  The Company enters into
futures transactions on the New York Mercantile Exchange ("NYMEX").  Future gas
purchases are based on predetermined BTU differentials and are negotiated with
natural gas suppliers and structured to provide similar risk protections as
NYMEX futures.

The Company maintains a three-person committee that oversees all hedging
activity of the Company.  This committee reports monthly to management regarding
recommended hedging transactions and positions.  Gains and losses related to
qualifying hedges, as defined by Statement of Financial Accounting Standards No.
80, "Accounting for Futures Contracts", of firm commitments or anticipated
transactions are recognized in plant revenue and feedstock purchases upon
execution of the hedged physical transaction.

During the three and six months ended June 30, 1997, a $14,000 and $1,018,000
gain, respectively, were recognized in operating income on the settlement of
propane and natural gas futures.  Financial instrument gains and losses on
hedging activities were generally offset by amounts realized from the sale of
the underlying products in the physical market.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement No.
128 ("SFAS 128"), "Earnings Per Share".  This Statement is effective for
financial statements issued for periods ending after December 15, 1997.  Earlier
adoption is not permitted.  SFAS 128 requires dual presentation of basic and
diluted EPS for entities with complex capital structures.  The impact of
adopting SFAS 128 will not have a material effect on Company's earnings per
share calculation.

PART II.   OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In April 1997, Domain Energy Corporation and EnCap Investments, L.C. informed
the Company that they had purported to transfer their interests in MEC and
Michigan Production Company to Energy Acquisition Corp.  MEC holds a minority
interest in West Shore. In April 1997, the Company commenced arbitration
proceedings pursuant to the Participation, Ownership and Operating Agreement for
West Shore, to challenge the transfer of the interest in MEC.

The arbitration demand also asserted claims involving certain West Shore 
operating issues generated by MEC's actions subsequent to the challenged 
transfer. Domain Energy Corporation, EnCap Investments, L.C. and other entities 
participating in the transfer transaction, named as Respondents in the 
arbitration, subsequently filed an action in Harris County, Texas seeking a 
declaration that the transfer transaction was proper and challenging the 
arbitrability of the Company's claims concerning the transfer. The Texas State 
Court action also sought an issuance of an injunction against the arbitration 
proceeding during the pendency of the declaratory judgment action.

To facilitate prompt resolution of the West Shore operating issue claims 
initially asserted in the arbitration and additional issues which have arisen 
since April, the Company amended the arbitration demand in July 1997 to 
withdraw, without prejudice, its challenge to the transfer transaction. The 
Company believes the transfer issue will be resolved by alternative means.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Stockholders held on June 6, 1997, the following
proposals were adopted by the margins indicated:

1. To elect two Class I directors to hold office for a three-year term expiring
at the Annual Meeting of Stockholders occurring in the year 2000 or until the
election and qualification of their respective successors.

                                      11
<PAGE>
 
                                                    Number of Shares
                                                 For            Withheld
                      Arthur J. Denney           6,862,718        1,500
                      Norman H. Foster, Ph.D.    6,858,461        5,757

2. To approve an amendment to the MarkWest Hydrocarbon, Inc. 1996 Stock
   Incentive Plan (the "Stock Incentive Plan"), to (i) increase the maximum
   number of shares of Common Stock underlying awards that may be granted to an
   eligible person who is an employee of the Company at the time of grant from
   10,000 shares in any one calendar year to 20,000 shares in any one calendar
   year, and (ii) increase the number of shares of Common Stock authorized for
   issuance under the Stock Incentive Plan from 600,000 shares in the aggregate
   to 850,000 shares in the aggregate.
          
                      For                   6,311,468
                      Against                 507,150
                      Abstain                  43,100
                      Not Voted                 2,500
 
3. To approve an amendment to the MarkWest Hydrocarbon, Inc. 1996 Non-Employee
   Director Stock Option Plan (the "Non-Employee Director Plan") to (i) increase
   the initial grant under the Non-Employee Director Plan to a newly-appointed,
   non-employee director of the Company upon the date on which such person first
   becomes a director from options to purchase 500 shares of Common Stock to
   options to purchase 1,000 shares of Common Stock, and (ii) provide for a
   retroactive grant, effective as of the approval of the Non-Employee Director
   Plan by the Board of Directors on July 31, 1996, of options to purchase 500
   shares of Common Stock under the Non-Employee Director Plan, with an exercise
   price equal to the initial public offering price of $10 per share to each 
   non-employee director of the Company as of such date.

                      For                   6,754,668
                      Against                  63,950
                      Abstain                  43,100
                      Not Voted                 2,500
 
4. To ratify the selection of Price Waterhouse LLP as the Company's independent
   accountants for the fiscal year ending December 31, 1997.

                      For                   6,861,127
                      Withheld                  3,091

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

        10.1 - Amended and Restated Credit Agreement, dated as of June 20, 1997
               among MarkWest Hydrocarbon, Inc., as the Borrower, and Certain
               Commercial Lending Institutions, as the Lenders, and Bank of
               Montreal acting through certain U.S. branches or agencies, as the
               Agent for the Lenders

        11 -   Statement regarding computation of earnings per share

        27 -   Financial Data Schedule
 
(b)     Reports on Form 8-K

        No reports on Form 8-K were filed during the quarter ended June 30, 
        1997.

                                      12
<PAGE>
 
                                  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 thereunto duly authorized.


                                 MarkWest Hydrocarbon, Inc.
                                       (Registrant)



 
Date:   August 13, 1997          By: /s/  Gerald A. Tywoniuk
                                     ------------------------------------
                                             Gerald A. Tywoniuk
                                       Chief Financial Officer and Vice
                                             President of Finance
                                       (On Behalf of the Registrant and
                                          as Principal Financial and
                                              Accounting Officer)

                                      13