Use these links to rapidly review the documentTable of Contents ITEM 8. Financial Statements and Supplementary Data Starfish Pipeline Company, LLC Index December 31, 2007 and 2006



UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý                                                                 |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|----------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|For the fiscal year ended December 31, 2007.                     
|or                                                               
|o                                                                 |  | 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 001-31239                                 

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MARKWEST ENERGY PARTNERS, L.P.(Exact name of registrant as specified in its charter)

|Delaware                                                       |  | 27-0005456                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

1515 Arapahoe Street, Tower 2, Suite 700, Denver, CO 80202-2126(Address of principal executive offices)

Registrant's
telephone number, including area code:303-925-9200

Securities registered pursuant to Section 12(b) of the Act:Common units representing limited partner interests, New
York Stock Exchange

Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý No o

Indicate by check mark if the registrant is not required file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No ý

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 ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definition of "large accelerated filer," "accelerated filer" and ""smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one)

|Large accelerated filer ý |  | Accelerated filer o |  | Non-accelerated filer o (Do not check if a smaller reporting company) |  | Smaller reporting company o
|------------------------- |  | ------------------- |  | --------------------------------------------------------------------- |  | ---------------------------

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No ý

The aggregate market value of common units held by non-affiliates of the registrant on June 29, 2007 was approximately $1.1 billion.

As
of February 28, 2008, the number of the registrant's common units were 50,876,295.

DOCUMENTS INCORPORATED BY REFERENCE:

The information required by Part III of this Report, to the extent not set forth herein, is incorporated herein by reference from the registrant's
definitive proxy statement relating to the Annual Meeting of Shareholders to be held in 2008, which definitive proxy statement shall be filed with the Securities and Exchange Commission within
120 days after the end of the fiscal year to which this Report relates.



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MarkWest Energy Partners, L.P.
Form 10-K

Table of Contents



|PART I     |          |     |                                                                                                            | 
|---------- | -------- | --- | ---------------------------------------------------------------------------------------------------------- | 
|           | Item 1.  |     | Business                                                                                                   | 
|           | Item 1A. |     | Risk Factors                                                                                               | 
|           | Item 1B. |     | Unresolved Staff Comments                                                                                  | 
|           | Item 2.  |     | Properties                                                                                                 | 
|           | Item 3.  |     | Legal Proceedings                                                                                          | 
|           | Item 4.  |     | Submission of Matters to a Vote of Security Holders                                                        | 
|PART II    |          |     |                                                                                                            | 
|           | Item 5.  |     | Market for Registrant's Common Units, Related Unitholder Matters and Issuer Purchases of Equity Securities | 
|           | Item 6.  |     | Selected Financial Data                                                                                    | 
|           | Item 7.  |     | Management's Discussion and Analysis of Financial Condition and Results of Operations                      | 
|           | Item 7A. |     | Quantitative and Qualitative Disclosures About Market Risk                                                 | 
|           | Item 8.  |     | Financial Statements and Supplementary Data                                                                | 
|           | Item 9.  |     | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                       | 
|           | Item 9A. |     | Controls and Procedures                                                                                    | 
|           | Item 9B. |     | Other Information                                                                                          | 
|PART III   |          |     |                                                                                                            | 
|           | Item 10. |     | Directors, Executive Officers and Corporate Governance                                                     | 
|           | Item 11. |     | Executive Compensation                                                                                     | 
|           | Item 12. |     | Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters              | 
|           | Item 13. |     | Certain Relationships and Related Transactions, and Director Independence                                  | 
|           | Item 14. |     | Principal Accountant Fees and Services                                                                     | 
|PART IV    |          |     |                                                                                                            | 
|           | Item 15. |     | Exhibits and Financial Statement Schedules                                                                 | 
|SIGNATURES |          | 159

Throughout
this document we make statements that are classified as "forward-looking." Please refer to the "Forward-Looking Statements" included later in this section for an explanation
of these types of assertions. Also, in this document, unless the context requires otherwise, references to "we," "us," "our," "MarkWest Energy" or the "Partnership" are intended to mean MarkWest
Energy Partners, L.P., and its consolidated subsidiaries owned as of December 31, 2007.

As
explained further in Part I, Item 1. Business, on February 21, 2008, MarkWest Energy Partners, L.P. closed its plan of redemption and merger (the "Merger")
with MarkWest Hydrocarbon, Inc. (the "Company") and MWEP, L.L.C., a wholly owned subsidiary of the Partnership, pursuant to which the Company was merged into the Partnership.

This
Annual Report on Form 10-K reflects amounts and events related prior to the consummation of the Merger and includes only the historical consolidated financial
results of MarkWest Energy Partners, L.P. on a stand alone basis. The references made to the entities herein refer to those entities as they existed prior to the consummation of the Merger on
February 21, 2008. The Partnership refers to MarkWest Energy Partners, L.P., prior to the consummation of the Merger, except where specifically noted. The Company refers to MarkWest
Hydrocarbon, Inc., except where specifically noted.

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Glossary of Terms

In addition, the following is a list of certain acronyms and terms used throughout the document:

|Bbls                                                |  | barrels                                                           
|--------------------------------------------------- |  | ------------------------------------------------------------------
|Bbl/d                                               |  | barrels per day                                                   
|Bcf                                                 |  | one billion cubic feet of natural gas                             
|Btu                                                 |  | one British thermal unit, an energy measurement                   
|Gal/d                                               |  | gallons per day                                                   
|Mcf                                                 |  | one thousand cubic feet of natural gas                            
|Mcf/d                                               |  | one thousand cubic feet of natural gas per day                    
|MMBtu                                               |  | one million British thermal units, an energy measurement          
|MMcf                                                |  | one million cubic feet of natural gas                             
|MMcf/d                                              |  | one million cubic feet of natural gas per day                     
|MTBE                                                |  | methyl tertieary butyl ether                                      
|Net operating margin (a non-GAAP financial measure) |  | revenues less purchased product costs                             
|NGLs                                                |  | natural gas liquids, such as propane, butanes and natural gasoline
|NA                                                  |  | not applicable                                                    

Forward-Looking Statements

Statements included in this Annual Report on Form 10-K that are not historical facts are forward-looking statements. We use words such as
"could," "may," "will," "predict", "should," "expect," "hope", "continue", "potential", "plan," "project," "anticipate," "believe," "estimate," "intend" and similar expressions to identify
forward-looking statements.

These
forward-looking statements are made based upon management's expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of
risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking
statements.

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PART I

ITEM 1.    Business

General

MarkWest Energy Partners, L.P. is a publicly traded Delaware limited partnership formed by MarkWest Hydrocarbon, Inc. on January 25, 2002, to
acquire most of the assets, liabilities and operations of the MarkWest Hydrocarbon Midstream Business. We are a master limited partnership engaged in the gathering, transportation and processing of
natural gas; the transportation, fractionation and storage of NGLs; and the gathering and transportation of crude oil. We conduct our operations in three geographical areas: the Southwest, the
Northeast, and the Gulf Coast. For more information on these geographical areas, see the Business Strategy discussion below. Our common units are traded on the New York Stock Exchange under the
symbol, "MWE." We are headquartered in Denver, Colorado, and more information about us can be found at our Internet website,www.markwest.com.

Recent Developments

On February 21, 2008, the Partnership consummated the transactions contemplated by its plan of redemption and merger with the Company and MWEP, L.L.C., a
wholly owned subsidiary of the Partnership. Pursuant to this agreement, the Company redeemed for cash approximately 3.9 million shares of its common stock, which we refer to as the
"redemption," followed immediately by a merger, pursuant to which all remaining shares of the Company common stock were converted into Partnership common units, which we refer to as the "merger." As a
result of the merger, the Company is a wholly owned subsidiary of the Partnership. In connection with the merger and redemption, the incentive distribution rights in the Partnership, the 2% economic
interest in the Partnership of MarkWest Energy GP, L.L.C. (the "General Partner") and the Partnership common units owned by the Company were exchanged for Partnership Class A Units.
Contemporaneously with the closing of the transactions contemplated by the merger, the Partnership separately acquired 100% of the Class B membership interests in the General Partner that had
been held by current and former management and certain directors of the Company and the General Partner for approximately $21.0 million in cash and 0.9 million Partnership common units.
The Company paid to its stockholders approximately $240.5 million in cash in the redemption and the Partnership issued to the Company's stockholders approximately 15.5 million
Partnership common units in the merger. As a result of the merger and redemption, the Company owns approximately 31% of the Partnership. Please refer to Note 22 of the accompanying Notes to
Consolidated Financial Statements included in Item 8 of this Form 10-K for further information about the merger and redemption and related subsequent events. The following

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organization
chart reflects the structure of the Partnership and Company both before and after the merger:

GRAPHIC

We
expect the merger and redemption to offer the following advantages:



The
elimination of the incentive distribution rights increases available cash to be distributed to common unitholders. Please refer to "Distributions of Available Cash" in
Part II, Item 5 of this Form 10-K for further information. In addition, the Partnership will also be able to distribute available cash from the Company after the
Company pays taxes on its portion of the earnings from its ownership of the Partnership Class A Units. Despite the additional interest expense from borrowings needed to consummate the merger
and redemption, we expect the cash available to distribute to common unitholders to increase in total and on a per common unit basis.

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Business Strategy

Our primary business strategy is to grow our business and increase distributable cash flow per unit and maintain our financial strength, flexibility and our
ability to access capital to fund our growth. We plan to accomplish this through the following:



We
conduct our operations in three geographical areas: the Southwest, the Northeast and the Gulf Coast. We also have six segments which are based on geographic area of operation. Our
assets and operations in each of these areas are described below.

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7

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We
own a 50% non-operating membership interest in Starfish, whose assets are located in the Gulf of Mexico and southwestern Louisiana. The Starfish interest is part of a
joint venture with Enbridge Offshore Pipelines LLC, which is accounted for using the equity method; the financial results for Starfish are included in equity from earnings (losses) from
unconsolidated affiliates and are not included in the Gulf Coast Business Unit results. Starfish owns the FERC-regulated Stingray natural gas pipeline, and the unregulated Triton natural
gas gathering system and West Cameron dehydration facility. All of the assets are located in the Gulf of Mexico and southwestern Louisiana.

For
further information, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in this Form 10-K, and
Item 8. Financial Statements and Supplementary Data included in this Form 10-K.

The
following summarizes the percentage of our revenue and net operating margin (a non-GAAP financial measure, seeOur
Contractsdiscussion below) generated by our assets, by geographic region, for the year ended December 31, 2007:

|                     |  | East Texas |   | Oklahoma |   | Other Southwest |   | Appalachia |   | Michigan |   | Gulf Coast |  
|-------------------- |  | ---------- | - | -------- | - | --------------- | - | ---------- | - | -------- | - | ---------- | -
|Revenue              |  | 31         | % | 34       | % | 10              | % | 11         | % | 2        | % | 12         | %
|Net operating margin |  | 30         | % | 25       | % | 7               | % | 10         | % | 3        | % | 25         | %

MarkWest
Hydrocarbon was founded in 1988 as a partnership and later incorporated in Delaware. MarkWest Hydrocarbon is an energy company primarily focused on marketing NGLs. MarkWest
Hydrocarbon's assets consist primarily of partnership interests in MarkWest Energy Partners and certain processing agreements in Appalachia.

Industry Overview, Competition

MarkWest Energy Partners provides services in most areas of the natural gas gathering, processing and fractionation industry. The following diagram illustrates
the typical natural gas gathering, processing and fractionation process:

GRAPHIC

The
natural gas gathering process begins with the drilling of wells into gas bearing rock formations. Once completed, the well is connected to a gathering system. Gathering systems
typically consist of a

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network
of small diameter pipelines and, if necessary, compression systems, that collect natural gas from points near producing wells, and transport it to larger pipelines for further transmission.

Natural
gas has a widely varying composition, depending on the field, the formation reservoir or facility from which it is produced. The principal constituents of natural gas are methane
and ethane. Most natural gas also contains varying amounts of heavier components, such as propane, butane, natural gasoline and inert substances that may be removed by any number of processing
methods.

Most
natural gas produced at the wellhead is not suitable for long-haul pipeline transportation or commercial use. It must be gathered, compressed and transported via
pipeline to a central facility, and then processed to remove the heavier hydrocarbon components and other contaminants that interfere with pipeline transportation or the end-use of the
gas. Our business includes providing these services either for a fee or a percentage of the NGLs removed or gas units processed. The industry as a whole is characterized by regional competition, based
on the proximity of gathering systems and processing plants to producing natural gas wells, or to facilities that produce natural gas as a byproduct of refining crude oil.

MarkWest
Energy also provides processing and fractionation services to crude oil refineries in the Corpus Christi, Texas, area through its Javelina Gas Processing and Fractionation
facility. While similar to the natural gas industry diagram outlined above, the following diagram illustrates the significant gas processing and fractionation processes at the Javelina Facility:

GRAPHIC

Natural
gas processing and treating involves the separation of raw natural gas into pipeline-quality natural gas, principally methane, and NGLs, as well as the removal of contaminants.
Raw natural gas from the wellhead is gathered at a processing plant, typically located near the production area, where it is dehydrated and treated, and then processed to recover a mixed NGL stream.
In the case of our Javelina facilities, the natural gas delivered to our processing plant is a byproduct of the crude oil refining process.

The
removal and separation of individual hydrocarbons by processing is possible because of differences in physical properties. Each component has a distinctive weight, boiling point,
vapor pressure and other physical characteristics. Natural gas may also be diluted or contaminated by water, sulfur compounds, carbon dioxide, nitrogen, helium or other components. We also produce a
high quality hydrogen stream that is delivered back to certain refinery customers.

After
being separated from natural gas at the processing plant, the mixed NGL stream is typically transported to a centralized facility for fractionation. Fractionation is the process by
which NGLs are further separated into individual, more marketable components, primarily ethane, propane, normal butane, isobutane and natural gasoline. Fractionation systems typically exist either as
an integral part of a gas processing plant or as a "central fractionator," often located many miles from the primary production and processing facility. A central fractionator may receive mixed
streams of NGLs from many processing plants.

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Described below are the five basic NGL products and their typical uses:



We
face competition for natural gas and crude oil transportation and in obtaining natural gas supplies for our processing and related services operations; in obtaining unprocessed NGLs
for fractionation; and in marketing our products and services. Competition for natural gas supplies is based primarily on the location of gas-gathering facilities and
gas-processing plants,
operating efficiency and reliability, and the ability to obtain a satisfactory price for products recovered. Competitive factors affecting our fractionation services include availability of capacity,
proximity to supply and industry marketing centers, and cost efficiency and reliability of service. Competition for customers is based primarily on price, delivery capabilities, flexibility and
maintenance of high-quality customer relationships.

Our
competitors include:



Many
of our competitors operate as master limited partnerships and enjoy a cost of capital comparable to and, in some cases, lower than ours. Other competitors, such as major oil and gas
and pipeline companies, have capital resources and control supplies of natural gas substantially greater than ours. Smaller local distributors may enjoy a marketing advantage in their immediate
service areas.

We
believe our competitive strengths include:



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11

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As
of February 25, 2008, we have available borrowing capacity of approximately $258.5 million under our new $350.0 million revolving credit facility. See further
discussion of our new credit facility in Note 22 of the accompanying Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. The borrowing
capacity is determined on a quarterly basis and is further adjusted to take into consideration the cash flow contribution of an acquisition at the time of its closing. The credit facility, together
with our ability to issue additional partnership units for financing and acquisition purposes, should provide us with a flexible financial structure that will facilitate the execution of our business
strategy.

To
better understand our business and the results of operations discussed in Item 6. Selected Financial Data and Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation, the following two factors are important to consider:



Our Contracts

We generate the majority of our revenues and net operating margin (a non-GAAP measure, see below for discussion and reconciliation of net operating
margin) from natural gas gathering, processing and transmission; NGL transportation, fractionation and storage; and crude oil gathering and transportation. We enter into a variety of contract types.
In many cases, we provide services under contracts that contain a combination of more than one of the arrangements described below. We provide services under the following different types of
arrangements (all of which constitute midstream energy operations):



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The
terms of our contracts vary based on gas quality conditions, the competitive environment when the contracts are signed and customer requirements. Our contract mix and, accordingly,
our exposure to natural gas and NGL prices, may change as a result of changes in producer preferences, our expansion in regions where some types of contracts are more common and other market factors.
Any change in mix will influence our financial results.

As
of December 31, 2007, our primary exposure to keep-whole contracts was limited to our Arapaho (Oklahoma) processing plant and our East Texas processing contracts.
At the Arapaho plant inlet, the Btu content of the natural gas meets the downstream pipeline specification; however, we have the option of extracting NGLs when the processing margin environment is
favorable. Due to our ability to operate the Arapaho plant in several recovery modes, our overall keep-whole contract exposure is limited to a small portion of the operating costs of the
plant.

Approximately
11% of the gas processed in East Texas for producers was processed under keep-whole terms. Our keep-whole exposure in this area was offset to a
great extent because the East

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Texas
agreements provide for the retention of natural gas as a part of the gathering and compression arrangements with all producers on the system. This excess gas helps offset the amount of
replacement natural gas purchases required to keep our producers whole on an MMbtu basis, thereby creating a partial natural hedge. The net result is a significant reduction in volatility for these
changes in natural gas prices. The remaining volatility for these contracts results from changes in NGL prices. We have an active commodity risk management program in place to reduce the impacts of
changing NGL prices.

Management
evaluates contract performance on the basis of net operating margin (a non-GAAP financial measure), which is defined as income (loss) from operations, excluding
facility expense, selling, general and administrative expense, depreciation, amortization, impairments and accretion of asset retirement obligations. These charges have been excluded for the purpose
of enhancing the understanding by both management and investors of the underlying baseline operating performance of our contractual arrangements, which management uses to evaluate our financial
performance for purposes of planning and forecasting. Net operating margin does not have any standardized definition and therefore is unlikely to be comparable to similar measures presented by other
reporting companies. Net operating margin results should not be evaluated in isolation of, or as a substitute for our financial results prepared in accordance with GAAP. Our usage of net operating
margin and the underlying methodology in excluding certain charges is not necessarily an indication of the results of operations expected in the future, or that we will not, in fact, incur such
charges in future periods.

The
following is a reconciliation to income from operations, the most comparable GAAP financial measure of this non-GAAP financial measure (in thousands):

|                        |                                                          | Year ended December 31, |        
|----------------------- | -------------------------------------------------------- | ----------------------- | -------
|
|Revenues                |                                                          | $                       | 602,879
|Purchased product costs |                                                          |                         | 358,720
|                        |                                                          |                         |        
|Net operating margin    |                                                          |                         | 244,159
|                        |                                                          |                         |        
|                        | Facility expenses                                        |                         |        
|                        | Selling, general and administrative                      |                         |        
|                        | Depreciation                                             |                         |        
|                        | Amortization of intangible                               |                         |        
|                        | Loss (gain) on disposal of property, plant and equipment |                         |        
|                        | Accretion of asset retirement obligation                 |                         |        
|                        | Impairments                                              |                         |        
|                        |                                                          |                         |        
|Income from operations  |                                                          | $                       | 52,912 
|                        |                                                          |                         |        

For
the year ended December 31, 2007, we calculated the following approximate percentages of our revenues and net operating margin from the following types of contracts:

|                     |  | Fee-Based |   | Percent-of-Proceeds(1) |   | Percent-of-Index(2) |   | Keep-Whole(3) |  
|-------------------- |  | --------- | - | ---------------------- | - | ------------------- | - | ------------- | -
|Revenue              |  | 15        | % | 38                     | % | 28                  | % | 19            | %
|Net operating margin |  | 32        | % | 41                     | % | 7                   | % | 20            | %

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Our
short natural gas positions under our keep-whole contracts are largely offset by our long positions in our other operating areas. As a result, our net exposure to natural
gas price volatility is not significant prior to the merger. While the percentages in the table above accurately reflect the
percentages by contract type, we manage our business by taking into account the offset described above, required levels of operational flexibility and the fact that our hedge plan is implemented on
this basis. When considered on this basis, the calculated percentages for the net operating margin in the table above for Percent-of-Proceeds,
Percent-of-Index and Keep-Whole contracts change to 61%, 0% and 7%, respectively. As a result of our acquisition of MarkWest Hydrocarbon and its NGL marketing
business, our exposure to keep-whole contracts will increase and as a result our exposure to natural gas volatility will increase as well. For further information on our natural gas volatility, please
read Item 7A. Quantitative and Qualitative Disclosures About Market RiskCommodity Price Riskas set forth in this report.

Acquisitions

A significant part of our business strategy includes acquiring additional businesses and assets that will allow us to increase distributions to our unitholders.
We regularly consider and enter into discussions regarding potential acquisitions. These transactions may be effectuated quickly, may occur at any time and may be significant in size relative to our
existing assets and operations.

Since
our initial public offering, we have completed nine acquisitions for an aggregate purchase price of approximately $810 million, net of working capital. The acquisitions were
individually accounted for as a business combination. Summary information regarding each of these acquisitions is presented below (consideration in millions):

|Name                    |  | Assets                                                          |  | Location                           |  | Consideration |       | Closing Date
|----------------------- |  | --------------------------------------------------------------- |  | ---------------------------------- |  | ------------- | ----- | ------------
|Santa Fe                |  | Gathering system                                                |  | Oklahoma                           |  | $             | 15.0  |             
|Javelina(1)             |  | Gas processing and fractionation facility                       |  | Corpus Christi, TX                 |  |               | 398.8 |             
|Starfish(2)             |  | Natural gas pipeline, gathering system and dehydration facility |  | Gulf of Mexico/ Southern Louisiana |  |               | 41.7  |             
|East Texas              |  | Gathering system and gas processing assets                      |  | East Texas                         |  |               | 240.7 |             
|Hobbs                   |  | Natural gas pipeline                                            |  | New Mexico                         |  |               | 2.3   |             
|Michigan Crude Pipeline |  | Common carrier crude oil pipeline                               |  | Michigan                           |  |               | 21.3  |             
|Western Oklahoma        |  | Gathering system                                                |  | Western Oklahoma                   |  |               | 38.0  |             
|Lubbock Pipeline        |  | Natural gas pipeline                                            |  | West Texas                         |  |               | 12.2  |             
|Pinnacle                |  | Natural gas pipelines and gathering systems                     |  | East Texas                         |  |               | 39.9  |             

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Regulatory Matters

Our operations are subject to extensive regulations. The failure to comply with applicable laws and regulations can result in substantial penalties. The
regulatory burden on our operations increases our

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cost
of doing business and, consequently, affects our profitability. However, we do not believe that we are affected in a significantly different manner by these laws and regulations than are our
competitors. Due to the myriad of complex federal, state, provincial and local regulations that may affect us, directly or indirectly, reliance on the following discussion of certain laws and
regulations should not be considered an exhaustive review of all regulatory considerations affecting our operations.



Interstate Gas Pipelines.Our natural gas pipeline operations are subject to federal, state and local regulatory authorities.
Specifically, our Hobbs, New Mexico natural gas pipeline, our proposed Arkoma Connector natural gas pipeline in Oklahoma, and our Michigan crude oil pipeline facilities and related assets are subject
to regulation by the FERC. In addition, the Midcontinent Express Pipeline connecting Bennington, Oklahoma, and Perryville, Louisiana, in which we have an option to acquire a 10% interest, will also be
subject to regulation by the FERC. Federal regulation extends to such matters as:



Under
the Natural Gas Act ("NGA"), FERC has authority to regulate natural gas companies that provide natural gas pipeline transportation services in interstate commerce. Its authority to
regulate those services includes the rates charged for the services, terms and conditions of service, certification and construction of new facilities, the extension or abandonment of services and
facilities, the maintenance of accounts and records, the acquisition and disposition of facilities, the initiation and discontinuation of services, and various other matters. Natural gas companies may
not charge rates that have been determined not to be just and reasonable by FERC. In addition, FERC prohibits natural gas companies from unduly preferring or unreasonably discriminating against any
person with respect to pipeline rates or terms and conditions of service. The rates and terms and conditions for our service will be found in FERC-approved tariffs. Pursuant to FERC's
jurisdiction over rates, existing rates may be challenged by complaint and proposed rate increases may be challenged by protest. We cannot assure you that FERC will continue to pursue its approach of
procompetitive policies as it considers matters such as pipeline rates and rules and policies that may affect rights of access to natural gas transportation capacity, and transportation facilities.
Any successful complaint or protest against our rates, or loss of market-based rate authority by FERC could have an adverse impact on our revenues associated with providing interstate gas
transportation services.

Energy Policy Act of 2005.On August 8, 2005, President Bush signed into law the Domenici-Barton Energy Policy Act of
2005 ("2005 EP Act"). Under the 2005 EP Act, FERC may impose civil penalties of up to $1,000,000 per day for each current violation of the NGA or the Natural Gas Policy Act of 1978. The 2005 EP Act
also amends the NGA to add an anti-market manipulation provision, which makes it unlawful for any entity to engage in prohibited behavior in contravention of rules and regulations to be
prescribed by FERC. FERC issued Order No. 670 to implement the anti-market manipulation provision of 2005 EP Act. This order makes it unlawful for gas pipelines and storage
companies that provide interstate services to: (1) in connection with the purchase or sale of natural gas subject to the jurisdiction of FERC, or the purchase or sale of transportation services
subject to the jurisdiction of FERC, for any entity, directly or indirectly, to use or employ any device, scheme or

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artifice
to defraud; (2) to make any untrue statement of material fact or omit to make any such statement necessary to make the statements made not misleading; or (3) to engage in any
act or practice that operates as a fraud or deceit upon any person. The anti-market manipulation rule and enhanced civil penalty authority reflect an expansion of FERC's enforcement
authority. Additional proposals and proceedings that might affect the natural gas industry are pending before Congress, FERC and the courts. We cannot assure you that present policies pursued by FERC
and Congress will continue.

Affiliate Relationships.Commencing in 2003, FERC issued a series of orders adopting rules for new Standards of Conduct for
Transmission Providers (Order No. 2004) that applied to interstate natural gas pipelines and to certain natural gas storage companies, which provide storage services in interstate commerce.
Among other matters, Order No. 2004 required interstate pipelines to operate independently from their energy affiliates, prohibited interstate pipelines from providing non-public
transportation or shipper information to their energy affiliates, prohibited interstate pipelines from favoring their energy affiliates in providing service, and obligated interstate pipelines to post
on their websites a number of items of information concerning the company, including its organizational structure, facilities shared with energy affiliates, discounts given for service and instances
in which the company has agreed to waive discretionary terms of its tariff.

The
United States Court of Appeals for the District of Columbia Circuit vacated and remanded Order No. 2004 in late 2006, as it relates to natural gas transportation providers. On
January 9, 2007, and as clarified on March 21, 2007, FERC issued an interim rule re-promulgating on an interim basis the standards of conduct that were not challenged before
the court. The interim rule makes the standards of conduct apply to the relationship between natural gas transportation providers and their marketing affiliates, but not to energy affiliates who are
not also marketing affiliates. FERC has now issued a notice of proposed rulemaking ("NOPR") that proposes permanent standards of conduct which FERC states will avoid the aspects of the previous
standards of conduct rejected by the court. We have no way to predict with certainty the scope of FERC's permanent rules on the standards of conduct.

Market Transparency Rulemakings.In 2007, FERC issued a NOPR on pipeline posting requirements and a final rule on annual
natural gas transaction reporting (Order 704). Under Order No. 704, wholesale buyers and sellers of more than a minimum volume of natural gas are now required to report, on May 1
of each year, beginning in 2009, aggregate volumes of natural gas purchased or sold at wholesale in the prior calendar year. Order No. 704 also requires market participants to indicate whether
they report prices to any index publishers, and if so, whether their reporting complies with the Commission's Policy Statement on price reporting. Several parties have filed requests for clarification
or rehearing that are currently pending before FERC.

Under
the NOPR on pipeline posting requirements, the Commission is proposing to require intrastate pipelines to post daily actual and scheduled flows on an Internet website. It is also
proposing to require that interstate pipelines add actual daily volumes to their Internet websites. We cannot predict the ultimate impact of these regulatory changes to our natural gas operations. We
do not believe we would be affected by any such FERC action materially different than any other natural gas company with which we compete.

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Gathering and Intrastate Pipeline Regulation.Section 1(b) of the NGA exempts natural gas gathering facilities from
the jurisdiction of FERC. We own a number of facilities that we believe meet the traditional tests FERC has used to establish a pipeline's status as a gatherer not subject to FERC jurisdiction. In the
states in which we operate, regulation of gathering facilities and intrastate pipeline facilities generally includes various safety, environmental and, in some circumstances, open access,
nondiscriminatory take requirement and complaint-based rate regulation. For example, some of our natural gas gathering facilities are subject to state ratable take and common purchaser statutes.
Ratable take statutes generally require gatherers to take, without undue discrimination, natural gas production that may be tendered to the gatherer for handling. Similarly, common purchaser statutes
generally require gatherers to purchase gas without undue discrimination as to source of supply or producer. These statutes are designed to prohibit discrimination in favor of one producer over
another producer or one source of supply over another source of supply. These statutes have the effect of restricting our right as an owner of gathering facilities to decide with whom we contract to
purchase or transport natural gas.

Natural
gas gathering may receive greater regulatory scrutiny at both the state and federal levels now that FERC has taken a less stringent approach to regulation of the gathering
activities of interstate pipeline transmission companies and a number of such companies have transferred gathering facilities to unregulated affiliates. Our gathering operations could be adversely
affected should they be subject in the future to the application of state or federal regulation of rates and services. Our gathering operations also may be or become subject to safety and operational
regulations relating to the design, installation, testing, construction, operation, replacement and management of gathering facilities. Additional rules and legislation pertaining to these matters are
considered or adopted from time to time. We cannot predict what effect, if any, such changes might have on our operations, but the industry could be required to incur additional capital expenditures
and increased costs depending on future legislative and regulatory changes.

Our
intrastate gas pipeline facilities are subject to various state laws and regulation that affect the rates we charge and terms of service. Although state regulation is typically less
onerous than at FERC, state regulation typically requires pipelines to charge just and reasonable rates and to provide service on a non-discriminatory basis. The rates and service of an
intrastate pipeline generally are subject to challenge by complaint.

Our
Appalachian pipeline carries NGLs across state lines. The primary shipper on the pipeline is MarkWest Hydrocarbon, which has entered into agreements with us providing for a fixed
transportation charge for the term of the agreements. They expire on December 31, 2015. We are the only other
shipper on the pipeline. We neither operate our Appalachian pipeline as a common carrier, nor hold it out for service to the public. Generally, there are currently no third-party shippers on this
pipeline and the pipeline is, and will continue to be, operated as a proprietary facility. The likelihood of other entities seeking to utilize our Appalachian pipeline is remote, so it should not be
subject to regulation by the FERC in the future. We cannot provide assurance, however, that FERC will not at some point determine that such transportation is within its jurisdiction, or that such an
assertion would not adversely affect our results of operations. In such a case, we would be required to file a tariff with FERC and provide a cost justification for the transportation charge.

Crude Common Carrier Pipeline Operations.Our Michigan Crude Pipeline is a crude oil pipeline that is a common carrier and
subject to regulation by the FERC under the October 1, 1977 version of the Interstate Commerce Act ("ICA") and the Energy Policy Act of 1992 ("EPAct 1992"). The ICA and its implementing
regulations give the FERC authority to regulate the rates charged for service on the interstate common carrier liquids pipelines and generally require the rates and practices of interstate liquids
pipelines to be just and reasonable and nondiscriminatory. The ICA also requires tariffs to be maintained on file with the FERC that set forth the rates it charges for providing transportation
services on its interstate common carrier liquids pipelines as well as the rules and regulations governing

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these
services. EPAct 1992 and its implementing regulations allow interstate common carrier oil pipelines to annually index their rates up to a prescribed ceiling level. In addition, the FERC retains
cost-of-service ratemaking, market-based rates and settlement rates as alternatives to the indexing approach.

With
respect to our Michigan Crude Pipeline, we filed a tariff establishing a cost-of-service rate structure to be effective starting January 1, 2006, and
pursuant to a FERC certified settlement with shippers on the pipeline, the rate structure is under a moratorium on rate changes or challenges for a three-year period, with limited
exceptions.

Environmental Matters



Our processing and fractionation plants, pipelines, and associated facilities are subject to multiple obligations and potential liabilities under a variety of
stringent and comprehensive federal, state and local laws and regulations governing discharges of materials into the environment or otherwise relating to environmental protection. Such laws and
regulations affect many aspects of our present and future operations, such as requiring the acquisition of permits or other approvals to conduct regulated activities, restricting the manner in which
we handle or dispose of our wastes, limiting or prohibiting activities in sensitive areas such as wetlands, ecologically-sensitive areas, or areas inhabited by endangered species, incurring capital
costs to construct, maintain and upgrade equipment and facilities, and requiring remedial actions to mitigate pollution caused by our operations or attributable to former operations. Failure to comply
with these stringent and comprehensive requirements may expose us to the assessment of administrative, civil and criminal penalties, the imposition of remedial requirements and the issuance of orders
enjoining or limiting some or all of our operations.

We
believe that our operations and facilities are in substantial compliance with applicable environmental laws and regulations, and that the cost of continued compliance with such laws
and regulations will not have a material adverse effect on our results of operations or financial condition. We cannot ensure, however, that existing environmental laws and regulations will not be
revised or that new laws and regulations will not be adopted or become applicable to us. The clear trend in environmental law is to place more restrictions and limitations on activities that may be
perceived to affect the environment, and thus there can be no assurance as to the amount or timing of future expenditures for environmental-regulation compliance or remediation, and actual future
expenditures may be different from the amounts we currently anticipate. Revised or additional environmental requirements that result in increased compliance costs or additional operating restrictions,
particularly if those costs are not fully recoverable from our customers, could have material adverse effect on our business, financial condition, results of operations and cash flow. We may not be
able to recover some or any of these costs from insurance.



To a large extent, the environmental laws and regulations affecting our operations relate to the release of hazardous substances or solid wastes into soils,
groundwater, and surface water, and include measures to control environmental pollution of the environment. For instance, the Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, or CERCLA, also known as the "Superfund" law, and comparable state laws, impose liability without regard to fault or the legality of the original conduct, on certain classes of persons that
contributed to a release of "hazardous substance" into the environment. These persons include current and prior owners or operators of a site where a release occurred and companies that disposed or
arranged for the disposal of the hazardous substances found at the site. Under CERCLA, these persons may be subject to joint and several strict liability for the costs of removing or remediating
hazardous substances that have been released into the environment, for restoration and damages to natural resources, and for the costs of certain health

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studies.
Additionally, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other
pollutants released into the environment. While we generate materials in the course of our operations that are regulated as hazardous substances under CERCLA or similar state statutes, we have not
received any notification that we may be potentially responsible for cleanup costs under such laws. We also may incur liability under the Resource Conservation and Recovery Act, as amended, or RCRA,
and comparable state statutes, which impose requirements relating to the handling and disposal of hazardous wastes and nonhazardous solid wastes. We are not currently required to comply with a
substantial portion of the RCRA requirements because our operations generate minimal quantities of hazardous wastes. However, it is possible that some wastes generated by us that are currently
classified as nonhazardous may in the future be designated as "hazardous wastes," resulting in the wastes being subject to more rigorous and costly disposal requirements.

We
currently own or lease, and have in the past owned or leased, properties that have been used over the years for natural gas gathering and processing, for NGL fractionation,
transportation and storage or for the storage and gathering and transportation of crude oil. Although solid waste disposal practices within the NGL industry and other oil and natural gas related
industries have improved over the years, a possibility exists that hydrocarbons and other solid wastes or hazardous wastes may have been disposed of on or under various properties owned or leased by
us during the operating history of those facilities. In addition, a number of these properties may have been operated by third parties whose treatment and disposal or release of hydrocarbons or other
wastes was not under our control. These properties and wastes disposed thereon may be subject to CERCLA, RCRA, and analogous state laws. Under these laws, we could be required to remove or remediate
previously disposed wastes or property contamination, including groundwater contamination or to perform remedial operations to prevent future contamination. We do not believe that there presently
exists significant surface and subsurface contamination of our properties by hydrocarbons or other solid wastes for which we are currently responsible. We do not believe that there presently exists
significant surface and subsurface contamination of our properties by hydrocarbons or other solid wastes for which we are currently responsible.



The previous owner/operator of our Boldman and Cobb facilities has been, or is currently involved in, investigatory or remedial activities with respect to the
real property underlying these facilities. These investigatory and remedial obligations arise out of a September 1994 "Administrative Order by Consent for Removal Actions" with EPA Regions II, III,
IV, and V; and an "Agreed Order" entered into by the previous owner/operator with the Kentucky Natural Resources and Environmental Protection Cabinet in October 1994. The previous owner/operator has
accepted sole liability and responsibility for, and indemnifies MarkWest Hydrocarbon against, any environmental liabilities associated with the EPA Administrative Order, the Kentucky Agreed Order or
any other environmental condition related to the real property prior to the effective dates of MarkWest Hydrocarbon's lease or purchase of the real property. In addition, the previous owner/operator
has agreed to perform all the required response actions at its expense in a manner that minimizes interference with MarkWest Hydrocarbon's use of the properties. On May 24, 2002, MarkWest
Hydrocarbon assigned to us the benefit of this indemnity from the previous owner/operator. To date, the previous owner/operator has been performing all actions required under these agreements and,
accordingly, we do not believe that the remediation obligation of these properties will have a material adverse impact on our financial condition or results of operations. To date, the previous
owner/operator has been performing all actions required under these agreements and, accordingly, we do not believe that the remediation obligation of these properties will have a material adverse
impact on our financial condition or results of operations.

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The Clean Air Act, as amended, and comparable state laws restrict the emission of air pollutants from many sources, including processing plants and compressor
stations, and also impose various monitoring and reporting requirements. These laws and any implementing regulations may require us to obtain pre-approval for the construction or
modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with stringent air permit requirements, or utilize specific
equipment or technologies to control emissions. As the result of changes to the Clean Air Act, we may be required to incur certain capital expenditures for air pollution control equipment in
connection with maintaining or obtaining operating permits addressing other air emission-related issues. We do not believe, however, that such requirements will have a material adverse affect on our
operations.



The Federal Water Pollution Control Act of 1972, as amended, also known as the "Clean Water Act," and analogous state laws impose restrictions and controls on the
discharge of pollutants into federal and state waters. Such discharges are prohibited, except in accord with the terms of a permit issued by the EPA or the analogous state agency. Spill prevention,
control and countermeasure requirements under federal law require appropriate containment berms and similar structures to help prevent the contamination of navigable waters in the event of a
hydrocarbon tank spill, rupture or leak. In addition, the Clean Water Act and analogous state law require individual permits or coverage under general permits for discharges of stormwater from certain
types of facilities. These permits may require us to monitor and sample the stormwater runoff. Any unpermitted release of pollutants, including oil, natural gas liquids or condensates, could result in
penalties, as well as significant remedial obligations. We believe that we are in substantial compliance with the Clean Water Act.



Some scientific studies have suggested that emissions of certain gases, commonly referred to as "greenhouse gases" and including carbon dioxide and methane, may
be contributing to warming of the Earth's atmosphere. In response to such studies, the U.S. Congress is actively considering legislation to reduce emissions of greenhouse gases, which may include the
implementation of emissions allowances that could be traded or acquired in the open market. This legislation may be subject to debate and a possible vote by mid-year 2008. In addition, at
least 17 states have already taken legal measures to reduce emissions of greenhouse gases, primarily through the planned development of greenhouse gas emission inventories and/or regional greenhouse
gas cap and trade programs.



Our operations and the operations of the natural gas and oil industry in general may be subject to laws and regulations regarding the security of industrial
facilities, including natural gas and oil facilities. The Department of Homeland Security Appropriations Act of 2007 required the Department of Homeland Security ("DHS"), to issue regulations
establishing risk-based performance standards for the security of chemical and industrial facilities, including oil and gas facilities that are deemed to present "high levels of security
risk." The DHS issued an interim final rule, known as the Chemical Facility Anti-Terrorism Standards interim rule, in April 2007 regarding risk-based performance standards to
be attained pursuant to the act and on November 20, 2007 further issued an Appendix A to the interim rule that established the chemicals of interest and their respective threshold
quantities that will trigger compliance with these interim rules. Covered facilities that are determined by DHS to pose a high level of security risk will be required to prepare and submit Security
Vulnerability Assessments and Site Security Plans as well as comply with other regulatory requirements, including those regarding inspections, audits, recordkeeping, and protection of
chemical-terrorism vulnerability information. In

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January
2008, we prepared and submitted to the DHS initial screening surveys for facilities operated by us that possess regulated chemicals of interest in excess of the Appendix A threshold
levels. Because we are currently awaiting a response from DHS on the extent to which some or all of our surveyed facilities may be determined to present a high level of security risk, the associated
costs for complying with this interim rule has not been determined by us, and it is possible that such costs ultimately could be substantial.

Pipeline Safety Regulations

Our pipelines are subject to regulation by the U.S. Department of Transportation ("DOT") under the Natural Gas Pipeline Safety Act of 1986, as amended ("NGPSA"),
with respect to natural gas and the Hazardous Pipeline Safety Act of 1979, as amended ("HLPSA"), with respect to crude oil, NGLs and condensates. The NGPSA and HLPSA govern the design, installation,
testing, construction, operation, replacement and management of natural gas, oil and NGL pipeline facilities. The NGPSA and HLPSA require any entity that owns or operates pipeline facilities to comply
with the regulations implemented under these acts, permit access to and allow copying of records, and to make certain reports and provide information as required by the Secretary of Transportation. We
believe that our pipeline operations are in substantial compliance with applicable existing NGPSA and HLPSA requirements; however, due to the possibility of new or amended laws and regulations or re
interpretation of existing laws and regulations, future compliance with the NGPSA and HLPSA could result in increased costs.

Our
pipelines are also subject to regulation by the DOT under the Pipeline Safety Improvement Act of 2002, which was reauthorized and amended by the Pipeline Inspection, Protection,
Enforcement and
Safety Act of 2006. The DOT, through the Pipeline and Hazardous Materials Safety Administration ("PHMSA"), has established a series of rules under 49 C.F.R. Part 192 that require pipeline
operators to develop and implement integrity management programs for gas transmission pipelines that, in the event of a failure, could affect high consequence areas. "High consequence areas" are
currently defined to include high population areas, areas unusually sensitive to environmental damage and commercially navigable waterways. Similar rules are also in place under 49 C.F.R.
Part 195 for operators of hazardous liquid pipelines including lines transporting NGLs and condensates. The DOT also is required by the Pipeline Inspections, Protection, Enforcement, and Safety
Act of 2006 to issue new regulations that set forth safety standards and reporting requirements applicable to low stress pipelines and gathering lines transporting hazardous liquids, including oil,
NGLs and condensate. A final rule addressing safety standards for hazardous liquid low-stress pipelines and gathering lines is anticipated to be issued by PHMSA in 2008. Such new hazardous
liquid pipeline safety standards may include applicable integrity management program requirements. While we believe that our pipeline operations are in substantial compliance with applicable
requirements, due to the possibility of new or amended laws and regulations, or reinterpretation of existing laws and regulations, there can be no assurance that future compliance with the
requirements will not have a material adverse effect on our results of operations or financial position.

Employee Safety

The workplaces associated with the processing and storage facilities and the pipelines we operate are also subject to oversight pursuant to the federal
Occupational Safety and Health Act, as amended, ("OSHA"), as well as comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA
hazard-communication standard requires that we maintain information about hazardous materials used or produced in operations, and that this information be provided to employees, state and local
government authorities, and citizens. We believe that we have conducted our operations in substantial compliance with OSHA requirements, including general industry standards, record-keeping
requirements and monitoring of occupational exposure to regulated substances.

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In general, we expect industry and regulatory safety standards to become stricter over time, resulting in increased compliance expenditures. While these expenditures cannot be accurately
estimated at this time, we do not expect such expenditures will have a material adverse effect on our results of operations.

Employees

We employ through our subsidiary, MarkWest Hydrocarbon, Inc., 356 individuals to operate our facilities and provide general and administrative services.
The Paper, Allied Industrial, Chemical and Energy Workers International Union Local 5-372 represents 15 employees at our Siloam fractionation facility in South Shore, Kentucky. The
collective bargaining agreement with this union was renewed on July 11, 2005, for a term of three years. The agreement covers only hourly, non-supervisory employees. We consider
labor relations to be satisfactory at this time.

Available Information

Our principal executive office is located at 1515 Arapahoe Street, Tower 2, Suite 700, Denver, Colorado 80202-2126. Our telephone number is
303-925-9200. Our common units trade on the New York Stock Exchange under the symbol "MWE." You can find more information about us at our Internet website, www.markwest.com. Our annual reports on
Form 10-K, our quarterly reports on Form 10-Q, our current reports on
Form 8-K and any amendments to those reports are available free of charge through our Internet website as soon as reasonably practicable after we electronically file or furnish such
material with the Securities & Exchange Commission.

ITEM 1A.    Risk Factors

In addition to the other information set forth elsewhere in this Form 10-K, you should carefully consider the following
factors when evaluating MarkWest Energy Partners.

Risks Inherent in Our Business



The amount of cash we can distribute on our units depends principally on the amount of cash we generate from our operations, which will fluctuate from quarter to
quarter based on, among other things:



In
addition, the actual amount of cash we will have available for distribution will depend on other factors, some of which are beyond our control, including:



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Unitholders
should be aware that the amount of cash we have available for distribution depends primarily on our cash flow and not solely on profitability, which is affected by
non-cash items. As a result, we may make cash distributions during periods when we record losses for financial accounting purposes and may not make cash distributions during periods when
we record net earnings for financial accounting purposes.



One of the ways we intend to grow our business is through the construction of additions to our existing gathering systems and construction of new gathering,
processing and treating facilities. The construction of gathering, processing and treating facilities requires the expenditure of significant amounts of capital, which may exceed our expectations, and
involves numerous regulatory, environmental, political, legal and inflationary uncertainties. If we undertake these projects, we may not be able to complete them on schedule or at all or at the
budgeted cost. Moreover, our revenues may not increase immediately upon the expenditure of funds on a particular project. For instance, if we build a new pipeline, the construction will occur over an
extended period of time, and we will not receive any material increases in revenues until after completion of the project, if at all.

Furthermore,
we may have only limited natural gas supplies committed to these facilities prior to their construction. Moreover, we may construct facilities to capture anticipated future
growth in production in a region in which anticipated production growth does not materialize. We may also rely on estimates of proved reserves in our decision to construct new pipelines and
facilities, which may prove to be inaccurate because there are numerous uncertainties inherent in estimating quantities of proved reserves. As a result, new facilities may not be able to attract
enough natural gas to achieve our expected investment return, which could adversely affect our operations and cash flows available for distribution to our unitholders.



Our ability to grow depends in part on our ability to make acquisitions that result in an increase in the cash generated from operations per unit. If we are
unable to make these accretive acquisitions because we are (1) unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts with them, (2) unable to
obtain financing for these acquisitions on economically acceptable terms, or (3) outbid by competitors, then our future growth and ability to increase distributions will be limited.



Our future growth will depend in part on our ability to integrate our future acquisitions. We cannot guarantee that we will successfully integrate any
acquisitions into our existing operations, or that we will achieve the desired profitability and anticipated results from such acquisitions. Failure to achieve such planned results could adversely
affect our operations and cash flows available for distribution to our unitholders.

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The
integration of acquisitions with our existing business involves numerous risks, including:



Further,
unexpected costs and challenges may arise whenever businesses with different operations or management are combined, and we may experience unanticipated delays in realizing the
benefits of an acquisition. Following an acquisition, we may discover previously unknown liabilities including those under the same stringent environmental laws and regulations relating to releases of
pollutants into the environment and environmental protection as applicable to our existing plants, pipelines and facilities. If so, our operation of these new assets could cause us to incur increased
costs to address these liabilities or to attain or maintain compliance with such requirements. If we consummate any future acquisition, our capitalization and results of operation may change
significantly, and unitholders will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and
other resources.

Our
acquisition strategy is based in part on our expectation of ongoing divestitures of assets within the midstream petroleum and natural gas industry. A material decrease in such
divestitures could limit our opportunities for future acquisitions, and could adversely affect our operations and cash flows available for distribution to our unitholders.



We have substantial indebtedness and other financial obligations. Subject to the restrictions governing our indebtedness and other financial obligations,
including the indentures governing our outstanding notes, we may incur significant additional indebtedness and other financial obligations.

Our
substantial indebtedness and other financial obligations could have important consequences. For example, they could:



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Furthermore,
these consequences could limit our ability, and the ability of our subsidiaries, to obtain future financings, make needed capital expenditures, withstand a future downturn
in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise. Our existing credit facility contains covenants requiring us to
maintain specified financial ratios and satisfy other financial conditions, which, if not maintained, may limit our ability to grant liens on our assets, make or own certain investments, enter into
any swap contracts other than in the ordinary course of business, merge, consolidate, or sell assets, incur indebtedness senior to the credit facility, make distributions on equity investments, and
declare or make, directly or indirectly, any distribution on our common units. Our obligations under the credit facility are secured by substantially all of our assets and guaranteed by all of our
subsidiaries, other than our operating company, which is the borrower under the credit facility (please read Item 7. Management's Discussion and Analysis of Financial Condition and Results of
OperationsLiquidity and Capital Resources). In particular, we may be unable to meet those ratios and conditions. Any future breach of any
of these
covenants or our failure to meet any of these ratios or conditions could result in a default under the terms of our credit facility, which could result in acceleration of our debt and other financial
obligations. If we were unable to repay those amounts, the lenders could initiate a bankruptcy or liquidation proceeding, or proceed against the collateral.



Our gathering systems are connected to natural gas reserves and wells, from which the production will naturally decline over time, which means that our cash flows
associated with these wells will also decline over time. To maintain or increase throughput levels on our gathering systems and the utilization rate at our processing plants and our treating and
fractionation facilities, we must continually obtain new natural gas supplies. Our ability to obtain additional sources of natural gas depends in part on the level of successful drilling activity near
our gathering systems.

We
have no control over the level of drilling activity in the areas of our operations, the amount of reserves associated with the wells or the rate at which production from a well will
decline. In addition, we have no control over producers or their production decisions, which are affected by, among other things, prevailing and projected energy prices, demand for hydrocarbons, the
level of reserves, geological considerations, governmental regulations and the availability and cost of capital. Fluctuations in energy prices can greatly affect production rates and investments by
third parties in the development of new oil and natural gas reserves. Drilling activity generally decreases as oil and natural gas prices decrease. Declines in natural gas prices, if sustained, could
lead to a material decrease in such production activity and ultimately to a decrease in exploration activity.

Because
of these factors, even if new natural gas reserves are discovered in areas served by our assets, producers may choose not to develop those reserves. If we are not able to obtain
new supplies of natural gas to replace the natural decline in volumes from existing wells due to reductions in drilling activity or competition, throughput on our pipelines and the utilization rates
of our treating and processing facilities would decline, which could have a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions.

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Although we obtain our supply of natural gas, refinery off-gas and NGLs from numerous third-party producers, a significant portion comes from a
limited number of key producers/suppliers who are committed to us under processing contracts. According to these contracts or other supply arrangements, however, the producers are under no obligation
to deliver a specific quantity of natural gas or NGLs to our facilities. If these key suppliers, or a significant number of other producers, were to decrease the supply of natural gas or NGLs to our
systems and facilities for any reason, we could experience difficulty in replacing those lost volumes. Because our operating costs are primarily fixed, a reduction in the volumes of natural gas or
NGLs delivered to us would result not only in a reduction of revenues, but also a decline in net income and cash flow.



Our costs may increase at a rate greater than the fees we charge to third parties. Furthermore, third parties may not renew their contracts with us. Additionally,
some third parties' obligations under their agreements with us may be permanently or temporarily reduced due to certain events, some of which are beyond our control, including force majeure events
wherein the supply of either natural gas, NGLs or crude oil are curtailed or cut off. Force majeure events include (but are not limited to): revolutions, wars, acts of enemies, embargoes, import or
export restrictions, strikes, lockouts, fires, storms, floods, acts of God, explosions and mechanical or physical failures of equipment affecting our facilities or facilities of third parties. If the
escalation of fees is insufficient to cover increased costs, if third parties do not renew or extend their contracts with us or if any third party suspends or terminates its contracts with us, our
financial results would suffer.



We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. Any material nonpayment or nonperformance by our key customers could
reduce our ability to make distributions to our unitholders. Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the
risk that they may default on their obligations to us.



The renewal or replacement of existing contracts with our customers at rates sufficient to maintain current revenues and cash flows depends on a number of factors
beyond our control, including competition from other gatherers, processors, pipelines, fractionators, and the price of, and demand for, natural gas, NGLs and crude oil in the markets we serve. Our
competitors include large oil, natural gas, refining and petrochemical companies, some of which have greater financial resources, more numerous or greater capacity pipelines, processing and other
facilities, and greater access to natural gas and NGL supplies than we do. Additionally, our customers that gather gas through facilities that are not otherwise dedicated to us may develop their own
processing and fractionation facilities in lieu of using our services. Certain of our competitors may also have advantages in competing for acquisitions, or other new business opportunities, because
of their financial resources and synergies in operations.

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As
a consequence of the increase in competition in the industry, and the volatility of natural gas prices, end-users and utilities are reluctant to enter into
long-term purchase contracts. Many end-users purchase natural gas from more than one natural gas company and have the ability to change providers at any time. Some of these
end-users also have the ability to switch between gas and alternative fuels in response to relative price fluctuations in the market. Because there are numerous companies of greatly
varying size and financial capacity that compete with us in the marketing of natural gas, we often compete in the end-user and utilities markets primarily on the basis of price. The
inability of our management to renew or replace our current contracts as they expire and to respond appropriately to changing market conditions could affect our profitability. For more information
regarding our competition, please read Item 1. BusinessOverviewof Part 1 of this report.



We are subject to significant risks associated with frequent and often substantial fluctuations in commodity prices. In the past, the prices of natural gas and
NGLs have been volatile, and we expect this volatility to continue. The New York Mercantile Exchange ("NYMEX") daily settlement price of natural gas for the prompt month contract in 2005 ranged from a
high of $15.38 per MMBtu to a low of $5.79 per MMBtu. In 2006, the same index ranged from a high of $10.63 per MMBtu to a low of $4.20 per MMBtu. In 2007, the same index ranged from a high of $8.64
per MMBtu to a low of $5.38 per MMBtu. A composite of the weighted monthly average NGLs price at our Appalachian facilities
based on our average NGLs composition in 2005 ranged from a high of approximately $1.31 per gallon to a low of $0.79 per gallon. In 2006, the same composite ranged from approximately $1.29 per gallon
to approximately $0.99 per gallon. In 2007, the same composite ranged from approximately $1.76 per gallon to approximately $0.96 per gallon. The markets and prices for natural gas and NGLs depend upon
factors beyond our control. These factors include demand for oil, natural gas and NGLs, which fluctuate with changes in market and economic conditions and other factors, including:



Our
net operating margins under various types of commodity-based contracts are directly affected by changes in NGL product prices and natural gas prices, and thus are more sensitive to
volatility in commodity prices than our fee-based contracts. Additionally, our purchase and resale of gas in the ordinary course of business exposes us to significant risk of volatility in
gas prices due to the potential difference in the time of the purchases and sales, and the potential existence of a difference in the gas price associated with each transaction.



Under the Partnership's keep-whole arrangements, its principal cost is delivering dry gas of an equivalent Btu content to replace Btus extracted from
the gas stream in the form of NGLs, or consumed as fuel during processing. The spread between the NGL product sales price and the purchase price of natural gas with an equivalent Btu content is called
the "frac spread." Generally, the frac spread and, consequently, the net operating margins are positive under these contracts. In the event

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natural
gas becomes more expensive on a Btu equivalent basis than NGL products, the cost of keeping the producer "whole" results in operating losses.

Due
to timing of gas purchases and liquid sales, direct exposure to either gas or liquids can be created because there is no longer an offsetting purchase or sale that remains exposed to
market pricing. Through the Partnership's marketing and derivatives activity, direct exposure may occur naturally or the Partnership may choose direct exposure to either gas or liquids when the
Partnership favors that exposure over frac spread risk. Given that the Partnership has positions, adverse movement in prices to the positions the Partnership has taken will negatively impact results.



Our operations expose us to fluctuations in commodity prices. We utilize derivative financial instruments related to the future price of crude oil, natural gas
and certain NGLs with the intent of reducing volatility in our cash flows due to fluctuations in commodity prices.

The
extent of our commodity price exposure is related largely to the effectiveness and scope of our derivative activities. We have a policy to enter into derivative transactions related
to only a portion of the volume of our expected production or fuel requirements and, as a result, we will continue to have direct commodity price exposure to the unhedged portion. Our actual future
production or fuel requirements may be significantly higher or lower than we estimate at the time we enter into derivative transactions for such period. If the actual amount is higher than we
estimate, we will have greater commodity price exposure than we intended. If the actual amount is lower than the amount that is subject to our derivative financial instruments, we might be forced to
satisfy all or a portion of our derivative transactions without the benefit of the cash flow from our sale or purchase of the underlying physical commodity, resulting in a substantial diminution of
our liquidity. As a result of these factors, our hedging activities may not be as effective as we intend in reducing the downside volatility of our
cash flows, and in certain circumstances may actually increase the volatility of our cash flows. In addition, our hedging activities are subject to the risks that a counterparty may not perform its
obligation under the applicable derivative instrument, the terms of the derivative instruments are imperfect, and our hedging policies and procedures are not properly followed. It is possible that the
steps we take to monitor our derivative financial instruments may not detect and prevent violations of our risk management policies and procedures, particularly if deception or other intentional
misconduct is involved. For further information about our risk management policies and procedures, please read Item 7A. Quantitative and Qualitative Disclosures About Market
RiskCommodity Price Riskas set forth in this report.



We evaluate our exposure to commodity price risk from an overall portfolio basis. Management of the General Partner has discretion in determining whether and how
to manage the commodity price risk associated with our physical and derivative positions.

To
the extent that we do not manage the commodity price risk relating to a position that is subject to commodity price risk, and commodity prices move adversely, we could suffer losses.
Such losses could be substantial, and could adversely affect our operations and cash flows available for distribution to our unitholders. In addition, managing the commodity risk may actually reduce
our opportunity to benefit from increases in the market or spot prices.

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Unfavorable commodity price changes may subject us to margin calls that require us to provide letter of credit collateral to our counterparties in amounts that
may be material. Such funding requirements could exceed our letter of credit availability on our credit line. If we were unable to meet these margin calls with letters of credit, we would be forced to
sell product to meet the margin calls, or to terminate the corresponding futures contracts. If we are forced to sell product to meet margin calls, we may have to sell product at prices that are not
advantageous, which could adversely affect our operations and cash flows available for distribution to our unitholders.



Some of our gas, liquids and crude oil transmission operations are subject to rate and service regulations under FERC or various state regulatory bodies,
depending upon jurisdiction. FERC generally regulates the transportation of natural gas and oil in interstate commerce, and FERC's regulatory authority includes: facilities construction, acquisition,
extension or abandonment of services or facilities; accounts and records; and depreciation and amortization policies. Intrastate natural gas pipeline operations and transportation on proprietary
natural gas or petroleum products pipelines are generally not subject to regulation by FERC, and the Natural Gas Act, which is referred to as "NGA," specifically exempts some gathering systems. Yet
such operations may still be subject to regulation by various state agencies. The applicable statutes and regulations generally require that our rates and terms and conditions of service provide no
more than a fair return on the aggregate value of the facilities used to render services. We cannot assure unitholders that FERC will not at some point determine that such gathering and transportation
services are within its jurisdiction, and regulate such services. FERC rate cases can involve complex and expensive proceedings. For more information regarding regulatory matters that could affect our
business, please read Item 1. BusinessRegulatory Mattersas set forth in this report.



The construction of additions to our existing gathering assets may require us to obtain new rights-of-way prior to constructing new
pipelines. We may be unable to obtain such rights-of-way to connect new natural gas supplies to our existing gathering lines or capitalize on other attractive expansion
opportunities. Additionally, it may become more expensive for us to obtain new rights-of-way or to renew existing rights-of-way. If the cost of
obtaining new rights-of-way or renewing existing rights-of-way increases, it may adversely affect our operations and cash flows available for
distribution to unitholders.



Columbia Gas is the previous or current owner of the property on which our Kenova, Boldman, Cobb and Kermit facilities are located and is the previous operator of
our Boldman and Cobb facilities. Columbia Gas has been or is currently involved in investigatory or remedial activities with respect to the real property underlying the Boldman and Cobb facilities
pursuant to an "Administrative Order by Consent for Removal Actions" entered into by Columbia Gas and the U.S. Environmental Protection Agency and, in the case of the Boldman facility, an "Agreed
Order" with the Kentucky Natural Resources and Environmental Protection Cabinet.

30

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Columbia
Gas has agreed to retain sole liability and responsibility for, and to indemnify MarkWest Hydrocarbon against, any environmental liabilities associated with these regulatory
orders or the real property underlying these facilities to the extent such liabilities arose prior to the effective date of the agreements pursuant to which such properties were acquired or leased
from Columbia Gas. At the closing of our initial public offering, MarkWest Hydrocarbon assigned us the benefit of its indemnity from Columbia Gas with respect to the Cobb, Boldman and Kermit
facilities. While we are not a party to the agreement under which Columbia Gas agreed to indemnify MarkWest Hydrocarbon with respect to the Kenova facility, MarkWest Hydrocarbon has agreed to provide
to us the benefit of its indemnity, as well as any other third party environmental indemnity of which it is a beneficiary. Our results of operation and our ability to make cash distributions to our
unitholders could be adversely affected if in the future either Columbia Gas or MarkWest Hydrocarbon fails to perform under the indemnification provisions of which we are the beneficiary.



Numerous governmental agencies enforce comprehensive and stringent federal, local and state laws and regulations on a wide range of environmental, safety and
other regulatory matters. We could be adversely affected by increased costs due to stricter pollution-control requirements or liabilities resulting from non-compliance with operating or
other regulatory permits. Joint and several strict liability may be incurred without regard to fault, or the legality of the original conduct, under certain of the environmental laws for remediation
of contaminated areas, including the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Resource
Conservation and Recovery Act, as amended, and analogous state laws. Private parties, including the owners of properties located near our storage, fractionation and processing facilities or through
which our pipeline systems pass, also may have the right to pursue legal actions to enforce compliance, as well as seek damages for non-compliance with environmental laws and regulations
or for personal injury or property damage. New, more stringent environmental laws, regulations and enforcement policies might adversely influence our products and activities. Federal, state and local
agencies also could impose additional safety requirements, any of which could affect our profitability. In addition, we face the risk of accidental releases or spills associated with our operations.
These could result in material costs and liabilities, including those relating to claims for damages to property, natural resources and persons. Our failure to comply with environmental or
safety-related laws and regulations could result in administrative, civil and criminal penalties, the imposition of investigatory and remedial obligations and even injunctions that restrict or
prohibit our operations. For more information regarding the environmental, safety and other regulatory matters that could affect our business, please read Item 1.
BusinessRegulatory Matters, Item 1. BusinessEnvironmental Matters, and
Item 1. BusinessPipeline Safety Regulations, each as set forth in this report.

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All of the natural gas we process, gather and transmit is delivered into pipelines for further delivery to end-users. If these pipelines cannot, or
will not, accept delivery of the gas due to downstream constraints on the pipeline, we will be forced to limit or stop the flow of gas through our pipelines and processing systems. In addition,
interruption of pipeline service upstream of our processing facilities would limit or stop flow through our processing facilities. Likewise, if the pipelines into which we deliver crude oil are
interrupted, we will be limited in, or prevented from conducting, our crude oil transportation operations. Any number of factors beyond our control could cause such interruptions or constraints on
pipeline service, including necessary and scheduled maintenance, or unexpected damage to the pipeline. Because our revenues and net operating margins depend upon (1) the volumes of natural gas
we process, gather and transmit, (2) the throughput of NGLs through our transportation, fractionation and storage facilities and (3) the volume of crude oil we gather and transport, any
reduction of volumes could adversely affect our operations and cash flows available for distribution to our unitholders.



Our operations depend upon the infrastructure that we have developed, including processing and fractionation plants, storage facilities, and various means of
transportation. Any significant interruption at these facilities or pipelines, or our inability to transmit natural gas or NGLs, or transport crude oil to or from these facilities or pipelines for any
reason, would adversely affect our operations and cash flows available for distribution to our unitholders.

Operations
at our facilities could be partially or completely shut down, temporarily or permanently, as the result of circumstances not within our control, such as:



We rely exclusively on the revenues generated from our gathering, processing, transportation, transmission, fractionation and storage businesses. An adverse
development in one of these businesses would have a significantly greater impact on our operations and cash flows available for distribution to our unitholders than if we maintained more diverse
assets.



Our ability to successfully operate our business, generate sufficient cash to pay the quarterly cash distributions to our unitholders, and to allow for growth, is
subject to a number of risks and uncertainties. Similarly, we may not be able to successfully expand our business through acquiring or growing our assets, because of various factors, including
economic and competitive factors beyond our

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control.
If we are unable to grow our business, or execute on our business plan, the market price of the common units is likely to decline.



Our industry is subject to numerous operating hazards and risks incidental to processing, transporting, fractionating and storing natural gas and NGLs and to
transporting and storing crude oil. These include:



As
a result, we may be a defendant in various legal proceedings and litigation arising from our operations. We may not be able to maintain or obtain insurance of the type and amount we
desire at reasonable rates. Market conditions could cause certain insurance premiums and deductibles to become unavailable, or available only for reduced amounts of coverage. For example, insurance
carriers now require broad exclusions for losses due to war risk and terrorist acts. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse
effect on our operations and cash flows available for distribution to our unitholders.



We own a 50% non-operating membership interest in Starfish, whose assets are located in the Gulf of Mexico and southwestern Louisiana. During 2005,
Hurricanes Katrina and Rita caused severe and widespread damage to oil and gas assets in the Gulf of Mexico and Gulf Coast regions. The loss to both offshore and onshore assets resulting from the
hurricanes has led to substantial insurance claims within the oil and gas industry. Insurance costs have increased within this region as a result of these developments. We have renewed our insurance
coverage relating to Starfish and mitigated a portion of the cost increase by reducing our coverage and broadening the self-insurance element of our overall coverage. In the future, we may
be unable to obtain adequate insurance on our interest in Starfish at rates we consider reasonable and as a result may experience losses that are not insured or that exceed the maximum limits under
our insurance policies. If a significant negative event that is not fully insured occurs with respect to Starfish, it could adversely affect our operations and cash flows available for distribution to
our unitholders.



Our future success depends to a large extent on the services of our key employees. Our business depends on our continuing ability to recruit, train and retain
highly qualified employees, including accounting, business operations, finance and other key back-office and mid-office personnel. The competition for these employees is
intense, and the loss of these employees could harm our business.

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Further,
our ability to successfully integrate acquired companies depends in part on its ability to retain key management and existing employees at the time of the acquisition.



Our operations require skilled and experienced laborers with proficiency in multiple tasks. In recent years, a shortage of workers trained in various skills
associated with the midstream energy business has caused us to conduct certain operations without full staff, which decreases our productivity and
increases our costs. This shortage of trained workers is the result of the previous generation's experienced workers reaching the age for retirement, combined with the difficulty of attracting new
laborers to the midstream energy industry. Thus, this shortage of skilled labor could continue over an extended period. If the shortage of experienced labor continues or worsens, it could have an
adverse impact on our labor productivity and costs and our ability to expand production in the event there is an increase in the demand for our products and services, which could adversely affect our
operations and cash flows available for distribution to our unitholders.



Since the September 11, 2001 terrorist attacks, the U.S. government has issued warnings that energy assets, specifically the nation's pipeline
infrastructure, may be future targets of terrorist organizations. These developments will subject our operations to increased risks. Any future terrorist attack that may target our facilities, those
of our customers and, in some cases, those of other pipelines, could have a material adverse effect on our business.

Risks Related to Our Partnership Structure



The General Partner, without your approval, may cause us to issue additional common units or other equity securities of equal rank with or senior to the common
units.

The
issuance of additional common units or other equity securities of equal or senior rank will have the following effects:



Unlike the holders of common stock in a corporation, unitholders have more limited voting rights on matters affecting our business, and therefore a more limited
ability to influence management's decisions regarding our business. Unitholders did not elect our General Partner, but will now have the right to elect our General Partner's board of directors. The
amended and restated partnership agreement provides that the General Partner may not withdraw and may not be removed at any time for any reason whatsoever. Furthermore, if any person or group other
than the General Partner and its

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affiliates
acquires beneficial ownership of 20% or more of any class of units (without the prior approval of the General Partner board), that person or group loses voting rights on all of its units.
However, if unitholders are dissatisfied with the performance of our General Partner, they have the right to annually elect its board of directors.



Under Delaware law, unitholders could be held liable for our obligations as a general partner if a court determined that the right or the exercise of the right by
unitholders as a group to approve certain transactions or amendments to the agreement of limited partnership, or to take other action under the Partnership Agreement was considered participation in
the "control" of our business. After the redemption and merger, unitholders will elect the members of the General Partner board, which may be deemed to be participation in the "control" of our
business. This could subject unitholders to liability as a general partner.

In
addition, Section 17-607 of the Delaware Revised Uniform Limited Partnership Act provides that, under some circumstances, a unitholder may be liable to us for the
amount of a distribution for a period of three years from the date of the distribution.



Changes in current state law may subject us to additional entity-level taxation by individual states. Because of widespread state budget deficits and other
reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation. Imposition of any such taxes
may substantially reduce the cash available for distribution to our unitholders. For example, the state of Texas and the state of Michigan have both instituted income-based taxes that result in an
entity level tax for the partnership. Beginning in 2008, the Partnership will be required to pay Texas franchise tax at a maximum effective rate of 1.0% of our gross income apportioned to Texas in the
prior year. Additionally, the Michigan Business Tax, which contains two prongs, also imposes a tax on the partnership. The two prongs comprise a tax at the rate of 0.8% of a taxpayer's modified gross
receipts and a tax at the rate of 4.95% of the taxpayer's business income. Each of the above mentioned rates also includes a surcharge of 21.99% resulting in overall rates of 0.97% and 6.03%. The
imposition of entity level taxes on us by Texas and Michigan and, if applicable, by any other state will reduce the cash available for distribution to our unitholders. The amended and restated
partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to additional amounts of entity-level taxation, the minimum quarterly
distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law on us.



As result of the merger, the allocable shares of nonrecourse liabilities allocated to existing unitholders will be recalculated to take into account common units
issued by us in exchange for Company common stock. If an existing unitholder experiences a reduction in our unitholder's share of nonrecourse liabilities as a result of the merger, a "reducing debt
shift," our unitholder will be deemed to have received a cash distribution equal to the amount of the reduction. A reduction in our unitholder's share of liabilities will result in a corresponding
basis reduction in our unitholder's common units. A reducing debt shift and the resulting deemed cash distribution may, under certain

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circumstances,
result in the recognition of taxable gain by our unitholder. If the reduction in our unitholder's share of nonrecourse liabilities and the resulting deemed cash distribution exceeds
such unitholder's common unit basis, such unitholder would recognize gain in an amount equal to such excess. We do not expect that any constructive cash distribution will exceed an existing
unitholder's tax basis in our common units.



The anticipated after-tax benefit of an investment in the common units depends largely on our being treated as a partnership for federal income tax
purposes. We have not requested, and do not plan to request, a ruling from the IRS on this or any other matter affecting us.

If
we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our income at the corporate tax rate, which is currently a maximum of 35%, and
would likely pay state income tax at varying rates. Distributions to our unitholders would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits
would flow through to our unitholders. Because a tax would be imposed upon us as a corporation, our cash flows would be substantially reduced. Therefore, our treatment as a corporation would result in
a material reduction in the anticipated cash flow and after-tax return to our unitholders, likely causing a substantial reduction in the value of the common units.

Current
law may change, causing us to be treated as a corporation for federal income tax purposes or otherwise subjecting us to entity-level taxation. For example, at the federal level,
legislation has been proposed that would eliminate partnership tax treatment for certain publicly traded partnerships. Any modification to the federal income tax laws and interpretations thereof may
or may not be applied retroactively. Although such legislation would not apply to us as currently proposed, it could be amended prior to enactment in a manner that does apply to us. We are unable to
predict whether any of these changes or other proposals will ultimately be enacted. Any such changes could negatively impact the value of an investment in our common units.

The
partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us
to entity-level taxation for federal, state or local income tax purposes, then the minimum quarterly distribution amount and the target distribution amounts will be reduced to reflect the impact of
that law on us.



We have not requested a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes or any other matter affecting us. The
IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some
or all of the positions we take. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market for our common units and the
price at which they trade. In addition, our costs of any contest with the IRS will be borne indirectly by our unitholders and the General Partner because the costs will reduce our cash available for
distribution.

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Because our unitholders will be treated as partners to whom we will allocate taxable income which could be different in amount than the cash we distribute, each
unitholder will be required to pay any federal income taxes and, in some cases, state and local income taxes on his share of our taxable income even if the unitholder receives no cash distributions
from us. A unitholder may not receive cash distributions from us equal to his share of our taxable income or even equal to the actual tax liability that results from that income.



If a unitholder sells his common units, he will recognize a gain or loss equal to the difference between the amount realized and his tax basis in those common
units. Because distributions in excess of the unitholder's allocable share of our net taxable income decrease the unitholder's tax basis in his common units, the amount, if any, of such prior excess
distributions with respect to the common units the unitholder sells will, in effect, become taxable income to the unitholder if the unitholder sells such common units at a price greater than his tax
basis in those common units, even if the price the unitholder receives is less than his original cost. Furthermore, a substantial portion of the amount realized, whether or not representing gain, may
be taxed as ordinary income due to potential recapture items, including depreciation recapture. In addition, because the amount realized includes a unitholder's share of our nonrecourse liabilities,
if the unitholder sells his units, the unitholder may incur a tax liability in excess of the amount of cash the unitholder receives from the sale.



Investment in our common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs), and
non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and other
retirement plans, will be unrelated business taxable income and will be taxable to them. Distributions to non-U.S. persons will be reduced by withholding taxes at the highest applicable
effective tax rate, and non-U.S. persons will be required to file federal tax returns and pay tax on their share of our taxable income. If a unitholder is a tax exempt entity or a
non-U.S. person, the unitholder should consult a tax advisor before investing in our common units.



Because we cannot match transferors and transferees of our common units and because of other reasons, we will adopt depreciation and amortization positions that
may not conform to all aspects of existing Treasury regulations. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to our unitholders. It also
could affect the timing of these tax benefits or the amount of gain from a unitholder's sale of our common units and could have a negative impact on the value of our common units or result in audit
adjustments to a unitholder's tax returns.

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We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of the units on the
first day of each month, instead of on the basis of the date a particular common unit is transferred. The use of this proration method may not
be permitted under existing Treasury Regulations. If the IRS were to challenge this method or new Treasury regulations were issued, we may be required to change the allocation of items of income,
gain, loss and deduction among our unitholders.



Because a unitholder whose common units are loaned to a "short seller" to cover a short sale of common units may be considered as having disposed of the loaned
units, he may no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan to the short seller and the unitholder may recognize gain or loss from
such disposition. Moreover, during the period of the loan to the short seller, any of our income, gain, loss or deduction with respect to those common units may not be reportable by the unitholder and
any cash distributions received by the unitholder as to those common units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain
recognition from a loan to a short seller are urged to modify any applicable brokerage account agreements to prohibit their brokers from borrowing their common units.



When we issue additional common units or engage in certain other transactions, we will determine the fair market value of our assets and allocate any unrealized
gain or loss attributable to our assets to the capital accounts of our unitholders and the General Partner. Our methodology may be viewed as understating the value of our assets. In that case, there
may be a shift of income, gain, loss and deduction between certain unitholders and the General Partner, which may be unfavorable to such unitholders. Moreover, under our valuation methods, subsequent
purchasers of common units may have a greater portion of their Internal Revenue Code Section 743(b) adjustment allocated to our tangible assets and a lesser portion allocated to our intangible
assets. The IRS may challenge our valuation methods, or our allocation of the Section 743(b) adjustment attributable to our tangible and intangible assets, and allocations of income, gain, loss
and deduction between the General Partner and certain of our unitholders.

A
successful IRS challenge to these methods or allocations could adversely affect the amount of taxable income or loss being allocated to our unitholders. It also could affect the amount
of gain from the sale of common units by our unitholders and could have a negative impact on the value of our common
units or result in audit adjustments to the tax returns of our unitholders without the benefit of additional deductions.

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We would be considered to have terminated for federal income tax purposes if there were a sale or exchange of 50% or more of the total interests in our capital
and profits within a twelve-month period. Our termination would, among other things, result in the closing of our taxable year for all unitholders, which would result in us filing two tax returns (and
the unitholders could receive two Schedules K-1) for one fiscal year and could result in a deferral of depreciation deductions allowable in computing our taxable income. In the case
of a unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable year may also result in more than twelve months of our taxable income or loss
being includable in his taxable income for the year of termination. Our termination currently would not affect our classification as a partnership for federal income tax purposes, but instead, we
would be treated as a new partnership for tax purposes. If treated as a new partnership, we would make new tax elections and could be subject to penalties if we are unable to determine that a
termination occurred.



In addition to federal income taxes, our unitholders will likely be subject to other taxes, including foreign, state and local taxes, unincorporated business
taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we conduct business or own property now or in the future, even if our unitholders do not live
in any of those jurisdictions. Our unitholders will likely be required to file foreign, state and local income tax returns and pay state and local income taxes in some or all of these various
jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with those requirements. We currently do business or own property in nine states, most of which impose
personal income taxes. Most of these states also impose an income tax on corporations and other entities. As we make acquisitions or expand our business, we may own assets or conduct business in
additional states that impose a personal income tax. It is our unitholder's responsibility to file all United States federal, foreign, state and local tax returns.

ITEM 1B.    Unresolved Staff Comments

None.

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ITEM 2.    Properties

The following tables set forth certain information relating to our gas processing facilities, fractionation facility, natural gas pipelines, NGL pipelines, and
crude oil pipeline as of and for the year ended December 31, 2007.

Gas Processing Facilities:

|            |                               |  |                     |  |      |  |         | Year ended December 31, 2007
|----------- | ----------------------------- |  | ------------------- |  | ---- |  | ------- | ----------------------------
|
|
|East Texas: |                               |  |                     |  |      |  |         |                             
|            | East Texas processing plant   |  | Panola County, TX   |  | 2005 |  | 200,000 |                             
|Oklahoma:   |                               |  |                     |  |      |  |         |                             
|            | Arapaho processing plant      |  | Custer County, OK   |  | 2000 |  | 100,000 |                             
|Appalachia: |                               |  |                     |  |      |  |         |                             
|            | Kenova processing plant(1)    |  | Wayne County, WV    |  | 1996 |  | 160,000 |                             
|            | Boldman processing plant(1)   |  | Pike County, KY     |  | 1991 |  | 70,000  |                             
|            | Cobb processing plant         |  | Kanawha County, WV  |  | 2005 |  | 30,000  |                             
|            | Kermit processing plant(1)(2) |  | Mingo County, WV    |  | 2001 |  | 32,000  |                             
|Michigan:   |                               |  |                     |  |      |  |         |                             
|            | Fisk processing plant         |  | Manistee County, MI |  | 1998 |  | 35,000  |                             
|Gulf Coast: |                               |  |                     |  |      |  |         |                             
|            | Javelina processing plant     |  | Corpus Christi, TX  |  | 1989 |  | 142,000 |                             

---

Fractionation Facility:

|            |                            |  |                 |  |      |  |         | Year ended December 31, 2007 |        
|----------- | -------------------------- |  | --------------- |  | ---- |  | ------- | ---------------------------- | -------
|
|
|Appalachia: |                            |  |                 |  |      |  |         |                              |        
|            | Siloam fractionation plant |  | South Shore, KY |  | 1957 |  | 600,000 |                              | 452,200

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Natural Gas Pipelines:

|                 |                                |  |                                         |  |     |  |           |  |         | Year ended December 31, 2007 |        
|---------------- | ------------------------------ |  | --------------------------------------- |  | --- |  | --------- |  | ------- | ---------------------------- | -------
|
|
|East Texas:      |                                |  |                                         |  |     |  |           |  |         |                              |        
|                 | East Texas gathering system    |  | Panola County, TX                       |  | 311 |  | 1990      |  | 440,000 |                              | 413,700
|Oklahoma:        |                                |  |                                         |  |     |  |           |  |         |                              |        
|                 | Foss Lake gathering system     |  | Roger Mills and Custer County, OK       |  | 240 |  | 1998      |  | 120,000 |                              | 104,000
|                 | Grimes gathering system        |  | Beckham, Roger Mills Counties, OK       |  | 25  |  | 2005      |  | 25,000  |                              | 12,500 
|                 | Woodford gathering system      |  | Hughes, Pittsburg and Coal Counties, OK |  | 40  |  | 2006      |  | 300,000 |                              | 114,000
|Other Southwest: |                                |  |                                         |  |     |  |           |  |         |                              |        
|                 | Appleby gathering system       |  | Nacogdoches County, TX                  |  | 139 |  | 1990      |  | 85,000  |                              | 58,700 
|                 | Other gathering systems        |  | Various                                 |  |     |  | Various   |  | 36,500  |                              | 8,700  
|Michigan:        |                                |  |                                         |  |     |  |           |  |         |                              |        
|                 | 90-mile gas gathering pipeline |  | Manistee, Mason and Oceana Counties, MI |  | 90  |  | 1994-1998 |  | 35,000  |                              | 5,200  

NGL Pipelines:

|            |                       |  |                                        |  |      |  |      |  |         | Year ended December 31, 2007 |        
|----------- | --------------------- |  | -------------------------------------- |  | ---- |  | ---- |  | ------- | ---------------------------- | -------
|
|
|Appalachia: |                       |  |                                        |  |      |  |      |  |         |                              |        
|            | Ranger to Kenova(3)   |  | Lincoln County, WV to Wayne County, WV |  | 40   |  | 1976 |  | 831,000 |                              | 0      
|            | Kenova to Siloam      |  | Wayne County, WV to South Shore, KY    |  | 40   |  | 1957 |  | 831,000 |                              | 253,500
|East Texas: |                       |  |                                        |  |      |  |      |  |         |                              |        
|            | East Texas liquidline |  | Panola County, TX                      |  | 37.5 |  | 2005 |  | 630,000 |                              | 492,100

---

Crude Oil Pipeline:

|          |                         |  |                                            |  |     |  |      |  |        | Year ended December 31, 2007 |       
|--------- | ----------------------- |  | ------------------------------------------ |  | --- |  | ---- |  | ------ | ---------------------------- | ------
|
|
|Michigan: |                         |  |                                            |  |     |  |      |  |        |                              |       
|          | Michigan crude pipeline |  | Manistee County, MI to Crawford County, MI |  | 250 |  | 1973 |  | 60,000 |                              | 14,000

41

---





Title to Properties

Substantially all of our pipelines are constructed on rights-of-way granted by the owners of record of the property. Lands over which
pipeline rights-of-way have been obtained may be subject to prior liens that have not been subordinated to the right-of-way grants. We have obtained,
where determined necessary, permits, leases, license agreements and franchise ordinances from public authorities to cross over or under, or to lay facilities in or along water courses, county roads,
municipal streets and state highways, as applicable. We also have obtained easements and license agreements from railroad companies to cross over or under railroad properties or
rights-of-way. Many of these authorizations and grants are revocable at the election of the grantor. In some cases, property on which our pipelines were built was purchased in
fee or held under long-term leases. Our Siloam fractionation plant and Kenova processing plant are on land that we own in fee.

Some
of the leases, easements, rights-of-way, permits, licenses and franchise ordinances that were transferred to us required the consent of the
then-current landowner to transfer these rights, which in some instances was a governmental entity. We believe that we have obtained sufficient third-party consents, permits and
authorizations for the transfer of the assets necessary for us to operate our business. We also believe we have satisfactory title or other right to all of our material land assets. Title to these
properties is subject to encumbrances in some cases; however, we believe that none of these burdens will materially detract from the value of these properties or from our interest in these properties,
or will materially interfere with their use in the operation of our business.

We
have pledged substantially all of our assets to secure the debt of our subsidiary, MarkWest Energy Operating Company, L.L.C. (the "Operating Company"), as discussed in Note 11
of the accompanying Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

ITEM 3.    Legal Proceedings

We are subject to a variety of risks and disputes, and are a party to various legal proceedings in the normal course of our business. We maintain insurance
policies in amounts and with coverage and deductibles as we believe are reasonable and prudent. However, we cannot assure either that the insurance companies will promptly honor their policy
obligations or that the coverage or levels of insurance will be adequate to protect us from all material expenses related to future claims for property loss or business interruption to the Partnership
and the Company (collectively MarkWest); or for third-party claims of personal and property damage; or that the coverages or levels of insurance it currently has will be available in the future at
economical prices. While it is not possible to predict the outcome of the legal actions with certainty, management is of the opinion that appropriate provision and accruals for potential losses
associated with all legal actions have been made in the financial statements.

In
June 2006, the Office of Pipeline Safety ("OPS") issued a Notice of Probable Violation and Proposed Civil Penalty ("NOPV") (CPF No. 2-2006-5001)
to both MarkWest Hydrocarbon and Equitable Production Company. The NOPV is associated with the pipeline leak and an ensuing explosion and fire that occurred on November 8, 2004 in Ivel,
Kentucky on an NGL pipeline owned by Equitable Production Company and previously leased and operated by our subsidiary, MarkWest Energy Appalachia, LLC. The NOPV sets forth six counts of
violations of applicable regulations, and a proposed civil penalty in the aggregate amount of $1,070,000. An administrative hearing on the matter, previously set for the last week of March, 2007, was
postponed to allow the administrative record to be produced and to allow OPS an opportunity to respond to a motion to dismiss one of the counts of violations, which involves $825,000 of the $1,070,000
proposed penalty. This count arises out of alleged activity in 1982 and 1987, which predates MarkWest's leasing and operation of the pipeline. MarkWest believes it has viable defenses to the remaining
counts and will vigorously defend all applicable assertions of violations at the hearing.

42

---



Related
to the above referenced 2004 pipeline explosion and fire incident, MarkWest Hydrocarbon and the Partnership have filed an action captionedMarkWest
Hydrocarbon, Inc., et al. v. Liberty Mutual Ins. Co., et al.(District Court, Arapahoe County, Colorado, Case No. 05CV3953 filed August 12, 2005),
as removed to the U.S. District Court for the District of Colorado, (Civil Action No. 1:05-CV-1948, on October 7, 2005) against their All-Risks
Property and Business Interruption insurance carriers as a result of the insurance companies' refusal to honor their insurance coverage obligation to pay the Partnership for certain costs related to
the pipeline incident. The costs include internal costs incurred for damage to, and loss of use of the pipeline, equipment and products; extra transportation costs incurred for transporting the
liquids while the pipeline was out of service; reduced volumes of liquids that could be processed; and the costs of complying with the OPS Corrective Action Order (hydrostatic testing,
repair/replacement and other pipeline integrity assurance measures). Following initial discovery,
MarkWest was granted leave of the Court to amend its complaint to add a bad faith claim and a claim for punitive damages. The Partnership has not provided for a receivable for any of the claims in
this action because of the uncertainty as to whether and how much it will ultimately recover under the policies. The costs associated with this claim have been expensed as incurred and any potential
recovery from the All-Risks Property and Business Interruption insurance carriers will be treated as "other income" if and when it is received. The Defendant insurance companies and
MarkWest have each filed separate summary judgment motions in the action.

With
regard to our Javelina facility, MarkWest Javelina is a party with numerous other defendants to several lawsuits brought by various plaintiffs who had residences or businesses
located near the Corpus Christi industrial area, an area which included the Javelina gas processing plant, and several petroleum, petrochemical and metal processing and refining operations. These
suits,Victor Huff v. ASARCO Incorporated, et al. (Cause No. 98-01057-F, 214th Judicial Dist. Ct.,
County of Nueces, Texas, original petition filed in March 3, 1998);Jason and Dianne Gutierrez, individually and as representative of the estate of Sarina Galan
Gutierrez(Cause No. 05-2470-A, 28th Judicial District, severed May 18, 2005, from the Gonzalescase cited above); andEsmerejilda G. Valasquez, et al. v. Occidental Chemical Corp., et
al.,Case No. A-060352-C, 128th Judicial District, Orange County, Texas, original petition filed July 10, 2006; as
refiled from previously dismissed petition captionedJesus Villarreal v. Koch Refining Co. et al., Cause
No. 05-01977-F, 214th Judicial Dist. Ct., County of Nueces, Texas, originally filed April 27, 2005), set forth claims for wrongful death,
personal injury or property damage, harm to business operations and nuisance type claims, allegedly incurred as a result of operations and emissions from the various industrial operations in the area
or from products Defendants allegedly manufactured, processed, used, or distributed. The actions have been and are being vigorously defended and; based on initial evaluation and consultations; it
appears at this time that these actions should not have a material adverse impact on our business.

In
the ordinary course of business, we are party to various other legal actions. In the opinion of management, none of these actions, either individually or in the aggregate, will have a
material adverse effect on our financial condition, liquidity or results of operations.

ITEM 4.    Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of the holders of our common units during the fourth quarter of the fiscal year ended December 31, 2007.

43

---





PART II

ITEM 5.    Market for Registrant's Common Units, Related Unitholder Matters and Issuer Purchases of Equity Securities

Our common units have been listed on the New York Stock Exchange ("NYSE"), under the symbol "MWE," since May 2, 2007. Our common units had been traded on
the American Stock Exchange ("AMEX"), under the symbol "MWE," from May 24, 2002 to May 2, 2007. Prior to May 24, 2002, our equity securities were not listed on any exchange, or
traded on any public trading market.

On
January 25, 2007, the board of directors of the general partner of the Partnership declared a two-for-one unit split, which became effective
February 28, 2007. For all periods presented, all references to the number of units and per unit net income and distribution amounts included in this report have been adjusted to give the
effect for the unit split.

The
following table sets forth the high and low sales prices of the common units as reported by NYSE or AMEX, as well as the amount of cash distributions paid per quarter for 2007 and
2006:

|Quarter Ended      |  | High |       | Low |   | Per
Common
Unit |  | Per
Subordinated
Unit(1) |       | Record Date |   | Payment Date
|------------------ |  | ---- | ----- | --- | - | --------------- |  | ------------------------ | ----- | ----------- | - | ------------
|December 31, 2007  |  | $    | 34.71 |     | $ | 29.55           |  | $                        | 0.570 |             | $ |            
|September 30, 2007 |  | $    | 37.25 |     | $ | 29.78           |  | $                        | 0.550 |             | $ |            
|June 30, 2007      |  | $    | 38.00 |     | $ | 33.27           |  | $                        | 0.530 |             | $ | 0.530       
|March 31, 2007     |  | $    | 36.45 |     | $ | 28.51           |  | $                        | 0.510 |             | $ | 0.510       
|December 31, 2006  |  | $    | 29.95 |     | $ | 23.38           |  | $                        | 0.500 |             | $ | 0.500       
|September 30, 2006 |  | $    | 24.75 |     | $ | 20.50           |  | $                        | 0.485 |             | $ | 0.485       
|June 30, 2006      |  | $    | 23.33 |     | $ | 19.75           |  | $                        | 0.460 |             | $ | 0.460       
|March 31, 2006     |  | $    | 24.00 |     | $ | 21.76           |  | $                        | 0.435 |             | $ | 0.435       

---

As of February 15, 2008 there were 167 holders of record of our common units.

Distributions of Available Cash

Within 45 days after the end of each quarter, we will distribute all of our "Available Cash" to unitholders of record on the applicable record date. We
will make distributions of "Available Cash" to all unitholders (common and Class A), pro rata and we will make distributions of Hydrocarbon Available Cash (as defined in our amended and
restated partnership agreement) pro rata to common unitholders. We define "Available Cash" in our amended and restated partnership agreement, and we generally mean, for each fiscal quarter:



44

---





Generally,
Hydrocarbon Available Cash is defined as all cash and cash equivalents on hand derived from or attributable to our ownership of, or sale or other disposition of, the shares of
common stock of the Company.

Our
ability to distribute available cash is contractually restricted by the terms of our credit facilities. Our credit facilities contain covenants requiring us to maintain certain
financial ratios and a minimum net worth. We are prohibited from making any distribution to unitholders if such distribution would cause an event of default or otherwise violate a covenant under our
credit facilities. In addition, our credit facilities prohibit us from borrowing more than $0.375 per outstanding unit during any consecutive 12-month period for the purpose of making
distributions to unitholders. Our credit facilities provide that any amount so borrowed must be repaid once annually.

There
is no guarantee that we will pay a minimum quarterly distribution on the common units in any quarter.

Incentive Distribution Rights

Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash after a minimum quarterly
distribution and certain target distribution levels have been achieved. All incentive distribution rights were eliminated as a result of the merger.

Distributions of Cash Upon Liquidation

If we dissolve in accordance with the amended and restated partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation.
We will first apply the proceeds of liquidation to the payment of its creditors. We will distribute any remaining proceeds to the unitholders, in accordance with their capital account balances, as
adjusted to reflect any gain or loss upon the sale or other disposition of our assets in liquidation.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information, as of December 31, 2007, regarding our common units that may be issued upon conversion of outstanding restricted
units granted under our 2003 Long-Term Incentive Plan to employees and directors of our general partner and employees of its affiliates who perform services for us. For more information
about this plan, which did not require approval by the Partnership's limited partners, you should read Note 13 of the accompanying Notes to Consolidated Financial Statements included in
Item 8 of this Form 10-K.

|                                                            |                                             | Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights |         | Weighted-
average exercise
price of
outstanding
options, warrants
and rights(1) |   | Number of
securities
remaining
available for future
issuance under
equity
compensation
plans
|----------------------------------------------------------- | ------------------------------------------- | ------------------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------- | - | --------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders:     |                                             |                                                                                            |         |                                                                                |   |                                                                                            
|Equity compensation plans not approved by security holders: |                                             |                                                                                             |         |                                                                                 |   |                                                                                             
|                                                            | Long-Term Incentive Plan(restricted units) |                                                                                             | 125,250 |                                                                                 |  |                                                                                             
|                                                            | Long-Term Incentive Plan(unit options)     |                                                                                             |        |                                                                                 |  |                                                                                             
|                                                            |                                             |                                                                                             |         |                                                                                 |   |                                                                                             
|                                                            |                                             | 125,250                                                                                     |         |                                                                                |   | 687,280                                                                                     
|                                                            |                                             |                                                                                             |         |                                                                                 |   |                                                                                             

---

45

---



In
connection with the Merger, the Partnership assumed the MarkWest Hydrocarbon, Inc. 2006 Stock Incentive Plan ("2006 Plan") which converted the outstanding shares of restricted
stock granted under the 2006 Plan to restricted units. The converted restricted units will remain outstanding under the term of the 2006 Plan until their respective settlement dates. The 2008
Long-Term Incentive Plan ("2008 LTIP") was approved by the unitholders on February 21, 2008, which makes available 2.5 million Partnership common units for issuance in the
future. Refer to Note 22 of the accompanying Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K.

PERFORMANCE GRAPH

Total Return to Stockholders
(Assumes $100 Investment on 12/31/02)

CHART

---

46

---





ITEM 6.    Selected Financial Data

The following table sets forth selected consolidated historical financial and operating data for MarkWest Energy Partners. We have derived the summary selected
historical financial data from our consolidated financial statements and related notes. All earnings per share and dividend information have been updated to reflect the February 2007
two-for-one unit split. The selected financial data should be read in conjunction with the combined and consolidated financial statements, including the notes thereto, and
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation in this Form 10-K.

|                                     |                                                                                                        | Year Ended December 31,  |                           
|------------------------------------ | ------------------------------------------------------------------------------------------------------ | ------------------------ | --------------------------
|
|
|Statement of Operations:             |                                                                                                        |                          |                           
|Revenues(4):                         |                                                                                                        | $                        | 602,879                   
|                                     | Operating expenses:                                                                                    |                          |                           
|                                     | Purchased product costs                                                                                |                          |                           
|                                     | Facility expenses(4)                                                                                   |                          |                           
|                                     | Selling, general and administrative expenses                                                           |                          |                           
|                                     | Depreciation                                                                                           |                          |                           
|                                     | Amortization of intangible assets                                                                      |                          |                           
|                                     | Loss (gain) on disposal of property, plant and equipment                                               |                          |                           
|                                     | Accretion of asset retirement obligations                                                              |                          |                           
|                                     | Impairments                                                                                            |                          |                           
|                                     |                                                                                                        |                          |                           
|                                     |                                                                                                        | Total operating expenses |                           
|                                     |                                                                                                        |                          |                           
|                                     | Income from operations                                                                                 |                          |                           
|                                     | Earnings (losses) from unconsolidated affiliates                                                       |                          |                           
|                                     | Interest income                                                                                        |                          |                           
|                                     | Interest expense                                                                                       |                          |                           
|                                     | Amortization of deferred financing costs and original issue discount (a component of interest expense) |                          |                           
|                                     | Miscellaneous (expense) income                                                                         |                          |                           
|                                     |                                                                                                        |                          |                           
|                                     | Income before income taxes                                                                             |                          |                           
|                                     | Income tax expense                                                                                     |                          |                           
|                                     |                                                                                                        |                          |                           
|                                     |                                                                                                        | Net income               |                           
|                                     |                                                                                                        |                          |                           
|                                     | Net income per limited partner unit: (see Item 8Note 2)                                               |                          |                           
|                                     | Basic                                                                                                  |                          | $                         
|                                     | Diluted                                                                                                |                          | $                         
|                                     | Cash distributions declared per limited partner unit                                                   |                          | $                         
|Balance Sheet Data (at December 31): |                                                                                                        |                          |                           
|                                     | Working capital                                                                                        |                          | $                         
|                                     | Property, plant and equipment, net                                                                     |                          |                           
|                                     | Total assets                                                                                           |                          |                           
|                                     | Total long-term debt                                                                                   |                          |                           
|                                     | Partners' capital                                                                                      |                          |                           
|Cash Flow Data:                      |                                                                                                        |                          |                           
|                                     | Net cash flow provided by (used in):                                                                   |                          |                           
|                                     |                                                                                                        | Operating activities     |                           
|                                     |                                                                                                        | Investing activities     |                           
|                                     |                                                                                                        | Financing activities     |                           
|Other Financial Data:                |                                                                                                        |                          |                           
|                                     | Maintenance capital expenditures(5)                                                                    |                          | $                         
|                                     | Growth capital expenditures(5)                                                                         |                          |                           
|                                     |                                                                                                        |                          |                           
|                                     |                                                                                                        |                          | Total capital expenditures
|                                     |                                                                                                        |                          |                           

---

47

---



2007

2006

2005

2004

2003Revenues:Unrealized (loss) gain

$
(62,388
)
$
6,245

$
(657
)
$
(71
)
$
(67
)Realized loss


(4,155
)

(613
)

(1,194
)

(749
)

(713
)(66,543
)

5,632


(1,851
)

(820
)

(780
)Facility expenses:Unrealized gain


12











Total (loss) gain

$
(66,531
)
$
5,632

$
(1,851
)
$
(820
)
$
(780
)


Operating Data

|                |                                                  | Year Ended December 31,
|--------------- | ------------------------------------------------ | -----------------------
|
|Southwest:      |                                                  |                        
|East Texas(1)   |                                                  |                        
|                | Gathering systems throughput (Mcf/d)             |                        
|                | NGL product sales (gallons)                      |                        
|Oklahoma        |                                                  |                        
|                | Foss Lake gathering systems throughput (Mcf/d)   |                        
|                | Woodford gathering systems throughput (Mcf/d)(2) |                        
|                | Grimes gathering system throughput (Mcf/d)       |                        
|                | Arapaho NGL product sales (gallons)              |                        
|Other Southwest |                                                  |                        
|                | Appleby gathering systems throughput (Mcf/d)     |                        
|                | Other gathering systems throughput (Mcf/d)       |                        
|Northeast:      |                                                  |                        
|Appalachia(3)   |                                                  |                        
|                | Natural gas processed for a fee (Mcf/d)          |                        
|                | NGLs fractionated for a fee (Gal/day)            |                        
|                | NGL product sales (gallons)                      |                        
|Michigan:       |                                                  |                        
|                | Natural gas processed for a fee (Mcf/d)          |                        
|                | NGL product sales (gallons)                      |                        
|                | Crude oil transported for a fee (Bbl/d)          |                        
|Gulf Coast(4):  |                                                  |                        
|                | Natural gas processed for a fee (Mcf/d)          |                        
|                | NGLs fractionated for a fee (Bbl/day)            |                        

---

48

---





ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis ("MD&A") contains statements that are forward-looking and should be read in conjunction with
"Selected Consolidated Financial Data" and our consolidated financial statements and accompanying notes included elsewhere in this report. These statements are based on current expectations and
assumptions that are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied in the forward-looking statements as a result of a number of
factors.

Overview

We are a master limited partnership whose diverse portfolio of midstream assets serves many of the most prolific natural gas basins in the United States. The
Partnership is primarily 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.

Our
primary business strategy is to grow sustainable cash flow and cash distributions to our unitholders. The key elements of our strategy are to optimize existing assets and services,
to expand operations through new construction, and to target accretive and complementary acquisitions and expansion opportunities that provide attractive growth potential.

On
February 21, 2008, we completed a merger by and among MarkWest Hydrocarbon, Inc. and MWEP, L.L.C., whereby MarkWest Hydrocarbon, Inc. became a wholly owned
subsidiary of the Partnership. We anticipate that, through the elimination of the incentive distribution rights, we will reduce our cost of capital and strengthen our competitive position. The
financial statements presented include the consolidated results of operations for the Partnership for periods prior to the merger.

We
are required by our partnership agreement to distribute available cash from operating surplus each quarter to pay the minimum quarterly distribution. The amount of cash we can
distribute on our units depends principally on the amount of cash generated from our operations.

Our
distributions have increased from $0.25 per unit for the quarter ended September 30, 2002 (its first full quarter of operation after its initial public offering), to $0.57 per
unit for the quarter ended December 31, 2007. We issued 4.8 million common units at our initial public offering in 2002, compared to 39.4 million common units outstanding on
December 31, 2007.

A
significant part of our business strategy includes acquiring additional businesses that will allow us to increase distributions to our unitholders. We regularly consider and enter into
discussions regarding potential acquisitions. These transactions can be effected quickly, may occur at any time and may be significant in size relative to our existing assets and operations.

In
September 2006, we announced a strategic agreement with Newfield Exploration which involves the construction and operation of a new gathering and compression system to support all
Newfield operated wells in a 200-square-mile project area situated in a four-county region in the Arkoma Basin in eastern Oklahoma. We have continued to expand our
opportunities in this area.

In
October 2007, we announced we would invest approximately $100 million to expand our Javelina plant, located in Corpus Christi, Texas. The steam methane reformer facility is
expected to commence delivering high-purity hydrogen in early 2010. This new facility is expected to produce in excess of 50 million cubic feet per day of high-purity
hydrogen.

In
January 2008, we entered into an option agreement with Midcontinent Express Pipeline LLC ("MEP LLC") that provides us with a one-time right to acquire
10 percent of the equity of MEP LLC after construction is complete on the Midcontinent Express Pipeline ("MEP") and it is placed into service. MEP LLC is a 50/50 joint venture
between Kinder Morgan Energy Partners, L.P. and Energy

49

---



Transfer
Partners, L.P. The MEP, connecting Bennington, Oklahoma, and Perryville, Louisiana, will have initial capacity of 1.4 Bcf/d.

Impact of Acquisitions on Comparability of Financial Results

In reviewing our historical results of operations, investors should be aware of the impact of our past acquisitions, which fundamentally affect the comparability
of our results of operations over the periods discussed.

Since
our initial public offering, we have completed nine acquisitions for an aggregate purchase price of $810 million, net of working capital. Six of these acquisitions occurred
in 2003 and 2004 and their results are included in the results of operations from the acquisition date.

Two
acquisitions occurred in 2005 and are included in the results of operations from the acquisition date.



One
acquisition occurred 2006 and it is included in the results of operations from the acquisition date.



Our Relationship with MarkWest Hydrocarbon, Inc.

We were formed by MarkWest Hydrocarbon in 2002 to acquire most of its natural gas gathering and processing assets and NGL transportation, fractionation and
storage assets. MarkWest Hydrocarbon remains one of our largest customers. We expect to continue deriving a portion of our revenues from the services we provide under our contracts with MarkWest
Hydrocarbon for the foreseeable future; however, the percentage of our revenues and net operating margins (a non-GAAP financial measure, see Item 1.
BusinessOur Contracts) will likely continue to decline as our other businesses grow. For the year ended December 31, 2007, 2006 and
2005, revenues from MarkWest Hydrocarbon accounted for 12% of our consolidated revenues.

MarkWest
Hydrocarbon was founded in 1988 as a partnership and later incorporated in Delaware. MarkWest Hydrocarbon is an energy company primarily focused on marketing NGLs. MarkWest
Hydrocarbon's assets consist primarily of partnership interests in the Partnership and certain processing agreements in Appalachia.

Neither
we nor our General Partner have any employees. However, under a Services Agreement entered into between our General Partner and MarkWest Hydrocarbon, Inc., MarkWest
Hydrocarbon acts in a management capacity rendering day-to-day operational, business and asset management, accounting, information services, personnel and related
administrative services to the Partnership. In return, the Partnership reimburses MarkWest Hydrocarbon for all documented expenses incurred on behalf of the Partnership and which are expressly
designated as reasonably necessary for the performance of the prescribed duties and specified functions. General corporate expenses and costs that are not specifically linked to either MarkWest
Hydrocarbon or us are allocated in accordance with an approved allocation methodology which is designed to ensure that neither entity bears a

50

---



disproportionate
or unfair burden of the other company's costs and expenses, and is reflective of respective statements of operations.

As
a result of the merger and redemption discussed further in Note 22 of the accompanying Notes to Consolidated Financial Statements included in Item 8 of this
Form 10-K, we will continue to have a relationship with the Company. As of February 22, 2008, the Company and its subsidiaries, in the aggregate, owns a 31% interest in the
Partnership, consisting of 22,500,000 Class A Units. The merger and redemption do not affect the Services Agreement or any other operating contractual arrangement.

Results of Operations

We reported net income of $17.2 million for the year ended December 31, 2007 compared to net income of $70.0 million for the year ended
December 31, 2006. Contributing factors to the $52.9 million change in net income were:



Segment Reporting

Our six geographical segments are: East Texas, Oklahoma, Other Southwest, Gulf Coast, Appalachia and Michigan. We capture information in this MD&A by geographical
segment, except that certain items are not allocated to our business segments because management does not consider them in its evaluation of business unit performance. The segment information
appearing in Note 19 to the consolidated financial statements,Segment Information, in Item 8 of this Form 10-K, is
presented on a basis consistent with the Partnership's internal management reporting, in accordance with SFAS No. 131,Disclosure about Segments of an Enterprise and
Related Information.

51

---



Year Ended December 31, 2007, Compared to Year Ended December 31, 2006

East Texas

Year ended
December 31,2007

2006(in thousands)Revenue

$
206,250

$
174,279Operating expenses:Purchased product costs


113,693


91,637Facility expenses


16,871


15,683Depreciation


9,607


7,783Amortization of intangible assets


8,269


8,244Accretion of asset retirement obligations


52


44Total operating expenses before selling, general and administrative expenses


148,492


123,391Operating income before items not allocated to segments

$
57,758

$
50,888


Revenue.Revenue increased $32.0 million, or 18%, during the year ended December 31, 2007, relative to 2006.
Revenues increased as a result of 18.2 million additional NGL gallons sold and 35,600 Mcf/d increase in gathering system throughput. In addition, the average price for all NGLs sold has
increased in 2007 as compared to the average price in 2006. This increase was partially offset by a decrease in sales of natural gas due to an October 2006 change from a keep whole purchase to a
processing contract at our Carthage facility.

Purchased Product Costs.Purchased product costs increased $22.1 million, or 24%, during the year ended
December 31, 2007, relative to 2006. The increase is related to increased average NGL pricing and additional NGL volumes purchased under percent of liquid contracts offset by the contract
change discussed above.

Facility Expenses.Facility expenses increased $1.2 million, or 8%, during the year ended December 31, 2007,
relative to 2006. The increase is related to increased payroll costs due to expanded operations, increase leased compression expense until rented compressors were replaced with purchased compressors
and increased property tax rates.

Depreciation.Depreciation expenses increased $1.8 million, or 23%, during the year ended December 31, 2007,
relative to 2006. The change is primarily due to expansion projects during 2007 and a full year of depreciation on 2006 projects.

52

---



Oklahoma

Year ended
December 31,2007

2006(in thousands)Revenue

$
229,800

$
207,510Operating expenses:Purchased product costs


153,241


170,168Facility expenses


20,291


7,883Depreciation


11,104


3,007Amortization of intangible assets


598


Accretion of asset retirement obligations


28


26Total operating expenses before selling, general and administrative expenses


185,262


181,084Operating income before items not allocated to segments

$
44,538

$
26,426


Revenue.Revenue increased $22.3 million, or 11%, during the year ended December 31, 2007, relative to 2006.
This increase is related primarily to an increase in volumes from our Woodford gathering system and the acquisition of the Grimes gathering system. The Woodford gathering system, which we continue to
develop and expand, had only one month of activity in the 2006 year. In addition, increased NGL and condensate revenue from our other gathering systems occurred due to increased volumes and
pricing but was largely offset by decreased revenue attributable to some changes from purchasing contracts to gathering contracts.

Purchased Product Costs.Purchased product costs decreased $16.9 million, or 10%, during the year ended
December 31, 2007, relative to 2006. The decrease was mainly attributable to the contractual changes described above and was offset by gas purchases related to our Woodford gathering system,
which began operation in December 2006.

Facility Expenses.Facility expenses increased $12.4 million, or 157%, during the year ended December 31, 2007,
relative to 2006. The increase was primarily due to the startup of operations for the Woodford gathering system and acquisition of the Grimes gathering system described above.

Depreciation.Depreciation expenses increased $8.0 million, or 268%, during the year ended December 31, 2007,
relative to 2006. The change is due to the Woodford gathering system being operational for a full year in 2007.

53

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Other Southwest

Year ended
December 31,2007

2006(in thousands)Revenue

$
67,411

$
84,595Operating expenses:Purchased product costs


43,954


67,349Facility expenses


6,883


5,638Depreciation


4,493


4,100Accretion of asset retirement obligations


21


20Impairment


356


Total operating expenses before selling, general and administrative expenses


55,707


77,107Operating income before items not allocated to segments

$
11,704

$
7,488


Revenue.Revenue decreased $17.2 million, or 20%, during the year ended December 31, 2007, relative to 2006.
The decrease is principally attributed to a late second quarter 2006 change in the contract mix at our Appleby facility, from purchasing contracts to gathering contracts. This decrease was partially
offset by transportation volumes increasing by approximately 24,500 Mcf/d.

Purchased Product Costs.Purchased product costs decreased $23.4 million, or 35%, during the year ended
December 31, 2007, relative to 2006. The decrease in costs is primarily a result of lower purchased volumes due to a change in our contract mix.

Facility Expenses.Facility expenses increased $1.2 million, or 22%, during the year ended December 31, 2007,
relative to 2006. The increase was due to higher compression and system operating costs at our Appleby facility.

Depreciation.Depreciation expense increased $0.4 million, or 10%, during the year ended December 31, 2007,
relative to 2006. The change is primarily due to the addition of the redesign and expansion of the compressor stations in our Appleby facility.

Impairments.Impairments increased $0.4 million during the year ended December 31, 2007, relative to 2006. The
increase was due to the deemed impairment of a system as further discussed in Note 10 to the consolidated financial statements included in Item 8 of this Form 10-K.

54

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Appalachia

Year ended
December 31,2007

2006(in thousands)Revenues:Unaffiliated

$
1,924

$
2,027Affiliated


74,981


73,636Total revenue


76,905


75,663Operating expenses:Purchased product costs


44,718


43,648Facility expenses


14,463


13,997Depreciation


3,410


3,573Accretion of asset retirement obligations


13


12Total operating expenses before selling, general and administrative expenses


62,604


61,230Operating income before items not allocated to segments

$
14,301

$
14,433


Revenue.Total revenue increased $1.2 million, or 2%, during the year ended December 31, 2007, relative to
2006. Effective November 16, 2007, Appalachia conveyed its Maytown facility to Equitable. As a result, revenue recognized in Appalachia from that point forward was recognized net as an agent
whereas before, Appalachia recognized revenue gross as a principal. This resulted in decreased revenues of approximately $8.2 million during 2007. Without this change, revenue would have
increased $9.5 million, or 13%, during the year ended December 31, 2007 relative to 2006. The increase was related to a 0.5 million gallons increase in volumes and a $0.19 per
gallon price increase at our Maytown facility.

Purchased Product Costs.Purchased product costs increased $1.1 million, or 2%, during the year ended
December 31, 2007, relative to 2006. As discussed above, purchased product costs were decreased by $8.2 million during 2007 as a result of the conveyance of its Maytown facility to
Equitable. Without this change, purchased product costs would have increased by $9.3 million, or 21%, during the year ended December 31, 2007 relative to 2006. The rise in costs is
primarily a result of volumes and prices increasing at the Maytown facility, which accounted for $7.4 million of the overall increase. Trucking expenses associated with the shutdown of the
Appalachia Liquids Pipeline System ("ALPS") increased purchased product costs by $1.6 million.

55

---



Michigan

Year ended
December 31,2007

2006(in thousands)Revenue

$
11,942

$
13,282Operating expenses:Purchased product costs


3,114


3,435Facility expenses


6,069


5,721Depreciation


4,668


5,015Total operating expenses before selling, general and administrative expenses


13,851


14,171Operating loss before items not allocated to segments

$
(1,909
)
$
(889
)


Revenue.Revenue decreased $1.3 million, or 10%, during the year ended December 31, 2007, relative to 2006. The
change is primarily due to decreased volumes, offset by an increase in prices at our West Shore facility. In addition, a sale of inventory in our Michigan crude pipeline did not recur in 2007.

Purchased Product Costs.Purchased product costs decreased $0.3 million, or 9%, during the year ended
December 31, 2007, relative to 2006. The decrease in costs is due to lower volumes offset by higher prices at our West Shore facility, as described above. In addition, a sale of inventory in
our Michigan crude pipeline did not recur in 2007.

Given
the continuing losses and moderately positive cash flows relating to the western Michigan gathering assets, management continues to consider alternatives, and we are evaluating
potential impairments on these assets. Management determined there were no impairments as of December 31, 2007.

Gulf Coast

Year ended December 31,2007

2006(in thousands)Revenue

$
77,114

$
68,950Operating expenses:Facility expenses


10,471


11,190Depreciation


6,619


6,500Amortization of intangible assets


7,805


7,803Total operating expenses before selling, general and administrative expenses


24,895


25,493Operating income before items not allocated to segments

$
52,219

$
43,457


Revenue.Revenues in the Gulf Coast business unit are generated under percent-of-proceeds
arrangements and are generally reported net of purchased product costs (see Item 7. Management's Discussion and Analysis of Financial Condition and Results of
OperationsRevenue Recognition in Critical Accounting Policies and Estimates). We gather and process refinery off-gas on behalf
of refiners, return or sell the resulting residue gas, condensate and NGLs at market prices and remit to refiners an agreed-upon percentage of the proceeds based on an actual revenues.

56

---



Revenue increased $8.2 million, or 12%, during the year ended December 31, 2007, relative to 2006. This was primarily attributable to the incremental sale of
0.3 million barrels of pentanes, which increased revenue by approximately $3.0 million. The pentanes are stored as a result of their seasonality and timing of the revenue generated from
the sale cannot be predicted. The remaining increase is due to improved pricing offset by volume declines in almost all products. Inlet rates were lower in 2007 because of two inlet gas compressor
outages in the first half of the year as well as our planned fourth quarter turnaround.

Facility Expenses.Facility expenses decreased $0.7 million, or 6%, during the year ended December 31, 2007,
relative to 2006. This decrease is for the most part attributable to a utility refund of $3.6 million from a rate case concluded in the first quarter of 2007. Without the refund, facility
expenses were higher by $2.9 million, mainly due to increased payroll, costs related to our fourth quarter turnaround and compressor repairs.

Reconciliation of Segment Operating Income to Consolidated Net Income

The following table provides a reconciliation of segment income to our consolidated net income. The ensuing items listed below the "Total segment operating
income" line are not allocated to business segments as management does not consider these items allocable to any individual segment: gains (losses) from derivative instruments, selling, general and
administrative expenses and depreciation of leasehold improvements at our corporate headquarters. Revenue from MarkWest Hydrocarbon is reflected as revenue from affiliates.

Year ended December 31,2007

2006(in thousands)Total segment operating income

$
178,611

$
141,803Revenue derivative (loss) gain not allocated to segments


(66,543
)

5,632Facilities expense derivative gain not allocated to segments


12


Depreciation not allocated to segments


(270
)

(15
)Selling, general and administrative expenses


(51,334
)

(44,377
)(Loss) gain on disposal of property, plant and equipment


(7,564
)

192Income from operations


52,912


103,235Earnings from unconsolidated affiliates


5,309


5,316Interest income


2,887


962Interest expense


(38,946
)

(40,666
)Amortization of deferred finance costs


(2,717
)

(9,094
)Miscellaneous (expense) income


(1,002
)

11,100Income before provision for income tax


18,443


70,853Provision for income tax


(1,244
)

(769
)Net income

$
17,199

$
70,084


Derivative (Loss) Gain.Loss from derivative instruments increased $72.1 million during the year ended
December 31, 2007, relative to 2006. The mark-to-market adjustments of our derivative instruments resulted in a $68.6 million increase in unrealized losses,
primarily due to a significant increase in the market price for crude oil. Crude oil is used as a proxy hedge for NGLs (see
Item 7A. Quantitative and Qualitative Disclosures About Market Risk). In addition, we recognized an increase in realized losses of $3.5 million from settlements.

57

---



Selling, General and Administrative Expenses.Selling, general and administrative expenses increased $7.0 million, or
16%, during the year ended December 31, 2007, relative to 2006. We incurred $6.4 million due to merger related activities in 2007. We expect to incur additional expenses of approximately
$2.7 million before the closing of the merger. We also incurred $2.7 million more of labor, benefits and related office expenses due to our expansion initiatives. These increases were
offset by a $2.2 million reduction in stock-based compensation expense related primarily to the Participation Plan. In addition, we incurred a one-time charge in 2006 to terminate
the old headquarters lease of $0.8 million.

(Loss) gain on disposal of property, plant and equipment.Loss from disposal of property, plant and equipment increased
$7.8 million, during the year ended December 31, 2007, relative to 2006. The loss is primarily due to the conveyance of the Maytown facility to Equitable and a write-off of
leasehold improvements as a result of the termination of the pipeline lease with Equitable in November 2007.

Interest Income.Interest income increased $1.9 million, during the year ended December 31, 2007, compared to
2006, primarily due to the proceeds received from a rate case concluded in the first quarter of 2007 in our Gulf Coast Business Unit.

Interest Expense.Interest expense decreased $1.7 million, or 4%, during the year ended December 31, 2007,
relative to 2006, largely due to increased capitalization of interest related to construction in progress of $3.3 million, versus $0.9 million in 2006. The remaining decrease in interest
expense is due to lower outstanding balances under our revolving facility and slightly lower interest rates.

Amortization of Deferred Finance Costs.The amortization related to deferred finance costs decreased $6.4 million
during the year ended December 31, 2007, relative to 2006. The decrease is attributable to costs associated with our debt refinancing in the third quarter of 2006. Deferred finance costs are
being amortized over the terms of the related obligations, which approximates the effective interest method.

Miscellaneous (Expense) Income.Miscellaneous income decreased $12.1 million during the year ended December 31,
2007, compared to 2006. This decrease was largely a result of a change in insurance recoveries related to our investment in Starfish.

Year Ended December 31, 2006, Compared to Year Ended December 31, 2005

East Texas

Year ended December 31,2006

2005(in thousands)Revenues

$
174,279

$
128,267Operating expenses:Purchased product costs


91,637


81,030Facility expenses


15,683


10,463Depreciation


7,783


4,836Amortization of intangible assets


8,244


8,293Accretion of asset retirement obligations


44


33Total operating expenses before selling, general and administrative expenses


123,391


104,655Operating income before selling, general and administrative expenses

$
50,888

$
23,612


58

---



Revenues:Revenues increased $46.0 million, or 36%, during the year ended December 31, 2006, relative to 2005.
The increase was due to our Carthage gas processing plant beginning operations on January 1, 2006; the start-up of the Blocker gathering system on March 1, 2006; and
increased condensate volumes over the same period a year ago.

Purchased Product Costs:Purchased product costs increased $10.6 million, or 13%, during the year ended
December 31, 2006, relative to the comparable period in 2005, primarily due to the start-up of the Carthage gas processing plant.

Facility Expenses:Facility expenses increased $5.2 million, or 50%, during the year ended December 31, 2006,
relative to the comparable period in 2005, primarily due to startup of the new Carthage gas processing plant and Blocker gathering system, including the related labor and property taxes.

Depreciation:Depreciation expense increased $2.9 million, or 61%, during the year ended December 31, 2006,
relative to the comparable period in 2005, mainly due to the new Carthage gas processing plant and Blocker gathering system.

Oklahoma

Year ended December 31,2006

2005(in thousands)Revenues

$
207,510

$
214,043Operating expenses:Purchased product costs


170,168


193,787Facility expenses


7,883


4,927Depreciation


3,007


2,385Accretion of asset retirement obligations


26


63Total operating expenses before selling, general and administrative expenses


181,084


201,162Operating income before selling, general and administrative expenses

$
26,426

$
12,881


Revenues:Revenues decreased $6.5 million, or 3%, during the year ended December 31, 2006, relative to the
comparable period in 2005. The decrease was due primarily due to lower natural gas prices that were partially offset by a 15% increase in gathering volumes from new well connects in 2006.

Purchased Product Cost:Purchased product costs decreased $23.6 million, or 12%, during the year ended
December 31, 2006, relative to the comparable period in 2005, primarily as a result of lower natural gas prices.

Facility Expenses:Facility expenses increased $3.0 million, or 60%, during the year ended December 31, 2006,
relative to the comparable period in 2005, primarily due to additional compression costs and higher operating taxes.

Depreciation:Depreciation expense increased $0.6 million, or 26%, during the year ended December 31, 2006,
relative to the comparable period in 2005, related to additional capital placed in service to accommodate a growing gathering system and new well connects.

59

---



Other Southwest

Year ended December 31,2006

2005(in thousands)Revenues

$
84,595

$
107,712Operating expenses:Purchased product costs


67,349


92,602Facility expenses


5,638


4,990Depreciation


4,100


3,383Amortization of intangible assets





68Accretion of asset retirement obligations


20


22Total operating expenses before selling, general and administrative expenses


77,107


101,065Operating income before selling, general and administrative expenses

$
7,488

$
6,647


Revenues:Revenues decreased $23.1 million, or 21%, during the year ended December 31, 2006, relative to the
comparable period in 2005. The decrease is mostly attributed to a decrease in natural gas prices, and is slightly offset by an increase in NGL volumes and prices.

Purchased Product Costs:Purchased product costs decreased $25.3 million, or 27%, during the year ended
December 31, 2006, relative to the comparable period in 2005 primarily due to a decrease in natural gas prices.

Facility Expenses:Facility expenses increased $0.6 million, or 13%, during the year ended December 31, 2006,
relative to the comparable period in 2005. The increase was primarily a result of additional compressor maintenance costs.

Depreciation:Depreciation expense increased $0.7 million, or 21%, during the year ended December 31, 2006,
relative to the same period in 2005, due to the addition of new compressors in 2006 and late 2005.

60

---



Appalachia

Year ended December 31,2006

2005(in thousands)RevenueUnaffiliated

$
2,027

$
1,686Affiliated


73,636


64,922Total revenues


75,663


66,608Operating expenses:Purchased product costs


43,648


38,435Facility expenses


13,997


19,360Depreciation


3,573


3,187Accretion of asset retirement obligations


12


41Total operating expenses before selling, general and administrative expenses


61,230


61,023Operating income before selling, general and administrative expenses

$
14,433

$
5,585


Revenues:Total revenues increased $9.1 million, or 14%, during the year ended December 31, 2006, relative to
the comparable period in 2005. The increase was primarily a result of higher prices and volumes for our Maytown NGLs in 2006. Higher gas volumes at the Kenova and Cobb plants and higher liquid volumes
at the Kenova, Cobb and Boldman plants also contributed to the increase; however, these results were offset slightly by lower gas volumes at Boldman.

Purchased Product Costs:Purchased product costs increased $5.2 million, or 14%, during the year ended
December 31, 2006, relative to the comparable period in 2005. The rise in costs is primarily a result of higher product prices. The increase was partially offset by reduced trucking expenses
amounting to $1.4 million associated with our continuing repair of the ALPS pipeline in 2005 versus the shutdown of the ALPS pipeline in late 2006.

Facility Expenses:Facility expenses decreased $5.4 million, or 28%, during the year ended December 31, 2006,
relative to the comparable period in 2005. These expenses were higher in 2005 due to costs incurred to repair the ALPS pipeline.

Depreciation:Depreciation expense increased $0.4 million, or 12%, during the year ended December 31, 2006,
relative to the comparable period in 2005, due to increased capitalized leasehold improvements associated with the ALPS pipeline.

61

---



Michigan

Year ended December 31,2006

2005(in thousands)Revenues

$
13,282

$
12,479Operating expenses:Purchased product costs


3,435


3,030Facility expenses


5,721


6,080Depreciation


5,015


4,665Total operating expenses before selling, general and administrative expenses


14,171


13,775Operating loss before selling, general and administrative expenses

$
(889
)
$
(1,296
)


Revenues:Revenues increased $0.8 million, or 6%, during the year ended December 31, 2006, relative to the
comparable period in 2005, principally due to an increase in product prices at our processing facility and increased processing fees at the West Shore facility, slightly offset by decreased volumes.

Purchased Product Costs:Purchased product costs increased $0.4 million, or 13%, during the year ended
December 31, 2006, relative to the comparable period in 2005, which was a result of higher product prices at our processing facility.

Gulf Coast

Year ended December 31,2006

2005(in thousands)Revenues

$
68,950

$
13,832Operating expenses:Facility expenses


11,190


2,152Depreciation


6,500


1,078Amortization of intangible assets


7,803


1,295Total operating expenses before selling, general and administrative expenses


25,493


4,525Operating income before selling, general and administrative expenses

$
43,457

$
9,307


The
results of operations at Javelina are based on twelve months of activity for the year ended December 31, 2006, compared to two months of activity beginning in November of
2005, the date of the acquisition.

Revenues:Revenues increased $55.1 million, during the year ended December 31, 2006, compared to the two month
period in 2005. The Javelina plant was able to grow revenue in 2006 despite reduced inlet gas from refineries.

62

---



Facility Expenses:Facility expenses increased $9.0 million during the year ended December 31, 2006, compared
to the two month period in 2005, because the 2006 results include a full year of operations.

Depreciation:Depreciation expense increased $5.4 million during the year ended December 31, 2006, compared to
the two month period in 2005, because the results include a full year of operations.

Amortization of intangible assets:Amortization expense increased $6.5 million during the year ended
December 31, 2006, compared to the two month period in 2005, because the results include a full year of amortization compared to the stub period in 2005.

Reconciliation of Segment Operating Income to Consolidated Net Income

Year ended December 31,2006

2005(in thousands)Total segment operating income

$
141,803

$
56,736Derivative gain (loss) not allocated to segments


5,632


(1,851
)Depreciation not allocated to segments


(15
)

Selling, general and administrative


(44,377
)

(21,597
)Gain on disposal of property, plant and equipment


192


24Income from operations


103,235


33,312Earnings (losses) from unconsolidated affiliates


5,316


(2,153
)Interest income


962


367Interest expense


(40,666
)

(22,469
)Amortization of deferred finance costs


(9,094
)

(6,780
)Miscellaneous income


11,100


78Income before Texas Margin Tax

$
70,853

$
2,355Texas Margin Tax


(769
)

Net income

$
70,084

$
2,355


Derivative gain (loss):Derivative gain (loss) increased $7.5 million during the year ended December 31, 2006,
compared to the corresponding period in 2005. This increase was due to the mark-to-market adjustments resulting from our electing not to adopt hedge accounting treatment on our
derivative instruments. The mark-to-market adjustments resulted in a $6.9 million increase in unrealized gains, and a $0.6 million decrease in realized losses,
when comparing 2006 to 2005 results.

Selling, General and Administrative Expense:Selling, general and administrative expenses increased $22.6 million, or
105%, during the year ended December 31, 2006, relative to the comparable period in 2005. The increase is primarily due to higher non-cash, equity-based compensation expense of
$12.0 million, primarily due to the Partnership's increased market value; an increase in labor
costs of $4.9 million related to increased costs for our existing employees plus the cost of additional personnel necessary to support our growth and strategic objectives; higher insurance
expense and taxes of $2.4 million; and a one-time charge to terminate the old headquarters lease of $0.8 million.

Earnings (losses) from Unconsolidated Affiliates:Earnings (losses) from unconsolidated affiliates is primarily related to
our investment in Starfish, a joint venture with Enbridge Offshore Pipelines LLC. The Partnership accounts for our 50% interest using the equity method, and the financial results for Starfish
are included as earnings from unconsolidated affiliates. During the year ended December 31, 2006, our earnings from unconsolidated affiliates increased $7.5 million, or 347%, relative to
the

63

---



comparable
period in 2005. The increase was primarily from resumed operations in 2006 following the shutdown and repairs from the hurricanes in 2005.

Interest Income:Interest income increased $0.6 million, or 162%, during the year ended December 31, 2006,
relative to the comparable period in 2005, primarily due to an increase in interest rates earned on invested funds.

Interest Expense:Interest expense increased $18.2 million, or 81%, during the year ended December 31, 2006,
relative to the comparable period in 2005, primarily due to increased debt levels resulting from the financing of our 2005 acquisitions and higher interest rates.

Amortization of Deferred Financing Costs (a component of interest expense):Amortization expense increased
$2.3 million, or 34%, during the year ended December 31, 2006, relative to the comparable period in 2005, primarily due to costs associated with our debt refinancing completed in the
fourth quarter of 2005 and our debt offering in July of 2006. Deferred financing costs are being amortized over the terms of the related obligations, which approximates the effective interest method.

Miscellaneous Income (Expense):The Partnership recognized $11.0 million of income from insurance recoveries, net of
Starfish insurance premiums, recovered from damages that occurred as a result of Hurricane Rita.

Texas Margin Tax:The State of Texas passed a new tax law that subjects the Partnership to an entity-level tax on the portion
of its income that is generated in Texas. We recorded a deferred tax liability of $0.8 million, related to the Partnership's temporary differences that are expected to reverse in future
periods.

Liquidity and Capital Resources

We believe that we will continue to have adequate liquidity to fund future recurring operating and investing activities. Our primary cash requirements consist of
normal operating expenses, capital expenditures to sustain and expand existing operations and revenue generating expenditures, interest payments on our senior secured revolving credit facility and
Senior Notes, distributions to our unitholders and acquisitions of new assets or businesses. Short-term cash requirements, such as operating expenses, capital expenditures to sustain
existing operations and quarterly distributions to our unitholders, are expected to be funded through operating cash flows. Long-term cash requirements for expansion projects and
acquisitions are expected to be funded by several sources, including cash flows from operating activities, borrowings under our new revolving credit facility and the issuance of additional equity and
debt securities, as appropriate. Cash flows from operating activities will be affected by prevailing economic conditions in our industry, as well as financial, business and other factors, some of
which are beyond our control. Our ability to complete future debt and equity offerings and the timing of any such offerings will depend on various factors, including prevailing market conditions,
interest rates, our financial condition and our credit ratings at the time. As a result of the Merger discussed in Item 1. Business, the incentive distribution rights have been eliminated,
which will substantially lower our cost of equity capital.

On
February 20, 2008, MarkWest Energy Partners, L.P. entered into a credit agreement ("Partnership Credit Agreement"). It provides for a maximum lending limit of
$575.0 million for a five-year term. The Partnership Credit Agreement includes a revolving facility of $350.0 million and a $225.0 million term loan, both of which can
be repaid at any time without penalty. Under certain circumstances, the revolving facility of the Partnership Credit Agreement can be increased from $350.0 million to $550.0 million. The
credit facility is guaranteed by the Partnership and all of the Partnership's subsidiaries, including the Company, and is collateralized by substantially all of the Partnership's assets and those of
its subsidiaries. The Partnership utilized borrowings under the $225.0 million term loan of the Partnership Credit Agreement and made an intercompany loan to the

64

---



Company
in the amount of $225.0 million to fund, in part, the redemption of its common stock pursuant to the Merger. In addition, borrowings under the revolving facility portion of the
Partnership Credit Agreement were used to finance other payments under the Merger, outstanding amounts due on its old revolver, and repay debt under the Corporation's credit agreement. The Partnership
Credit Agreement required the payment of $10.2 million in deferred financing costs. As of February 25, 2008, the Partnership had borrowed $45.5 million under the revolving
facility portion of the Partnership Credit Agreement and approximately $258.5 million was available to be borrowed.

The
borrowings under the credit facility bear interest at a variable interest rate, plus basis points. The variable interest rate typically is based on the London Inter Bank Offering
Rate ("LIBOR"); however, in certain borrowing circumstances the rate would be based on the higher of a) the Federal Funds Rate plus 0.5-1%, and b) a rate set by the
Partnership Credit Facility's administrative agent, based on the U.S. prime rate. The basis points correspond to the ratio of the Partnership's Consolidated Funded Debt (as defined in the Partnership
Credit Agreement) to Adjusted Consolidated EBITDA (as defined in the Partnership Credit Agreement), ranging from 0.50% to 1.25% for Base
Rate loans, and 1.50% to 2.25% for Eurodollar Rate loans. The basis points will increase by 0.50% during any period (not to exceed 270 days) where the Partnership makes an acquisition for a
purchase price in excess of $50.0 million ("Acquisition Adjustment Period"). The Partnership will incur a commitment fee on the unused portion of the credit facility at a rate between 30.0 and
50.0 basis points based upon the ratio of consolidated senior debt (as defined in the Partnership Credit Agreement) to consolidated EBITDA (as defined in the Partnership Credit Facility).

At
December 31, 2007, the Partnership and its subsidiary, MarkWest Energy Finance Corporation, also have two series of senior notes outstanding, $225.0 million, at a fixed
rate of 6.875% which will mature in November 2014 (the "2014 Senior Notes") and $272.2 million, net of unamortized discount of $2.8 million at a fixed rate of 8.5% due July 15,
2016 (the "2016 Senior Notes").

The
indenture governing the 2014 Senior Notes and the 2016 Senior Notes limits the activity of the Partnership and its restricted subsidiaries. The indenture place limits on the ability
of the Partnership and its restricted subsidiaries to incur additional indebtedness; declare or pay dividends or distributions or redeem, repurchase or retire equity interests or subordinated
indebtedness; make investments; incur liens; create any consensual limitation on the ability of the Partnership's restricted subsidiaries to pay dividends, make loans or transfer property to the
Partnership; engage in transactions with the Partnership's affiliates; sell assets, including equity interests of the Partnership's subsidiaries; make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any subordinated obligation or guarantor subordination obligation (except principal and interest at maturity); and consolidate, merge or
transfer assets.

The
Partnership can raise debt and equity securities in the future under a shelf registration statement on Form S-3 that was filed with the SEC and became immediately
effective in November 2006.

The
Partnership currently has budgeted from $350.0 million to $400.0 million for growth capital expenditures in 2008 and from $5.0 million to $10.0 million of
maintenance capital. Growth capital includes expenditures made to expand or increase the efficiency of the existing operating capacity of our assets, or facilitate an increase in volumes within our
operations, whether through construction or acquisition. Maintenance capital includes expenditures to replace partially or fully depreciated assets in order to extend their useful lives.

65

---



Cash Flow

December 31,2007

2006Net cash provided by operating activities

$
149,399

$
150,977Net cash used in investing activities


(312,085
)

(119,338
)Net cash provided by (used in) financing activities


154,789


(17,342
)


Net
cash provided by operating activities decreased $1.6 million during the year ended December 31, 2007, relative to 2006. The change resulted mainly from increased
selling, general and administrative expenses (excluding non-cash components) of $7.1 million, of which $6.4 million is related to merger costs, and additional margin calls of
approximately $19.3 million, offset by increased cash flows generated from operations and a $5.5 million refund from a rate case concluded in the first quarter of 2007. We expect to
incur an additional $2.7 million in merger costs during the first quarter of 2008. Margin calls will be less likely to occur as the Partnership Credit Agreement limits our ability to enter into
transactions with parties that require such arrangements.

Net
cash used in investing activities increased $192.7 million for the year ended December 31, 2007, compared to 2006. The increase was primarily due to capital
expenditures. The Partnership used $312.3 million for capital expenditures in 2007, consisting of $308.7 million for growth capital and $3.6 million for maintenance capital.

Net
cash provided by financing activities increased $172.1 million for the year ended December 31, 2007, compared to 2006. This increase was primarily due to the net
proceeds of $229.5 million from our two private placements of common units discussed below used to fund capital expenditures. In the prior
years we received net proceeds of $397.6 million related to a private placement of senior notes and proceeds from a public unit offering but the funds were primarily used to pay down
long-term debt. This increase was offset by increased distributions to unitholders of $35.0 million.

On
April 9, 2007, we completed a private placement of 4.1 million unregistered common units. The units were issued at a purchase price of $32.98 per unit. The registration
statement for these common units was declared effective on July 11, 2007. The sale of units raised net proceeds of approximately $137.7 million, including the general partner's
contribution of $2.8 million to maintain its 2% general partner interest and after legal, accounting and other transaction expenses.

On
December 18, 2007, we completed a private placement of 2.9 million unregistered common units. The units were issued at a purchase price of $31.50 per unit. The sale of
units raised net proceeds of approximately $91.8 million, including the general partner's contribution to maintain its 2% general partner interest and after legal, accounting and other
transaction expenses.

66

---



Total Contractual Cash Obligations

A summary of our total contractual cash obligations as of December 31, 2007, is as follows (in thousands):

|                                                                          |                             | Payment Due by Period
|------------------------------------------------------------------------- | --------------------------- | ---------------------
|
|Long-term debt                                                            |                             | $                    
|Interest expense on long-term debt(1)                                     |                             |                      
|Operating leases                                                          |                             |                      
|Purchase obligations (2)                                                  |                             |                      
|Other long-term liabilities reflected on the Consolidated Balance Sheets |                             |                      
|                                                                          | Asset retirement obligation |                      
|                                                                          | Other (3)                   |                      
|                                                                          |                             |                      
|Total contractual cash obligations                                        |                             | $                    
|                                                                          |                             |                      

---

Off-Balance Sheet Arrangements

The Partnership does not engage in off-balance sheet financing activities.

Matters Influencing Future Results

On September 28, 2007, we announced an approximate $100.0 million expansion of the Javelina plant. This expansion involves the installation of a
steam methane reformer facility for the recovery of high purity hydrogen. This new facility's production is supported by a 20-year hydrogen supply agreement. Construction of the facility
began in the fourth quarter of 2007 and we expect to commence delivering high-purity hydrogen in early 2010. Once operational, the facility, combined with the existing facilities at the
Javelina plant will have the capacity to deliver 50 MMcf/d of high-purity hydrogen.

The
Partnership completed the Merger with the Company and entered into a new credit agreement on February 21, 2008, as discussed further in Note 22 of the accompanying
Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. The Merger is considered a downstream merger whereby the Company is viewed as the surviving
consolidated entity for accounting purposes rather than the Partnership, which is the surviving consolidated entity for legal purposes. As such, the Merger will be accounted for in the Company's
consolidated financial statements as an acquisition of non-controlling interest using the purchase method of accounting. Under this accounting method, the Partnership's accounts, including
goodwill, will be adjusted to proportionately step up the book value of certain assets and liabilities. The total fair value of the non-controlling interest to be acquired was the number
of non-controlling interest units outstanding on the date the merger closed of 34.5 million valued at the then current per unit market price of the Partnership common units of
$31.79.

Our
future results will be impacted by the completion of the proportionate step up of the book value of certain assets and liabilities. Depending on the allocation, interest expense,
amortization of intangibles and deferred financing costs, depreciation expense and income tax balances could change

67

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materially
in the future. The purchase price allocation is dependent upon certain valuations and other studies that have not progressed to a stage where there is sufficient information to make a
definitive allocation. Therefore, we are unable to predict the impact of the purchase price allocation on our balance sheet and statement of operations.

The
cash and the Partnership units distributed to officers and directors of the General Partner for their Class B membership interests in the General Partner were recorded as
settlement of the share based payment liability as discussed further in Note 13 of the accompanying Notes to Consolidated Financial Statements included in Item 8 of this
Form 10-K. In the future, our results will not include compensation for the general partner interests under the Participation Plan. For the year ended December 31, 2007,
2006, and 2005, our results included compensation expense of $10.9 million, $13.5 million and $2.0 million, respectively, related to Participation Plan.

The
2008 LTIP reserves 2.5 million common units for issuance in the future. As discussed further in Note 22 of the accompanying Notes to Consolidated Financial Statements
included in Item 8 of this Form 10-K, on February 21, 2008, 765,000 phantom units were granted to senior executives and other key employees under the 2008 LTIP. The
maximum amount of compensation expense for the grant made on February 21, 2008 will range from $9.7 million to $24.3 million. Forty percent (40%) of the total individual grant is
based on continuing employment over the three-year vesting period and this represents the minimum in the range. Sixty percent (60%) of the total individual grant is performance-based and is
conditional upon the achievement of designated annual financial performance goals established by the Board of Directors. The maximum of the range assumes such conditions will be achieved. The timing
of this expense cannot be estimated.

Our
affiliate, MarkWest Pioneer, L.L.C. ("Pioneer"), is in a pre-filing process with the Federal Energy Regulatory Commission ("FERC") to construct a new interstate natural
gas transmission pipeline. The pipeline will be named the Arkoma Connector Pipeline, and will extend approximately 50 miles from an interconnect with MarkWest's gathering system in the Woodford Shale
production area in southeastern Oklahoma to an interconnect with the Midcontinent Express Pipeline in Bennington, Oklahoma.

The
Arkoma Connector Pipeline will provide additional outlets for producers in the Woodford Shale as volumes continue to increase. We recently executed agreements with certain producers
to provide transportation capacity in excess of 500,000 Mcf/d on the Arkoma Connector Pipeline, and Pioneer will be conducting an open season, prior to submission of our formal application to FERC, in
order to gauge additional interest in available capacity.

On
February 11, 2008, we agreed to acquire a 20% interest in Centrahoma Operating LLC ("Centrahoma LLC") for $11.6 million, with a right to acquire an
additional 20% interest under certain circumstances. Closing on March 3, 2008 is subject to conveyance of certain properties to Centrahoma LLC by the other member and the reimbursement
of $0.6 million to the Partnership related to the termination of a virtual joint venture with the other member of the Centrahoma LLC. Centrahoma Operating LLC will own certain
processing plants in the Arkoma basin. In addition, MarkWest will sign, at closing, agreements to dedicate certain acreage in the Woodford Shale play to the Centrahoma LLC through
March 1, 2018.

The
loss to both offshore and onshore assets resulting from Hurricanes Katrina and Rita in 2005 has led to substantial insurance claims within the oil and gas industry. Along with other
industry participants, we have seen our insurance costs increase substantially within this region as a result of these developments. We have mitigated a portion of the cost increase by reducing our
coverage and adding a broader self-insurance element to our overall coverage.

68

---



Seasonality

For the portion of our business that is affected by commodity prices, sales volumes also are affected by various other factors such as fluctuating and seasonal
demands for products, changes in transportation and travel patterns and variations in weather patterns from year to year. In general, the Company stores a portion of the propane that is produced in
the summer to be sold in the winter months. The Company also stores pre-purchases in the summer of a portion of the natural gas that we are required to replace during the winter in
accordance with our Appalachian keep-whole processing agreements.

Effects of Inflation

Inflation did not have a material impact on our results of operations for the years ended December 31, 2007, 2006 or 2005. Although the impact of inflation
has been insignificant in recent years, it is still a factor in the United States economy and may increase the cost to acquire or replace property, plant and equipment. It may also increase the costs
of labor and supplies. To the extent permitted by competition, regulation and our existing agreements, we have and will continue to pass along increased costs to our customers in the form of higher
fees.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Estimates are used in accounting for, among other items, valuing identified intangible assets, determining the fair value of derivative instruments, evaluating
impairments of long lived assets, establishing estimated useful lives for long-lived assets, valuing asset retirement obligations, and in determining liabilities, if any, for legal
contingencies.

The
policies and estimates discussed below are considered by management to be critical to an understanding of the Partnership's financial statements, because their application requires
the most significant judgments from management in estimating matters for financial reporting that are inherently uncertain. See Note 2 of the accompanying Notes to the Consolidated Financial
Statements included in Item 8 of this Form 10-K for additional information on these policies and estimates, as well as a discussion of additional accounting policies and
estimates.



The Partnership's intangible assets are comprised of customer contracts and relationships acquired in business combinations, recorded under the purchase method of
accounting at their estimated fair values at the date of acquisition. Using relevant information and assumptions, management determines the fair value of acquired identifiable intangible assets. Fair
value is generally calculated as the present value of estimated future cash flows using a risk-adjusted discount rate. The key assumptions include contract renewals, economic incentives to
retain customers, historical volumes, current and future capacity of the gathering system, pricing volatility, and the discount rate. Amortization of intangibles with definite lives is calculated
using the straight-line method over the estimated useful life of the intangible asset. The estimated economic life is determined by assessing the life of the assets to which the contracts
and relationships relate, likelihood of renewals, the projected reserves, competitive factors, regulatory or legal provisions, and maintenance and renewal costs.



The Partnership evaluates its long-lived assets, including intangibles, for impairment when events or changes in circumstances warrant such a review.
A long-lived asset group is considered impaired

69

---



when
the estimated undiscounted cash flows from such asset group are less than the asset group's carrying value. In that event, a loss is recognized to the extent that the carrying value exceeds the
fair value of the long-lived asset group. Fair value is determined primarily using estimated discounted cash flows. Management considers the volume of reserves behind the asset and future
NGL product and natural gas prices to estimate cash flows. The amount of additional reserves developed by future drilling activity depends, in part, on expected natural gas prices. Projections of
reserves, drilling activity and future commodity prices are inherently subjective and contingent upon a number of variable factors, many of which are difficult to forecast. Any significant variance in
any of these assumptions or factors could materially affect future cash flows, which could result in the impairment of an asset.

For
assets identified to be disposed of in the future, the carrying value of these assets is compared to the estimated fair value, less the cost to sell, to determine if impairment is
required. Until the assets are disposed of, an estimate of the fair value is re-determined when related events or circumstances change.

We
determined that an impairment of a system had occurred during the third quarter of 2007. The fair value of the long-lived assets was determined based on management's
opinion that the idle assets had no economic value. Therefore, an impairment of long-lived assets of $0.4 million was recognized during year ended December 31, 2007. See
Note 10 of the accompanying Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for a description of the impairment analysis.



On March 31, 2005, the Partnership acquired its non-controlling, 50% interest in Starfish Pipeline Company, LLC ("Starfish"), which is
accounted for under the equity method. Differences between the Partnership's investment and its proportionate share of Starfish's reported equity are amortized based upon the respective useful lives
of the assets to which the differences relate.

We
believe the equity method is an appropriate means for us to recognize increases or decreases measured by GAAP in the economic resources underlying the investments. Regular evaluation
of these investments is appropriate to evaluate any potential need for impairment. We use the following types of evidence of a loss in value to identify a loss in value of an investment that is other
than a temporary decline. Examples of a loss in value may be identified by:



SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities("SFAS 133"), established
accounting and reporting standards requiring that derivative instruments (including certain derivative instruments embedded in other contracts) be recorded at fair value and included in the
consolidated balance sheet as assets or liabilities. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting
designation, which is established at the inception.

To
the extent derivative instruments designated as cash flow hedges are effective, changes in fair value are recognized in other comprehensive income until the underlying hedged item is
recognized in earnings. Effectiveness is evaluated by the derivative instrument's ability to offset changes in fair value or cash flows of the underlying hedged item. Any change in the fair value
resulting from ineffectiveness is recognized immediately in earnings. Changes in the fair value of derivative instruments designated as fair value hedges, as well as the changes in the fair value of
the underlying hedged item, are recognized currently in earnings. Any differences between the changes in the fair values of the hedged item and the derivative instrument represent gains or losses from
ineffectiveness. During 2007 and 2006, we did not designate any cash flow or fair value hedges.

70

---



In the course of normal operations, the Partnership routinely enters into contracts such as forward physical contracts for the sale of natural gas, propane, and other NGLs, that under
SFAS 133, qualify for and are designated as a normal sales contract. Such contracts are exempted from the fair value accounting requirements of SFAS 133 and are accounted for using
accrual accounting.

All
derivative instruments other than those designated as cash flow hedges, fair value hedges or normal purchase or sale are marked-to-market through revenue or
facility expense, the same account as the item being hedged. When available, quoted market prices or prices obtained through external sources are used to determine a contract's fair value. For
contracts with a delivery location or duration for which quoted market prices are not available, fair value is determined based on pricing models developed primarily from historical and expected
correlations with quoted market prices. Values are adjusted to reflect the credit risk inherent in the transaction. Changes in market prices and management estimates directly affect the estimated fair
value of these contracts. Accordingly, it is reasonably possible that such estimates may change in the near term.

We
included changes in our risk management activities in cash flow from operating activities on the Consolidated Statement of Cash Flows.



The Partnership enters into revenue arrangements where it sells customer's gas and/or NGLs and depending on the nature of the arrangement acts as the principal or
agent. Revenue from such sales is recognized gross where the Partnership acts as the Principal, under Emerging Issues Task Force Issue No. 99-19, Reporting Revenue Gross as a
Principal versus Net as an Agent, as the Partnership takes title to the gas and/or NGLs, has physical inventory risk and does not earn a fixed amount. Revenue is recognized net when the Partnership
earns a fixed amount and does not take ownership of the gas and/or NGLs.



Except as discussed in the following paragraph, basic and diluted net income per limited partner unit is calculated by dividing net income, after deducting
amounts specially allocated to the general partner's interests, including interests in incentive distribution rights, by the weighted-average number of limited partner common and subordinated units
outstanding during the period.

Emerging
Issues Task Force Issue No. 03-06,Participating Securities and the Two-Class Method under FASB Statement
No. 128("EITF 03-06"), addresses the computation of earnings per share by entities that have issued securities other than common stock that
contractually entitle the holder to participate in dividends and earnings of the entity. EITF 03-06 provides that the general partner's interest in net income is to be calculated
based on the amount that would be allocated to the general partner if all the net income for the period were distributed, and not on the basis of actual cash distributions for the period.



The Partnership adopted SFAS No. 123 (revised 2004),Share-Based Payment("SFAS 123R"), on
January 1, 2006, using the modified prospective method. Prior to adopting SFAS 123R, the Partnership elected to measure compensation expense for equity-based employee compensation plans
as prescribed by Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employees("APB 25").

The
Partnership issues restricted units under the MarkWest Energy Partners, L.P. Long-Term Incentive Plan. A restricted unit is a "phantom" unit that entitles the
grantee to receive a common unit upon the vesting of the phantom unit or, at the discretion of the Compensation Committee, cash equivalent to the value of a common unit. The restricted units are
treated as liability awards under

71

---



SFAS 123R,
and were treated as variable awards under APB 25. The Partnership applied variable accounting under APB 25 for the plan because a phantom unit is an award to employees
entitling them to increases in the market value of the Partnership's units subsequent to the date of grant without issuing units to the employees, similar to a stock appreciation right. As a result,
the Partnership is required to mark to market the awards at the end of each reporting period. Compensation expense is measured for the phantom unit grants using the market price of MarkWest Energy
Partners' common units on the date the units are granted. The fair value of the units awarded is amortized into earnings over the period of service, adjusted quarterly for the change in the fair value
of the unvested units granted. The phantom units vest over a stated period.

Vesting
is accelerated for certain employees, if specified performance measures are met. The accelerated vesting criteria provisions are based on annualized distribution goals. If the
Partnership's distributions are at or above the goal for a certain number of consecutive quarters, vesting of the employee's phantom units is accelerated. The vesting of any phantom units, however,
may not occur until at least one year following the date of grant. The general partner of the Partnership may also elect to accelerate the vesting of outstanding awards, which results in an immediate
charge to operations for the unamortized portion of the award.

MarkWest
Hydrocarbon also entered into arrangements with certain directors and employees of the Company referred to as the Participation Plan. Under this plan, MarkWest Hydrocarbon sold
subordinated units of the Partnership or interests in the Partnership's general partner, under a purchase and sale agreement. Both the subordinated unit and general partner interest transactions were
considered compensatory arrangements due to the put-and-call provisions and the associated valuation being based on a formula instead of an independent third party valuation.
The subordinated units convert to common units after a holding period. Historically, MarkWest Hydrocarbon had settled the subordinated units for cash when individuals left the Company. The general
partner interests have no definite term, but historically have been settled for cash when the employee left the Company. Under SFAS 123R, the subordinated units and general partner interests
were classified as liability awards. As a result, MarkWest Hydrocarbon was required to mark to market the subordinated unit and general partner interest valuations at the end of each period. Please
refer to Note 22 of the accompanying Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K for further information about the termination of
the Participation Plan.

Under
Topic 1-B of the codification of the Staff Accounting Bulletins,Allocation of Expenses And Related Disclosure In Financial Statements of
Subsidiaries, Divisions Or Lesser Business Components of Another Entity, compensation expense related to services provided by MarkWest Hydrocarbon's employees and directors
recognized under the Participation Plan should be allocated to the Partnership. The allocation is based on the percent of time that each employee devotes to the Partnership. Compensation attributable
to interests that were sold to individuals who serve on both the Partnership's board of directors of the Partnership's General Partner and on the board of directors of MarkWest Hydrocarbon is
allocated equally.

These
charges are included in selling, general and administrative expenses and are allocated to the general partner pursuant to the Partnership Agreement. Assuming the compensation cost
for the Long-Term Incentive Plan and the Participation Plan had been determined based on the fair-value methodology of SFAS 123R, the net income and earnings per unit
would have been the same as reported on the financial statements for the year ended December 31, 2005.

Recent Accounting Pronouncements

In September 2006 the FASB issued SFAS No. 157,Fair Value Measurements("SFAS 157").
SFAS 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that
prioritizes the

72

---



information
used to develop those assumptions. SFAS 157 is effective for the Partnership's financial statements as of January 1, 2008. On February 6, 2008 the FASB, approved the
partial deferral of SFAS 157 for non-financial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a reoccurring
basis (at least annually) until fiscal years beginning after November 15, 2008. The Partnership has elected to defer recognition of items including:



For
the provisions of SFAS 157 adopted, they will not have an impact on the Partnership's financial statements.

In
February 2007 the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits an entity to measure certain financial assets and financial liabilities at fair value. The statement's objective is to improve financial reporting by allowing
entities to mitigate volatility in reported earnings caused by the measurement of related assets and liabilities using different attributes, without having to apply complex hedge accounting
provisions. Under SFAS 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected
on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value option election is irrevocable, unless a
new election date occurs. SFAS 159 establishes presentation and disclosure requirements to help financial statement users understand the effect of the entity's election on its earnings, but
does not eliminate disclosure requirements of other accounting standards. Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet. SFAS 159 is
effective for the Partnership as of January 1, 2008. The provisions of SFAS 159 will not have an impact on the Partnership's financial statements.

In
December 2007 the FASB issued SFAS No. 141 (revised 2007),Business Combinations("SFAS 141R"). This statement replaces
SFAS 141,Business Combinations. The statement provides for how the acquirer recognizes and measures the identifiable assets acquired,
liabilities assumed and any non-controlling interest in the acquiree. SFAS 141R provides for how the acquirer recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase. The statement determines what information to disclose to enable users to be able to evaluate the nature and financial effects of the business
combination. The provisions of SFAS 141R are effective for the Partnership as of January 1, 2009 and do not allow early adoption. The Partnership is currently evaluating the impact of
adopting this statement.

73

---





In December 2007 the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51("SFAS 160"). This statement provides that noncontrolling interests in subsidiaries held by parties other than the parent be identified, labeled and
presented in the statement of financial position within equity, but separate from the parent's equity. SFAS 160 states that the amount of consolidated net income attributable to the parent and
to the noncontrolling interest be clearly identified on the consolidated statement of income. The statement provides for consistency regarding changes in parent ownership including when a subsidiary
is deconsolidated. Any retained noncontrolling equity investment in the former subsidiary will be initially measured at fair value. The provisions of SFAS 160 are effective for the Partnership
as of January 1, 2009 and do not allow early adoption. The Partnership is currently evaluating the impact of adopting the statement.

ITEM 7A.    Quantitative and Qualitative Disclosures About Market Risk

Market risk includes the risk of loss arising from adverse changes in market rates and prices. We face market risk from commodity price changes and, to a lesser
extent, interest rate changes.



Our primary risk management objective is to reduce downside volatility in our cash flows arising from changes in commodity prices related to future sales of
natural gas, NGLs and crude oil. Swaps and futures contracts may allow us to reduce downside volatility in its realized margins as realized losses or gains on the derivative instruments generally are
offset by corresponding gains or losses in our sales of physical product. While we largely expect our realized derivative gains and losses to be offset by increases or decreases in the value of our
physical sales, we will experience volatility in reported earnings due to the recording of unrealized gains and losses on our derivative positions that will have no offset. The volatility in any given
period related to unrealized gains or losses can be significant to our overall results, however, we ultimately expect those gains and losses to be offset when they become realized. A committee,
comprised of the senior management team of our general partner, oversees all of our derivative activity.

We
utilize a combination of fixed-price forward contracts, fixed-for-floating price swaps and options on the over-the-counter ("OTC")
market. We may also enter into futures contracts traded on the NYMEX. Swaps and futures contracts allow us to manage volatility in our margins because corresponding losses or gains on the financial
instruments are generally offset by gains or losses in our physical positions.

We
enter into OTC swaps with financial institutions and other energy company counterparties. We conduct a standard credit review on counterparties and have agreements containing
collateral requirements where deemed necessary. We use standardized swap agreements that allow for offset of positive and negative exposures. We may be subject to margin deposit requirements under OTC
agreements (with non-bank counterparties) and NYMEX positions that we plan to meet with letters of credit. Such funding requirements could exceed our letter of credit availability on our
credit line. If we were unable to meet these margin calls with letters of credit, we would be forced to sell product to meet the margin calls, or to terminate the corresponding futures contracts. If
we are forced to sell product to meet margin calls, we may have to sell product at prices that are not advantageous.

The
use of derivative instruments may expose us to the risk of financial loss in certain circumstances, including instances when (i) NGLs do not trade at historical levels
relative to crude oil, (ii) sales volumes are less than expected, requiring market purchases to meet commitments, or (iii) our OTC counterparties fail to purchase or deliver the
contracted quantities of natural gas, NGLs or crude oil or otherwise fail to perform. To the extent that we enter into derivative instruments, we may be prevented from realizing the benefits of
favorable price changes in the physical market. We are

74

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similarly
insulated, however, against unfavorable changes in such prices. As of February 12, 2008, we currently have hedged approximately 80% of our long positions in 2008 and MarkWest
Hydrocarbon currently has hedged approximately 68% of its frac spread positions in 2008.

The
following table provides information on our specific derivative positions at December 31, 2007, including the weighted average prices ("WAVG"):

WTI Crude Collars

Volumes (Bbl/d)

WAVG Floor (Per Bbl)

WAVG Cap (Per Bbl)

Fair Value
(in thousands)2008

3,150

$
67.17

$
77.21

$
(20,296
)2009

2,925


63.66


69.76


(20,376
)2010

1,514


66.52


74.71


(6,862
)


|
|

WTI Crude Swaps

Volumes (Bbl/d)

WAVG Price (Per Bbl)

Fair Value
(in thousands)2008

150

$
69.76

$
(1,257
)2010

1,173


65.61


(8,143
)


We
have entered into a contract which gives us an option to fix a component of the utilities cost to an index price on electricity at one of our plant locations. Under SFAS 133, Accounting for Derivative Instruments and
Hedging Activities("SFAS 133"), the value of the derivative component of this contract is marked to
market based on an index price through facilities expense. The estimated fair value of this contract was approximately $0.1 million current liability and $0.1 million noncurrent asset at
December 31, 2007. The estimated fair value of this contract at December 31, 2006 was near zero.

The
impact of our commodity derivative instruments on our financial position are summarized below (in thousands):

December 31,2007

2006Fair value of derivative instruments:Current asset

$
99

$
4,211Noncurrent asset


82


2,759Current liability


(21,658
)

(91
)Noncurrent liability


(35,381
)

(1,362
)


We
entered into the following derivative positions subsequent to December 31, 2007:

WTI Crude Puts

Volumes (Bbl/d)

WAVG Floor (Per Bbl)2008 (Feb through Dec)

3,346

$
80.002009

2,413


80.002010

1,191


80.002011

1,818


80.00


|
|

WTI Crude Collars

Volumes (Bbl/d)

WAVG Floor (Per Bbl)

WAVG Cap (Per Bbl)2011

1,706

$
80.00

$
104.50


75

---



The
following table provides information on MarkWest Hydrocarbon's specific derivative positions at December 31, 2007:

Natural Gas Swaps

Volumes (MMBtu/d)

WAVG Price
(Per MMBtu)

Fair Value
(in thousands)2008

18,465

$
8.38

$
(2,195
)2009

17,561


7.98


3,4402010

10,143


8.27


1,209


|
|

Propane Swaps

Volumes (Gal/d)

WAVG Price
(Per Gal)

Fair Value
(in thousands)2008

84,207

$
1.13

$
(13,287
)


|
|

Natural Gasoline Swaps

Volumes (Gal/d)

WAVG Price (Per Gal)

Fair Value
(in thousands)2008

14,292

$
1.60

$
(2,552
)


|
|

Normal Butane Swaps

Volumes (Gal/d)

WAVG Price (Per Gal)

Fair Value
(in thousands)2008

19,745

$
1.30

$
(3,728
)


|
|

Isobutane Swaps

Volumes (Gal/d)

WAVG Price (Per Gal)

Fair Value
(in thousands)2008

6,165

$
1.32

$
(1,186
)


|
|

WTI Crude Swaps

Volumes (Bbl/d)

WAVG Price (Per Bbl)

Fair Value
(in thousands)2008

1,368

$
62.79

$
(14,113
)2009

3,313


66.38


(25,124
)2010

2,284


68.52


(13,429
)2011 (through Mar 31)

2,351


71.27


(2,725
)


MarkWest
Hydrocarbon has a contract with one of the largest producers in the Appalachia region which creates a floor on the frac spread that can be realized on a specified volume
purchased. Under SFAS 133, the value of this contract is marked based on an index price through purchased product costs. At December 31, 2007, the fair value of this contract was
recorded as a current liability of $9.4 million and a noncurrent liability of $6.7 million.

The
impact of MarkWest Hydrocarbon's commodity derivative instruments on its standalone financial position are summarized below (in thousands):

December 31,2007

2006Fair value of derivative instruments:Current asset

$
9,342

$
5,727Noncurrent asset


5,332


35Current liability


(55,768
)

(7,385
)Noncurrent liability


(48,670
)

(98
)


76

---



MarkWest
Hydrocarbon entered into the following derivative positions subsequent to December 31, 2007:

Natural Gas Swaps

Volumes (MMBtu/d)

WAVG Price
(Per MMBtu)2011

14,662

$
8.88


|
|

WTI Crude Swaps

Volumes (Bbl/d)

WAVG Price (Per Bbl)2011

2,447

$
91.542012 (through Jan 31)

2,142


91.50


Management
periodically estimates the effects of its hedge program and further changes in crude oil prices on the cash flow from operations, including MarkWest Hydrocarbon, for the
year-ended December 31, 2008.

Management's
analysis considers a hypothetical change in oil prices, derivative instruments outstanding as of February 28, 2008, no change in natural gas prices, and production
estimated through December 31, 2008.



Management's
analysis also considers a hypothetical change in natural gas prices, derivative instruments outstanding as of February 28, 2008, no change in crude oil prices, and
production estimated through December 31, 2008.



We
consider the stated hypothetical change in commodity prices to be reasonable given current and historic market performance. The sensitivity analysis presented does not consider the
actions management may take to mitigate our exposure to changes, nor does it consider the effects that such hypothetical adverse changes may have on overall economic activity. Actual changes in market
prices may differ from hypothetical changes. The effect of the stated theoretical change represents potential losses in our condensed consolidated financial position and results of operations.



Our primary interest rate risk exposure results from the revolving portion of the partnership credit facility that has a borrowing capacity of
$250.0 million and was entered into on December 29, 2005. The debt related to this agreement bears interest at variable rates that are tied to either the U.S. prime

77

---



rate
or LIBOR at the time of borrowing. We may make use of interest rate swap agreements in the future, to adjust the ratio of fixed and floating rates in our debt portfolio.

|Long-term Debt                 |  | Interest Rate |  | Lending Limit  |  | Due Date          |  | Outstanding at December 31, 2007
|------------------------------ |  | ------------- |  | -------------- |  | ----------------- |  | --------------------------------
|Partnership Credit Facility(1) |  | Variable      |  | $250.0 million |  | December 29, 2010 |  | $                               
|2014 Senior Notes              |  | Fixed         |  | $225.0 million |  | November, 2014    |  | $                               
|2016 Senior Notes              |  | Fixed         |  | $275.0 million |  | July, 2016        |  | $                               

---

Based
on our overall interest rate exposure at December 31, 2007, a hypothetical increase or decrease of one percentage point in interest rates applied to borrowings under our
credit facility would change earnings by approximately $0.6 million over a 12-month period.

78

---





ITEM 8.    Financial Statements and Supplementary Data

Index to Consolidated Financial Statements



|Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm                                              |  | 80
|--------------------------------------------------------------------------------------------------------------------------- |  | --
|Consolidated Balance Sheets at December 31, 2007 and 2006                                                                   |  | 81
|Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005                                  |  | 82
|Consolidated Statements of Changes in Capital and Comprehensive Income for the years ended December 31, 2007, 2006 and 2005 |  | 83
|Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005                                  |  | 84
|Notes to Consolidated Financial Statements for the years ended December 31, 2007, 2006 and 2005                             |  | 85

All
omitted schedules have been omitted because they are not required or because the required information is contained in the financial statements or notes thereto.

79

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors of
MarkWest Energy GP, L.L.C.
Denver, Colorado

We
have audited the accompanying consolidated balance sheets of MarkWest Energy Partners, L.P. and subsidiaries (the "Partnership") as of December 31, 2007 and 2006, and
the related consolidated statements of operations, changes in capital and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2007. These financial
statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of MarkWest Energy Partners, L.P. and subsidiaries as of
December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America.

We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Partnership's internal control over financial reporting as of
December 31, 2007, based on the criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 29, 2008 expressed an unqualified opinion on the Partnership's internal control over financial reporting.

|/s/ DELOITTE & TOUCHE LLP          |  | 
|---------------------------------- |  | 
|Denver, Colorado
February 29, 2008 |  | 

80

---





MARKWEST ENERGY PARTNERS, L.P.        CONSOLIDATED BALANCE SHEETS        (in thousands)

|                                                                                  |                                                                                                                 | December 31,                             |         
|--------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | --------
|
|ASSETS                                                                            |                                                                                                                 |                                          |         
|Current assets:                                                                   |                                                                                                                 |                                          |         
|                                                                                  | Cash and cash equivalents                                                                                       |                                          | $       
|                                                                                  | Receivables, net of allowances of $160 and $118, respectively                                                   |                                          |         
|                                                                                  | Receivables from affiliate                                                                                      |                                          |         
|                                                                                  | Inventories                                                                                                     |                                          |         
|                                                                                  | Fair value of derivative instruments                                                                            |                                          |         
|                                                                                  | Other assets                                                                                                    |                                          |         
|                                                                                  |                                                                                                                 |                                          |         
|                                                                                  |                                                                                                                 | Total current assets                     |         
|                                                                                  |                                                                                                                 |                                          |         
|Property, plant and equipment                                                     |                                                                                                                 |                                          | 965,234 
|Less: Accumulated depreciation                                                    |                                                                                                                 |                                          | (141,497
|                                                                                  |                                                                                                                 |                                          |         
|                                                                                  |                                                                                                                 | Total property, plant and equipment, net |         
|                                                                                  |                                                                                                                 |                                          |         
|Other assets:                                                                     |                                                                                                                 |                                          |         
|                                                                                  | Investment in Starfish                                                                                          |                                          |         
|                                                                                  | Intangibles and other assets, net of accumulated amortization of $45,753 and $29,080, respectively              |                                          |         
|                                                                                  | Deferred financing costs, net of accumulated amortization of $7,804 and $5,326, respectively                    |                                          |         
|                                                                                  | Fair value of derivative instruments                                                                            |                                          |         
|                                                                                  | Other long-term assets                                                                                          |                                          |         
|                                                                                  |                                                                                                                 |                                          |         
|                                                                                  |                                                                                                                 | Total other assets                       |         
|                                                                                  |                                                                                                                 |                                          |         
|                                                                                  |                                                                                                                 | Total assets                             |         
|                                                                                  |                                                                                                                 |                                          |         
|LIABILITIES AND CAPITAL                                                           |                                                                                                                 |                                          |         
|Current liabilities:                                                              |                                                                                                                 |                                          |         
|                                                                                  | Accounts payable                                                                                                |                                          | $       
|                                                                                  | Payables to affiliate                                                                                           |                                          |         
|                                                                                  | Accrued liabilities                                                                                             |                                          |         
|                                                                                  | Fair value of derivative instruments                                                                            |                                          |         
|                                                                                  |                                                                                                                 |                                          |         
|                                                                                  |                                                                                                                 | Total current liabilities                |         
|Long-term debt, net of original issue discount of $2,805 and $3,135, respectively |                                                                                                                 |                                          | 552,695 
|Deferred taxes                                                                    |                                                                                                                 |                                          | 1,220   
|Fair value of derivative instruments                                              |                                                                                                                 |                                          | 35,381  
|Other long-term liabilities                                                       |                                                                                                                 |                                          | 3,130   
|Commitments and contingencies (see Note 17)                                       |                                                                                                                 |                                          |         
|Capital:                                                                          |                                                                                                                 |                                          |         
|                                                                                  | General partner                                                                                                 |                                          |         
|                                                                                  | Limited partners:                                                                                               |                                          |         
|                                                                                  | Common unitholders (39,358 and 31,166 units issued and outstanding at December 31, 2007 and 2006, respectively) |                                          |         
|                                                                                  | Subordinated unitholders (0 and 1,200 units issued and outstanding at December 31, 2007 and 2006, respectively) |                                          |         
|                                                                                  |                                                                                                                 |                                          |         
|                                                                                  |                                                                                                                 | Total capital                            |         
|                                                                                  |                                                                                                                 |                                          |         
|                                                                                  |                                                                                                                 | Total liabilities and capital            |         
|                                                                                  |                                                                                                                 |                                          |         

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

81

---





MARKWEST ENERGY PARTNERS, L.P.        CONSOLIDATED STATEMENTS OF OPERATIONS        (in thousands, except per unit amounts)

|                                                  |                                                                                                        | Year ended December 31,                |     
|------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | -------------------------------------- | ----
|
|Revenue:                                          |                                                                                                        |                                        |     
|                                                  | Unaffiliated parties                                                                                   |                                        | $   
|                                                  | Affiliates                                                                                             |                                        |     
|                                                  | Derivative (loss) gain                                                                                 |                                        |     
|                                                  |                                                                                                        |                                        |     
|                                                  |                                                                                                        | Total revenue                          |     
|                                                  |                                                                                                        |                                        |     
|Operating expenses:                               |                                                                                                        |                                        |     
|                                                  | Purchased product costs                                                                                |                                        |     
|                                                  | Facility expenses                                                                                      |                                        |     
|                                                  | Selling, general and administrative expenses                                                           |                                        |     
|                                                  | Depreciation                                                                                           |                                        |     
|                                                  | Amortization of intangible assets                                                                      |                                        |     
|                                                  | Loss (gain) on disposal of property, plant and equipment                                               |                                        |     
|                                                  | Accretion of asset retirement obligations                                                              |                                        |     
|                                                  | Impairments                                                                                            |                                        |     
|                                                  |                                                                                                        |                                        |     
|                                                  |                                                                                                        | Total operating expenses               |     
|                                                  |                                                                                                        |                                        |     
|                                                  | Income from operations                                                                                 |                                        |     
|Other income (expense):                           |                                                                                                        |                                        |     
|                                                  | Earnings (losses) from unconsolidated affiliates                                                       |                                        |     
|                                                  | Interest income                                                                                        |                                        |     
|                                                  | Interest expense                                                                                       |                                        |     
|                                                  | Amortization of deferred financing costs and original issue discount (a component of interest expense) |                                        |     
|                                                  | Miscellaneous (expense) income                                                                         |                                        |     
|                                                  |                                                                                                        |                                        |     
|                                                  |                                                                                                        | Income before provision for income tax |     
|                                                  |                                                                                                        | Provision for income tax expense       |     
|                                                  |                                                                                                        |                                        |     
|                                                  |                                                                                                        | Net income                             |     
|                                                  |                                                                                                        |                                        |     
|Interest in net income:                           |                                                                                                        |                                        |     
|                                                  | General partner                                                                                        |                                        | $   
|                                                  |                                                                                                        |                                        |     
|                                                  | Limited partners                                                                                       |                                        | $   
|                                                  |                                                                                                        |                                        |     
|Net income per limited partner unit (See Note 2): |                                                                                                        |                                        |     
|                                                  | Basic                                                                                                  |                                        | $   
|                                                  |                                                                                                        |                                        |     
|                                                  | Diluted                                                                                                |                                        | $   
|                                                  |                                                                                                        |                                        |     
|Weighted-average units outstanding:               |                                                                                                        |                                        |     
|                                                  | Basic                                                                                                  |                                        |     
|                                                  |                                                                                                        |                                        |     
|                                                  | Diluted                                                                                                |                                        |     
|                                                  |                                                                                                        |                                        |     
|Distributions declared per limited partner unit   |                                                                                                        | $                                      | 2.09
|                                                  |                                                                                                        |                                        |     

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

82

---





MARKWEST ENERGY PARTNERS, L.P.        CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL AND COMPREHENSIVE INCOME        (in thousands)

|                                                                                                   |  | PARTNERS' CAPITAL |  |   |         |   |       
|-------------------------------------------------------------------------------------------------- |  | ----------------- |  | - | ------- | - | ------
|
|
|
|
|Balance at December 31, 2004                                                                       |  | 15,283            |  | $ | 227,483 |   | 6,000 
|Issuance of units in private placement, net of offering costs                                      |  | 4,438             |  |   | 97,518  |   |      
|Common units issued for vested restricted units, including contribution by MarkWest Energy GP, LLC |  | 18                |  |   | 432     |   |      
|Contributions by MarkWest Energy GP, LLC                                                           |  |                  |  |   |        |   |      
|Common unit registration costs                                                                     |  |                  |  |   | (45     | ) |      
|Subordinated units converted to common units                                                       |  | 2,400             |  |   | 496     |   | (2,400
|Participation Plan compensation expense allocated from MarkWest Hydrocarbon                        |  |                  |  |   |        |   |      
|Distributions to partners                                                                          |  |                  |  |   | (24,866 | ) |      
|Net (loss) income                                                                                  |  |                  |  |   | (136    | ) |      
|Unrealized gains on commodity derivative instruments accounted for as hedges                       |  |                  |  |   |        |   |      
|                                                                                                   |  |                   |  |   |         |   |       
|Comprehensive income                                                                               |  |                   |  |   |         |   |       
|                                                                                                   |  |                   |  |   |         |   |       
|Balance at December 31, 2005                                                                       |  | 22,139            |  |   | 300,882 |   | 3,600 
|Common units issued for vested restricted units                                                    |  | 27                |  |   | 637     |   |      
|Issuance of units in public offering, net of offering costs                                        |  | 6,600             |  |   | 123,410 |   |      
|Subordinated unites converted to common units                                                      |  | 2,400             |  |   | 203     |   | (2,400
|Contributions by MarkWest Energy GP, LLC                                                           |  |                  |  |   |        |   |      
|Participation Plan compensation expense allocated from MarkWest Hydrocarbon                        |  |                  |  |   |        |   |      
|Distributions to partners                                                                          |  |                  |  |   | (46,481 | ) |      
|Net income (loss)                                                                                  |  |                  |  |   | 63,796  |   |      
|                                                                                                   |  |                   |  |   |         |   |       
|Balance at December 31, 2006                                                                       |  | 31,166            |  |   | 442,447 |   | 1,200 
|Common units issued for vested restricted units, including contribution by MarkWest Energy GP, LLC |  | 41                |  |   | 1,281   |   |      
|Issuance of units in private offering, net of offering costs                                       |  | 6,951             |  |   | 224,951 |   |      
|Conversion of subordinated units                                                                   |  | 1,200             |  |   | (259    | ) | (1,200
|Common unit registration costs                                                                     |  |                  |  |   | (307    | ) |      
|Participation Plan compensation expense allocated from MarkWest Hydrocarbon                        |  |                  |  |   |        |   |      
|Distributions to partners                                                                          |  |                  |  |   | (72,391 | ) |      
|Net income                                                                                         |  |                  |  |   | 3,360   |   |      
|                                                                                                   |  |                   |  |   |         |   |       
|Balance at December 31, 2007                                                                       |  | 39,358            |  | $ | 599,082 |   |      
|                                                                                                   |  |                   |  |   |         |   |       

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

83

---





MARKWEST ENERGY PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

|                                                                                                        |                                                                                   | December 31,                                              |       
|------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------- | ------
|
|Net income                                                                                              |                                                                                   | $                                                         | 17,199
|Adjustments to reconcile net income to net cash provided by operating activities (net of acquisitions): |                                                                                   |                                                           |       
|                                                                                                        | Depreciation                                                                      |                                                           |       
|                                                                                                        | Amortization of intangible assets                                                 |                                                           |       
|                                                                                                        | Amortization of deferred financing costs and original issue discount              |                                                           |       
|                                                                                                        | Accretion of asset retirement obligation                                          |                                                           |       
|                                                                                                        | Impairments                                                                       |                                                           |       
|                                                                                                        | Restricted unit compensation expense                                              |                                                           |       
|                                                                                                        | Participation Plan compensation expense                                           |                                                           |       
|                                                                                                        | Equity in (earnings) loss of unconsolidated affiliates                            |                                                           |       
|                                                                                                        | Distributions from equity investment                                              |                                                           |       
|                                                                                                        | Unrealized loss (gain) on derivative instruments                                  |                                                           |       
|                                                                                                        | Loss (gain) on disposal of property, plant and equipment                          |                                                           |       
|                                                                                                        | Loss on sale of equity investee                                                   |                                                           |       
|                                                                                                        | Deferred taxes                                                                    |                                                           |       
|                                                                                                        | Other                                                                             |                                                           |       
|Changes in operating assets and liabilities, net of working capital acquired:                           |                                                                                   |                                                           |       
|                                                                                                        | Receivables                                                                       |                                                           |       
|                                                                                                        | Receivables from affiliates                                                       |                                                           |       
|                                                                                                        | Inventories                                                                       |                                                           |       
|                                                                                                        | Other assets                                                                      |                                                           |       
|                                                                                                        | Accounts payable and accrued liabilities                                          |                                                           |       
|                                                                                                        | Payables to affiliates                                                            |                                                           |       
|                                                                                                        |                                                                                   |                                                           |       
|                                                                                                        |                                                                                   | Net cash provided by operating activities                 |       
|                                                                                                        |                                                                                   |                                                           |       
|Cash flows from investing activities:                                                                   |                                                                                   |                                                           |       
|                                                                                                        | Acquisitions                                                                      |                                                           |       
|                                                                                                        | Investment in Starfish                                                            |                                                           |       
|                                                                                                        | Capital expenditures                                                              |                                                           |       
|                                                                                                        | Proceeds from sale of equity investee                                             |                                                           |       
|                                                                                                        | Proceeds from disposal of property, plant and equipment                           |                                                           |       
|                                                                                                        |                                                                                   |                                                           |       
|                                                                                                        |                                                                                   | Net cash flows used in investing activities               |       
|                                                                                                        |                                                                                   |                                                           |       
|Cash flows from financing activities:                                                                   |                                                                                   |                                                           |       
|                                                                                                        | Proceeds from long-term debt                                                      |                                                           |       
|                                                                                                        | Payments of long-term debt                                                        |                                                           |       
|                                                                                                        | Proceeds from private placement of senior notes                                   |                                                           |       
|                                                                                                        | Payments for debt issuance costs, deferred financing costs and registration costs |                                                           |       
|                                                                                                        | Proceeds from private placements, net                                             |                                                           |       
|                                                                                                        | Proceeds from public unit offering, net                                           |                                                           |       
|                                                                                                        | Contributions by MarkWest Energy GP, LLC                                          |                                                           |       
|                                                                                                        | Distributions to unitholders                                                      |                                                           |       
|                                                                                                        |                                                                                   |                                                           |       
|                                                                                                        |                                                                                   | Net cash flows provided by (used in) financing activities |       
|                                                                                                        |                                                                                   |                                                           |       
|Net (decrease) increase in cash                                                                         |                                                                                   |                                                           | (7,897
|Cash and cash equivalents at beginning of year                                                          |                                                                                   |                                                           | 34,402
|                                                                                                        |                                                                                   |                                                           |       
|Cash and cash equivalents at end of year                                                                |                                                                                   | $                                                         | 26,505
|                                                                                                        |                                                                                   |                                                           |       
|Supplemental disclosures of cash flow information:                                                      |                                                                                   |                                                           |       
|Cash paid during the year for interest, net of amounts capitalized                                      |                                                                                   | $                                                         | 39,224
|                                                                                                        |                                                                                   |                                                           |       
|Supplemental schedule of non-cash investing and financing activities:                                   |                                                                                   |                                                           |       
|Accrued property, plant and equipment                                                                   |                                                                                   | $                                                         | 16,913
|                                                                                                        |                                                                                   |                                                           |       
|Property, plant and equipment asset retirement obligation                                               |                                                                                   | $                                                         | 253   
|                                                                                                        |                                                                                   |                                                           |       
|Deferred offering costs payable                                                                         |                                                                                   | $                                                         |      
|                                                                                                        |                                                                                   |                                                           |       
|Accrued amounts due to Javelina sellers and Starfish                                                    |                                                                                   | $                                                         |      
|                                                                                                        |                                                                                   |                                                           |       
|Accrued private placement proceeds                                                                      |                                                                                   | $                                                         |      
|                                                                                                        |                                                                                   |                                                           |       

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

84

---



MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Organization

MarkWest Energy Partners, L.P. ("MarkWest Energy Partners") was formed on January 25, 2002, as a Delaware limited partnership. The Partnership and
its wholly owned subsidiary, MarkWest Energy Operating Company, L.L.C. (the "Operating Company"), were formed to acquire, own and operate most of the assets, liabilities and operations of MarkWest
Hydrocarbon, Inc.'s Midstream Business (the "Midstream Business"). MarkWest Energy Partners is 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. MarkWest Energy Partners has established a significant presence in the Southwest through strategic
acquisitions and strong organic growth opportunities stemming from those acquisitions. MarkWest Energy Partners is also one of the largest processors of
natural gas in the Appalachian Basin, one of the country's oldest natural gas producing regions. Finally, MarkWest Energy Partners processes natural gas and owns a crude oil transportation pipeline in
Michigan. MarkWest Energy Partners' principal executive office is located in Denver, Colorado.

On
February 21, 2008, MarkWest Energy Partners, L.P. consummated the transactions contemplated by its plan of redemption and merger with MarkWest Hydrocarbon, Inc.
(the "Company" or "MarkWest Hydrocarbon") and MWEP, L.L.C., a wholly owned subsidiary of the Partnership. A discussion of the merger and its accounting impact on the Partnership is described in
Note 22.

2.    Summary of Significant Accounting Policies



The accompanying consolidated financial statements include the accounts of MarkWest Energy Partners, L.P., and all of its majority-owned subsidiaries
(collectively, the "Partnership"), and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Equity investments in which the
Partnership exercises significant influence, but does not control and is not the primary beneficiary, are accounted for using the equity method.

On
February 28, 2007 the Partnership completed a two-for-one split of the Partnership's common units, whereby holders of record at the close of business on
February 22, 2007 received one additional common unit for each common unit owned on that date. For all periods presented prior to February 22, 2007, all references to the number of units
and per unit net income and distribution amounts included in this report have been adjusted to give the effect to the unit split.



The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Estimates affect, among other items, valuing identified intangible assets, determining the fair value of derivative instruments, evaluating impairments of long lived
assets, establishing estimated useful lives for long-lived assets, estimating revenues and expense accruals, valuing asset retirement obligations, and in determining liabilities, if any,
for legal contingencies.

85

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)



The Partnership considers investments in highly liquid financial instruments purchased with an original maturity of 90 days or less to be cash equivalents.
Such investments include money market accounts.



Inventories are valued at the lower of weighted average cost or market. Inventories consisting primarily of crude oil and unprocessed natural gas are valued based
on the cost of the raw material. Processed natural gas inventories include material, labor and overhead. Shipping and handling costs are included in operating expenses.



Property, plant and equipment are recorded at cost. Expenditures that extend the useful lives of assets are capitalized. Repairs, maintenance and renewals that do
not extend the useful lives of the assets are expensed as incurred. Interest costs for the construction or development of long-term assets are capitalized and amortized over the related
asset's estimated useful life. Leasehold improvements are depreciated over the shorter of the useful life or lease term. Depreciation is provided, principally on the straight-line method,
over the following estimated useful lives:

Asset Class

Range of Estimated Useful LivesBuildings

20 - 25 yearsGas gathering facilities

20 - 25 yearsGas processing plants

20 - 25 yearsFractionation and storage facilities

20 - 25 yearsNatural gas pipelines

20 - 25 yearsCrude oil pipelines

20 - 25 yearsNGL transportation facilities

20 - 25 yearsEquipment and other

3 - 10 years


The
Partnership recognizes the fair value of a liability for an asset retirement obligation in the period in which the liability is incurred, with an offsetting increase in the carrying
amount of the related long-lived asset. The recognition of an asset retirement obligation requires that management make numerous estimates, assumptions and judgments regarding such factors
as the estimated probabilities, amounts and timing of settlements; the credit-adjusted risk-free rate to be used; inflation rates, and future advances in technology. In periods subsequent
to initial measurement of the liability, the Company must recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the
timing or the amount of the original estimate of undiscounted cash flows. Over time, the liability is accreted to its future value, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss. The Partnership adopted the Financial Accounting Standards
Board ("FASB") Interpretation No. 47,Accounting for Conditional Asset Retirement Obligations("FIN 47"), on January 1, 2005.
FIN 47 clarified the accounting for conditional asset retirement obligations under Statement of Financial Accounting Standards ("SFAS") No. 143,

86

---



MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

Accounting for Asset Retirement Obligations("SFAS 143"). A conditional asset retirement obligation is an unconditional legal obligation to perform an activity in which
the timing and / or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 requires an entity to recognize a liability for a
conditional asset retirement obligation if the amount can be reasonably estimated. Adopting FIN 47 had an immaterial impact on the Partnership.



On March 31, 2005, the Partnership acquired its non-controlling, 50% interest in Starfish Pipeline Company, LLC ("Starfish") for
$41.7 million, which is accounted for under the equity method. Differences between the Partnership's investment and its proportionate share of Starfish's reported equity are amortized based
upon the respective useful lives of the assets to which the differences relate. The Partnership's share of Starfish's income was $5.3 million in 2007 and 2006 compared to a loss of
$2.2 million in 2005.

Management's
accounting policy requires an evaluation of operating losses, if any, and other factors that may have occurred, that may be indicative of a decrease in value of the
investment which is other than temporary, and which should be recognized even though the decrease in value is in excess of what would otherwise be recognized by application of the equity method. The
evaluation determines if an equity method investment should be impaired and that an impairment, if any, is fairly reflected in these financial statements.

The
Partnership believes the equity method is an appropriate means for it to recognize increases or decreases measured by GAAP in the economic resources underlying the investments.
Regular evaluation of these investments is appropriate to evaluate any potential need for impairment. It uses
the following types of evidence of a loss in value to identify a loss in value of an investment that is other than a temporary decline. Examples of a loss in value may be identified by:





The Partnership's intangible assets are comprised of customer contracts and relationships acquired in business combinations, recorded under the purchase method of
accounting at their estimated fair values at the date of acquisition. Using relevant information and assumptions, management determines the fair value of acquired identifiable intangible assets. Fair
value is generally calculated as the present value of estimated future cash flows using a risk-adjusted discount rate. The key assumptions include contract renewals, economic incentives to
retain customers, historical volumes, current and future capacity of the gathering system, pricing volatility, and the discount rate. Amortization of intangibles with definite lives is calculated
using the straight-line method over the estimated useful life of the intangible asset. The estimated economic life is determined by assessing the life of the assets to which the contracts
and relationships relate, likelihood of renewals, the projected reserves, competitive factors, regulatory or legal provisions, and maintenance and renewal costs.

87

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)



The Partnership evaluates its long-lived assets, including intangibles, for impairment when events or changes in circumstances warrant such a review.
A long-lived asset group is considered impaired when the estimated undiscounted cash flows from such asset group are less than the asset group's carrying value. In that event, a loss is
recognized to the extent that the carrying value exceeds the fair value of the long-lived asset group. Fair value is determined primarily using estimated discounted cash flows. Management
considers the volume of reserves behind the asset and future NGL product and natural gas prices to estimate cash flows. The amount of additional reserves developed by future drilling activity depends,
in part, on expected natural gas prices. Projections of reserves, drilling activity and future commodity prices are inherently subjective and contingent upon a number of variable factors, many of
which are difficult to forecast. Any significant variance in any of these assumptions or factors could materially affect future cash flows, which could result in the impairment of an asset.

For
assets identified to be disposed of in the future, the carrying value of these assets is compared to the estimated fair value, less the cost to sell, to determine if impairment is
required. Until the assets are disposed of, an estimate of the fair value is re-determined when related events or circumstances change.



Deferred financing costs, included in Other assets in the Consolidated Balance Sheets, are amortized over the estimated lives of the related obligations or, in
certain circumstances, accelerated if the obligation is refinanced, using the straight line method which approximates the effective interest method.



Deferred income represents prepayments received in revenue generating contracts. In certain cases, the Partnership received prepayments under fixed fee contracts
to deliver NGLs at a future date. Deferred income is recognized as revenue upon delivery of the product. In other cases, the Partnership received prepayments related to the construction of gathering
facilities to transport the producer's gas from certain delivery points. Deferred income is generally recognized into revenue over the term of the gathering contract. Deferred income is reported in
Accrued Liabilities and Other Long Term Liabilities in the accompanying Balance Sheets.



SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities("SFAS 133"), established
accounting and reporting standards requiring that derivative instruments (including certain derivative instruments embedded in other contracts) be recorded at fair value and included in the
consolidated balance sheet as assets or liabilities. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and the resulting
designation, which is established at the inception.

To
the extent derivative instruments designated as cash flow hedges are effective, changes in fair value are recognized in other comprehensive income until the underlying hedged item is
recognized in earnings. Effectiveness is evaluated by the derivative instrument's ability to offset changes in fair value

88

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

or
cash flows of the underlying hedged item. Any change in the fair value resulting from ineffectiveness is recognized immediately in earnings. Changes in the fair value of derivative instruments
designated as fair value hedges, as well as the changes in the fair value of the underlying hedged item, are recognized currently in earnings. Any differences between the changes in the fair values of
the hedged item and the derivative instrument represent gains or losses from ineffectiveness. During 2007 and 2006, we did not designate any cash flow or fair value hedges.

In
the course of normal operations, the Partnership routinely enters into contracts such as forward physical contracts for the sale of natural gas, propane, and other NGLs, that under
SFAS 133, qualify for and are designated as a normal sales contract. Such contracts are exempted from the fair value accounting requirements of SFAS 133 and are accounted for using
accrual accounting.

All
derivative instruments other than those designated as cash flow hedges, fair value hedges or normal purchase or sale are marked to market through revenue or facility expense, the
same account as the item hedged. Changes in risk management activities are reported in cash flow from operating activities on the Consolidated Statement of Cash Flows.



Management believes the carrying amount of financial instruments, including cash, accounts receivable, accounts payable, and accrued expenses approximates fair
value because of the short-term maturity of these instruments. Management believes the carrying value of the Partnership's Credit Facility (see Note 11) approximates fair value due
to its variable interest rates. The estimated fair value of the Senior Notes (see Note 11) was approximately $490.7 million and $499.8 million at December 31, 2007 and
2006, respectively, based on quoted market prices. Derivative instruments not designated as hedges (see Note 12) are recorded at fair value, based on available market information.



The Partnership generates the majority of its revenues from natural gas gathering, processing and transmission; NGL transportation, fractionation and storage; and
crude oil gathering and transportation. It enters into variety of contract types. In many cases, the Partnership provides services under contracts that contain a combination of more than one of the
arrangements described below. The Partnership provides services under the following different types of arrangements (all of which constitute midstream energy operations):



89

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)



In
many cases, the Partnership provides services under contracts that contain a combination of more than one of the arrangements described above. The terms of the Partnership's contracts
vary based on gas quality conditions, the competitive environment when the contracts are signed and customer requirements. Under all of the arrangements, revenue is recognized at the time the product
is delivered and title is transferred. It is upon delivery and title transfer that the Partnership meets all four revenue recognition criteria, and it is at such time that the Partnership recognizes
revenue.

The
Partnership's assessment of each of the four revenue recognition criteria as they relate to its revenue producing activities is as follows:

Persuasive evidence of an arrangement exists.The Partnership's customary practice is to enter into a written contract,
executed by both the customer and the Partnership.

Delivery.Delivery is deemed to have occurred at the time the product is delivered and title is transferred, or in the case
of fee-based arrangements, when the services are rendered.
To the extent the Partnership retains its equity liquids as inventory, delivery occurs when the inventory is subsequently sold and title is transferred to the third party purchaser.

The fee is fixed or determinable.The Partnership negotiates the fee for its services at the outset of its
fee-based arrangements. In these arrangements, the fees are nonrefundable. The fees are generally due within ten days of delivery or services rendered. For other arrangements, the amount
of revenue is determinable when the sale of the applicable product has been completed upon delivery and transfer of tile. Proceeds from the sale of products are generally due in ten days.

Collectibility is reasonably assured.Collectibility is evaluated on a customer-by-customer basis.
New and existing customers are subject to a credit review process, which evaluates the customers' financial position (e.g. cash position and credit rating) and their ability to pay. If
collectibility is not considered

90

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

reasonably
assured at the outset of an arrangement in accordance with the Partnership's credit review process, revenue is recognized when the fee is collected.

The
Partnership enters into revenue arrangements where it sells customer's gas and/or NGLs and depending on the nature of the arrangement acts as the principal or agent. Revenue from
such sales is recognized gross where the Partnership acts as the Principal, under Emerging Issues Task Force ("EITF") Issue No. 99-19,Reporting Revenue
Gross as a Principal versus Net as an Agent, as the Partnership takes title to the gas and/or NGLs, has physical inventory risk and does not earn a fixed amount. Revenue is
recognized net when the Partnership earns a fixed amount and does not take ownership of the gas and/or NGLs.

Gas
volumes received may be different from gas volumes delivered, resulting in gas imbalances. The Partnership records a receivable or payable for such imbalances based upon the
contractual terms of the purchase agreements. The Partnership had an imbalance payable of $0.9 million at December 31, 2007 and 2006, recorded in accrued liabilities in the accompanying
consolidated Balance Sheets. The Partnership had an imbalance receivable of $1.7 million and $2.7 million at December 31, 2007 and 2006, respectively, recorded in other
receivables in the accompanying consolidated Balance Sheets. Revenues for the transportation of crude are based upon regulated tariff rates and the related transportation volumes and are recognized
when delivery of crude is made to the purchaser or other common carrier pipeline. As described above, changes in the fair value of commodity derivative instruments are recognized currently in revenue.



The Partnership routinely makes accruals based on estimates for both revenues and expenses due to the timing of compiling billing information, receiving certain
third party information and reconciling the Partnership's records with those of third parties. The delayed information from third parties includes, among other things, actual volumes purchased,
transported or sold, adjustments to inventory and invoices for purchases, actual natural gas and NGL deliveries and other operating expenses. The Partnership makes accruals to reflect estimates for
these items based on its internal records and information from third parties. Most of the estimated accruals are reversed in the following month when actual information is received from third parties
and the Partnership's internal records have been reconciled.



The Partnership adopted SFAS No. 123 (revised 2004),Share-Based Payment("SFAS 123R"), on
January 1, 2006, using the modified prospective method. Prior to adopting SFAS 123R, the Partnership elected to measure compensation expense for equity-based employee compensation plans
as prescribed by Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employees("APB 25").

The
Partnership issues restricted units under the MarkWest Energy Partners, L.P. Long-Term Incentive Plan. A restricted unit is a "phantom" unit that entitles the
grantee to receive a common unit upon the vesting of the phantom unit or, at the discretion of the Compensation Committee, cash equivalent to the value of a common unit. The restricted units are
treated as liability awards under SFAS 123R, and were treated as variable awards under APB 25. The Partnership applied variable accounting under APB 25 for the plan because a
phantom unit is an award to employees entitling them to increases in the market value of the Partnership's units subsequent to the date of grant without

91

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

issuing
units to the employees, similar to a stock appreciation right. As a result, the Partnership is required to mark to market the awards at the end of each reporting period. Compensation expense
is measured for the phantom unit grants using the market price of MarkWest Energy Partners' common units on the date the units are granted. The fair value of the units awarded is amortized into
earnings over the period of service, adjusted quarterly for the change in the fair value of the unvested units granted. The phantom units vest over a stated period.

Vesting
is accelerated for certain employees, if specified performance measures are met. The accelerated vesting criteria provisions are based on annualized distribution goals. If the
Partnership's
distributions are at or above the goal for a certain number of consecutive quarters, vesting of the employee's phantom units is accelerated. The general partner of the Partnership may also elect to
accelerate the vesting of outstanding awards, which results in an immediate charge to operations for the unamortized portion of the award.

To
satisfy common unit awards, the Partnership will issue new common units, acquire common units in the open market, or use common units already owned by the general partner.

MarkWest
Hydrocarbon entered into arrangements with certain directors and employees of the Company referred to as the Participation Plan. Under this plan, the Company sold subordinated
units of the Partnership or interests in the Partnership's general partner, under a purchase and sale agreement. Both the subordinated unit and general partner interest transactions were considered
compensatory arrangements due to the put-and-call provisions and the associated valuation being based on a formula instead of an independent third party valuation. The
subordinated units converted to common units after a holding period. Historically, the Company has settled the subordinated units for cash when individuals left the Company. The general partner
interests have no definite term, but historically have been settled for cash when the employee left the Company. Under SFAS 123R, the subordinated units and general partner interests were
classified as liability awards. As a result, the Company was required to mark to market the subordinated unit and general partner interest valuations at the end of each period. Please refer to
Note 22 for further information about the termination of the Participation Plan.

Under
Topic 1-B of the codification of the Staff Accounting Bulletins,Allocation of Expenses and Related Disclosure in Financial Statements of
Subsidiaries, Divisions or Lesser Business Components of Another Entity, some portion of compensation expense related to services provided by MarkWest Hydrocarbon's employees
and directors recognized under the Participation Plan should be allocated to the Partnership. The allocation is based on the percent of time each employee devotes to the Company. Compensation
attributable to interests sold to individuals who serve on both the board of MarkWest Hydrocarbon and the Partnership's Board of Directors of the Partnership's General Partner is allocated equally.

These
charges are included in selling, general and administrative expenses and are allocated to the general partner pursuant to the Partnership Agreement. Assuming the compensation cost
for the Long-Term Incentive Plan and the Participation Plan had been determined based on the fair-value methodology of SFAS 123R, the net income and earnings per unit
would have been the same as reported on the financial statements for the year ended December 31, 2005.

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)



The Partnership is not a taxable entity for federal income tax purposes. As such, the Partnership does not directly pay federal income tax. The Partnership's
taxable income or loss, which may vary substantially from the net income or loss reported in the Consolidated Statements of Operations, is includable in the federal income tax returns of each partner.
The aggregate difference in the basis of the Partnership's net assets for financial and income tax purposes cannot be readily determined as the Partnership does not have access to information about
each partner's tax attributes related to the Partnership.

The
Partnership is a taxable entity under certain state jurisdictions. The Partnership accounts for state income taxes under the asset and liability method pursuant to SFAS
No. 109,Accounting for Income Taxes("SFAS 109"). Under SFAS 109, deferred income taxes are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss and credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect of any tax rate change on deferred taxes is recognized in the period that includes the enactment date of the tax rate change. Realizability of deferred tax assets is
assessed and, if not more likely than not, a valuation allowance is recorded to write down the deferred tax assets to their net realizable value.

The
Partnership adopted FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes("FIN 48"), on
January 1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements in accordance with SFAS 109. Specifically, the
pronouncement prescribes a "more likely than not" recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. The interpretation also provides guidance on the related derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition of
uncertain tax positions. The adoption of FIN 48 did not have a material effect on the Partnership's financial position or results of operations.



Comprehensive income (loss) includes net income and other comprehensive income (loss), which includes unrealized gains and losses on commodity or interest rate
derivative financial instruments accounted for as hedges.



Except as discussed in the following paragraph, basic and diluted net income per limited partner unit is calculated by dividing net income, after deducting
amounts specially allocated to the general partner's interests, including interests in incentive distribution rights, by the weighted-average number of limited partner common and subordinated units
outstanding during the period.

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

EITF No. 03-06,Participating Securities and the Two-Class Method under FASB Statement
No. 128,("EITF 03-06") addresses the computation of earnings per share by entities that have issued securities other than common stock that
contractually entitle the holder to participate in dividends and earnings of the entity. EITF 03-06 provides that the general partner's interest in net income is to be calculated
based on the amount that would be allocated to the general partner if all the net income for the period were distributed, and not on the basis of actual cash distributions for the period.

The
following table sets forth the computation of basic and diluted earnings per limited partner unit, as adjusted for the February 28, 2007 two-for-one
unit split. The net income available to limited partners and the weighted average limited partner units outstanding have been adjusted for instruments considered common unit equivalents in 2007, 2006
and 2005 (in thousands, except per unit data):

|                                                                   |                                                                                                                                    | Year ended December 31, |       
|------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | ------
|
|Numerator for basic and diluted earnings per limited partner unit: |                                                                                                                                    |                         |       
|Net income                                                         |                                                                                                                                    | $                       | 17,199
|Less:                                                              |                                                                                                                                    |                         |       
|                                                                   | General partner's incentive distribution paid                                                                                      |                         |       
|                                                                   |                                                                                                                                    |                         |       
|Sub-total                                                          |                                                                                                                                    |                         | (6,517
|Plus:                                                              |                                                                                                                                    |                         |       
|                                                                   | Allocated depreciation expense attributable to the general partners contribution for construction of the Cobb Gas Extraction Plant |                         |       
|                                                                   | Participation plan allocation                                                                                                      |                         |       
|                                                                   |                                                                                                                                    |                         |       
|Net income before GP interest                                      |                                                                                                                                    |                         | 4,469 
|Less:                                                              |                                                                                                                                    |                         |       
|                                                                   | General partner's 2% interest                                                                                                      |                         |       
|                                                                   |                                                                                                                                    |                         |       
|Net income available to limited partners under EITF 03-6           |                                                                                                                                    | $                       | 4,378 
|                                                                   |                                                                                                                                    |                         |       
|Denominator:                                                       |                                                                                                                                    |                         |       
|                                                                   | Denominator for basic earnings per limited partner unit-weighted average number of limited partner units                           |                         |       
|Effect of dilutive securities:                                     |                                                                                                                                    |                         |       
|                                                                   | Weighted-average of restricted units outstanding                                                                                   |                         |       
|                                                                   |                                                                                                                                    |                         |       
|                                                                   | Denominator for diluted earnings per limited partner unit-weighted average number of limited partner units                         |                         |       
|                                                                   |                                                                                                                                    |                         |       
|Net income per limited partner unit:                               |                                                                                                                                    |                         |       
|                                                                   | Basic                                                                                                                              |                         | $     
|                                                                   |                                                                                                                                    |                         |       
|                                                                   | Diluted                                                                                                                            |                         | $     
|                                                                   |                                                                                                                                    |                         |       



In September 2006 the FASB issued SFAS No. 157,Fair Value Measurements("SFAS 157").
SFAS 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that
prioritizes the

94

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

information
used to develop those assumptions. SFAS 157 is effective for the Partnership's financial statements as of January 1, 2008. On February 6, 2008 the FASB, approved the
partial deferral of SFAS 157 for non-financial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a reoccurring
basis (at least annually) until fiscal years beginning after November 15, 2008. The Partnership has elected to defer recognition of items including:



For
the provisions of SFAS 157 adopted as of January 1, 2008, they will not have an impact on the Partnership's financial statements.

In
February 2007 the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities("SFAS 159"), which permits an entity to measure certain financial assets and financial liabilities at fair value. The statement's objective is to improve financial reporting by allowing
entities to mitigate volatility in reported earnings caused by the measurement of related assets and liabilities using different attributes, without having to apply complex hedge accounting
provisions. Under SFAS 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected
on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value option election is irrevocable, unless a
new election date occurs. SFAS 159 establishes presentation and disclosure requirements to help financial statement users understand the effect of the entity's election on its earnings, but
does not eliminate
disclosure requirements of other accounting standards. Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet. SFAS 159 is effective for the
Partnership as of January 1, 2008. The provisions of SFAS 159 will not have an impact on the Partnership's financial statements.

In
December 2007 the FASB issued SFAS No. 141 (revised 2007),Business Combinations("SFAS 141R"). This statement
replaces SFAS 141,Business Combinations. The statement provides for how the acquirer recognizes and measures the identifiable assets acquired,
liabilities assumed and any non-controlling interest in the acquiree. SFAS 141R provides for how the acquirer recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase. The statement determines what information to disclose to enable users to be able to evaluate the nature and financial effects of the business
combination. The provisions of SFAS 141R are effective for the Partnership as of January 1, 2009 and do not allow early adoption. The Partnership is currently evaluating the impact of
adopting this statement.

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.    Summary of Significant Accounting Policies (Continued)

In
December 2007 the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51("SFAS 160"). This statement provides that noncontrolling interests in subsidiaries held by parties other than the parent be identified, labeled and
presented in the statement of financial position within equity, but separate from the parent's equity. SFAS 160 states that the amount of consolidated net income attributable to the parent and
to the noncontrolling interest be clearly identified on the consolidated statement of income. The statement provides for consistency regarding changes in parent ownership including when a subsidiary
is deconsolidated. Any retained noncontrolling equity investment in the former subsidiary will be initially measured at fair value. The provisions of SFAS 160 are effective for the Partnership
as of January 1, 2009 and do not allow early adoption. The Partnership is currently evaluating the impact of adopting the statement.

3.    Acquisitions

During 2006 and 2005, the Partnership completed the following acquisitions. Each acquisition was accounted for under the purchase method. The assets acquired and
liabilities assumed were recorded at
the estimated fair market values as of the acquisition date. The preliminary allocation of assets and liabilities may be adjusted to reflect the final determined amounts during a short period of time
following the acquisition. The results of operations from these acquisitions are included in our consolidated financial statements from the acquisition date.



On December 29, 2006, the Partnership purchased 100% of the ownership interest in Santa Fe Gathering, L.L.C. for $15.0 million subject to
working capital adjustments. The gathering system is located in Roger Mills and Beckham Counties, Oklahoma. The Grimes system was constructed in May 2005 to gather from growing production
fields.



On November 1, 2005, the Partnership acquired equity interests in Javelina Company, Javelina Pipeline Company and Javelina Land Company, L.L.C., which were
40%, 40% and 20%, respectively, owned by subsidiaries of El Paso Corporation, Kerr-McGee Corporation and Valero Energy Corporation. The Partnership paid consideration of
$357.0 million, plus $41.8 million for net working capital that included approximately $35.5 million in cash. The Corpus Christi, Texas, gas processing facility treats and
processes off-gas from six local refineries, two of which are owned by Valero Energy Corporation, two by Koch Industries, Inc. and two by Citgo Petroleum Corporation. The
Partnership and the seller negotiated a final settlement of the acquired working capital of $41.8 million, and the final payment of $5.9 million was paid to the sellers in May of 2006
and included in the final purchase price allocation, which was completed in the second quarter of 2006.



On March 31, 2005, the Partnership acquired a 50% non-operating membership interest in Starfish from an affiliate of Enterprise Products
Partners L.P. for $41.7 million. The Partnership financed this by borrowing $40.0 million from its credit facility during the first quarter of 2005. Starfish is a joint venture
with Enbridge Offshore Pipelines LLC, which the Partnership accounts for using the equity

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.    Acquisitions (Continued)

method.
Starfish owns the FERC-regulated Stingray natural gas pipeline, and the unregulated Triton natural gas gathering system and West Cameron dehydration facility. All of the assets are
located in the Gulf of Mexico and southwestern Louisiana.

The
following table summarizes the costs and allocations of the above acquisitions (in thousands):

2006

2005Santa Fe

JavelinaAcquisition Costs:Cash consideration

$
14,941

$
396,836Direct acquisition costs


29


2,009Totals:

$
14,970

$
398,845Allocation of acquisition costs:Current assets

$
331

$
111,679Customer contracts


11,959


194,650Property, plant and equipment


3,087


162,859Inventory


11


Liabilities assumed


(418
)

(70,343
)Totals:

$
14,970

$
398,845




The following table reflects the pro forma consolidated results of operations for the year ended December 31, 2005, as though the Javelina and Starfish
acquisitions had occurred on January 1, 2005. The unaudited pro forma results of operations for the Santa Fe acquisition has not been presented, as the acquisition is not considered
significant. The results have been prepared for comparative purposes only and may not be indicative of future results. All earnings per share information have been updated to reflect the
February 2007 unit split.

Year ended December 31,2005As Reported

Pro Forma(in thousands, except per unit data)Revenue

$
541,090

$
796,954Net income (loss)

$
2,355

$
(5,492
)Net income (loss)limited partners

$
242

$
(7,007
)Net income (loss) per sharelimited partnersBasic

$
0.01

$
(0.32
)Diluted

$
0.01

$
(0.32
)Weighted average number of outstanding common units:Basic


21,790


21,790Diluted


21,858


21,858


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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.    Significant Customers and Concentration of Credit Risk

For the years ended December 31, 2007, 2006 and 2005, revenues from MarkWest Hydrocarbon totaled $75.0 million, $73.6 million and
$64.9 million, representing 12% of consolidated Partnership revenues. Sales to MarkWest Hydrocarbon are made primarily from the Appalachia segment. As of December 31, 2007 and 2006, the
Partnership had $8.6 million and $4.7 million, respectively, of accounts receivable from MarkWest Hydrocarbon.

For
the years ended December 31, 2007 and 2006, revenues from one customer totaling $191.5 million and $76.0 million, representing 31.8% and 12.1% of consolidated
Partnership revenues, respectively. Sales to this customer are made primarily from the East Texas segment. As of December 31, 2007 and 2006, the Partnership had $6.4 million and
$3.0 million of accounts receivable from this customer, respectively.

For
the years ended December 31, 2007 and 2006, revenues from one customer totaled $88.9 million and $63.0 million, representing 14.8% and 10.0% of consolidated
Partnership revenues, respectively. Sales to this customer are made primarily from the Oklahoma segment. As of December 31, 2007 and 2006, the Partnership had $9.5 million and
$5.2 million of accounts receivable from this customer, respectively.

For
the year ended December 31, 2005, revenues from one other customer totaled $67.0 million, representing 12.4% of consolidated Partnership revenues, respectively. Sales
to this customer were made primarily from the Oklahoma segment. As of December 31, 2005, the Partnership had $5.5 million of accounts receivable from this customer.

5.    Receivables and Other Current Assets

Receivables consist of the following (in thousands):

December 31,2007

2006Trade, net

$
101,828

$
68,692Other


8,326


17,434Total receivables

$
110,154

$
86,126


Other
current assets consist of the following (in thousands):

December 31,2007

2006Margin deposits (see Note 12)

$
19,300

$
Prepaid fuel


14


1,215Prepaid insurance


192


391Prepaid equipment rental


401


283Merger finance costs


857


Risk management premiums





1,009Prepaid other


129


149Total other current assets

$
20,893

$
3,047


98

---



MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.    Receivables and Other Current Assets (Continued)

6.    Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

December 31,2007

2006Gas gathering facilities

$
596,627

$
289,586Gas processing plants


213,487


217,080Fractionation and storage facilities


24,266


23,470Natural gas pipelines


42,347


42,361Crude oil pipelines


19,113


19,113NGL transportation facilities


4,676


5,326Land, building and other equipment


15,498


16,871Construction in progress


49,220


41,942965,234


655,749Less: accumulated depreciation


(141,497
)

(104,863
)Total property, plant and equipment

$
823,737

$
550,886


The
Partnership capitalizes interest on major projects during construction. For the years ended December 31, 2007 and 2006, the Partnership capitalized interest of
$3.3 million and $0.9 million, respectively.

7.    Intangible Assets

The Partnership's intangible assets at December 31, 2007 and 2006, are comprised of customer contracts and relationships, as follows (in thousands):

|           |        | December 31, 2007 |         | December 31, 2006 |   |        
|---------- | ------ | ----------------- | ------- | ----------------- | - | -------
|
|East Texas |        | $                 | 165,379 |                   | $ | (28,252
|Javelina   |        |                   | 195,137 |                   |   | (16,903
|Oklahoma   |        |                   | 11,959  |                   |   | (598   
|           |        |                   |         |                   |   |        
|           | Total: |                   | $       | 372,475           |   | $      
|           |        |                   |         |                   |   |        

Amortization
expense related to the intangible assets was $16.7 million, $16.0 million and $9.7 million for the years ended December 31, 2007,
2006 and 2005, respectively.

Estimated
future amortization expense related to the intangible assets at December 31, 2007, is as follows (in thousands):

Year ending December 31:2008

$
16,6722009


16,6722010


16,6722011


16,6722012


16,672Thereafter


243,362$
326,722


99

---



MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7.    Intangible Assets (Continued)

8.    Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

December 31,2007

2006Product and operations

$
14,689

$
8,653Professional services


956


1,133Taxes (other than income tax)


4,428


3,118Interest


13,457


13,935Accrued property, plant and equipment


16,913


10,866Deferred income


1,436


167Deferred lease obligation


2,235


2,344Phantom unit accrual


2,807


2,007Accrued derivative settlement


1,940


Other


1,177


1,032Total accrued liabilities

$
60,038

$
43,255


9.    Asset Retirement Obligation

The following is a reconciliation of the changes in the asset retirement obligation from January 1, 2006 to December 31, 2007 (in thousands):

Year ended December 31,2007

2006Beginning asset retirement obligation

$
1,268

$
1,102Liabilities incurred


109


64Revisions in estimated cash flows


144


Accretion expense


114


102Ending asset retirement obligation

$
1,635

$
1,268


At
December 31, 2007 and 2006, there were no assets legally restricted for purposes of settling asset retirement obligations. The asset retirement obligation has been recorded as
part of other long-term liabilities in the accompanying Consolidated Balance Sheets.

10.    Impairment of Long-Lived Assets

The Partnership's policy is to evaluate whether there has been a permanent impairment in the value of long-lived assets when certain events have taken
place that indicate that the remaining balance may not be recoverable. The Partnership evaluates the carrying value of its property and equipment on at least a segment level and at lower levels where
cash flows for specific assets can be identified.

The
analysis determined that a system located in the Other Southwest segment had future estimated cash inflows estimated to be near zero because the system was shut-in for a
year, and as such the carrying amounts of the assets exceeded the estimated undiscounted cash flows. It was determined that an impairment of the system had occurred. Fair value of the
long-lived assets was determined

100

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.    Impairment of Long-Lived Assets (Continued)

based
on management's opinion that the idle assets had no economic value. Therefore, an impairment of long-lived assets of $0.4 million was recognized during the year ended
December 31, 2007.

11.    Debt

Debt is summarized below (in thousands):

December 31,2007

2006Credit facilityRevolver facility, 7.09% and 8.75% interest, respectively, due December 2010

$
55,500

$
30,000Senior NotesSenior Notes, 6.875% interest, due November 2014


225,000


225,000Senior Notes, 8.5% interest, net of original issue discount of $2,805 and $3,135, respectively, due July 2016


272,195


271,865Total long-term debt

$
552,695

$
526,865


Partnership Credit Facility

On December 29, 2005, the Operating Company, a wholly owned subsidiary of MarkWest Energy Partners L.P., entered into the fifth amended and restated
credit agreement ("Partnership Credit Facility"), which provides for a maximum lending limit of $615.0 million for a five-year term. The credit facility includes a revolving
facility of $250.0 million and a $365.0 million term loan. In July 2006, using proceeds from debt and equity offerings, the Partnership permanently reduced the borrowing capacity
of the term loan to $45.9 million. In October 2006 the Partnership retired the remaining $45.9 million outstanding on the term loan using a portion of the proceeds from the 2016
senior notes (see Note 16). The credit facility is guaranteed by the Partnership and all of the Partnership's subsidiaries and is collateralized by substantially all of the Partnership's assets
and those of its subsidiaries. The borrowings under the credit facility bear interest at a variable interest rate, plus basis points. The basis points vary based on the ratio of the Partnership's
Consolidated Debt (as defined in the Partnership Credit Facility) to Consolidated EBITDA (as defined in the Partnership Credit Facility), ranging from 0.50% to 1.50% for Base Rate loans, and 1.50% to
2.50% for Eurodollar Rate loans. The basis points will increase by 0.50% during any period (not to exceed 270 days) where the Partnership makes an acquisition for a purchase price in excess of
$50.0 million ("Acquisition Adjustment Period"). For the year ended December 31, 2007, the weighted average interest rate on the outstanding borrowing under the Partnership Credit
Facility was 7.09% and had no unused letters of credit.

Under
the provisions of the Partnership Credit Facility, the Partnership is subject to a number of restrictions on its business, including restrictions on its ability to grant liens on
assets; make or own certain investments; enter into any swap contracts other than in the ordinary course of business; merge, consolidate or sell assets; incur indebtedness (other than subordinated
indebtedness); make distributions on equity investments; and declare or make, directly or indirectly, any restricted payments.

101

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.    Debt (Continued)

The Partnership Credit Facility also contains covenants requiring the Partnership to maintain:



Both
the total debt and senior debt ratios contain adjustment clauses providing for greater flexibility during any Acquisition Adjustment Period.

These
covenants are used to calculate the available borrowing capacity on a quarterly basis. The Partnership incurs a commitment fee on the unused portion of the credit facility at a
rate between 30.0 and 50.0 basis points based upon the ratio of Consolidated Senior Debt (as defined in the Partnership Credit Facility) to Consolidated EBITDA (as defined in the Partnership Credit
Facility). The revolver portion of the facility matures on December 29, 2010. The Partnership's Credit Facility also contains provisions requiring prepayments from certain Net Cash Proceeds (as
defined in the Partnership Credit Facility) received from certain triggering sales that have not been reinvested within one hundred eighty days. The Javelina Acquisition (see Note 3) was funded
through the fourth amended and restated credit agreement, which provided for a maximum lending limit of $500.0 million for a term of one year and was comprised of a revolving facility of
$100.0 million and a $400.0 million term loan. The fourth amended and restated credit agreement had terms similar to the new credit facility. In the fourth quarter of 2005 the
Partnership completed two private placement offerings to repay a portion of the borrowed funds. The Partnership was in compliance with all covenants as of December 31, 2007.

In
October 2004 the Operating Company, coincident with the issuance of the 2014 Senior Notes discussed below, entered into the third amended and restated credit agreement ("Old
Credit Facility"), which provided for a maximum lending limit of $200.0 million for a term of five years. The Old Credit Facility included a revolving facility of $200.0 million. The
borrowings under the Old Credit Facility carried interest at a variable rate based on one of two indices that included either (i) LIBOR plus an applicable margin, which was fixed at a rate of
2.75% for the first two quarters following the closing of the credit facility, or (ii) Base Rate (as defined for any day, a fluctuating rate per annum equal to the higher of (a) the
Federal Funds Rate plus 1/2 of 1% or (b) the rate of interest in effect for such day as publicly announced from time to time by the administrative agent of the debt as its "prime
rate") plus an applicable margin, which margin is fixed at a rate of 2.00% for the first two quarters following the closing of the credit facility. After that period the applicable margin adjusted
quarterly based on the ratio of funded debt to EBITDA (as defined in the credit agreement).

Subsequent
to year end, the Partnership Credit Facility was replaced with a new debt agreement as further discussed in Note 22.



In October 2004 MarkWest Energy Partners, L.P. and its wholly owned subsidiary, MarkWest Energy Finance Corporation (the "Issuers"),
co-issued $225.0 million in senior notes at a fixed rate of 6.875%, payable semi-annually in arrears on May 1 and November 1, and commencing on
May 1, 2005

102

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.    Debt (Continued)

(the
"2014 Senior Notes"). The 2014 Senior Notes mature on November 1, 2014. The Partnership may redeem some or all of the notes at any time on or after November 1, 2009, at certain
redemption prices together with accrued and unpaid interest to the date of redemption. The Partnership may redeem all of the notes at any time prior to November 1, 2009, at a
make-whole redemption price. In addition, prior to November 1, 2007, the Partnership may redeem up to 35% of the aggregate principal amount of the notes with the proceeds of certain
equity offerings at a stated redemption price. The Partnership must offer to repurchase the notes at a specified price if it a) sells certain assets and does not reinvest the proceeds or repay
senior indebtedness, or b) experiences specific kinds of changes in control. The notes are senior unsecured obligations equal in right of payment with all of the Partnership's existing and
future senior debt. The senior notes are senior in right of payment to all of the Partnership's future subordinated debt but effectively junior in right of payment to its secured debt to the extent of
the assets securing the debt, including the Partnership's obligations in respect of its Partnership Credit Facility. The proceeds from these notes were used to pay down the Partnership's outstanding
debt under its credit facility. The Issuers have no assets or operations independent of this debt and their investments in guarantor subsidiaries. Each of the Partnership's existing subsidiaries,
other than MarkWest Energy Finance Corporation, has guaranteed the notes jointly and severally and fully and unconditionally. The 2014 Senior Notes are senior unsecured obligations equal in right of
payment with all of the Partnership's existing and future senior debt. These notes are senior in right of payment to all of the Partnership's future subordinated debt but effectively junior in right
of payment to its secured debt to the extent of the assets securing the debt, including the Partnership's obligations in respect of its Partnership Credit Facility.

The
indenture governing the Partnership's 2014 Senior Notes limits the activity of the Partnership and its restricted subsidiaries. Limitations include the ability of the Partnership and
its restricted subsidiaries to incur additional indebtedness; declare or pay dividends or distributions, or redeem, repurchase or retire equity interests or subordinated indebtedness; make
investments; incur liens; create any consensual limitation on the ability of the Partnership's restricted subsidiaries to pay dividends, make loans or transfer property to the Partnership; engage in
transactions with the Partnership's affiliates; sell assets, including equity interests of the Partnership's subsidiaries; make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any subordinated obligation or guarantor subordination obligation (except principal and interest at maturity); and consolidate, merge or transfer assets. Subject
to compliance with certain covenants, the Partnership may issue additional notes from time to time under the indenture pursuant to Rule 144A and Regulation S under the Securities Act of
1933.

The
Partnership agreed to file an exchange offer registration statement or, under certain circumstances, a shelf registration statement, pursuant to a registration rights agreement
relating to the 2014 Senior Notes. The Partnership failed to complete the exchange offer in the time provided for in the subscription agreements (April 26, 2005) and, as a consequence, was
incurring an interest rate penalty of 0.5% annually, increasing 0.25% every 90 days thereafter up to 1%, until such time as the exchange offer was completed. The registration statement was
filed on January 17, 2006, the exchange offer was completed on March 7, 2006, and the interest penalty ceased.



In July 2006 MarkWest Energy Partners, L.P. and its wholly owned subsidiary, MarkWest Energy Finance Corporation (the "Issuers"),
co-issued $200 million in aggregate principal amount of 81/2%

103

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11.    Debt (Continued)

senior
notes due 2016 (the "2016 Senior Notes") to qualified institutional buyers. The 2016 Senior Notes will mature on July 15, 2016, and interest is payable on each July 15 and
January 15, commencing January 15, 2007. In October 2006 the Partnership offered $75.0 million in additional debt securities under this same indenture. The net proceeds
from the private placements were approximately $191.2 million and $74.5 million, respectively, after deducting the initial purchasers' discounts and legal, accounting and other
transaction expenses. The Issuers used a portion of the net proceeds from the offerings to repay the term debt under the Partnership Credit Facility. Affiliates of several of the initial purchasers,
including RBC Capital Markets Corporation, J.P. Morgan Securities Inc., and Wachovia Capital Markets, LLC, are lenders under the Partnership Credit Facility. The Issuers have no
assets or operations independent of this debt and their investments in guarantor subsidiaries. Each of the Partnership's existing subsidiaries, other than MarkWest Energy Finance Corporation, has
guaranteed the notes jointly and severally and fully and unconditionally. The 2016 Senior Notes are senior unsecured obligations equal in right of payment with all of the Partnership's existing and
future senior debt. These notes are senior in right of payment to all of the Partnership's future subordinated debt but effectively junior in right of payment to its secured debt to the extent of the
assets securing the debt, including the Partnership's obligations in respect of its Partnership Credit Facility.

The
indenture governing the Partnership's 2016 Senior Notes limits the activity of the Partnership and its restricted subsidiaries. Limitations under the indenture include the ability of
the Partnership and its restricted subsidiaries to incur additional indebtedness; declare or pay dividends or distributions, or redeem, repurchase or retire equity interests or subordinated
indebtedness; make investments; incur liens; create any consensual limitation on the ability of the Partnership's restricted subsidiaries to pay dividends, make loans or transfer property to the
Partnership; engage in transactions with the Partnership's affiliates; sell assets, including equity interests of the Partnership's subsidiaries; make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any subordinated obligation or guarantor subordination obligation (except principal and interest at maturity); and consolidate, merge or
transfer assets. Subject to compliance with certain covenants, the Partnership may issue additional notes from time to time under the indenture pursuant to Rule 144A and Regulation S
under the Securities Act of 1933.

The
aggregate minimum principal payments on long-term debt are as follows, as of December 31, 2007, exclusive of any prepayments related to Excess Cash Flow (in
thousands):

Year ending December 31:2008

$
2009


2010


55,5002011


2012


Thereafter


500,000$
555,500


104

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.    Derivative Financial Instruments



The Partnership's primary risk management objective is to reduce downside volatility in its cash flows arising from changes in commodity prices related to future
sales of natural gas, NGLs and crude oil. Swaps and futures contracts may allow the Partnership to reduce downside volatility in its realized margins as realized losses or gains on the derivative
instruments generally are offset by corresponding gains or losses in the Partnership's sales of physical product. While management largely expects realized derivative gains and losses to be offset by
increases or decreases in the value of physical sales, the Partnership will experience volatility in reported earnings due to the recording of unrealized gains and losses on derivative positions that
will have no offset. The Partnership's non-trading commodity derivative instruments are recorded at fair value in the Consolidated Balance Sheets and Statements of Operations. Accordingly,
the volatility in any given period related to unrealized gains or losses can be significant to the overall financial results of the Partnership; however, management ultimately expects those gains and
losses to be offset when they become realized. The Partnership does not have any trading derivative financial instruments.

Because
of the strong correlation between NGL prices and crude oil prices and limited liquidity in the NGL financial market, the Partnership uses crude oil derivative instruments to
manage NGL price risk. As a result of these transactions, the Partnership has mitigated a significant portion of its expected commodity price risk with agreements expiring at various times through the
fourth quarter of 2010. The margins earned from condensate sales are directly correlated with crude oil prices. The Partnership has a committee comprised of the senior management team that oversees
all of the risk management activity and continually monitors the risk management program and expects to continue to adjust its financial positions as conditions warrant.

The
Partnership utilizes a combination of fixed-price forward contracts, fixed-for-floating price swaps and options available in the
over-the-counter ("OTC") market, and futures contracts traded on the New York Mercantile Exchange. The Partnership enters into OTC swaps with financial institutions and other
energy company counterparties. Management conducts a standard credit review on counterparties
and has agreements containing collateral requirements where deemed necessary. The Partnership uses standardized agreements that allow for offset of positive and negative exposures. Some of the
agreements may require a margin deposit. The margin deposits have been recorded as "Other current assets" in the accompanying Condensed Consolidated Balance Sheets (see Note 5).

The
use of derivative instruments may create exposure to the risk of financial loss in certain circumstances, including instances when (i) NGLs do not trade at historical levels
relative to crude oil, (ii) sales volumes are less than expected, requiring market purchases to meet commitments, or (iii) OTC counterparties fail to purchase or deliver the contracted
quantities of natural gas, NGLs or crude oil or otherwise fail to perform. To the extent that the Partnership engages in derivative activities, it may be prevented from realizing the benefits of
favorable price changes in the physical market; however, it may be similarly insulated against unfavorable changes in such prices.

Fair
value is based on available market information for the particular derivative instrument, and incorporates the commodity, period, volume and pricing. Where published market values
are not readily available, the Partnership uses a third-party service. The Partnership periodically compares the third party pricing to available broker quotes. The options are recorded at fair value
on the balance

105

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.    Derivative Financial Instruments (Continued)

sheet.
The impact of the Partnership's commodity derivative instruments on financial position are summarized below (in thousands):

December 31,2007

2006Fair value of derivative instruments:Current asset

$
99

$
4,211Noncurrent asset


82


2,759Current liability


(21,658
)

(91
)Noncurrent liability


(35,381
)

(1,362
)Risk management premiums:Current asset

$


$
1,009Noncurrent asset


717


717


The
Partnership has recorded premium payments relating to certain derivative option contracts. The premiums allowed the Partnership to secure specific pricing on those contracts. The
payment is recorded as an asset and is amortized through revenue as the puts expire or are exercised. The current and noncurrent risk management premiums have been recorded as "Other assets" and
"Other long-term assets," respectively, in the accompanying Consolidated Balance Sheets.

The
Partnership generally accounts for the impact of its commodity derivative instruments as a component of revenue. The Partnership also has a contract allowing it to fix a component of
the price of electricity at one of its plant locations. Unrealized gains (losses) from the contract are recognized as a component of facility expenses. The impact of the Partnership's commodity
derivative instruments included in "Revenue" and "Facility expenses" in the accompanying Consolidated Statements of Operations are summarized below (in thousands):

Year ended December 31,2007

2006

2005Revenue:Realized loss

$
(4,155
)
$
(613
)
$
(1,194
)Unrealized (loss) gain


(62,388
)

6,245


(657
)Derivative (loss) gain

$
(66,543
)
$
5,632

$
(1,851
)


|
|

Year ended December 31,2007

2006

2005Facility expenses:Unrealized gain

$
12

$


$



106

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.    Incentive Compensation Plans

Total compensation expense for share-based pay arrangements was as follows (in thousands):

Year ended December 31,2007

2006

2005MarkWest Energy PartnersRestricted units

$
2,080

$
1,686

$
1,076Distribution equivalent rights


235


198


120MarkWest HydrocarbonGeneral partner interests under Participation Plan


10,880


13,463


2,038Subordinated units under Participation Plan





22


17Total compensation expense

$
13,195

$
15,369

$
3,251


Of
the total compensation expense recognized for restricted units, $0.1 million, and $0.4 million related to the accelerated vesting of restricted units for the years ended
December 31, 2006, and 2005, respectively. The accelerated vesting of restricted units occurs when specific distribution targets are achieved, as set forth in the individual grant agreements.

A
Distribution Equivalent Right is a right, granted in tandem with a specific restricted unit, to receive an amount in cash equal to, and at the same time as, the cash distributions made
by the Partnership with respect to a unit during the period such restricted unit is outstanding. Cash compensation expense has been recorded as either "Selling, general and administrative expenses" or
"Facility expenses" in the accompanying Consolidated Statements of Operations.

Compensation
expense has been recorded as "Selling, general and administrative expenses" in the accompanying Consolidated Statements of Operations. The expense not yet recognized as of
December 31, 2007, related to unvested restricted units was $1.6 million, with a weighted average
remaining vesting period of 1.5 years. The actual compensation expense recognized might differ for the restricted units, as they qualify as liability awards, which are affected by changes in
fair value.



The General Partner has adopted the Long Term Incentive Plan (the "LTIP") for employees and directors of the General Partner, as well as employees of its
affiliates who perform services for the Partnership. The LTIP currently permits the grant of awards covering an aggregate of 1.0 million common units, comprised of 0.4 million restricted
units and 0.6 million unit options. The LTIP is administered by the compensation committee of the General Partner's Board of Directors.

Restricted Units.A restricted unit is a "phantom" unit that entitles the grantee to receive a common unit upon the vesting
of the phantom unit or, at the discretion of the Compensation Committee, cash equivalent to the value of a common unit. The restricted units vest over a service period of three years, although vesting
for certain awards accelerates if specific annualized distribution goals are met.

Unit Options.The Compensation Committee has the authority to make grants of unit options under the LTIP to employees and
directors containing such terms as determined by the committee. As of December 31, 2007, the Partnership had not issued any unit options.

107

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.    Incentive Compensation Plans (Continued)

The
following is a summary of restricted units granted under the LTIP:

Number of units

Weighted-average
grant-date fair valueUnvested at January 1, 2005

59,000

$
20.65Granted

40,278


24.74Vested

(18,200
)

18.95Forfeited

(3,350
)

21.25Unvested at December 31, 2005

77,728


23.14Granted

81,886


24.35Vested

(26,986
)

22.25Forfeited

(7,428
)

22.75Unvested at December 31, 2006

125,200


24.14Granted

54,716


31.62Vested

(40,912
)

23.50Forfeited

(13,754
)

25.93Unvested at December 31, 2007

125,250


27.42


|
|

Year ended December 31,2007

2006

2005Weighted-average grant-date fair value of restricted units granted for the year

$
1,730,054

$
1,993,658

$
996,423Total fair value of restricted units vested / total intrinsic value of restricted units settled for the year


1,281,046


636,713


444,550


During
the years ended December 31, 2007, 2006, and 2005, the Partnership received no proceeds (other than the contributions by the General Partner to maintain its 2% ownership
interest) for issuing restricted units. None of the restricted units that vested in 2007, 2006, and 2005 were redeemed by the Partnership for cash. For the years ended December 31, 2007, 2006,
and 2005, the Partnership issued 40,912, 26,986, and 17,000 common units, respectively, and an additional 500 units were acquired in the open market in 2005.

As
of the Merger, the Partnership assumed the MarkWest Hydrocarbon, Inc. 2006 Stock Incentive Plan ("2006 Plan") which converted the outstanding shares of restricted stock granted
under the 2006 Plan to restricted units. The converted restricted units will remain outstanding under the term of the 2006 Plan until their respective settlement dates. The 2008 Long-Term
Incentive Plan ("2008 LTIP") was approved by the unitholders on February 21, 2008, which makes available 2.5 million Partnership common units for issuance in the future. Refer to
Note 22 for discussions of grants made under the 2008 LTIP.

108

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.    Incentive Compensation Plans (Continued)



MarkWest Hydrocarbon has also entered into arrangements with certain directors and employees of the Company referred to as the Participation Plan. Under it, the
Company sells interests in the General Partner under a purchase and sale agreement. There is no vesting period or maximum contractual term under the Participation Plan.

The
interests in the General Partner are sold with certain put-and-call provisions. These require MarkWest Hydrocarbon to buy back, or require the individuals to
sell back their interest in the general partner to MarkWest Hydrocarbon. Specifically, the employees and directors can exercise their put if (1) MarkWest Hydrocarbon or the Partnership's
general partner undergoes a change of control; (2) additional membership interests are issued that, on a pro forma basis, decrease the distributions to all the then-existing
members; (3) any amendment, alteration or repeal of the provisions of the general partner agreement materially and adversely affects the then-existing rights, duties, obligations or
restrictions of the employees and directors; or (4) the employee or director (i) becomes totally disabled while a director, officer or employee of the general partner of MarkWest
Hydrocarbon or of any of their affiliates, or (ii) dies, or (iii) retires as a director, officer or employee of the general partner of MarkWest Hydrocarbon or of any of their affiliates
after reaching the age of 60 years. The employee or his estate has 120 days after the put event to exercise the put under (4) and 30 days after notice to exercise under (1)
through (3). MarkWest Hydrocarbon can exercise its call option if (i) the employee or director ceases to be a director or employee of MarkWest Hydrocarbon or any of its affiliates, or
(ii) if there is a change of control of MarkWest or of the Partnership's general partner. For the call option based upon a termination of employment or directorship, MarkWest Hydrocarbon has
12 months following the termination date to exercise its call option. MarkWest Hydrocarbon has agreed to exempt the general partner interests of three present or former directors from the call
option based upon a termination of employment or directorship. Additionally, pursuant to the terms of Mr. Semple's employment agreement with MarkWest Hydrocarbon, all of his general partner
interest has become exempt from the call option based upon a termination of employment or directorship for reasons other than cause. For the call option based upon a change of control of MarkWest or
of the Partnership's general partner, MarkWest Hydrocarbon has 30 days following the change of control to exercise its call option.

As
the formula used to determine the sale and buy-back price is not based on an independent third-party valuation, coupled with the attributes of the
put-and-call provisions, these transactions are considered compensatory arrangements, similar to a stock appreciation right. Compensation expense related to general partner
interests is calculated as the difference in the formula value and the amount paid by those individuals. The formula value is the amount MarkWest Hydrocarbon would have to pay the employees and
directors to repurchase the general partner interests, and is based on the current market value of the Partnership's common units and the current quarterly distributions paid. On October 13,
2006, the Company completed the repurchase of a 0.5% interest in the general partner.

Pursuant
to the terms of the amended and restated Class B Membership Interest Contribution Agreement dated October 26, 2007, all outstanding interests in the General
Partner will be exchanged
for a combination of common units and cash on the date of the merger as described in Note 22. The exchange will be accounted for as a settlement of a share based payment liability under
SFAS 123R and any difference between the carrying value of the Company's liability and the payment will be recorded as additional compensation expense at the time of the merger.

109

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.    Income Tax

On July 12, 2007, the State of Michigan enacted changes in its taxation scheme. As a result, the Partnership has made the necessary adjustments to its
deferred tax assets (and liabilities) in the form of a charge (or benefit) to income, as part of its income tax provisions in the third quarter of 2007. Michigan's new tax law replaces the single
business tax with a two-prong tax. The two prongs comprise a tax at the rate of 0.8% of a taxpayer's modified gross receipts and a tax at the rate of 4.95% of the taxpayer's business
income. Each of the above mentioned rates also includes a surcharge of 21.99% resulting in overall rates of 0.97% and 6.03%. The new law took effect on January 1, 2008 and applies to all
business activity occurring after December 31, 2007. The current single business tax will remain in effect through December 31, 2007. Adopted on September 30, 2007, and
effective January 1, 2008, Michigan House Bill 5104 creates a deduction from a taxpayer's pre-apportioned business income tax base equal to the total book-tax difference
triggered by the enactment of the Michigan business tax that results in a net deferred tax liability. The net impact of this change was a $0.2 million charge to income in 2007.

The
Texas margin tax law that was signed into law on May 18, 2006, causes the Partnership to be subject to an entity-level tax on the portion of its income that is generated in
Texas beginning with the tax year ending in 2007. The Texas margin tax is imposed at a maximum effective rate of 1.0%. As of December 31, 2007 and 2006, the Partnership has recorded a deferred
tax liability related to the Texas margin tax of $1.0 million and $0.8 million, respectively.

The
components of the provision for income tax from continuing operations are as follows (in thousands):

Year ended December 31,2007

2006Current income tax expenseState

$
793

$
Deferred income tax expenseState


451


769Provision for income tax

$
1,244

$
769


15.    Employee Benefit Plan

All employees dedicated to, or otherwise principally supporting the Partnership are employees of MarkWest Hydrocarbon, and substantially all of these employees
are participants in MarkWest Hydrocarbon's defined contribution benefit plan. The employer matching contribution expense related to this plan allocated to the Partnership was $0.9 million, for
each of the years ended December 31, 2007, 2006 and 2005, respectively. The plan is discretionary, with annual contributions determined by MarkWest Hydrocarbon's Board of Directors.

16.    Partners' Capital

As of December 31, 2007, partners' capital consists of 39,357,592 common limited partner units, representing a 98% partnership interest and a 2% general
partner interest. MarkWest Hydrocarbon and its subsidiaries, in the aggregate, own a 14% interest in the Partnership consisting of 4,938,992 common limited partner units and a 2% general partner
interest. On August 15, 2007, the Partnership converted its remaining 1.2 million subordinated units to common units. The conversion was made due to the

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.    Partners' Capital (Continued)

achievement
of specified financial tests defined in the amended and restated partnership agreement. At December 31, 2007, there were no subordinated units outstanding.

The
Partnership Agreement defines the Partnership's ability to issue new capital, maintain capital accounts, and distribute cash, as discussed, below.

The
Partnership has the ability to issue an unlimited number of units to fund immediately accretive acquisitions. An immediately accretive acquisition is one that, in the general
partner's good faith determination, would have resulted in an increase to the amount of operating surplus generated by the Partnership on a per-unit basis with respect to each of the four
most recently completed quarters on a pro forma basis. During 2006 and 2005, the Partnership consummated a total of three acquisitions, aggregating approximately $455.5 million, exclusive of
working capital adjustments, certain of which were subsequently funded partially by equity offerings.

The
Partnership Agreement contains specific provisions for the allocation of net income and losses to each of the partners for purposes of maintaining their respective partner capital
accounts. Per the Partnership Agreement, compensation expense under the Participation Plan allocated to the Partnership by MarkWest Hydrocarbon is allocated entirely to the general partner (see
Note 2).



The Partnership distributed all of its Available Cash (as defined) to unitholders of record and the general partner within 45 days after the end of each
quarter. Available Cash is generally defined as all cash and cash equivalents of the Partnership on hand at the end of each quarter, less reserves established by the general partner for future
requirements, plus all cash for the quarter from working capital borrowings made after the end of the quarter. The general partner had the discretion to establish cash reserves that are necessary or
appropriate to (i) provide for the proper conduct of the Partnership's business; (ii) comply with applicable law, any debt instruments or other agreements; or (iii) provide funds
for distributions to unitholders and the general partner for any one or more of the next four quarters.



During the subordination period (as defined), before any distributions of available cash from operating surplus was made on the subordinated units, the common
unitholders had the right to receive distributions of available cash in an amount equal to the minimum quarterly distribution of $0.50 per quarter per common unit, plus any arrearages in the payment
of the minimum quarterly distribution on the common units from prior quarters.

The
subordination period ends on the first day of any quarter beginning after June 30, 2009, when certain financial tests are met. Additionally, a portion of the subordinated
units may convert earlier into common units on a one-for-one basis if additional financial tests or financial goals are met. The earliest possible date by which some of the
subordinated units could be
converted into common units was June 30, 2005. As a result of achieving those goals all subordinated units had been converted to common units as of August 15, 2007.

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.    Partners' Capital (Continued)



During the subordination period, the quarterly distributions of available cash were made in the following manner:





The Partnership will make distributions of available cash for any quarter after the subordination period in the following manner:





Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash after the minimum quarterly
distribution and the target distribution levels, as described below, have been achieved. The general partner currently holds the incentive distribution rights, but may transfer these rights separately
from its general partner interest, subject to restrictions in the Partnership Agreement. As discussed in Note 22, the incentive distributions rights were exchanged for Partnership
Class A Units on February 21, 2008.

If,
for any quarter:



then,
the Partnership will distribute any additional available cash for that quarter among the unitholders and the general partner in the manner described in the following paragraph.

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.    Partners' Capital (Continued)

The
general partner is entitled to incentive distributions if the quarterly distribution amount exceeds the target levels specified below:

Marginal Percentage Interest in DistributionsTotal Quarterly Distribution
Target Amount

Unitholders

General
PartnerMinimum Quarterly Distribution

$0.25

98
%
2
%First Target Distribution

up to $0.275

98
%
2
%Second Target Distribution

above $0.275 up to $0.3125

85
%
15
%Third Target Distribution

above $0.3125 up to $0.375

75
%
25
%Thereafter

above $0.375

50
%
50
%


In
each case, the amount of the target distribution set forth above is exclusive of any distributions to common unitholders to eliminate payment of any cumulative minimum quarterly
distribution. The Partnership is currently distributing at a rate in excess of $0.375 per unit.

The
quarterly cash distributions applicable to 2007, 2006 and 2005, were as follows:

Quarter Ended

Record Date

Payment Date

Amount Per UnitDecember 31, 2007

February 7, 2008

February 14, 2008

$
0.570September 30, 2007

November 8, 2007

November 14, 2007

$
0.550June 30, 2007

August 8, 2007

August 14, 2007

$
0.530March 31, 2007

May 9, 2007

May 15, 2007

$
0.510December 31, 2006

February 8, 2007

February 14, 2007

$
0.500September 30, 2006

November 3, 2006

November 14, 2006

$
0.485June 30, 2006

August 7, 2006

August 14, 2006

$
0.460March 31, 2006

May 5, 2006

May 15, 2006

$
0.435December 31, 2005

February 8, 2006

February 14, 2006

$
0.410September 30, 2005

November 8, 2005

November 14, 2005

$
0.410June 30, 2005

August 9, 2005

August 15, 2005

$
0.400March 31, 2005

May 10, 2005

May 16, 2005

$
0.400




The Partnership completed a private placement of 2.9 million unregistered common units. The units were issued at a purchase price of $31.50 per unit. The
sale of units raised net proceeds of approximately $91.8 million, including the general partner's contribution of $1.8 million to maintain its 2% general partner interest and after
legal, accounting and other transaction expenses. The proceeds of this private placement were used primarily to fund capital expenditure requirements.



The Partnership completed a private placement of approximately 4.1 million unregistered common units. The units were issued at a sales price of $32.98 per
unit. The registration statement for these common units was declared effective on July 11, 2007. The sale of units resulted in net proceeds of approximately $137.7 million, including the
General Partner's contribution of $2.8 million to maintain

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16.    Partners' Capital (Continued)

its
2% interest and after legal, accounting and other transaction expenses. The net proceeds from the offering were used to fund capital expenditure requirements.



On February 28, 2007 the Partnership completed a two-for-one split of the Partnership's common units, whereby holders of record at
the close of business on February 22, 2007 received one additional common unit for each common unit owned on that date. The unit split resulted in the issuance of 15,603,257 common units and
600,000 Subordinated units Partnership units. For all periods presented, all references to the number of units and per unit net income and distribution amounts included in this report have been
adjusted to give the effect for the unit split.



The Partnership priced its offering of 6,000,000 common units at $19.875 per unit. In addition, on July 12, 2006, the Partnership completed the sale of an
additional 600,000 common units to cover over-allotments in connection with the Common Unit Offering. The sale of units resulted in total gross proceeds of $131.2 million, and net
proceeds of approximately $125.9 million, after the underwriters' commission and legal, accounting and other transaction expenses. The Partnership used the net proceeds from the offering, which
includes a capital contribution from its general partner to maintain its 2% general partner interest in the Partnership, to repay a portion of the outstanding indebtedness under term debt on the
Partnership Credit Facility.



The Partnership sold 1,149,428 common units to certain accredited investors at $21.75 per common unit, for gross proceeds of $25.0 million.
$20 million of the proceeds were received in December 2005. The remaining $5 million was accrued at December 31, 2005, and received in January 2006. Offering costs
of $0.1 million reduced the aggregate gross proceeds of $25.0 million to $24.9 million of net proceeds. The net proceeds of $24.9 million, and the $0.5 million
contributed by the general partner to maintain its 2% interest, resulted in total net proceeds associated with the private placement of $25.4 million.



The Partnership sold 3,288,130 common units to certain accredited investors at $22.105 per common unit, for gross proceeds of $72.7 million. Offering costs
of $0.1 million reduced the aggregate gross proceeds of $72.7 million to $72.6 million of net proceeds. The net proceeds of $72.6 million, and the $1.5 million
contributed by the general partner to maintain its 2% interest, resulted in total net proceeds associated with the private placement of $74.1 million.

17.    Commitments and Contingencies



The Partnership is subject to a variety of risks and disputes, and is a party to various legal proceedings in the normal course of its business. The Partnership
maintains insurance policies in amounts and with coverage and deductibles as it believes is reasonable and prudent. However, the

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17.    Commitments and Contingencies (Continued)

Partnership
cannot assure either that the insurance companies will promptly honor their policy obligations or that the coverage or levels of insurance will be adequate to protect the Partnership from
all material expenses related to future claims for property loss or business interruption to the Partnership and the Company; or for third-party claims of personal and property damage; or that the
coverages or levels of insurance it currently has will be available in the future at economical prices. While it is not possible to predict the outcome of the legal actions with certainty, Management
is of the opinion that appropriate provision and accruals for potential losses associated with all legal actions have been made in the financial statements.

In
June 2006, the Office of Pipeline Safety ("OPS") issued a Notice of Probable Violation and Proposed Civil Penalty ("NOPV") (CPF No. 2-2006-5001)
to both MarkWest Hydrocarbon and Equitable Production Company. The NOPV is associated with the pipeline leak and an ensuing explosion and fire that occurred on November 8, 2004 in Ivel,
Kentucky on an NGL pipeline owned by Equitable Production Company and leased and operated by a subsidiary, MarkWest Energy Appalachia, LLC. The NOPV sets forth six counts of violations of
applicable regulations, and a proposed civil penalty in the aggregate amount of $1,070,000. An administrative hearing on the matter, previously set for the last week of March, 2007, was postponed to
allow the administrative record to be produced and to allow OPS an opportunity to respond to a motion to dismiss one of the counts of violations, which involves $825,000 of the $1,070,000 proposed
penalty. This count arises out of alleged activity in 1982 and 1987, which predates MarkWest's leasing and operation of the pipeline. MarkWest believes it has viable defenses to the remaining counts
and will vigorously defend all applicable assertions of violations at the hearing.

Related
to the above referenced 2004 pipeline explosion and fire incident, MarkWest Hydrocarbon and the Partnership have filed an action captionedMarkWest
Hydrocarbon, Inc., et al. v. Liberty Mutual Ins. Co., et al.(District Court, Arapahoe County, Colorado, Case No. 05CV3953 filed August 12, 2005),
as removed to the U.S. District Court for the District of Colorado, (Civil Action No. 1:05-CV-1948, on October 7, 2005) against their All-Risks
Property and Business Interruption insurance carriers as a result of the insurance companies' refusal to honor their insurance coverage obligation to pay the Partnership for certain costs related to
the pipeline incident. The costs include internal costs incurred for damage to, and loss of use of the pipeline, equipment and products; extra transportation costs incurred for transporting the
liquids while the pipeline was out of service; reduced volumes of liquids that could be processed; and the costs of complying with the OPS Corrective Action Order (hydrostatic testing,
repair/replacement and other pipeline integrity assurance measures). Following initial discovery, MarkWest was granted leave of the Court to amend its complaint to add a bad faith claim and a claim
for punitive damages. The Partnership has not provided for a receivable for any of the claims in this
action because of the uncertainty as to whether and how much it will ultimately recover under the policies. The costs associated with this claim have been expensed as incurred and any potential
recovery from the All-Risks Property and Business Interruption insurance carriers will be recognized if and when it is received. The Defendant insurance companies and MarkWest have each
filed separate summary judgment motions in the action and these motions are pending with the Court.

With
regard to the Partnership's Javelina facility, MarkWest Javelina is a party with numerous other defendants to several lawsuits brought by various plaintiffs who had residences or
businesses located near the Corpus Christi industrial area, an area which included the Javelina gas processing plant, and several petroleum, petrochemical and metal processing and refining operations.
These suits,Victor Huff v. ASARCO Incorporated, et al. (Cause No. 98-01057-F, 214th Judicial Dist.
Ct., County of

115

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17.    Commitments and Contingencies (Continued)

Nueces,
Texas, original petition filed in March 3, 1998);Jason and Dianne Gutierrez, individually and as representative of the estate of Sarina Galan
Gutierrez(Cause No. 05-2470-A, 28th Judicial District, severed May 18, 2005, from the Gonzalescase cited above); andEsmerejilda G. Valasquez, et al. v. Occidental Chemical Corp., et
al.,Case No. A-060352-C, 128th Judicial District, Orange County, Texas, original petition filed July 10, 2006; as
refiled from previously dismissed petition captionedJesus Villarreal v. Koch Refining Co. et al., Cause
No. 05-01977-F, 214th Judicial Dist. Ct., County of Nueces, Texas, originally filed April 27, 2005), set forth claims for wrongful death,
personal injury or property damage, harm to business operations and nuisance type claims, allegedly incurred as a result of operations and emissions from the various industrial operations in the area
or from products Defendants allegedly manufactured, processed, used, or distributed. The actions have been and are being vigorously defended and; based on initial evaluation and consultations; it
appears at this time that these actions should not have a material adverse impact on the Partnership's financial position or results of operations.

In
the ordinary course of business, the Partnership is a party to various other legal actions. In the opinion of Management, none of these actions, either individually or in the
aggregate, will have a material adverse effect on the Partnership's financial condition, liquidity or results of operations.



The Partnership has various non-cancelable operating lease agreements expiring at various times through fiscal year 2016. Annual rent expense under
these operating leases was $9.8 million, $8.0 million and $5.9 million for the years ended December 31, 2007, 2006 and 2005, respectively. The minimum future lease payments
under these operating leases as of December 31, 2007, are as follows (in thousands):

Year ending December 31,2008

$
6,2512009


2,5212010


2,0522011


1,8462012


1,8792013 and thereafter


6,623$
21,172


18.    Related Party Transactions

Affiliated revenues in the Consolidated Statements of Operations consist of service fees and NGL product sales. Concurrent with the closing of the IPO, the
Partnership entered into several contracts with MarkWest Hydrocarbon. Specifically, the Partnership entered into:



116

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18.    Related Party Transactions (Continued)



Under
the Services Agreement with MarkWest Hydrocarbon, MarkWest Hydrocarbon continues to provide centralized corporate functions such as accounting, treasury, engineering, information
technology, insurance and other services. The Partnership reimburses MarkWest Hydrocarbon monthly for the selling, general and administrative expenses. For the years ended December 31, 2007,
2006 and 2005, MarkWest Hydrocarbon charged approximately $20.8 million, $18.0 million and $10.9 million, respectively, for these expenses.

The
Partnership also reimburses MarkWest Hydrocarbon for the salaries and employee benefits, such as 401(k) and health insurance, of plant operating personnel as well as other direct
operating expenses. For the years ended December 31, 2007, 2006 and 2005, these costs totaled $26.5 million, $18.1 million and $14.6 million, respectively, and are included
in facility expenses. The Partnership has no employees.

19.    Segment Information

The Partnership is engaged in the gathering, processing and transmission of natural gas; the transportation, fractionation and storage of natural gas liquids and
refinery off-gas; and the gathering and transportation of crude oil. The Partnership is a processor of natural gas in the northeastern and southwestern United States, processing gas from
the Appalachian Basin, one of the country's oldest natural gas-producing regions, and from East Texas, Gulf Coast and Michigan. The Partnership's chief operating decision maker is the
chief executive officer ("CEO"). The CEO reviews the Partnership's discrete financial information on a geographic and operational basis, as the products and services are closely related within each
geographic region and business operations. Accordingly, the CEO makes

117

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.    Segment Information (Continued)

operating
decisions, assesses financial performance and allocates resources on a segment basis. The Partnership's segments are as follows:

|Segment         |  | Related Legal Entity                                                                                                                                                       |  | Products and services                                     
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------
|Southwest       |  |                                                                                                                                                                            |  |                                                           
|East Texas      |  | MarkWest Energy East Texas Gas Company, L.L.C.
MarkWest Pipeline Company, L.L.C.                                                                                           |  | Gathering, processing, pipeline, fractionation and storage
|Oklahoma        |  | MarkWest Western Oklahoma Gas Company, L.L.C.
MarkWest Pioneer, L.L.C.                                                                                                     |  | Gathering, processing and pipeline                        
|Other Southwest |  | MarkWest Power Tex L.L.C.
MarkWest Pinnacle L. L.C.
MarkWest PNG Utility L. L.C.
MarkWest Texas PNG Utility L. L.C.
MarkWest Blackhawk L. L.C.
MarkWest New Mexico L. L.C. |  | Gathering and pipeline                                    
|Gulf Coast      |  |                                                                                                                                                                            |  |                                                           
|Gulf Coast      |  | MarkWest Javelina Company, L.L.C.
MarkWest Javelina Pipeline Company, L.L.C.
MarkWest Gas Services, L.L.C.                                                                 |  | Gathering, processing and pipeline                        
|Northeast       |  |                                                                                                                                                                            |  |                                                           
|Appalachia      |  | MarkWest Energy Appalachia, L.L.C.                                                                                                                                         |  | Processing, pipelines, fractionation and storage          
|Michigan        |  | Basin Pipeline, L.L.C.
West Shore Processing Company, L.L.C.
Matrex, L.L.C
MarkWest Michigan Pipeline Company, L.L.C.                                                      |  | Gathering, processing and crude oil transportation        

The
Partnership prepares business segment information in accordance with GAAP (see Note 2), except that certain items below the "Operating Income" line are not allocated to
business segments, as management does not consider them in its evaluation of business unit performance. In addition, selling, general and administrative expenses are not allocated to individual
business segments. Management evaluates business segment performance based on operating income before selling, general and administrative expenses. Revenues from MarkWest Hydrocarbon are reflected as
revenue from Affiliates.

The
table below presents information about operating income for the reported segments for the three years ended December 31, 2007, 2006 and 2005 (in thousands).

118

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.    Segment Information (Continued)

Year ended December 31, 2007:

|                                     |                                           | East Texas                                                     |         | Oklahoma |         | Other Southwest |         | Appalachia |        | Michigan |        | Gulf Coast |        | Total 
|------------------------------------ | ----------------------------------------- | -------------------------------------------------------------- | ------- | -------- | ------- | --------------- | ------- | ---------- | ------ | -------- | ------ | ---------- | ------ | ------
|Revenue:                             |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                     | Unaffiliated parties                      |                                                                | $       | 206,250  |         | $               | 229,800 |            | $      | 67,411   |        | $          | 1,924  |       
|                                     | Affiliated parties                        |                                                                |         |         |         |                 |        |            |        |         |        |            | 74,981 |       
|                                     |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                     |                                           | Total revenue                                                  |         |          | 206,250 |                 |         | 229,800    |        |          | 67,411 |            |        | 76,905
|Operating expenses:                  |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                     | Purchased product costs                   |                                                                |         | 113,693  |         |                 | 153,241 |            |        | 43,954   |        |            | 44,718 |       
|                                     | Facility expenses                         |                                                                |         | 16,871   |         |                 | 20,291  |            |        | 6,883    |        |            | 14,463 |       
|                                     | Depreciation                              |                                                                |         | 9,607    |         |                 | 11,104  |            |        | 4,493    |        |            | 3,410  |       
|                                     | Amortization of intangible assets         |                                                                |         | 8,269    |         |                 | 598     |            |        |         |        |            |       |       
|                                     | Accretion of asset retirement obligations |                                                                |         | 52       |         |                 | 28      |            |        | 21       |        |            | 13     |       
|                                     | Impairments                               |                                                                |         |         |         |                 |        |            |        | 356      |        |            |       |       
|                                     |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                     |                                           | Operating income (loss) before items not allocated to segments |         | $        | 57,758  |                 | $       | 44,538     |        | $        | 11,704 |            | $      | 14,301
|                                     |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Capital expenditures                 |                                           | $                                                              | 32,998  |          | $       | 247,430         |         | $          | 14,795 |          | $      | 2,488      |        | $     
|Assets attributable to segments      |                                           | $                                                              | 348,670 |          | $       | 390,200         |         | $          | 33,393 |          | $      | 44,222     |        | $     
|Investment in Starfish               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Leasehold improvements(1)            |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Fair value of derivative instruments |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                     |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Total Assets                         |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                     |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       

---

Year ended December 31, 2006:

|                                               |                                           | East Texas                                                     |         | Oklahoma |         | Other Southwest |         | Appalachia |        | Michigan |        | Gulf Coast |        | Total 
|---------------------------------------------- | ----------------------------------------- | -------------------------------------------------------------- | ------- | -------- | ------- | --------------- | ------- | ---------- | ------ | -------- | ------ | ---------- | ------ | ------
|Revenue:                                       |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               | Unaffiliated parties                      |                                                                | $       | 174,279  |         | $               | 207,510 |            | $      | 84,595   |        | $          | 2,027  |       
|                                               | Affiliated parties                        |                                                                |         |         |         |                 |        |            |        |         |        |            | 73,636 |       
|                                               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               |                                           | Total Revenue                                                  |         |          | 174,279 |                 |         | 207,510    |        |          | 84,595 |            |        | 75,663
|Operating expenses:                            |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               | Purchased product costs                   |                                                                |         | 91,637   |         |                 | 170,168 |            |        | 67,349   |        |            | 43,648 |       
|                                               | Facility expenses                         |                                                                |         | 15,683   |         |                 | 7,883   |            |        | 5,638    |        |            | 13,997 |       
|                                               | Depreciation                              |                                                                |         | 7,783    |         |                 | 3,007   |            |        | 4,100    |        |            | 3,573  |       
|                                               | Amortization of intangible assets         |                                                                |         | 8,244    |         |                 |        |            |        |         |        |            |       |       
|                                               | Accretion of asset retirement obligations |                                                                |         | 44       |         |                 | 26      |            |        | 20       |        |            | 12     |       
|                                               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               |                                           | Operating income (loss) before items not allocated to segments |         | $        | 50,888  |                 | $       | 26,426     |        | $        | 7,488  |            | $      | 14,433
|                                               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Capital expenditures                           |                                           | $                                                              | 23,508  |          | $       | 34,114          |         | $          | 12,669 |          | $      | 2,315      |        | $     
|Capital expenditures not allocated to segments |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Capital expenditures                           |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Assets attributable to segments                |                                           | $                                                              | 331,485 |          | $       | 126,421         |         | $          | 72,068 |          | $      | 51,020     |        | $     
|Investment in Starfish                         |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Fair value of derivative instruments           |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Leasehold Improvements                         |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|Total Assets                                   |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       
|                                               |                                           |                                                                |         |          |         |                 |         |            |        |          |        |            |        |       

119

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.    Segment Information (Continued)

Year ended December 31, 2005:

|                                                                            |                                           | East Texas    |         | Oklahoma |         | Other Southwest |         | Appalachia |        | Michigan |         | Gulf Coast |        | Total 
|--------------------------------------------------------------------------- | ----------------------------------------- | ------------- | ------- | -------- | ------- | --------------- | ------- | ---------- | ------ | -------- | ------- | ---------- | ------ | ------
|Revenue:                                                                    |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|                                                                            | Unaffiliated parties                      |               | $       | 128,267  |         | $               | 214,043 |            | $      | 107,712  |         | $          | 1,686  |       
|                                                                            | Affiliated parties                        |               |         |         |         |                 |        |            |        |         |         |            | 64,922 |       
|                                                                            |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|                                                                            |                                           | Total Revenue |         |          | 128,267 |                 |         | 214,043    |        |          | 107,712 |            |        | 66,608
|Operating expenses:                                                         |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|                                                                            | Purchased product costs                   |               |         | 81,030   |         |                 | 193,787 |            |        | 92,602   |         |            | 38,435 |       
|                                                                            | Facility expenses                         |               |         | 10,463   |         |                 | 4,927   |            |        | 4,990    |         |            | 19,360 |       
|                                                                            | Depreciation                              |               |         | 4,836    |         |                 | 2,385   |            |        | 3,383    |         |            | 3,187  |       
|                                                                            | Amortization of intangible assets         |               |         | 8,293    |         |                 |        |            |        | 68       |         |            |       |       
|                                                                            | Accretion of asset retirement obligations |               |         | 33       |         |                 | 63      |            |        | 22       |         |            | 41     |       
|                                                                            |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|Operating income (loss) before selling, general and administrative expenses |                                           | $             | 23,612  |          | $       | 12,881          |         | $          | 6,647  |          | $       | 5,585      |        | $     
|                                                                            |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|Capital expenditures                                                        |                                           | $             | 46,088  |          | $       | 11,937          |         | $          | 7,765  |          | $       | 4,611      |        | $     
|Assets attributable to segments                                             |                                           | $             | 324,231 |          | $       | 75,576          |         | $          | 59,178 |          | $       | 55,436     |        | $     
|Investment in Starfish                                                      |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|                                                                            |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|Total Assets                                                                |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       
|                                                                            |                                           |               |         |          |         |                 |         |            |        |          |         |            |        |       

The following is a reconciliation of operating income before selling, general and administrative expenses to net income (in thousands):

|                                                        |                                                                                    | Year ended December 31, |        
|------------------------------------------------------- | ---------------------------------------------------------------------------------- | ----------------------- | -------
|
|Total segment revenue                                   |                                                                                    | $                       | 669,422
|                                                        | Revenue derivative (loss) gain not allocated to segments                           |                         |        
|                                                        |                                                                                    |                         |        
|Total revenue                                           |                                                                                    | $                       | 602,879
|                                                        |                                                                                    |                         |        
|Operating income before items not allocated to segments |                                                                                    | $                       | 178,611
|                                                        | Revenue derivative (loss) gain not allocated to segments                           |                         |        
|                                                        | Facilities expense derivative gain not allocated to segments                       |                         |        
|                                                        | Depreciation expense not allocated to segments                                     |                         |        
|                                                        | Selling, general and administrative expenses not allocated to segments             |                         |        
|                                                        | (Loss) gain on disposal of property, plant and equipment not allocated to segments |                         |        
|                                                        |                                                                                    |                         |        
|Income from operations                                  |                                                                                    |                         | 52,912 
|                                                        | Earnings (losses) from unconsolidated affiliates                                   |                         |        
|                                                        | Interest income                                                                    |                         |        
|                                                        | Interest expense                                                                   |                         |        
|                                                        | Amortization of deferred financing costs                                           |                         |        
|                                                        | Miscellaneous (expense) income                                                     |                         |        
|                                                        |                                                                                    |                         |        
|Income before provision for income tax                  |                                                                                    |                         | 18,443 
|                                                        | Provision for income tax                                                           |                         |        
|                                                        |                                                                                    |                         |        
|Net income                                              |                                                                                    | $                       | 17,199 
|                                                        |                                                                                    |                         |        

120

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19.    Segment Information (Continued)

20.    Quarterly Results of Operations (Unaudited)

The following summarizes the Partnership's quarterly results of operations (in thousands):

|                                             |         | Three months ended |        
|-------------------------------------------- | ------- | ------------------ | -------
|
|2007                                         |         |                    |        
|Revenue                                      |         | $                  | 130,840
|Income (loss) from operations                |         |                    | 11,833 
|Net income (loss)                            |         |                    | 4,756  
|Limited partner's share of net income (loss) |         |                    | 4,657  
|Net income (loss) per limited partner unit:  |         |                    |        
|                                             | Basic   |                    | $      
|                                             | Diluted |                    | $      

|
|

|                                      |         | Three months ended
|------------------------------------- | ------- | ------------------
|
|2006                                  |         |                   
|Revenue                               |         | $                 
|Income from operations                |         |                   
|Net income                            |         |                   
|Limited partner's share of net income |         |                   
|Net income per limited partner unit:  |         |                   
|                                      | Basic   |                   
|                                      | Diluted |                   

21.    Valuation and Qualifying Accounts

Activity in the allowance for doubtful accounts is as follows (in thousands):

|                               |  | Year Ended December 31, |    
|------------------------------ |  | ----------------------- | ---
|
|Balance at beginning of period |  | $                       | 118
|Charged to costs and expenses  |  |                         | 47 
|Other charges(1)               |  |                         | (5 
|                               |  |                         |    
|Balance at end of period       |  | $                       | 160
|                               |  |                         |    

---

22.    Subsequent Events

On January 28, 2008, MarkWest Pioneer, L.L.C., a wholly owned subsidiary of the Partnership announced that it has submitted a pre-filing
application with the Federal Energy Regulatory Commission ("FERC") to construct a new interstate natural gas transmission pipeline. The 30-inch pipeline will be named the Arkoma Connector
Pipeline ("ACP") and will extend approximately 50 miles from an interconnect with the Partnership's gathering system in the Woodford Shale production area in southeastern Oklahoma to an interconnect
with the Midcontinent Express Pipeline ("MEP") in

121

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22.    Subsequent Events (Continued)

Bennington,
Oklahoma. The ACP will provide significant additional outlets for producers in the Woodford Shale as volumes continue to rapidly increase. In addition, the Partnership executed agreements
with significant Woodford producers, including Newfield Exploration Company, to provide transportation capacity in excess of 500,000 Mcf/d on the ACP. The Partnership plans to spend
$40.0 million in 2008 on developing the ACP, to be funded by operating cash flows and available debt.

In
conjunction with the transportation agreements, the Partnership and Midcontinent Express Pipeline LLC ("MEP LLC") entered into an option agreement that provides the
Partnership with a one-time right to acquire 10 percent of the equity of MEP LLC after construction is
complete on the MEP and it is placed into service. MEP LLC is a 50/50 joint venture between Kinder Morgan Energy Partners, L.P. and Energy Transfer Partners, L.P. The MEP,
connecting Bennington, Oklahoma, and Perryville, Louisiana, will have initial capacity of 1.4 Bcf/d.

On
February 11, 2008, the Partnership agreed to acquire a 20% interest in Centrahoma Operating LLC ("Centrahoma LLC") for $11.6 million, with a right to
acquire an additional 20% interest under certain circumstances. Closing on March 3, 2008 is subject to conveyance of certain properties to Centrahoma LLC by the other member and the
reimbursement of $0.6 million to the Partnership related to the termination of a virtual joint venture with the other member of the Centrahoma LLC. Centrahoma Operating LLC will
own certain processing plants in the Arkoma basin. In addition, MarkWest will sign, at closing, agreements to dedicate certain acreage in the Woodford Shale play to the Centrahoma LLC through
March 1, 2018.

On
February 20, 2008, the Partnership entered into a new credit agreement ("Partnership Credit Agreement"). The Partnership Credit Agreement provides for a maximum lending limit
of $575.0 million for a five-year term. The Partnership Credit Agreement includes a senior secured revolving facility of $350.0 million (that under certain circumstances can
be increased to $550.0 million) and a $225.0 million term loan, both of which can be repaid at any time without penalty. The credit facility is guaranteed by the Partnership and all of
the Partnership's subsidiaries, including the Company, and is collateralized by substantially all of the Partnership's assets and those of its subsidiaries. The Partnership made an intercompany loan
to the Company in the amount of $225.0 million to fund, in part, the redemption of its common stock pursuant to the Merger and utilized borrowings under the $225.0 million term loan of
the Partnership Credit Agreement. The Company will borrow the money from the Partnership on the same terms as the Partnership is borrowing the funds pursuant to the Partnership's credit facilities
described above, except that the Company will pay interest to the Partnership at the Partnership's debt cost plus 1.0%. In addition, borrowings under the revolving facility portion of Partnership
Credit Agreement were used to finance other payments under the Merger, outstanding amounts due on the Partnership Credit Facility of $67.0 million. The Partnership Credit Agreement required the
payment of $10.2 million in deferred financing costs. As of February 25, 2008, the Partnership had borrowed $45.5 million under the revolving facility portion of Partnership
Credit Agreement and approximately $258.5 was available to be borrowed.

The
borrowings under the credit facility bear interest at a variable interest rate, plus basis points. The variable interest rate typically is based on the London Inter Bank Offering
Rate ("LIBOR"); however, in certain borrowing circumstances the rate would be based on the higher of a) the Federal Funds Rate plus 0.5-1%, and b) a rate set by the
Partnership Credit Facility's administrative agent, based on the U.S. prime rate. The basis points correspond to the ratio of the Partnership's

122

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22.    Subsequent Events (Continued)

Consolidated
Funded Debt (as defined in the Partnership Credit Agreement) to Adjusted Consolidated EBITDA (as defined in the Partnership Credit Agreement), ranging from 0.50% to 1.25% for Base Rate
loans, and 1.50% to 2.25% for LIBOR loans. The basis points will increase by 0.50% during any period (not to exceed 270 days) where the Partnership makes an acquisition for a purchase price in
excess of $50.0 million. The Partnership will incur a commitment fee on the unused portion of the credit facility at a rate between 30.0 and 50.0 basis points based upon the ratio of
consolidated senior debt (as defined in the Partnership Credit Agreement) to consolidated EBITDA (as defined in the Partnership Credit Facility). As of February 25, 2008, the interest note for
borrowings under the Credit Facility was LIBOR plus 1.50%.

On
February 21, 2008, the Partnership consummated the transactions contemplated by its plan of redemption and merger with the Company and MWEP, L.L.C., a wholly owned subsidiary
of the Partnership. Under the Merger, the Company, subject to pro ration, redeemed for cash those shares of Company common stock electing to receive cash. Immediately after the redemption, the
Partnership acquired the Company through a merger of MWEP, L.L.C. with and into the Company, pursuant to which all remaining shares of the Company's common stock were converted into approximately
15.4 million Partnership common units. As a result of the merger, the Company is a wholly owned subsidiary of the Partnership. In connection with the merger, the incentive distribution rights
in the Partnership, the 2% economic interest in the Partnership of MarkWest Energy GP, L.L.C. (the "General Partner") and the Partnership common units owned by the Company were exchanged for
Partnership Class A Units. Contemporaneously with the closing of the transactions contemplated by the Merger, the Partnership separately acquired 100% of the Class B membership interests
in the General Partner that had been held by current and former management and certain directors of the Company and the General Partner. The Company paid to its stockholders approximately
$240.5 million in cash in the redemption and the Partnership issued to the Company's stockholders approximately 15.5 million Partnership common units in the merger. As a result of the
merger and redemption, the Company owns approximately 31% of the Partnership.

The
Merger will be accounted for in accordance with SFAS 141, and related interpretations. The Merger is considered a downstream merger whereby the Company is viewed as the
surviving consolidated entity for accounting purposes rather than the Partnership, which is the surviving consolidated entity for legal purposes. As such, the merger will be accounted for in the
Company's consolidated financial statements as an acquisition of non-controlling interest using the purchase method of accounting. Under this accounting method, the Partnership's accounts,
including goodwill, will be adjusted to proportionately step up the book value of certain assets and liabilities. The total fair value of the non-controlling interest to be acquired was
the number of non-controlling interest units outstanding on the date the merger closed valued at the then current per unit market price of the Partnership common units. The cash and the
Partnership units distributed to officers and directors of the General Partner for their Class B membership interests in the General Partner were recorded as settlement of the share-based
payment liability.

The
General Partner board approved the 2008 LTIP on October 12, 2007 and such plan was approved by the Partnership unitholders at the meeting to approve the Merger. The 2008 LTIP
reserves 2.5 million common units for issuance for the purpose of attracting and retaining highly qualified officers, directors, key employees and other key individuals and to motivate them to
serve the general partner and to expend maximum effort to improve the business results and earnings of the General Partner, the Partnership and their affiliates. The 2008 LTIP will be treated as an
equity plan. No

123

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MARKWEST ENERGY PARTNERS, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22.    Subsequent Events (Continued)

further
awards will be made pursuant to the long-term incentive plan currently in place. The compensation committee of the general partner administers the 2008 LTIP and may award
unrestricted units, restricted units, phantom units, distribution equivalent rights, performance awards or any combination of the aforementioned.

On
February 21, 2008, 765,000 phantom units were granted to senior executives and other key employees under the 2008 LTIP. The phantom units vest on a time-based and
performance-based schedule over a three year period. Forty percent (40%) of the total individual grant is based on continuing employment over the three-year vesting period, and sixty
percent (60%) of the total individual grant is performance-based. Vesting of the performance-based awards is conditional upon the achievement of designated annual financial performance goals
established by the Board of Directors, with 10% of the performance-based awards reserved for vesting at the discretion the Board of Directors. The annual financial performance goals will be based upon
established targets of distributable cash flow per unit. This long-term equity incentive arrangement also contains a recapture provision. If the annual performance targets are not achieved
in year one and/or year two of the vesting schedule, but the cumulative three year overall performance goal is achieved, the recapture provision allows for the vesting of a reduced percentage of the
year one and/or year two performance equity awards.

124

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ITEM 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A.    Controls and Procedures



As of December 31, 2007, an evaluation was performed under the supervision and with the participation of the Partnership's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures as defined in Rule 13a-15(e)
under the Exchange Act. Based on that evaluation, the Partnership's management, including the Chief Executive Officer and Chief Financial Officer, concluded the Partnership's disclosure controls and
procedures were effective to ensure that information required to be disclosed by the Partnership in reports that it files or submits under the Exchange Act is (a) recorded, processed,
summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (b) accumulated and communicated to the Partnership's management, including
the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure.



There have been changes in our internal controls over financial reporting that occurred during the fiscal year ended December 31, 2007, that have
materially affected or are reasonably likely to materially affect our internal controls over financial reporting:

Remediation of Prior Year's Material Weaknesses in Internal Control.For the period ended December 31, 2006, as
reported on form 10K/A Item 9A, a material weakness existed related to proper contract accounting for certain technical accounting issues such as accounting for derivatives and revenue
recognition as of December 31, 2006. Specifically, management did not have a process in place to monitor previously existing contracts in response to specific technical accounting issues such
as changes in SFAS No.133, Accounting for Derivative Instruments and Hedging Activities,and revenue recognition issues such as whether to record
revenue gross as a principal or net as an agent.

Subsequent
to December 31, 2006, management has enhanced its contract accounting review process to ensure appropriate accounting treatment for new and previously existing
contracts. Management has also completed a reevaluation of all critical accounting memos that have a direct impact on contract accounting. In addition, management has enhanced existing contract
accounting review checklists to ensure proper accounting analysis of significant revenue recognition and technical accounting areas. Management has assessed the design and operational effectiveness of
these described control activities as part of its overall assessment of internal control over financial reporting as of December 31, 2007, and concluded that this material weakness has been
remediated. See Management's Report on Internal Control Over Financial Reporting below for management's conclusion on its overall assessment.

Ongoing System Implementation.In May 2007 the Partnership began the phased implementation of an Enterprise Resource Planning
("ERP") system. Implementing an ERP system involves significant changes in business processes that management believes will provide meaningful benefits, including more standardized and efficient
processes throughout the Partnership. As a result of this implementation, some internal controls over financial reporting have been changed to address the new environment associated with the
implementation of this system. While the Partnership believes that this new system will strengthen its internal controls over financial reporting, there are inherent risks in implementing any new
system and the Partnership will continue to evaluate and test these control changes to ensure the effectiveness of the Company's internal controls over financial reporting.

125

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Except
as described above, there were no other changes in the Partnership's internal controls over financial reporting during the year ended December 31, 2007, that have
materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Partnership is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Rule 13a-15(f) under the Exchange Act. The Partnership's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America and includes those
policies and procedures that:



Management,
including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control
system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, any evaluation of the effectiveness of controls is subject
to risks that those internal controls may become inadequate in future periods because of changes in business conditions, or that the degree of compliance with the policies or procedures deteriorates.

Management
assessed the effectiveness of our internal controls over financial reporting as of December 31, 2007. In making this assessment, management used the criteria
established inInternal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was effective at the reasonable assurance level as of
December 31, 2007.

The
effectiveness of our internal control over financial reporting as of December 31, 2007 has been audited by Deloitte & Touche LLP, our independent registered
public accounting firm. Deloitte & Touche LLP's report is contained herein.

126

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors of
MarkWest Energy GP, L.L.C.
Denver, Colorado

We
have audited the internal control over financial reporting of MarkWest Energy Partners, L.P. and subsidiaries (the "Partnership") as of December 31, 2007, based on
criteria established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Partnership's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanyingManagement's Report on Internal Control Over Financial Reporting.Our responsibility is to express an
opinion on the Partnership's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or
persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those
policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material
misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria
established inInternal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

127

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We
have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year
ended December 31, 2007 of the Partnership and our report dated February 29, 2008, expressed an unqualified opinion on those financial statements.

/s/
DELOITTE & TOUCHE LLP

Denver,
Colorado
February 29, 2008

ITEM 9B.    Other Information

None.

128

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PART III

ITEM 10.    Directors, Executive Officers and Corporate Governance

Management of MarkWest Energy Partners, L.P.

MarkWest Energy GP, L.L.C., as our general partner, manages our operations and activities on our behalf. Our general partner's board of directors will be
elected by our unitholders following the redemption and merger. Our general partner owes a fiduciary duty to our unitholders, although such duty is limited under our Partnership Agreement. Our general
partner will be liable, as general partner, for all of our debts (to the extent not paid from our assets), except for indebtedness or other obligations that are made specifically
non-recourse to it. Whenever possible, however, our general partner intends to incur indebtedness or other obligations that are non-recourse.

The
members of the Audit Committee of the board of directors of our general partner for 2006 and 2007 were Keith E. Bailey, Charles K. Dempster and William P. Nicoletti. The Audit
Committee reviews our external financial reporting, recommends engagement of our independent auditors and reviews procedures for internal auditing and the adequacy of our internal accounting controls.
Following the redemption and merger, the Audit Committee will be increased to four members, who will be Keith E. Bailey (chairman), Donald C. Heppermann, William A. Kellstrom and William P. Nicoletti.
Also following the redemption and merger, four members of the board of directors of our general partner will serve on the Compensation Committee, which oversees compensation decisions for the
directors and officers of our general partner, as well as the overall compensation plans described below under the headings "Non-Competition, Non-Solicitation and
Confidentiality Agreement and Severance Plan" and "Long-Term Incentive Plan," which is included herein by reference. The members of the Compensation Committees for 2006 and 2007 were
Charles K. Dempster, Keith E. Bailey, and William P. Nicoletti. Following the redemption and merger, the Compensation Committee members will be Charles K. Dempster (chairman), Keith E. Bailey, William
A. Kellstrom and Donald D. Wolf. Finally, as a result of the redemption and merger, our general partner's board established a Nominating and Corporate Governance Committee in accordance with the New
York Stock Exchange's corporate governance rules. The Nominating and Corporate Governance Committee members are Don Heppermann (chairman), William A. Nicoletti, and Michael L. Beatty.

Directors and Executive Officers of MarkWest Energy GP, L.L.C.

The following table shows information for the directors and executive officers of MarkWest Energy GP, L.L.C., our general partner. Executive officers are
appointed and directors are elected for one-year terms.

|Name                 |  | Age |  | Position with our General Partner                    |  | Since
|-------------------- |  | --- |  | ---------------------------------------------------- |  | -----
|John M. Fox          |  | 67  |  | Chairman of the Board of Directors                   |  | 2002 
|Keith E. Bailey      |  | 65  |  | Director                                             |  | 2005 
|Michael L. Beatty    |  | 60  |  | Director                                             |  | 2008 
|Charles K. Dempster  |  | 65  |  | Director                                             |  | 2002 
|Donald C. Heppermann |  | 64  |  | Director                                             |  | 2002 
|William A. Kellstrom |  | 66  |  | Director                                             |  | 2002 
|Anne E. Mounsey      |  | 41  |  | Director                                             |  | 2008 
|William P. Nicoletti |  | 62  |  | Director                                             |  | 2002 
|Donald D. Wolf       |  | 64  |  | Director                                             |  | 2008 
|Frank M. Semple      |  | 56  |  | President, Chief Executive Officer and Director      |  | 2003 
|C. Corwin Bromley    |  | 50  |  | Senior Vice President, General Counsel and Secretary |  | 2004 
|Nancy K. Buese       |  | 38  |  | Senior Vice President, Chief Financial Officer       |  | 2006 
|John C. Mollenkopf   |  | 46  |  | Senior Vice President, Chief Operations Officer      |  | 2006 
|Randy S. Nickerson   |  | 46  |  | Senior Vice President, Chief Commercial Officer      |  | 2006 
|Andrew L. Schroeder  |  | 49  |  | Vice President, Finance and Treasurer                |  | 2003 

129

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Keith E. Baileyhas served as a member of the Board of Directors of our general partner since January 2005.
Mr. Bailey serves as the chairman of the Board's Audit Committee and also serves on the Board's
Compensation Committee. Mr. Bailey was formerly the Chairman, President and Chief Executive Officer of The Williams Companies, Inc. ("Williams"). Commencing in 1973, Mr. Bailey
served in various capacities with Williams and its subsidiaries, including President and Chairman of Williams Pipe Line, Chairman of WilTel Communications, President of Williams Natural Gas, and
Executive Vice President and Chief Financial Officer of Williams. Also, Mr. Bailey served on the Williams board of directors from 1988 until his retirement in 2002, including eight years as
Chairman. He currently serves on the boards of directors of Apco Argentina Inc., Associated Electric & Gas Insurance Services Limited (AEGIS) and Integrys Energy Group, Inc.
Mr. Bailey holds a bachelor's degree in mechanical engineering from the Missouri School of Mines and Metallurgy.

Michael L. Beattywas elected to the Board of Directors of our general partner in February 2008 and serves on the Board's Nominating and
Corporate Governance Committee, having previously served as a member of the board of directors of MarkWest Hydrocarbon, Inc. since June 2005. Mr. Beatty is currently Chairman of the law
firm of Beatty & Wozniak, P.C. headquartered in Denver, Colorado, with a practice focused exclusively on energy, including oil and gas exploration, regulatory affairs, public lands, litigation
and title. A Harvard Law School graduate, Mr. Beatty began his career in the energy industry as in-house counsel for Colorado Interstate Gas Company, and ultimately became Executive
Vice President, General Counsel and a Director of The Coastal Corporation. He served as Chief of Staff to Colorado Governor Roy Romer from 1993 to 1995. Mr. Beatty also currently serves on the
board of directors of Denbury Resources Inc.

Charles K. Dempsterhas served as a member of the Board of Directors of our general partner since December 2002. Mr. Dempster
serves as the chairman of the Board's Compensation Committee. Mr. Dempster has more than 30 years of experience in the natural gas and power industry. He held various management and
executive positions with Enron Corporation and its predecessors between 1969 and 1986, focusing on natural gas supply, transmission and distribution. From 1986 through 1992, Mr. Dempster served
as President of Reliance Pipeline Company and Executive Vice President of Nicor Oil and Gas Corporation, oil and natural gas midstream and exploration subsidiaries of Nicor Inc. in Chicago. In
1993, he was appointed President of Aquila Energy Corporation, a wholly owned midstream, pipeline and energy-trading subsidiary of Utilicorp, Inc. Mr. Dempster retired in 2000 as
Chairman and Chief Executive Officer of Aquila Energy Company. Mr. Dempster holds a bachelor's degree in civil engineering from the University of Houston and attended graduate business school
at the University of Nebraska.

John M. Foxhas served as Chairman of the Board of Directors of our general partner since its inception in May of 2002, and in the same
capacity for MarkWest Hydrocarbon since its inception in April 1988. Mr. Fox also served as President and Chief Executive Officer of our general partner and of MarkWest Hydrocarbon from their
respective inception until his retirement as President on November 1, 2003 and his resignation as Chief Executive Officer effective December 31, 2003. Mr. Fox was a founder of
Western Gas Resources, Inc. and was its Executive Vice President and Chief Operating Officer from 1972 to 1986. Mr. Fox is the father of Anne E. Mounsey, a member of the Board of
Directors.

Donald C. Heppermannhas served as a member of the Board of Directors of our general partner since its inception in May 2002 and of the
MarkWest Hydrocarbon's board of directors since November 2002, and serves as chairman of the Board's Nominating and Corporate Governance Committee and serves on the Audit Committee and the Pricing
Committee. Mr. Heppermann served as Executive Vice President, Chief Financial Officer and Secretary of our general partner and of MarkWest Hydrocarbon, Inc. since October 2003 until his
retirement in March 2004. Mr. Heppermann joined our

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general
partner and MarkWest Hydrocarbon in November 2002 as Senior Vice President and Chief Financial Officer, and served as Senior Executive Vice President beginning in January 2003. Prior to
joining MarkWest, Mr. Heppermann was a private investor and a career executive in the energy industry with responsibilities in operations, finance, business development and strategic planning.
From 1990 to 1997, Mr. Heppermann served as President and Chief Operating Officer for InterCoast Energy Company, an unregulated subsidiary of Mid American Energy Company. From 1987 to 1990,
Mr. Heppermann was employed by Pinnacle West Capital Corporation, the holding company for Arizona Public Service Company, where he was Vice President of Finance. From 1965 to 1987, Enron
Corporation and its predecessors employed Mr. Heppermann in a variety of positions, including Executive Vice President, Gas Pipeline Group.

William A. Kellstromhas served as a member of the Board of Directors of our general partner since its inception in May 2002 and of
MarkWest Hydrocarbon's board of directors since May 2000. Mr. Kellstrom serves on the general partner Board's Audit Committee and also serves on the Board's Compensation Committee.
Mr. Kellstrom has held a variety of managerial positions in the natural gas industry since 1968. They include distribution, pipelines and marketing. He held various management and executive
positions with Enron Corporation, including Executive Vice President, Pipeline Marketing and Senior Vice President, Interstate Pipelines. In 1989, he created and was President of Tenaska Marketing
Ventures, a gas marketing company for the Tenaska Power Group. From 1992 until 1997 he was with NorAm Energy Corporation (since merged with Reliant Energy, Incorporated) where he was President of the
Energy Marketing Company and Senior Vice President, Corporate Development. Mr. Kellstrom retired in 1997 and is periodically engaged as a consultant to energy companies.

Anne E. Mounseywas elected to the Board of Directors of our general partner in February 2008. Ms. Mounsey previously served as a
member of the board of directors of MarkWest Hydrocarbon, Inc. since October 2004. From 1991 to 2003, Ms. Mounsey held various positions with MarkWest Energy and MarkWest Hydrocarbon,
her most recent as Manager of Marketing and Business Development. Ms. Mounsey is the daughter of John M. Fox, our general partner's Chairman of the Board of Directors.

William P. Nicolettihas served as a member of the Board of Directors of our general partner since its inception in May 2002.
Mr. Nicoletti serves on the Board's Audit Committee and also serves on the Board's Nominating and Corporate Governance Committee. Mr. Nicoletti is Managing Director of Nicoletti &
Company Inc., a private banking firm formed in 1991. Previously, he was a Managing Director and head of Energy Investment Banking for PaineWebber Incorporated and E.F Hutton &
Company Inc. Mr. Nicoletti is a director and Chairman of the Audit Committee of Kestrel Heat LLC, the
general partner of Star Gas Partners, L.P. Mr. Nicoletti is a graduate of Seton Hall University and received an MBA from Columbia University Graduate School of Business.

Frank M. Semplewas appointed as President of both our general partner and MarkWest Hydrocarbon, Inc. on November 1, 2003.
Mr. Semple also became Chief Executive Officer of both MarkWest entities on January 1, 2004. Mr. Semple is a member of the Board of Directors of our general partner and of
MarkWest Hydrocarbon. Prior to his service with MarkWest, Mr. Semple served in various capacities, most recently as Chief Operating Officer of WilTel Communications, formerly Williams
Communications Group, Inc. ("WCG") from 1997 to 2003. Prior to his tenure at WilTel Communications, he was the Senior Vice President/General Manager of Williams Natural Gas from 1995 to 1997,
Vice President of Marketing and Vice President of Operations and Engineering for Northwest Pipeline, and Director of Product Movements and Division Manager for Williams Pipeline during his
22-year career with The Williams Companies. During his tenure at Williams Communications, he also served on the board of directors for PowerTel Communications and the Competitive
Telecommunications Association (Comptel). Mr. Semple holds a Mechanical Engineering degree from the United States Naval Academy and is a professional engineer registered in the state of Kansas.

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Donald D. Wolfwas elected to the Board of Directors of our general partner in February 2008 and serves on the Board's Compensation
Committee. Mr. Wolf previously served as a member of the board of directors of MarkWest Hydrocarbon, Inc. since June 1999. In September 2004, Mr. Wolf joined Aspect Energy as
President and Chief Executive Officer. He is also Chief Executive Officer of Quantum Resources, LLC. Mr. Wolf served as Chairman, Chief Executive Officer and Director of Westport Resources
Corporation from July 1996 until Westport's merger with Kerr McKee Corporation in 2004. Mr. Wolf has a diversified 40-year career in the oil and natural gas industry.



C. Corwin Bromley,Senior Vice President, General Counsel and Secretary, was appointed as General Counsel of our
general partner in September 2004. Prior to joining MarkWest, Mr. Bromley served as Assistant General Counsel at Foundation Coal Holdings, Inc. f/k/a RAG American Coal
Holding, Inc. from 1999 through 2004, and as General-Managing Attorney and Sr. Environmental Attorney at Cyprus Amax Minerals Company from 1989 to 1999. Prior to that, Mr. Bromley was in
private practice with the law firm Popham, Haik, Schnobrich & Kaufman from 1984 through 1989. Preceding his legal career, Mr. Bromley worked as a structural/design engineer involved in
several domestic and international LNG and energy projects with the firms CBI, Inc. and Chicago Bridge & Iron Company. Mr. Bromley received his J.D. degree from the University of
Denver and his bachelor's degree in Civil Engineering from the University of Wyoming.

Nancy K. Buese, Senior Vice President, Chief Financial Officer, was appointed Chief Financial Officer of our general partner in October
2006. Prior to her appointment as CFO, Ms. Buese served as Chief Accounting Officer of MarkWest since November 2005. Prior to joining MarkWest, Ms. Buese was the Chief Financial Officer
for Experimental and Applied Sciences ("EAS") in Golden, Colorado. EAS is a wholly owned subsidiary of Abbott Laboratories. Prior to her employment at EAS, Ms. Buese was a Vice President with
TransMontaigne Inc. in Denver, Colorado. Preceding this appointment, Ms. Buese was a Partner with Ernst & Young LLP, having spent time in the firm's Denver, London, New
York and Washington, D.C. offices.

John C. Mollenkopf,Senior Vice President, Chief Operations Officer, was appointed as Chief Operations Officer of our general partner in
October 2006. Prior to his appointment as COO, Mr. Mollenkopf served as Senior Vice President, Southwest Business Unit, since January 2004 and as Vice President, Business Development since
January 2003. Prior to these positions,, he served as Vice President, Michigan Business Unit, of our general partner since its inception in May 2002 and in the same capacity with MarkWest Hydrocarbon
since December 2001. Prior to that, Mr. Mollenkopf was General Manager of the Michigan Business Unit of MarkWest Hydrocarbon since 1997. He joined MarkWest Hydrocarbon in 1996 as Manager, New
Projects. From 1983 to 1996, Mr. Mollenkopf worked for ARCO Oil and Gas Company, holding various positions in process and project engineering, as well as operations supervision.

Randy S. Nickerson,Senior Vice President, Chief Commercial Officer, was appointed as Chief Commercial Officer of our general partner in
October 2006. Prior to his appointment as CCO, Mr. Nickerson served as Senior Vice President, Corporate Development of MarkWest since January 2003. Prior to these positions,
Mr. Nickerson served as Senior Vice President of our general partner since its inception in May 2002 and served in the same capacity with MarkWest Hydrocarbon since December 2001. Prior to
that, Mr. Nickerson served as MarkWest Hydrocarbon's Vice President and the General Manager of the Appalachia Business Unit since June 1997. Mr. Nickerson joined MarkWest Hydrocarbon in
July 1995 as Manager, New Projects and served as General Manager of the Michigan Business Unit from June 1996 until June 1997. From 1990 to 1995, Mr. Nickerson was a Senior Project Manager and
Regional Engineering Manager for Western Gas Resources, Inc. From 1984 to 1990, Mr. Nickerson worked for Chevron USA and Meridian Oil Inc. in various process and project
engineering positions.

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Andrew L. Schroeder,Vice President Finance, Treasurer and Assistant Secretary, was appointed as Vice President and Treasurer of our
general partner in February 2003. Prior to his appointment, he was Director of Finance/Business Development at Crestone Energy Ventures from 2001 through 2002. Prior to that, Mr. Schroeder
worked at Xcel Energy for two years as Director of Corporate Financial Analysis. Prior to that, he spent seven years working with various energy companies. He began his career with Touche,
Ross & Co. and spent eight years in public accounting. Mr. Schroeder is a Certified Public Accountant licensed in the state of Colorado.

Audit Committee Financial Expert

Each of the individuals serving on our Audit Committee satisfies the standards for independence of the AMEX and the SEC as they relate to audit committees. Our
board of directors believes each of the members of the Audit Committee is financially literate. In addition, our board of directors has determined that Mr. Bailey is financially sophisticated
and qualifies as an "audit committee financial expert" within the meaning of the regulations of the SEC.

Audit Committee Pre-Approval Policy

The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accounting
firm on a case-by-case basis. These services may include audit services, audit-related services, tax services and other services. Our Chief Financial Officer is responsible for
presenting the Audit Committee with an overview of all proposed audit, audit-related, tax or other non-audit services to be performed by the independent registered public accounting firm.
The presentation must be in sufficient detail to define clearly the services to be performed. The Audit Committee does not delegate its responsibilities to pre-approve services performed
by the independent registered public accounting firm to management or to an individual member of the Audit Committee. The Audit Committee may, however, from time to time delegate its authority to the
Audit Committee Chairman, who reports on the independent registered public accounting firm services approved by the Chairman at the next Audit Committee meeting.

Code of Conduct and Ethics

We have adopted a Code of Conduct and Ethics that complies with SEC standards, applicable to the persons serving as our directors, officers (including without
limitation, our CEO, CFO and Principal Operations Officers) and employees. This includes the prompt disclosure to the SEC of a Current Report on Form 8-K of any waiver of the code
for executive officers or directors approved by the board of directors. A copy of our Code of Business Conduct and Ethics is available free of charge in print to any unitholder who sends a request to
the office of the Secretary of MarkWest Energy Partners, L.P. at 1515 Arapahoe Street, Suite 700, Denver, Colorado 80202. The Code of Conduct and Ethics is also posted on our website, www.markwest.com.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our general partner's directors, executive officers, and persons who own more
than 10% of any class of our equity securities registered under Section 12 of the Exchange Act, to file with the SEC initial reports of ownership and reports of changes in ownership in such
securities. SEC regulations also require directors, executive officers and greater than 10% unitholders to furnish us with copies of all Section 16(a) reports they file.

To
our knowledge, based solely on review of the copies of such reports furnished to us and written representations that no other reports were required, we believe our directors,
executive officers and greater than 10% unitholders complied with all Section 16(a) filing requirements during the year ended

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December 31,
2007. We are not aware of any failures to file a Section 16(a) form with the SEC, or any transaction that was required to be reported, but that was not reported on a
timely basis.

ITEM 11.    Executive Compensation

Information required to be set forth in Item 11. Executive Compensation, has been omitted and will be incorporated herein by reference, when filed, to our
Proxy Statement for our 2008 Annual Meeting of Unitholders expected to be filed no later than April 29, 2008.

ITEM 12.    Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters

Information required to be set forth in Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters, has been
omitted and will be incorporated herein by reference, when filed, to our Proxy Statement for our 2008 Annual Meeting of Unitholders expected to be filed no later than April 29, 2008.

ITEM 13.    Certain Relationships and Related Transactions, and Director Independence

Information required to be set forth in Item 13. Certain Relationships and Related Transactions, and Director Independence, has been omitted and will be
incorporated herein by reference, when filed, to our Proxy Statement for our 2008 Annual Meeting of Unitholders expected to be filed no later than April 29, 2008.

ITEM 14.    Principal Accountant Fees and Services

Information required to be set forth in Item 14. Principal Accountant Fees and Expenses, has been omitted and will be incorporated herein by reference,
when filed, to our Proxy Statement for our 2008 Annual Meeting of Unitholders expected to be filed no later than April 29, 2008.

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PART IV

ITEM 15.    Exhibits and Financial Statement Schedules





Schedule ASignificant Subsidiary Financial StatementsStarfish Pipeline Company, LLC

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Starfish Pipeline Company, LLC

Consolidated Financial Statements
December 31, 2007 and 2006

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Starfish Pipeline Company, LLC        Index        December 31, 2007 and 2006



|                                  |  | Page(s)
|--------------------------------- |  | -------
|Report of Independent Auditors    |  | 138    
|Consolidated Financial Statements |  |        
|Balance Sheets                    |  | 139    
|Statements of Income              |  | 140    
|Statements of Members' Capital    |  | 141    
|Statements of Cash Flows          |  | 142    
|Notes to Financial Statements     |  | 143    

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Report of Independent Auditors

To
the Board of Directors and Members of
Starfish Pipeline Company, LLC

In
our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of members' capital and cash flows present fairly, in all material
respects, the financial position of Starfish Pipeline Company, LLC and its subsidiaries (the "Company") at December 31, 2007 and 2006, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

As
described in Note 3 to the financial statements, the Company has significant transactions and relationships with affiliated entities.

/s/
PricewaterhouseCoopers LLP
Houston, Texas
February 22, 2008

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Starfish Pipeline Company, LLC        Consolidated Balance Sheets        December 31, 2007 and 2006

|(in thousands of dollars)                            |                                                               | 2007                                   |         | 2006 
|---------------------------------------------------- | ------------------------------------------------------------- | -------------------------------------- | ------- | -----
|Assets                                               |                                                               |                                        |         |      
|Current assets                                       |                                                               |                                        |         |      
|                                                     | Cash and cash equivalents                                     |                                        | $       | 1,504
|                                                     | Transportation receivables (Note 2)                           |                                        |         | 3,920
|                                                     | Accrued other receivables (Note 4)                            |                                        |         | 343  
|                                                     | Other receivables from related parties                        |                                        |         | 22   
|                                                     | Gas imbalance and gas imbalance net under recoveries (Note 2) |                                        |         | 491  
|                                                     | Other assets                                                  |                                        |         | 418  
|                                                     |                                                               |                                        |         |      
|                                                     |                                                               | Total current assets                   |         |      
|Pipelines, plant and equipment, net (Note 5)         |                                                               |                                        | 127,019 |      
|                                                     |                                                               |                                        |         |      
|                                                     |                                                               | Total assets                           |         | $    
|                                                     |                                                               |                                        |         |      
|Liabilities and Members' Capital                     |                                                               |                                        |         |      
|Current liabilities                                  |                                                               |                                        |         |      
|                                                     | Accounts payable and accrued liabilities                      |                                        | $       | 2,257
|                                                     | Other payables to related parties                             |                                        |         | 370  
|                                                     | Gas imbalances (Note 2)                                       |                                        |         |     
|                                                     | Current obligation under capital lease                        |                                        |         | 622  
|                                                     |                                                               |                                        |         |      
|                                                     |                                                               | Total current liabilities              |         |      
|Obligation under capital lease, less current portion |                                                               |                                        | 5,216   |      
|Asset retirement obligation (Note 7)                 |                                                               |                                        | 5,651   |      
|Regulatory liability (Note 7)                        |                                                               |                                        | 9,722   |      
|                                                     |                                                               |                                        |         |      
|                                                     |                                                               | Total liabilities                      |         |      
|Members' capital                                     |                                                               |                                        | 109,879 |      
|                                                     |                                                               |                                        |         |      
|                                                     |                                                               | Total liabilities and members' capital |         | $    
|                                                     |                                                               |                                        |         |      

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

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Starfish Pipeline Company, LLC        Consolidated Statements of Income        Years Ended December 31, 2007, 2006 and 2005

|(in thousands of dollars)        |                               | 2007 |        | 2006   |   | 2005   |       
|-------------------------------- | ----------------------------- | ---- | ------ | ------ | - | ------ | ------
|Operating revenues               |                               |      |        |        |   |        |       
|Transportation                   |                               | $    | 27,081 |        | $ | 28,736 |       
|Dehydration and other            |                               |      | 5,532  |        |   | 3,342  |       
|                                 |                               |      |        |        |   |        |       
|                                 | Total revenues                |      |        | 32,613 |   |        | 32,078
|                                 |                               |      |        |        |   |        |       
|Operating expenses               |                               |      |        |        |   |        |       
|Operating and maintenance        |                               |      | 9,640  |        |   | 12,856 |       
|Administrative and general       |                               |      | 1,724  |        |   | 1,922  |       
|Depreciation and amortization    |                               |      | 8,946  |        |   | 7,786  |       
|Accretion and regulatory expense |                               |      | 344    |        |   | 324    |       
|                                 |                               |      |        |        |   |        |       
|                                 | Total operating expenses      |      |        | 20,654 |   |        | 22,888
|                                 |                               |      |        |        |   |        |       
|                                 | Net operating income (loss)   |      |        | 11,959 |   |        | 9,190 
|                                 |                               |      |        |        |   |        |       
|Other income (expense)           |                               |      |        |        |   |        |       
|Interest expense                 |                               |      | (453   | )      |   | (504   | )     
|Interest income                  |                               |      | 183    |        |   | 269    |       
|Other income                     |                               |      | 429    |        |   | 546    |       
|                                 |                               |      |        |        |   |        |       
|                                 | Total other income (expenses) |      |        | 159    |   |        | 311   
|                                 |                               |      |        |        |   |        |       
|                                 | Net income (loss)             |      | $      | 12,118 |   | $      | 9,501 
|                                 |                               |      |        |        |   |        |       

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

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Starfish Pipeline Company, LLC        Consolidated Statements of Members' Capital        Years Ended December 31, 2007, 2006 and 2005

|(In thousands of dollars)     |  | MarkWest |         | Enbridge |   | Total   |  
|----------------------------- |  | -------- | ------- | -------- | - | ------- | -
|
|Balances at December 31, 2004 |  | $        | 36,819  |          | $ | 36,819  |  
|Contributions                 |  |          | 1,486   |          |   | 1,486   |  
|Distributions                 |  |          | (2,653  | )        |   | (2,654  | )
|Net income                    |  |          | (434    | )        |   | (434    | )
|                              |  |          |         |          |   |         |  
|Balances at December 31, 2005 |  |          | 35,218  |          |   | 35,217  |  
|Contributions                 |  |          | 19,751  |          |   | 19,752  |  
|Net income                    |  |          | 4,751   |          |   | 4,750   |  
|                              |  |          |         |          |   |         |  
|Balances at December 31, 2006 |  |          | 59,720  |          |   | 59,719  |  
|Distributions                 |  |          | (10,839 | )        |   | (10,839 | )
|Net income                    |  |          | 6,059   |          |   | 6,059   |  
|                              |  |          |         |          |   |         |  
|Balances at December 31, 2007 |  | $        | 54,940  |          | $ | 54,939  |  
|                              |  |          |         |          |   |         |  

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

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Starfish Pipeline Company, LLC        Consolidated Statements of Cash Flows        Years Ended December 31, 2007, 2006 and 2005

|(in thousands of dollars)                                                        |                                  | 2007                                      |                                                     | 2006  |        | 2005    |       
|-------------------------------------------------------------------------------- | -------------------------------- | ----------------------------------------- | --------------------------------------------------- | ----- | ------ | ------- | ------
|Cash flows from operating activities                                             |                                  |                                           |                                                     |       |        |         |       
|Net income                                                                       |                                  | $                                         | 12,118                                              |       | $      | 9,501   |       
|Adjustments to reconcile net income to net cash provided by operating activities |                                  |                                           |                                                     |       |        |         |       
|                                                                                 | Depreciation and amortization    |                                           |                                                     | 8,946 |        |         | 7,786 
|                                                                                 | Accretion and regulatory expense |                                           |                                                     | 344   |        |         | 324   
|                                                                                 | Provision for bad debts          |                                           |                                                     |      |        |         | (1,422
|                                                                                 | Changes in working capital       |                                           |                                                     |       |        |         |       
|                                                                                 |                                  | Transportation receivables                |                                                     |       | 3,496  |         |       
|                                                                                 |                                  | Other receivables from related parties    |                                                     |       | 229    |         |       
|                                                                                 |                                  | Gas imbalance net under recoveries        |                                                     |       | 1,020  |         |       
|                                                                                 |                                  | Accrued other receivable and other assets |                                                     |       | 703    |         |       
|                                                                                 |                                  | Accounts payable and accrued liabilities  |                                                     |       | (1,528 | )       |       
|                                                                                 |                                  | Gas imbalances                            |                                                     |       | (322   | )       |       
|                                                                                 |                                  | Other payables to related parties         |                                                     |       | (2,675 | )       |       
|                                                                                 |                                  |                                           |                                                     |       |        |         |       
|                                                                                 |                                  |                                           | Net cash provided by operating activities           |       |        | 22,331  |       
|                                                                                 |                                  |                                           |                                                     |       |        |         |       
|Cash flows from investing activities                                             |                                  |                                           |                                                     |       |        |         |       
|Capital expenditures                                                             |                                  |                                           | (1,375                                              | )     |        | (27,993 | )     
|Acquisition of assets                                                            |                                  |                                           |                                                    |       |        | (22,747 | )     
|                                                                                 |                                  |                                           |                                                     |       |        |         |       
|                                                                                 |                                  |                                           | Net cash used in investing activities               |       |        | (1,375  | )     
|                                                                                 |                                  |                                           |                                                     |       |        |         |       
|Cash flows from financing activities                                             |                                  |                                           |                                                     |       |        |         |       
|Contribution from members                                                        |                                  |                                           |                                                    |       |        | 39,503  |       
|Distribution to members                                                          |                                  |                                           | (21,678                                             | )     |        |        |       
|Capital lease payments                                                           |                                  |                                           | (620                                                | )     |        | (578    | )     
|                                                                                 |                                  |                                           |                                                     |       |        |         |       
|                                                                                 |                                  |                                           | Net cash (used in) provided by financing activities |       |        | (22,298 | )     
|                                                                                 |                                  |                                           |                                                     |       |        |         |       
|                                                                                 |                                  |                                           | (Decrease) increase in cash and cash equivalents    |       |        | (1,342  | )     
|Cash and cash equivalents                                                        |                                  |                                           |                                                     |       |        |         |       
|Beginning of year                                                                |                                  |                                           | 2,846                                               |       |        | 1,574   |       
|                                                                                 |                                  |                                           |                                                     |       |        |         |       
|End of year                                                                      |                                  | $                                         | 1,504                                               |       | $      | 2,846   |       
|                                                                                 |                                  |                                           |                                                     |       |        |         |       

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

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Starfish Pipeline Company, LLC        Notes to Consolidated Financial Statements        December 31, 2007 and 2006

1.    Organization and Business

Starfish Pipeline Company, LLC ("Starfish" or the "Company") was formed on December 8, 2000, under the provisions of the Delaware Limited Liability
Company Act. Starfish was owned 50% each by Enterprise Products Operating, LP ("Enterprise") and Shell Gas Transmission, LLC ("Shell"), an affiliate of Shell Oil Company ("SOC"). In
January 2001, Starfish acquired 100% of Stingray Pipeline Company, LLC ("Stingray"), West Cameron Dehydration, LLC ("West Cameron") and Triton Gathering, LLC ("Triton", previously
East Breaks Gathering Company, LLC) from Deepwater Holdings, LLC, an affiliate of the El Paso Corporation. The purchase price was $50,200,000, which was allocated based on the fair value
of the net assets acquired. Since the estimated fair value of the net assets was in excess of the purchase price, no goodwill was recorded. On December 31, 2004, SOC sold its interest in Shell
to Enbridge Holdings (Offshore) L.L.C. ("Enbridge"), an affiliate of Enbridge (U.S.) Inc. Therefore, as of December 31, 2004, SOC was no longer an affiliate. Subsequent to the sale,
Shell was renamed Enbridge Offshore (Gas Transmission) L.L.C. On March 31, 2005, with an effective date of January 1, 2005, Enterprise sold its interest in Starfish to MarkWest Energy
Partners L.P. ("MarkWest"). Therefore, as of January 1, 2005, Enterprise was no longer an affiliate.

Stingray
operates a regulated natural gas pipeline system (the "Stingray System") engaged in the transmission of natural gas in the Louisiana and Texas offshore areas. The Stingray
System consists of (i) 361 miles of 6 to 36-inch diameter pipeline that transports natural gas from the High Island Offshore System, or HIOS, West Cameron, East Cameron, Garden
Banks and Vermilion lease areas in the Gulf of Mexico to onshore transmission systems in Louisiana, (ii) 43 miles of 16 to 20-inch diameter pipeline connecting platforms and leases
in the Garden Banks Block 191 and 72 areas to the Stingray System, and (iii) 13 miles of 16-inch diameter pipeline connecting the GulfTerra Energy Partners L.P., formerly
known as El Paso Energy Partners L.P., platform at East Cameron Block 373 to the Stingray System at East Cameron Block 338.

West
Cameron operates an unregulated natural gas dehydration facility that provides interruptible dehydration service to offshore platform operators connected to the Stingray System. The
facility is located at Stingray station 701 in Holly Beach, Louisiana.

Triton
is an unregulated gathering system that includes 18 laterals, which are connected to the Stingray System, and located in the Garden Banks, East Cameron, Vermilion, and West
Cameron areas of the Gulf of Mexico. This includes the Gunnison lateral completed in December 2003 and the West Cameron 62 Lateral purchased from El Paso in May 2006.

Starfish
has no employees and receives all administrative and operating support through contractual arrangements with affiliated companies. These services and agreements are outlined in
Note 3, Related Party Transactions.

Agreements
between the member companies address the allocation of income and capital contributions and distributions amongst the respective members' capital accounts.

The
terms of the agreements include, but are not limited to, the following:



143

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Starfish Pipeline Company, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and 2006

1.    Organization and Business (Continued)



2.    Significant Accounting Policies



The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in
consolidation.



The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of certain assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the related reported amounts of revenue
and expenses during the reporting period. Such estimates and assumptions include those made in areas of FERC regulations, fair value of financial instruments, future cash flows associated with assets,
useful lives for depreciation and potential environmental liabilities. Actual results could differ from those estimates. Management believes that the estimates are reasonable.

Development
and production of natural gas in the service area of the pipeline and dehydration facilities are subject to, among other factors, prices for natural gas and federal and state
energy policy, none of which are within Starfish's control.



The Stingray System is an interstate pipeline subject to regulation by the Federal Energy Regulatory Commission ("FERC"). Stingray has accounting policies that
conform to generally accepted accounting principles in the United States of America, as applied to regulated enterprises and are in accordance with the accounting requirements and ratemaking practices
of the FERC.

Stingray
follows the regulatory accounting principles prescribed under Statement of Financial Accounting Standards ("SFAS") No. 71,Accounting for the
Effects of Certain Types of Regulation.If Stingray discontinued the application of SFAS No. 71, due to an increased level of competition and discounting in its market
area, adjustments and reversals of regulatory assets and liabilities would be necessary.



All highly liquid investments with maturity of three months or less when purchased are considered to be cash equivalents.

144

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Starfish Pipeline Company, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and 2006

2.    Significant Accounting Policies (Continued)



Allowances have been established for losses on accounts, which may become uncollectible. Collectibility is reviewed regularly and the allowance is adjusted as
necessary, primarily under the specific identification method. The allowance was $0 at December 31, 2007 and 2006, respectively.

The
Company recognized provisions for bad debts of $1,421,567 in 2005 relating to imbalance disputes with shippers which were resolved in 2006.



Pipelines, plant and equipment consist primarily of natural gas pipeline assets and related facilities that are recorded at cost. The regulated portion of the
pipeline assets includes an Allowance for Funds Used During Construction ("AFUDC"). The rates used in the calculation of AFUDC are determined in accordance with guidelines established by FERC. The
pipeline and related facilities are depreciated on the straight-line method over 100 years. The dehydration facility is depreciated based on a useful life of 40 years. The
laterals are depreciated based on a useful life of 10 years. Routine maintenance and repair costs are expensed as incurred while additions, improvements and replacements are capitalized.

Leased
property and equipment are capitalized, as appropriate, and the present value of the related lease payments is recorded as a liability. Amortization of capitalized lease assets is
computed on a straight-line method over the term of the lease and recorded as a component of depreciation expense. Improvements to leased properties are amortized over their useful lives
or the lease period, whichever is shorter.

Starfish
records depreciation using the group method of depreciation which is commonly used by pipelines, utilities and similar entities. Under the group method, upon the disposition of
property, plant and equipment, the cost less net proceeds is typically charged to accumulated depreciation and no gain or loss on disposal is recognized. However, when a separately identifiable group
of assets, such as a stand-alone pipeline system is sold, Starfish will recognize a gain or loss in the Consolidated Statements of Income for the difference between the cash received and the net book
value of the assets sold.



Starfish evaluates its assets for impairment when events or circumstances indicate that the carrying values may not be recovered. These events include market
declines that are believed to be other than temporary, changes in the manner in which Starfish intends to use a long-lived asset and adverse changes in the legal or business environment,
such as adverse actions by regulators. When an event occurs, Starfish evaluates the recoverability of its carrying value based on its long-lived assets' ability to generate future cash
flows on an undiscounted basis. If impairment is indicated Starfish will adjust the carrying value of assets downward.



Effective January 1, 2003, Starfish adopted SFAS No. 143,Accounting for Asset Retirement
Obligations. SFAS No. 143, issued in June 2001, requires the recording of liabilities equal to the fair

145

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Starfish Pipeline Company, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and 2006

2.    Significant Accounting Policies (Continued)

value
of asset retirement obligations and corresponding additional asset costs. The obligations included are those for which there is a legal obligation as a result of existing or enacted law, statute
or contract. Over time, the liability would be accreted to its present value, and the capitalized cost would be depreciated over the useful life of the related asset. Upon settlement of the liability,
an entity would either settle the obligation for its recorded amount or recognize a gain or loss. Starfish's assets are under the jurisdiction of the Department of Transportation and the Minerals
Management Service ("MMS"). The MMS requires the ultimate abandonment of offshore facilities when they are no longer in use or when suspension for future utilization cannot be justified. Stingray and
Triton recorded asset retirement obligations for several of their laterals during FAS 143 implementation in 2003. Starfish did not recognize any asset retirement obligations for its remaining
assets because these were determined to be part of the main trunk-line system or laterals with long term usage potential, and due to current reserve estimates and expanding production in
the deepwater of the Gulf of Mexico, the date of abandonment could not be reasonably estimated. FIN 47 provides specific guidance regarding when an asset retirement obligation is reasonably
estimable including when sufficient information is available to apply an expected present value technique. The Company's implementation of FIN 47 did not have a material impact effect on these
financial statements.

Costs
related to the retirement of the Stingray System are provided for in the rates charged to shippers, as allowed by the FERC. The amounts charged to shippers for the costs related to
the retirement of the Stingray System differ from the period costs recognized in accordance with SFAS No. 143, and therefore, result in a difference in the timing of recognition of period costs
for financial reporting and rate-making purposes. The Company recognizes a regulatory asset or liability for differences in the timing of recognition of the period costs associated with
asset retirement obligations for financial reporting and rate-making purposes.



Starfish is treated as a tax partnership under the provisions of the Internal Revenue Code. Accordingly, the accompanying financial statements do not reflect a
provision for income taxes since Starfish's results of operations and related credits and deductions will be passed through to and taken into account by its members in computing their respective tax
liabilities.



Revenue from pipeline transportation of hydrocarbons is recognized upon receipt of the hydrocarbons into the pipeline system. Revenue from dehydration services is
recognized at the time the service is performed.



In the course of providing transportation services to customers, Stingray may receive different quantities of gas from shippers than the quantities delivered on
behalf of those shippers. These transactions result in imbalances (gains and losses), which are settled in-kind each month through a fuel gas and unaccounted-for gas tracking
mechanism, negotiated cash-outs between parties, or are subject to a cash-out procedure included in Stingray's tariff. Gas imbalances represent natural gas volumes owed to or
due from Stingray's customers. Gas imbalances and gas imbalance over (under)

146

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Starfish Pipeline Company, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and 2006

2.    Significant Accounting Policies (Continued)

recoveries
are valued at an average monthly index price, which was $6.9560 per dekatherm ("Dth") for the month of December 2007 and $6.6100 per Dth for the month of December 2006.

Stingray's
FERC Gas Tariff, Third Revised Volume No. 1, Section 11.5, states that subsequent to the end of the twelve month billing period ending November 30 of each
year, Stingray shall compare the revenues and costs under the cash-out procedures and shall refund, within 60 days, the gas imbalance net over recoveries to firm and interruptible
transportation customers on a pro-rata basis in accordance with the transportation revenues Stingray received during that billing period. If the revenues received are less than the costs
incurred, then Stingray shall carry forward the gas imbalance net under recoveries and may offset such net under recoveries against any future net over recoveries that may occur.



Starfish records environmental liabilities at their undiscounted amounts when environmental assessments indicate that remediation efforts are probable and the
costs can be reasonably estimated. Estimates of our liabilities are based on currently available facts, existing technology and presently
enacted laws and regulations, and include estimates of associated legal costs. As of December 31, 2007 and 2006, Starfish had no liabilities recognized for environmental costs.



The reported amounts of financial instruments such as cash and cash equivalents, receivables, and current liabilities approximate fair value because of their
short maturities.



Certain reclassifications have been made in the prior year consolidated financial statements to conform to the 2007 financial statement presentation. These
reclassifications have no impact on net income.

3.    Related Party Transactions

Starfish has no employees. Operating, maintenance and general and administrative services are provided to Starfish under service agreements with an Enbridge
affiliate in 2007, 2006, and 2005. Substantially all operating and administrative expenses were incurred through services provided under these agreements. At December 31, 2007 and 2006,
respectively, Starfish had affiliate payables of $369,507 and $3,044,796, and affiliates receivable of $22,360 and $251,378 relating to these agreements.

4.    Accrued Other Receivables

Stingray operates an on-shore separation facility and charges the owners a fee for normal operations and any direct cost relating to repairs and
maintenance of the facility. Upon request, Stingray also performs offshore repairs and maintenance services and charges the owners for those services. Included in accrued other receivables is $343,285
and $1,288,531 related to these activities in 2007 and 2006, respectively.

147

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Starfish Pipeline Company, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and 2006

5.    Pipelines, Plant and Equipment

Pipelines, plant and equipment at December 31, 2007 and 2006, is comprised of the following:

(in thousands of dollars)

2007

2006Regulated pipelines and equipment

$
66,967

$
47,585Regulated pipeline under capital lease


9,778


9,778Unregulated pipelines and equipment


66,312


66,312Dehydration facilities


4,349


4,349Construction in progress


16,004


32,865Asset retirement cost (regulated pipelines)


1,398


2,027164,808


162,916Accumulated depreciation


37,789


29,473$
127,019

$
133,443


6.    Capital Lease

Stingray leases a 36-inch pipeline from Natural Gas Pipeline Company of America ("NGPL"), an affiliate of Kinder Morgan, Inc.,
that connects Stingray's pipeline system to onshore Louisiana. In June 1999, the lease agreement with NGPL was extended for an additional 14 years beginning December 1, 1999, through
November 30, 2013, with an option to purchase the asset at the expiration of the lease. Accordingly, Stingray accounts for this lease as a capital lease. The present value of the lease payments
under the capital lease is recorded as other current and noncurrent liabilities in the accompanying balance sheet.

Future
minimum lease payments under capital leases are as follows:

(in thousands of dollars)Year Ended December 31,2008

$
1,0732009


1,0732010


1,0732011


1,0732012


1,073Thereafter


2,056Total minimum lease payments


7,421Less: Amount representing interest


(1,583
)Present value of net minimum lease payments, including current maturities of $622

$
5,838


148

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Starfish Pipeline Company, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and 2006

7.    Asset Retirement Obligation

Activity related to the Company's asset retirement obligation ("ARO") during the year ended December 31, 2007 and 2006, is as follows:

(in thousands of dollars)

2007

2006Balance of ARO as of January 1

$
5,936

$
5,593Liabilities incurred during period





19Revisions resulting from changes in expected cash flows


(629
)

Accretion expense


344


324Balance of ARO as of December 31

$
5,651

$
5,936


For
the years ended December 31, 2007, 2006 and 2005, the Company recognized depreciation expense related to its asset retirement cost ("ARC") of $505,191, $512,500 and $223,000,
respectively.

The
rate case filed by Stingray with the FERC (Docket No. RP99-166) decreased the amount the Company could charge in their rates ("Negative Salvage") for asset retirement
obligations. Beginning in 2003, the Negative Salvage the Company was allowed to recover was 0.25% of the total value of the Stingray System (approximately $697,000 per year). The Company recognized
regulatory expense of approximately $267,309, $248,237 and $363,000 during the years ended December 31, 2007, 2006 and 2005, respectively. Activity related to the Company's regulatory liability
during the years ended December 31, 2007 and 2006, is as follows:

(in thousands of dollars)

2007

2006Balance of regulatory liability as of January 1

$
9,349

$
9,180Negative Salvage recovered


697


697Current period ARO accretion (Stingray's System)


(267
)

(248
)Current period ARC depreciation (Stingray's System)


(57
)

(280
)Balance of regulatory liability as of December 31

$
9,722

$
9,349


8.    Regulatory Matters



The FERC has jurisdiction over Stingray with respect to transportation of gas, rates and charges, construction of new facilities, extension or abandonment of
service facilities, accounts and records, depreciation and amortization policies and certain other matters.

An
annual charge totaling $297,597, $226,948 and $337,079 was paid to the FERC for fiscal years 2007, 2006 and 2005, respectively. This charge, to be recovered from customers through
rates, was recorded as a regulatory asset and will be amortized over twelve months. During 2007, 2006 and 2005, respectively, $244,610, $304,518 and $318,082 was recorded as amortization expense.

149

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Starfish Pipeline Company, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2007 and 2006

9.    Commitments and Contingencies

In the ordinary course of business, Starfish and its subsidiaries are subject to various laws and regulations including regulations of the FERC. In the opinion of
management, compliance with existing laws and regulations will not materially affect the financial position or results of operations of Starfish.

Various
legal actions, which have arisen in the ordinary course of business, are pending with respect to the assets of the Starfish. Management believes that the ultimate disposition of
these actions, either individually or in aggregate, will not have a material adverse effect on the financial position, the results of operations or cash flows of Starfish.

10.    Impact of Hurricane Rita

In September 2005, Hurricane Rita ("Rita") caused substantial damage to both onshore and offshore facilities, resulting in loss of revenues and significant
capital and maintenance expenditures. Onshore refurbishments were primarily complete as of December 31, 2005, and the majority of offshore refurbishments were completed as of
December 31, 2006. As the Company is self insured, capital expenditures of approximately $24,218,000 and $24,051,000 and maintenance expenditures of approximately $6,724,000 and $6,356,000 have
been incurred as of December 31, 2007 and 2006, respectively.

11.    Supplemental Cash Flow Disclosures

Cash paid for interest for the years ended December 31, 2007, 2006 and 2005 was approximately $453,000, $495,000 and $451,000, respectively.

Noncash
financing and investing activities include:

During
2007 and 2006, respectively, $0 and $19,000 of fixed asset additions were recognized due to recording of an asset retirement obligation.

A
revision resulting from changes in expected cash flows decreased the asset retirement obligation and asset retirement cost by $629,148 as of December 31, 2007.

Construction
in progress additions and accrued liabilities amount to approximately $1,063,000, $532,000 and $0 for the years ended December 31, 2007, 2006 and 2005, respectively.

The
members agreed on December 19, 2005 to provide capital contributions in the amount of $2,972,000. As of December 31, 2005, a receivable in the amount of $1,486,000, was
due from MarkWest. Starfish received the contribution in January 2006.

12.    Business and Credit Concentrations

For the year ended December 31, 2007, six customers accounted for approximately 56% of revenues and 11.1% of transportation receivables. For the year ended
December 31, 2006, four customers accounted for approximately 51% of revenues and 23% of transportation receivables. For the year ended December 31, 2005, two customers accounted for
approximately 29% of revenues.

150

---







|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                       
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1(2)         |  | Purchase Agreement dated as of March 24, 2003, among PNG Corporation, Energy Spectrum Partners LP, MarkWest Texas GP, L.L.C., MW Texas Limited, L.L.C. and MarkWest Energy Partners, L.P.                                                                                                                         
|2.2(2)         |  | Plan of Merger entered into as of March 28, 2003, by and among MarkWest Blackhawk L.P., MarkWest Pinnacle L.P., MarkWest PNG Utility L.P., MarkWest Texas PNG Utility L.P., Pinnacle Natural Gas Company, Pinnacle Pipeline
Company, PNG Transmission Company, PNG Utility Company and Bright Star Gathering, Inc.
|2.3(3)         |  | Asset Purchase-and-Sale Agreement dated as of November 18, 2003, by and between American Central Western Oklahoma Gas Company, L.L.C., MarkWest Western Oklahoma Gas Company, L.L.C. and American Central Gas Technologies, Inc.                                                                                  
|2.4(4)         |  | Purchase and Sale Agreement, dated as of November 7, 2003, by and between Shell Pipeline Company, LP and Equilon Enterprises L.L.C., dba Shell Oil Products US, and MarkWest Michigan Pipeline Company, L.L.C.                                                                                                    
|2.5(8)         |  | Asset Purchase and Sale Agreement and addendum, thereto, dated as of July 1, 2004, by and between American Central Eastern Texas Gas Company Limited Partnership, ACGC Gathering Company, L.L.C. and MarkWest Energy East Texas Gas
Company's L.P.                                                                
|2.6(15)        |  | Purchase and Sale Agreement effective as of January 1, 2005 between MarkWest Energy Partners L.P. and Enterprise Products Operating L.P.                                                                                                                                                                          
|2.7(16)        |  | Purchase and Sale Agreement, dated as of September 16, 2005, by and between El Paso Corporation, as seller, and MarkWest Energy Partners, L.P. as buyer.                                                                                                                                                          
|2.8(16)        |  | Purchase and Sale Agreement, dated as of September 16, 2005, by and between Kerr McGee Corp., KM Investment Corp., and Javelina Holdings Corp., as joint sellers, and MarkWest Energy Partners, L.P. as buyer.                                                                                                    
|2.9(16)        |  | Purchase and Sale Agreement, dated as of September 16, 2005, by and between Valero Energy Corp., and Valero Javelina, L.P., as sellers, and MarkWest Energy Partners, L.P. as buyer.                                                                                                                              
|2.10(31)       |  | Agreement and Plan of Redemption and Merger dated September 5, 2007 by and among MarkWest Hydrocarbon, Inc. MarkWest Energy Partners, L.P. and MWEP, L.L.C.                                                                                                                                                       
|3.1(1)         |  | Certificate of Limited Partnership of MarkWest Energy Partners, L.P.                                                                                                                                                                                                                                              
|3.2(5)         |  | Amended and Restated Agreement of Limited Partnership of MarkWest Energy Partners, L.P., dated as of May 24, 2002.                                                                                                                                                                                                
|3.3(1)         |  | Certificate of Formation of MarkWest Energy Operating Company, L.L.C.                                                                                                                                                                                                                                             
|3.4(5)         |  | Amended and Restated Limited Liability Company Agreement of MarkWest Energy Operating Company, L.L.C., dated as of May 24, 2002.                                                                                                                                                                                  
|3.5(1)         |  | Certificate of Formation of MarkWest Energy GP, L.L.C.                                                                                                                                                                                                                                                            
|3.6(5)         |  | Amended and Restated Limited Liability Company Agreement of MarkWest Energy GP, L.L.C., dated as of May 24, 2002.                                                                                                                                                                                                 

151

---



|3.7(12)  |  | Amendment No. 1 to Amended and Restated Limited Partnership Agreement MarkWest Energy Partners, L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.8(23)  |  | Amendment No. 2 to Amended and Restated Limited Partnership Agreement MarkWest Energy Partners, L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.9(28)  |  | Amendment No. 3 to Amended and Restated Limited Partnership Agreement MarkWest Energy Partners, L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.1(6)   |  | Purchase Agreement dated as of June 13, 2003, by and among MarkWest Energy Partners, L.P. and Tortoise Capital Advisors, LLC as attorney-in-fact for the Purchasers.                                                                                                                                                                                                                                                                                                                                                                             
|4.2(6)   |  | Registration Rights Agreement dated as of June 13, 2003, by and among MarkWest Energy Partners, L.P. and Tortoise Capital Advisors, LLC as attorney-in-fact for the Purchasers.                                                                                                                                                                                                                                                                                                                                                                  
|4.3(8)   |  | Unit Purchase Agreement dated as of July 29, 2004 among MarkWest Energy Partners, L.P., and MarkWest Energy GP, L.L.C. and each of Kayne Anderson Energy Fund II, L.P., and MarkWest Energy GP, L.L.C. and each of Kayne
Anderson Energy Fund II, L.P., Kayne Anderson Capital Income Partners, L.P., Kayne Anderson MLP Fund, L.P., Kayne Anderson Capital Income Fund, LTD., Kayne Anderson Income Partners, L.P., HFR RV Performance Master Trust,
Tortoise Energy Infrastructure Corporation and Energy Income and Growth Fund as Purchasers.
|4.4(8)   |  | Registration Rights Agreement dated as of July 29, 2004, among MarkWest Energy Partners, L.P., and each of Kayne Anderson Energy Fund II, L.P., Kayne Anderson Capital Income Fund, LTD., Kayne Anderson Income Partners,
 L.P., HFR RV Performance Master Trust, Tortoise Energy Infrastructure Corporation and Energy Income and Growth Fund.                                                                                                                                                                                                  
|4.5(10)  |  | Purchase Agreement dated October 19, 2004, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, the Guarantors named therein and the Initial Purchasers named therein.                                                                                                                                                                                                                                                                                                                                                     
|4.6(10)  |  | Registration Rights Agreement dated October 25, 2004, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, the Guarantors named therein and the Initial Purchasers named therein.                                                                                                                                                                                                                                                                                                                                          
|4.7(10)  |  | Indenture dated as of October 25, 2004, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee.                                                                                                                                                                                                                                                                                                                                          
|4.8(10)  |  | Form of 6.875% Series A Senior Notes due 2014 with attached notation of Guarantees (incorporated by Reference to Exhibits A and D of Exhibit 4.7 hereto)                                                                                                                                                                                                                                                                                                                                                                                         
|4.9(17)  |  | Registration Rights Agreement, dated as of November 9, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.10(17) |  | Unit Purchase Agreement, dated as of November 9, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.11(18) |  | Registration Rights Agreement, dated as of December 23, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.12(18) |  | Unit Purchase Agreement, dated as of December 23, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

152

---



|4.13(24) |  | Registration Rights Agreement dated as of July 6, 2006 among MarkWest Energy Partners, L.P., with MarkWest Energy Finance Corporation as the Issuers, the Guarantors named therein, and each of RBC Capital Markets Corporation, J.P. Morgan
Securities Inc., Wachovia Capital Markets, LLC, A.G. Edwards & Sons, Inc., Credit Suisse Securities (USA) LLC, Fortis Securities LLC, Mizuho International plc, Piper Jaffray & Co. and SG Americas
Securities, LLC collectively as Initial Purchasers.                   
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.14(24) |  | Indenture dated as of July 6, 2006, among MarkWest Energy Partners, L.P., MarkWest Energy Finance Corporation, as Issuers, the Guarantors named therein, and Wells Fargo Bank, National Association, as Trustee.                                                                                                                                                                                                                                                                                                       
|4.15(24) |  | Form of 8.5% Series A and Series B Senior Notes due 2016 with attached notation of Guarantees (incorporated by Reference to Exhibits A and D of Exhibit 4.11 hereto.                                                                                                                                                                                                                                                                                                                                                   
|4.16(25) |  | Registration Rights Agreement dated as of October 20, 2006 among MarkWest Energy Partners, L.P., with MarkWest Energy Finance Corporation as the Issuers, the Guarantors named therein, and RBC Capital Markets as the Initial
Purchaser.                                                                                                                                                                                                                                                                              
|4.17(30) |  | Unit Purchase Agreement dated April 9, 2007 by and among MarkWest Energy Partners, L.P., MarkWest Energy G.P., L.L.C., and each of Kayne Anderson MLP Investment Company, GPS Income Fund, L.P., GPS High Yield Equities
Fund, L.P., GPS New Equity Fund, L.P., Agile Performance Fund, L.L.C., Tortoise Energy Infrastructure Corporation, Tortoise Energy Capital Corporation, Royal Bank of Canada, Structured Finance Americas, L.L.C., The Cushing MLP
Opportunity Fund I, L.P., and ZLP Fund, L.P. as purchasers.
|4.18(30) |  | Registration Rights Agreement dated April 9, 2007 by and between MarkWest Energy Partners, L.P., and each of Kayne Anderson MLP Investment Company, GPS Income Fund, L.P., GPS High Yield Equities Fund, L.P., GPS New
Equity Fund, L.P., Agile Performance Fund, L.L.C., Tortoise Energy Infrastructure Corporation, Tortoise Energy Capital Corporation, Royal Bank of Canada, Structured Finance Americas, L.L.C., The Cushing MLP Opportunity Fund I, L.P.,
and ZLP Fund, L.P. as purchasers.                      
|4.19(36) |  | Unit Purchase Agreement, dated as of December 18, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.20(36) |  | Registration Rights Agreement, dated as of December 18, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.1(5)  |  | Credit Agreement dated as of May 20, 2002, among MarkWest Energy Operating Company, L.L.C (as the Borrower), MarkWest Energy Partners, L.P. (as a Guarantor), Bank of America (as Administrative Agent), and Lenders Party Hereto $60,000,000
Senior Credit Facility, and Banc of America Securities, L.L.C. as sole lead arranger and book manager.                                                                                                                                                                   
|10.2(3)  |  | Amended and Restated Credit Agreement dated as of December 1, 2003, among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Bank One, NA, as
Syndication Agent, Fortis Capital Corp., as Documentation Agent, to the $140,000,000 Senior Credit Facility.                                                                                                                                                           

153

---



|10.3(5)   |  | Contribution, Conveyance and Assumption Agreement dated as of May 24, 2002, by and among MarkWest Energy Partners, L.P.; MarkWest Energy Operating Company, L.L.C.; MarkWest Energy GP, L.L.C.; MarkWest Michigan, Inc.; MarkWest
Energy Appalachia, L.L.C.; West Shore Processing Company, L.L.C.; Basin Pipeline, L.L.C.; and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                          
|--------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.4(5)   |  | MarkWest Energy Partners, L.P. Long-Term Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.5(5)   |  | First Amendment to MarkWest Energy Partners, L.P. Long-Term Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.6(5)   |  | Omnibus Agreement dated of May 24, 2002, among MarkWest Hydrocarbon, Inc.; MarkWest Energy GP, L.L.C.; MarkWest Energy Partners, L.P.; and MarkWest Energy Operating Company, L.L.C.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.7(5)+  |  | Fractionation, Storage and Loading Agreement dated as of May 24, 2002, between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.8(5)+  |  | Gas Processing Agreement dated as of May 24, 2002, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.9(5)+  |  | Pipeline Liquids Transportation Agreement dated as of May 24, 2002, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.10(5)  |  | Natural Gas Liquids Purchase Agreement dated as of May 24, 2002, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.11+    |  | Gas Processing Agreement (Maytown) dated as of May 28, 2002, between Equitable Production Company and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.12+    |  | Amendment to Gas Processing Agreement (Maytown) dated as of March 26, 2002, between Equitable Production Company and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.13(7)  |  | Services Agreement dated January 1, 2004 between MarkWest Energy GP, L.L.C. and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.14(8)  |  | Second Amended and Restated Credit Agreement dated as of July 30, 2004 among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Fortis Capital
Corp., as Syndication Agent, Bank One, NA, as Documentation Agent and Societe Generale, as Documentation Agent to the $315,000,000 Senior Credit Facility.                                                                                                                                                                                                                         
|10.15(8)  |  | First Amendment to the Second Amended and Restated Credit Agreement dated as of August 20, 2004, among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as
Administrative Agent, Fortis Capital Corp., as Syndication Agent, Bank One, NA, as Documentation Agent and Societe Generale, as Documentation Agent.                                                                                                                                                                                                                                          
|10.16(11) |  | Third Amended and Restated Credit Agreement dated as of October 25, 2004 among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Bank One,
N.A., as Syndication Agent, Fortis Capital Corp., as Documentation Agent, U.S. Bank National Association, as Documentation Agent, Societe Generale, as Documentation Agent, and Wachovia Bank, National Association, as Documentation Agent, RBC Capital
Markets and J.P. Morgan Securities Inc., as Lead Arrangers and Joint Bookrunners, to the $200,000,000 Senior Credit Facility.

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|10.18(14)D |  | Executive Employment Agreement effective September 5, 2007 between MarkWest Hydrocarbon, Inc. and Frank Semple.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19(19)  |  | Fourth Amended and Restated Credit Agreement, dated as of November 1, 2005, among MarkWest Energy Operating Company, L.L.C., as borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, JP Morgan
Chase Bank, N.A., as Co-Syndication Agent, Fortis Capital Corp., as Co-Syndication Agent, Societe Generale, as Co-Documentation Agent, Wachovia Bank, National Association, as Co-Documentation Agent and RBC Capital Markets, as Sole Lead Arranger and
Bookrunner to the $100,000,000 Revolver Facility and $400,000 Term Loan.                                                                                                          
|10.20(20)  |  | Fifth amended and restated credit agreement dated as of December 29, 2005, among MarkWest Energy Operating Company, L.L.C., as Borrower, MarkWest Energy Partners, L.P., as Guarantor, Royal Bank of Canada, as Administrative Agent, Bank One,
N.A., as Syndication Agent, Forties Capital Corp., as Documentation Agent, U.S. Bank National Association, as Documentation Agent, Society General, as Documentation Agent, and Wachovia Bank, National Association, as Documentation Agent, RBC Capital
Markets and J.P. Morgan Securities Inc., as Lead Arrangers and Joint Bookrunners, to the $615,000,000 Senior Credit Facility.                                                      
|10.21(26)  |  | Office Lease Agreement, dated April 19, 2006, by and between Park Central Property LLC, the landlord, and MarkWest Energy Partners, L.P., the tenant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.22(14)D |  | Form of Executive Employment Agreement effective September 5, 2007 between MarkWest Hydrocarbon, Inc. and Nancy K. Buese, C. Corwin Bromley, John C. Mollenkopf and Randy S. Nickerson.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.23(29)  |  | Form of Indemnification Agreement between MarkWest Energy Partners, LLP and each Non-employee Director and the following Officers of the Company: Frank Semple, President and Chief Executive Officer; Nancy Buese, Senior Vice President and Chief
Financial Officer; Randy Nickerson, Senior Vice President and Chief Commercial Officer; John Mollenkopf, Senior Vice President and Chief Operations Officer; C. Corwin Bromley, Senior Vice President, General Counsel and Secretary; David Young, Senior
Vice President of Corporate Services; Richard Ostberg, Vice President of Risk and Compliance, and Andrew Schroeder, Vice President and Treasurer dated as of January 26, 2007.
|10.24(31)  |  | Exchange Agreement dated September 5, 2007 by and among MarkWest Energy Partners, L.P., MarkWest Hydrocarbon, Inc., and MarkWest Energy, GP L.L.C.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.25(31)  |  | Voting Agreement dated September 5, 2007 by and among MarkWest Energy Partners, L.P. and the Fox Family Holders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.26(34)+ |  | Hydrogen Supply Agreement dated September 28, 2007, by and between MarkWest Blackhawk, L.P. and CITGO Refining and Chemicals Company L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.27(32)  |  | Amended and Restated Class B Membership Interest Contribution Agreement dated October 26, 2007 by and among MarkWest Energy Partners, L.P. and John M. Fox, Donald C. Heppermann, Frank M. Semple, Nancy K. Buese,
Randy S. Nickerson, John C. Mollenkopf, C. Corwin Bromley, Andrew L. Schroeder, Jan Kindrick, Cindy Kindrick, Kevin Kubat and Art Denney as the Sellers.                                                                                                                                                                                                                                                                                                                 

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|10.28(33) |  | Amended and Restated Form of Indemnification Agreement dated October 26, 2007 by and between MarkWest Energy Partners, L.P. and each non-employee director and executive officer of the General Partner, including the following named executive
officers: Frank Semple, President and Chief Executive Officer; Nancy Buese, Senior Vice President and Chief Financial Officer; Randy Nickerson, Senior Vice President and Chief Commercial Officer; John Mollenkopf, Senior Vice President and Chief
Operations Officer; C. Corwin Bromley, Senior Vice President, General Counsel and Secretary and Andrew Schroeder, Vice President and Treasurer.
|--------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.29*+   |  | Gas Processing Agreement dated as of November 1, 2007, by and between MarkWest Javelina Company and CITGO Refining and Chemicals Company, L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.30*+   |  | Amendment to Gas Processing Agreement dated as of December 11, 2007, by and between MarkWest Javelina Company and CITGO Refining and Chemicals Company, L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.31(35) |  | Amended Class B Membership Interest Contribution Agreement dated as of October 26, 2007, to Agreement and Plan of Redemption and Merger by and among the Partnership, MarkWest Hydrocarbon, Inc. and MWEP, L.L.C.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.32*    |  | Omnibus Termination Agreement dated as of November 16, 2007, by and between MarkWest Energy Appalachia, L.L.C. and Equitable Production Company and Equitable Gathering LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.33*+   |  | Natural Gas Liquids Transportation, Fractionation, and Marketing Agreement dated as of November 16, 2007, by and between MarkWest Energy Appalachia, L.L.C. and Equitable Gathering LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.34*    |  | Assignment and Bill of Sale and Assumption Agreement dated as of November 16, 2007, by and between MarkWest Energy Appalachia, L.L.C. and Equitable Production Company and Equitable Gathering LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.35*+   |  | Second Amendment to the Gas Processing Agreement dated as of December 26, 2007, by and between MarkWest Energy Appalachia, L.L.C. and MarkWest Hydrocarbon, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|16.1(22)  |  | Changes in registrants certifying accountants. MarkWest Energy Partners, L.P. dismissed KPMG LLP as the Partnership's independent registered public accounting firm and engaged Deloitte & Touche LLP as its new independent
registered public accounting firm.                                                                                                                                                                                                                                                                                                                                                                                      
|21.1*     |  | List of subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|23.1*     |  | Consent of Deloitte & Touche LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|23.2*     |  | Consent of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|31.1*     |  | Chief Executive Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|31.2*     |  | Chief Financial Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|32.1*     |  | Certification of Chief Executive Officer of the General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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|32.2* |  | Certification of Chief Financial Officer of the General Partner pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

Pursuant to the requirements of section 13 or 15(d) 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 Energy Partners, L.P.
|----------------------- |  | ------------------------------
|                        |  |                               
|                        |  | By:                           
|                        |  | Its                           
|Date: February 29, 2008 |  | By:                           

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities with
MarkWest Energy GP, L.L.C., the General Partner of MarkWest Energy Partners, L.P., the Registrant, and on the dates indicated.

|Date: February 29, 2008 |  | By: |  | /s/FRANK M. SEMPLEFrank M. Semple President and Chief
Executive Officer(Principal Executive Officer)                                         
|----------------------- |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|Date: February 29, 2008 |  | By: |  | /s/NANCY K. BUESENancy K. Buese Senior Vice President & Chief Financial
Officer(Principal Financial Officer and
Principal Accounting Officer)
|Date: February 29, 2008 |  | By: |  | /s/JOHN M. FOXJohn M. Fox Chairman of the Board and Director                                                                                 
|Date: February 29, 2008 |  | By: |  | /s/KEITH E. BAILEYKeith E. Bailey Director                                                                                                   
|Date: February 29, 2008 |  |     |  | /s/MICHAEL L. BEATTYMichael L. Beatty Director                                                                                               

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|Date: February 29, 2008 |  | By: |  | /s/CHARLES K. DEMPSTERCharles K. Dempster Director  
|----------------------- |  | --- |  | ----------------------------------------------------
|Date: February 29, 2008 |  | By: |  | /s/DONALD C. HEPPERMANNDonald C. Heppermann Director
|Date: February 29, 2008 |  | By: |  | /s/WILLIAM A. KELLSTROMWilliam A. Kellstrom Director
|Date: February 29, 2008 |  |     |  | /s/ANNE E. MOUNSEYAnne E. Mounsey Director          
|Date: February 29, 2008 |  | By: |  | /s/WILLIAM P. NICOLETTIWilliam P. Nicoletti Director
|Date: February 29, 2008 |  |     |  | /s/DONALD D. WOLFDonald D. Wolf Director            

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