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MPLX LP  (NYSE:MPLX)
Q3 2018 Earnings Conference Call
Nov. 01, 2018, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the MPLX Third Quarter Earnings Call. My name is Elan and I will be your operator for today's call. And at this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). Please note that this conference is now being recorded.

I would now like to turn the call over to Kristina Kazarian. Kristina, you may begin.

Kristina Kazarian -- Vice President, Investor Relations

Good morning, and welcome to the MPLX third quarter 2018 earnings webcast and conference call. The synchronized slides that accompany this call can be found on ww.mplx.com under the Investors tab.

On the call today are Gary Heminger, Chairman and CEO; Mike Hennigan, President; Pam Beall, CFO and other members of the Management team. We invite you to read the Safe Harbor statement and non-GAAP disclaimer on Slide 2. It's a reminder that we will be making forward-looking statements during the call and the question-and-answer session that follows. Actual results may differ materially from what we expect today. Factors that could cause actual results to differ are included there, as well as in our SEC filings.

Now, I will turn the call over to Gary Heminger for opening remarks.

Gary Heminger -- Chairman & Chief Executive Officer

Thanks, Kristina. Good morning and thank you for joining our call. I am pleased to report that MPLX once again delivered exceptional results for the third quarter adjusted EBITDA of $937 million and distributable cash flow of $766 million. Our distributable cash flow was up 10% sequentially, which provided a strong distribution coverage of 1.47x. We also ended the quarter with a solid leverage ratio of 3.8x.

Our growth in earnings and cash flow continues to be driven by strong results in logistics and storage segment as well as record volumes in the Gathering and Processing segment. We also announced several strategic investments and acquisitions during the quarter. First, we plan to jointly construct Permian-to-Gulf Coast long-haul crude oil pipeline, which is expected to be operational in mid-2020. Second, we acquired a strategically located Gulf Coast Export Terminal in Mt. Airy, Louisiana, in close proximity to several large refineries to several -- to serve regional demands.

These and other planned investments demonstrate our team's ability to respond to market trends and build infrastructure that connects growing domestic supply sources to global demand. As we assess our business opportunities, we intend to maintain our focus on self-funding, the equity needs of our organic growth projects with an emphasis on higher coverage and lower leverage. We believe this approach positions our partnership well to drive long-term sustainable shareholder value.

With that let me turn the call over to Mike to review our operational highlights.

Michael Hennigan -- President & Director

Thanks, Gary. Slide 4 provides an overview of our Logistics and Storage segment. The L&S segment reported third quarter adjusted EBITDA of $547 million, which increased 24% year-over-year, after adjusting for the impact of dropdowns. Total pipeline throughput averaged 3.39 million barrels per day and approximately 7% increase over the third quarter, 2017. The increased throughput level was primarily driven by higher volumes on a recently expanded Ozark and Wood River-to-Patoka pipeline systems, which are now capable of transporting 360,000 barrels of crude oil per day. During the quarter, we also placed into service two 410,000 barrel crude tanks in Texas City, Texas. These tanks are expected to support export and logistics opportunity to MPC and other market participants.

Slide 5 highlights two planned Permian long-haul pipeline investments that we announced during the quarter. First, we plan to jointly construct with Energy Transfer Magellan Midstream and Delek, a crude oil pipeline running from the Permian Basin to the Texas Gulf Coast which we are calling the Permian to Gulf Coast or PGC Pipeline. The 600-mile PGC Pipeline is expected to have notable Texas margins including Wink, Crane and Midland. Pipeline will have the strategic capability to transport crude to both Energy Transfer's Nederland terminal and Magellan's East Houston terminal for ultimate delivery through their respective distribution systems. Pipeline is expected to be operational in mid-2020.

We expect that 30-inch diameter pipeline has the potential to be expanded depending on the level of interest during the open season. We also plan to participate in developing the Whistler Pipeline, a 2 billion cubic feet per day natural gas pipeline. Whistler is expected to provide an outlook for increased natural gas production from the Permian Basin to growing markets along the Texas Gulf Coast. Pipeline will have multiple upstream connections in both the Midland and Delaware Basins including a direct connection to the recently completed Agua Blanca pipeline, our joint venture pipeline with WhiteWater Midstream, WPX Energy and Targa Resources. Whistler is expected to begin operations in the fourth quarter of 2020.

Turning the Slide 6, we also announced the acquisition of a Gulf Coast export terminal in the quarter. The Mt. Airy terminal is strategically located on the Mississippi River in close proximity to several refineries, including MPC's Garyville refinery. Facility currently has 120,000 barrel per day dock and 4 million barrels of fully leased third party storage. Permits have already been secured to construct a second 120,000 barrel per day dock and the facility has the ability to expand to 10 million barrels of storage.

Moving to Slide 7, on October 17, we announced with Crimson Midstream, the commencement of a binding open season for the Swordfish Pipeline. This project is all about using existing assets to meet changing market needs. By early 2020, Swordfish would enable large volumes of crude oil to flow south from St. James to the Clovelly storage hub, which is a key crude distributor to Airy refineries and the connection point for crude exports via Louisiana Offshore Oil Port or LOOP. LOOP is the only Gulf Coast port that can sell a 2 million barrels VLCC without reverse lightering. The proposed pipeline would have the ability to transport up to 600,000 barrels per day of crude oil. Leveraging existing infrastructure makes this project a more competitive supply option for regional refiners than alternatively proposed projects. The pipeline would also provide needed additional capacity for exporters of North American crude.

In addition, we continue to progress the project to reverse the Capline pipeline. The owners have been meeting frequently in an effort to provide the market with a reverse Capline solution that could include WTI sweet crude and heavy sour crude.

Moving to our Gathering and Processing segment, Slide 8 provides an overview of our operations and some highlights for the quarter. Within G&P, we reported third quarter segment adjusted EBITDA of $390 million, a 22% increase over the same period last year. The increased EBITDA was driven by record gathered, processed and fractionated volumes. We continue to execute on our robust organic growth capital plan for the GMP segment. Through the end of October, we have commissioned six new processing plants, increasing our processing capacity by approximately 1.1 billion cubic feet per day. In addition, we expect to add 400 million cubic feet per day of additional processing capacity and 100,000 barrels per day of fractionation capacity by the end of the year.

Slide 9 provides an overview of our operations in the Marcellus and Utica shale during the quarter. Gathered volumes increased 35% over the same quarter last year to an average of 3.1 billion cubic feet per day, setting a record for the partnership. The increase was primarily driven by Utica dry gas and Marcellus wet gas volumes. Processed volumes averaged approximately 5.5 billion cubic feet per day in the quarter, representing a 10% increase over the same quarter last year. The increase was primarily driven by ramping up volumes at the Sherwood 9, Houston 1 and Majorsville 7 plants that we placed in service earlier this year.

With utilization near a 100% at our Sherwood Complex for the third quarter, we were pleased to commence operations of the Sherwood 10 plant at the end of October. We also remain on track to play Sherwood 11 plant in service by the end of the year, which will bring the capability of this complex up to 2.2 billion cubic feet per day and as disclosed last quarter, we continue with the development of Sherwood plants 12 and 13 as well as the new Smithburg Complex, all of which support Antero Resources growing production in the wet gas area of West Virginia. In Southwest Pennsylvania, we expect to place into service the first plant at our Harmon Creek Complex in the fourth quarter. This plant will help serve the needs of Range Resources, another one of our top producer customers in the Marcellus basin.

Slide 10 provides a summary of our fractionated volumes in the Marcellus and Utica regions. We produced a record 454,000 barrels a day of ethane and heavier NGLs in the quarter, up 24% year-over-year. We expect to add 20,000 barrels per day of new ethane fractionation capacity at Sherwood in mid-November. We also plan on completing a 20,000 barrels a day (inaudible) unit in Harmon Creek and a fourth 60,000 barrel per day propane plus fractionator at our Hopedale Complex in the fourth quarter. These capacity additions will further strengthen MPLX's position in the Northeast.

Moving to our Southwest operations on Slide 11 Gathered volumes averaged 1.6 billion cubic feet per day for the third quarter, representing a 14% increase over the same quarter last year. Processed volumes averaged approximately 1.5 billion cubic feet per day for the quarter, an 11% increase over the third quarter, 2017. Much of this increase was driven by the volumes that our recently completed Argo plant in the Delaware Basin and the Omega plant in the STACK shale play of Oklahoma.

In Southeast Oklahoma as part of our Centrahoma joint venture with Targa Resources, we expect to add two additional processing plants in the fourth quarter. These plants called Hickory Hills and Tupelo will add 270 million cubic feet of Processing capacity that will support growing natural gas production from the Arkoma Woodford Basin. We will maintain our 40% ownership in the expanded joint venture.

Before I turn the call over to Pam, I want to take a minute to summarize where we are strategically, We've been communicating for the past year our desire to focus on growing our longer duration ratable earnings base. In a short period of time, our team has made great strides toward accomplishing this goal and we are seeing the effect in our repeated record results, strong base business growth, and exciting new project announcements including long-haul pipelines and export facilities. Most importantly though is that throughout this year, we have focused on high-grading our opportunity set and being selective toward the best return projects, so that we can continue to execute a self-funding model and finance our approximately $2 billion of organic growth capital without issuing any equity, while maintaining an investment grade credit profile and strong distribution coverage.

I will now turn the call over to Pam to cover our financial highlights.

Pamela Beall -- Chief Financial Officer

Yeah. Thank you, Mike. Turning to our financial highlights on Slide 12, we reported adjusted EBITDA of 937 million and distributable cash flow of 766 million for the third quarter, both of which increased substantially versus the same quarter last year. Total Logistics and Storage segment adjusted EBITDA was 547 million while the Gathering and Processing segment contributed 390 million in adjusted EBITDA .Through the first nine months of 2018, we reported adjusted EBITDA of nearly $2.6 billion.

Our strong third quarter performance puts us on a pace to reach approximately $3.5 billion of adjusted EBITDA for the year, which I want to highlight is over $100 million higher than the current street consensus estimate. We plan to give 2019 EBITDA guidance during Investor Day in early December, but keep in mind that if you use third quarter 2018, as a proxy, you would arrive at an annualized total adjusted EBITDA run rate of nearly $3.750 billion, which again is also over 100 million higher than the current street consensus estimates for 2019. And that's without considering the incremental growth that we expect from our ongoing capital investments, which Mike just highlighted, which includes for the fourth quarter. The addition of $600 million cubic feet per day of processing capacity and 100 million cubic feet -- sorry, 100,000 barrels a day of fractionation capacity for the quarter.

So now I'll turn it over to Slide 13, third quarter adjusted EBITDA, the bridge shows the change in adjusted EBITDA in the third quarter of 2017 to the third quarter of '18. Since the prior year quarter, we increased adjusted EBITDA by $399 million. The assets and services acquired from MPC in the third quarter of 2017 and the first quarter of 2018 generated an increase in adjusted EBITDA of $276 million, with each dropdowns contributions broken out separately on the waterfall. Excluding the impact of the dropdowns, the increase in Logistics and Storage segment was primarily driven by earnings from the expanded Ozark pipeline as well as EBITDA from other recently completed investments, such as the Marine expansion and the Robinson butane cavern. And lastly, the increase in the Gathering and Processing segment was primarily driven by record volumes. We also benefited from higher commodity prices during the quarter.

Slide 14 provides a summary of key financial highlights and select balance sheet information. We had approximately $2.3 billion of liquidity at the end of the quarter, which is approximately 1.25 billion available on our bank revolver and 1 billion available on the intercompany facility with MPC. I want to highlight that during the quarter we funded significant organic capital investments and we completed the $451 million acquisition of the Mt. Airy terminal without using -- without issuing any equity, and at the same time we maintain debt-to-EBITDA below 4x. The growth in EBITDA and distributable cash flow supported 1.4x coverage for the quarter.

We are committed to maintaining a strong balance sheet and we ended the quarter with a leverage ratio of 3.8x, which is comfortably within levels appropriate for an investment grade credit profile. MPLX had a strong check track record of returning capital to unit holders and last week, the Board of Directors of our general partner declared a distribution of $0.6375 per common unit. A very strong performance in both the Logistics and Storage segment and the Gathering and Processing segment demonstrates our ability to execute our strategy to grow the business with our strong balance sheet and the robust organic growth opportunities across a very broad asset base located in strategic markets, we remain confident in the long-term value proposition for our investors.

And now let me turn the call back over to Kristina.

Kristina Kazarian -- Vice President, Investor Relations

Thanks, Pam. As we open the call for questions, we ask that you limit yourself to one question, plus a follow-up, you may reprompt for additional questions as time permits. With that, we'll now open the call to questions. Alan, we're ready.

Questions and Answers:

Operator

And we will now begin the question-and-answer session. (Operator instructions). Our first question today is from Jeremy Tonet from JPMorgan.

Jeremy Tonet -- JPMorgan -- Analyst

Hi, good morning. Just wanted to start off with the -- the growth of 2Q is quite robust particularly in Northeast G&P. Just wondering if you could dive in a little bit more as far as what the drivers were quarter over quarter there and is this kind of ratable as you're alluding to there, are there any kind of one-time items we should -- we should think about?

Pamela Beall -- Chief Financial Officer

Yes, Jeremy. I would say nothing was a one-time item that was significant in the sequential increase in earnings in the Gathering and Processing segment, really, it was attributed largely to volumes. Again throughout the year we continue to get the benefit of higher commodity prices as well, but it's really the fruits that we're reaping from the benefits of the investments that we've made really throughout last year and through this year, we brought on, significant capacity to support the producer customers in the area. So that's really what was driving the increase in the quarter.

Jeremy Tonet -- JPMorgan -- Analyst

That's helpful, thanks. And as I think about some of your actions recently, the initiatives you announced between Swordfish, (inaudible) acquisition, PGC and Whistler, it seems like you really kind of building out the upstream and downstream integration for your platform . Do you see more opportunities to do this going forward, how do you think about that?

Michael Hennigan -- President & Director

Jeremy, it's Mike. You're right on. We are trying to purposely diversify our cash flow base and put a little more concentration in the Permian, as well as all along the Gulf Coast. So the way we look at it is we have a really strong solid refining support network strong and growing foundation up in the Northeast and we're -- and we're trying to add to that along the value chain down in the Gulf Coast, starting with all the way out in the Delaware Basin with our PGC Pipeline, we're concentrating on exports. We have a Texas City tank farm that we're starting to grow out, as you continue further east as you mentioned we purchased the Mt. Airy terminal. And we're also just launching the Open Season on Swordfish. So we are trying to diversify ourselves from a cash flow standpoint as well as concentrate in both long-haul pipes and export facilities.

Gary Heminger -- Chairman & Chief Executive Officer

And Jeremy, this is Gary. When you look at Swordfish and goes all the way down to the LOOP, Louisiana Offshore Oil Port export facility, that capital has already been put in place, it's operational, all the permitting was done 30 years ago. This thing is up and running. This is the most efficient way to be able to move crude oil into the Eastern Gulf, either to be used within the Eastern Gulf through refining system with -- St. James is the big manifold for the entire Eastern Gulf or you can then take it all down and export it. The other thing is that LOOP is the hub of most of the offshore production in the Eastern Gulf. So you have tremendous flexibility to bring that production in, take it up into the refineries or to bring barrels all the way down either from Cushing Patoka, and eventually the reversal of Capline, which we think will be shortly coming, that all the way to bring the Canadian barrels in. So Swordfish just provides a tremendous option for the Eastern Gulf Refining Complex as well as Export Complex.

Operator

Thank you. Our next question is from Shneur Gershuni from UBS.

Shneur Gershuni -- UBS -- Analyst

Hi, good morning guys. Just a quick question to start off. You sort of had some interesting language today with respect to the MPLX and ANDX is to -- how it potentially could fall out. I realized you can't formally comment on which path you're going to take, but I was wondering if you can talk about any goal [ph] metrics from a financial perspective? Although you did outline them, I guess my question is when do you want to get to those metrics, does it have to be when the two entities combine, the metrics need to be there on day one on the coverage and on the leverage side or does it -- if there is a path to it within the next 12 months to 18 months, is that acceptable? Just trying to understand that in the context of -- is there potential for cuts to both distributions dip -- if you need to be at the metrics immediately on day one, if you can sort of comment on that?

Michael Hennigan -- President & Director

Shneur when we look at this, and you're right, we have very little analysis. We've just embarked on this and we can't comment on that analysis today, but we did choose our words carefylly whether it's MPLX that may buy ANDX or vice versa of ANDX buying MPLX, and that will be determined over time. We have not set a calendar that it has to be done in a certain period of time, but as I spoke this morning on the MPC call, in this type of business and now MPLX being one of the biggest MLPs in the space, scale matters and -- and scale leads to efficiency. And -- so -- we don't have any bright line test that has to be done in a certain period of time, but it just makes sense that we go down that path. I'm not going to discuss any cutting of distributions at all. We have put out in the ANDX announcement last week that we were going to keep the distribution flat. It didn't say anything in that release about the distribution decrease. And so we are doing our analysis and we just continue to -- in the meantime operate as normal, but we'll do this analysis and see where it takes us. But I think that both opportunities are on the table depending on who the acquirer is.

Shneur Gershuni -- UBS -- Analyst

And as a follow up question with the Swordfish announcement and so forth, part of your answer to the prior question, what's the outlook for capital, I'm reversal? Is it finding [ph], when it comes to fruition. I know that this has probably been asked about for numerous times over the past 3 years, but are we finally there, especially with the ability to export and so forth?

Michael Hennigan -- President & Director

Yes Shneur , it's Mike. So what I said in the prepared remarks is, the three owners have been meeting frequently because the market interest obviously is not to move from South to North any longer. There is a desire in the market for both heavy sour as well as light sweet crudes to get to the Eastern Gulf market and the owners are looking at that as we speak and it's part of the overall strategy that we've deployed with the Swordfish Pipeline, it says, we got to be involved in that activity from an infrastructure standpoint. So it is an ongoing discussion, we'll give more color as it develops, but I can tell you that the market interest out there is -- is for North to South and not from South to North as the market has evolved.

Operator

Thank you. Our next question is from Spiro Dounis from Credit Suisse.

Spiro Dounis -- Credit Suisse -- Analyst

Hey, good morning everyone. I'm sort of start off with a two-part question on Northeast, maybe get the disparity, you call that aren't [ph] consensus estimates. And as you just saw Marcellus, just tell us what you're seeing and hearing from the upstream customers like AR and Range, just around the sustainability of that growth through '19? And then conversely, you just tried some color around Processing in the Utica. I think one of your competitors today said we should be seeing more or less bottoming there, wasn't if bias to the upside and that segment seemed to be a laggard this quarter?

Michael Hennigan -- President & Director

Yes, so I'll give you a comment and let let Greg also comment. So overall, I would tell you, we feel really strongly about the growth potential up in the Northeast. If you look year-over-year, our G&P segment is up over 20%. We're seeing strong growth in Marcellus wet as well as Utica dry. I know sometimes people try to bifurcate the two and look at them, but we kind of look at them holistically as producers kind of optimize around the asset base, but I think you're seeing in both Antero's, Ranges in the other producers disclosures there that we're pretty bullish about the opportunity set and the actual data continues to be very strong year-on-year. I'll let Greg add to that comment.

Gregory Floerke -- Executive Vice President, Gathering and Processing

This is Greg Floerke. To add on to what Mike said in terms of the Marcellus growth in our anchors customers, we continue to build plants and fill those and we've had steady growth. I think we've proven track record over the years and we don't -- NGL pricing is only driving more bullishness from that perspective. And likewise with the Utica, we do have some customers that crossover. We sort of look at the Marcellus and Utica together in terms of how our systems are integrated and the opportunity, and NGL pricing has been excellent high levels and that's driving rigs back over in the Utica. So we are seeing that and we are bullish about the future on Utica processing as well.

Michael Hennigan -- President & Director

Yes, I just want to add one other comment through -- for this year up in the Northeast, we have put in place six processing plants, we were in the process of doing that. We've already disclosed a couple for 2019 and at the Investor Day in early December we'll give more color as to what we look like. But I can tell you ahead of time that we still anticipating considerable growth up in that area.

Spiro Dounis -- Credit Suisse -- Analyst

Got it. I appreciate that. And then just going back to Capline, one of your peers announced pretty strong customer interest and potentially approaching FID in the next quarter so on Seahorse, which obviously gets you down to St. James. And so totally got you the fact that you guys are Brownfield and obviously very competitive, but curious if you and your partners on Capline will view that data point as reason to move faster on Capline reversal. Do you have the ability to do that? And Wood and FID on Seahorse changes any of the math or equation for you?

Michael Hennigan -- President & Director

Yes, so, I don't want to comment on the competitive projects other than I could tell you, inside the market right today there's many projects that are competing for this infrastructure opportunity. We believe that the most competitive is going to be existing assets as Gary mentioned earlier. Swordfish is existing assets in the ground, Capline is existing assets in the ground, there some connectivity that we can't talk about it yet, about -- of these projects that we think will also enhance the competitive nature. So we feel pretty strongly that with existing assets, we have a strong offering, a competitive offering that should be well received in the marketplace. Obviously, the alternative projects will be presented to the market as well and we just feel pretty confident that ours is a strong offering.

Operator

Thank you. Our next question is from Jerren Holder from Goldman Sachs.

Jerren Holder -- Goldman Sachs -- Analyst

Thanks, good morning. Mike, I would love to get your views on the ongoing NGL pipeline and fractionation constraints. How long do you think they last and what does this mean for MPLX?

Michael Hennigan -- President & Director

Sure, if you're talking about up in the Northeast, Jerren. Is that what you're referring to?

Jerren Holder -- Goldman Sachs -- Analyst

Gulf Coast, Midwest and how that impacts, what's going on in Northeast as well?

Michael Hennigan -- President & Director

It's starting up in the Northeast, the market is anticipating ME2 start-up, which we believe is coming shortly. We are in constant communication with Energy Transfer there and we're in the process of getting ready for start-up in the near term there. The Northeast system is pretty bottled up at this point and we need some relief there. As you know, the rest of the market is also in a similar situation, excess capacity is not available in most areas, so new builds are being deployed. We are active marketing our projects in a lot of different areas. I can't comment on everything, but I will say that we are attentive to the situation and we're looking to be part of the solutions there. In the Permian, we have announced a crude project and a natural gas project. We have not announced an NGL project to date, but we continue to work on that as a potential for the future as well. And then as you heard us say along the lines earlier is that we are attentive that all of these markets need export capability, whether it's crude or NGLs or gas and we are continuing to put a focus on export activity as well.

Jerren Holder -- Goldman Sachs -- Analyst

Great. And my follow-up, recognizing the comment on strong third quarter and how that probably implies that consensus maybe a bit low into 2019, what do you think the street is missing that has us a bit low?

Pamela Beall -- Chief Financial Officer

Yes, it's Pam. So I think the question that was asked earlier, not only do we have a strong quarter compared to a year ago, but strong sequential growth and we see that, that's sustainable and growing. And so we think maybe the street is missing some of the strength in the market on the Gathering and Processing side as well as the fact that we are growing many of the segments within the Logistics and Storage of the business. So we've been focused on not just the assets that are in place and escalations in rates, but also looking for ways to get higher utilization out of those assets, drive more volume through the existing assets that we have, which was your lowest form of capital and return improvement. So we've seen good growth really in both Gathering and Processing and Logistics and Storage and Mike highlighted some of the long-haul pipeline opportunities that will further propel the Logistics and Storage business well into the future.

Operator

Thank you. Our next question is from Michael Blum from Wells Fargo.

Michael Blum -- Wells Fargo -- Analyst

Thanks, good morning everyone. First question is just more of a clarification. Is the Whistler Pipeline project, is that now a fully sanction FID project, should we consider that going forward?

Michael Hennigan -- President & Director

We haven't announced that yet Michael. Our goal obviously is to be online by fourth quarter of 2020, so we're working hard at that, in order to meet that it won't be too much longer, where we have to decide whether we've reached FID or not. So we haven't disclosed that as a fully go project yet, but we're pretty confident in the interest in it, but we are continuing the work to try and meet the timeline that we've discussed.

Michael Blum -- Wells Fargo -- Analyst

Okay, great. And then a question about dropdowns actually. So I recognize you have a clearly robust organic slate, so you don't really need dropdowns anytime soon, but correct me if I'm wrong, I think there are still assets at least at the A and the B -- B level there were assets that could still get dropped down to the MLPs, so the question is kind of what -- what is still available upstairs and then should we assume that those assets would be dropped to MPLX or ANDX or will that just be deferred until after you merge the companies?

Gary Heminger -- Chairman & Chief Executive Officer

Yes that's going to be deferred until we really get our analysts -- analysis, I should say done around the company's. We will -- that's part of the analysis that we have ongoing. We are not -- by the time we get to the -- by the time we get to the Analyst Day meeting, we're really going to, I would say detour around a lot of questions on ANDX and MPLX because we won't have completed the work and have that direction complete yet by that time. But when it does, we will let you know what the dropdown inventory is at ANDV. We have limited dropdown inventory still at MPC, but yes, I guess it's kind of a high-grade issue because we have so many outstanding organic projects that Mike and his team have been developing and I think with projects like the Swordfish just makes all the sense is absolutely the best project for the producers to have the lowest transportation cost. So, we'll see what plays out over time.

Operator

Thank you. Our next question is from Tom Abrams from Morgan Stanley.

Thomas Abrams -- Morgan Stanley -- Analyst

I had a follow-up to that last question on ANDX choice one by the other vice versa. Is there a third choice in there somewhere because not every ANDX asset really fits with MPLX as it is structured today? Could you actually bring some of those assets up into the parent, the sponsor and just by the remainder into MPLX?

Gary Heminger -- Chairman & Chief Executive Officer

Well, we'll se,e but I think that's really probably a small part of the equation. When you look at any assets that may be -- really are there any assets that go up into the parent where we own them. So no, I don't know about anything else that we are -- we aren't looking at anything else today along those lines.

Thomas Abrams -- Morgan Stanley -- Analyst

Okay, and then on the Capline reversal, is there a chance that a portion of it, say the Memphis to Patoka portion is bidirectional?

Michael Hennigan -- President & Director

Yes, we're looking at everything Tom at this point. I guess, we're meeting and looking at the options that we have and I mentioned there is some connectivity, possibilities that we're still kicking around. I think the important thing for the market to know is the interest to move South to North is much, much less than it was before, obviously, and at this point we're concentrating much more on North to South movements than South to North.

Operator

Thank you. Our next question is from Dennis Coleman from Bank of America Merrill Lynch.

Dennis Coleman -- Bank of America Merrill Lynch -- Analyst

Yes, good morning. Thanks for taking my questions. I'd like to just focus a couple of questions on the Mt. Airy purchase and the terminal there and just make sure I understand some of the opportunity. So the capacity there, its third party leased storage so you don't -- you don't actually own the tanks, but you're suggesting that you could expand tanks up to 10 million, is that correct? Is that, how that works?

Michael Hennigan -- President & Director

No, Dennis what we are saying is the existing tank it's on the site today is about 4 million barrels and it's fully leased to third parties, but we own the facility, we own all the tankage there. We were just commenting that today the tank is -- it's on site is leased to the third parties. So what makes us excited about this opportunity is #1, it's an opportunity for us to synergize with MPC because the vicinity is close to Garyville, so we know there's going to be some opportunity within the Marathon Family. At the same time, we're also pointing out that there is a considerable amount of third party business that we also plan to grow. And we bought this facility just recently, closed on it obviously, but it's already permitted for the second dock and we're pointing out that we have 4 million barrels of storage with the ability to grow up to 10 million barrels. So there's a lot of upside to it, we're pretty excited about it at this point. The growth will be obviously developing the additional business both with MPC and with others and we're just trying to point out that we have both occurring at this point.

Dennis Coleman -- Bank of America Merrill Lynch -- Analyst

Okay, so that 10 million barrels is defined by the land position or permitting?

Michael Hennigan -- President & Director

Yes, we have a quite a bit of acreage there. And right now with the area that we have in the Phase 1 of this project is another dock and up to 10 million barrels of storage. Obviously, we can look for further opportunities, but we're at 4 million now, so what we're disclosing is the phases to try and take ourselves from 4 million to 10 million.

Operator

(Operator Instructions). And our next question is from Matthew Phillips from Guggenheim Partners.

Matthew Phillips -- Guggenheim Partners -- Analyst

Hey, guys. I just wanted to pick up on Gary's comments around -- around the LOOP. Clearly, the Swordfish project will indicates the LOOP. You expect the LOOP to be materially growing in terms of exports. What sort of reconfiguration CapEx timeline do you think you'll need on LOOP to fully configured to be a major export port? And what is the process there with the other owners compared to say the Capline process?

Gary Heminger -- Chairman & Chief Executive Officer

Yes, let me ask John Swearingen, who is the Chairman of LOOP to talk about that.

John Swearingen -- Chairman

Yes, good morning. LOOP is obviously very well positioned. They have -- they've done a fantastic job of trying to figure out how they can use their existing assets there and the existing main oil line to load the VLCCs. So they've got really a number of plans. One, just with the existing main oil line, but then there is also potential investments down the road to add more, so just tremendous capability that LOOP has to figure into some of these crude oil movements that Mike and Gary have talked about, very exciting.

Gary Heminger -- Chairman & Chief Executive Officer

But we already the capital is in -- it's already operational that we can export from there today. So we don't have much additional work to do right, John.

John Swearingen -- Chairman

That's correct. They've already made some movements and continue to respond to the market on cargos that are looking to get moved out. So they've done -- again just a fantastic job of utilizing the existing capital and the facilities that are there.

Matthew Phillips -- Guggenheim Partners -- Analyst

Got it. That's helpful. I mean -- switching topics a bit, this is pretty preliminary, but if Newfield does get acquired, that's a pretty strong vote of confidence for the STACK. This hasn't necessarily been a huge featured area for you all, I mean, how do you expect something like that to change your plans or present opportunities for increased growth in that area?

Gregory Floerke -- Executive Vice President, Gathering and Processing

This is Greg Floerke again. We actually -- we've had a great relationship and continue to have a great relationship with Newfield, they are great anchor customer in the STACK for us. We not only gather and process rich gas for them with our Omega plant, but we also gather crude oil for them. So we continue to see growth there and we would expect regardless of what moves forward on the M&A side to see that growth continue.

Operator

Thank you. I am showing no further questions at this time.

Kristina Kazarian -- Vice President, Investor Relations

Great. Well, thank you for joining us today and thank you for your interest in MPLX. Should you have additional questions or would like clarification on any of the topics discussed this morning, we will be available to take your calls. Alan, with that, I will turn the call back to you.

Operator

Thank you. This does conclude today's conference. You may disconnect at this time.

Duration: 43 minutes

Call participants:

Kristina Kazarian -- Vice President, Investor Relations

Gary Heminger -- Chairman & Chief Executive Officer

Michael Hennigan -- President & Director

Pamela Beall -- Chief Financial Officer

Jeremy Tonet -- JPMorgan -- Analyst

Shneur Gershuni -- UBS -- Analyst

Spiro Dounis -- Credit Suisse -- Analyst

Gregory Floerke -- Executive Vice President, Gathering and Processing

Jerren Holder -- Goldman Sachs -- Analyst

Michael Blum -- Wells Fargo -- Analyst

Thomas Abrams -- Morgan Stanley -- Analyst

Dennis Coleman -- Bank of America Merrill Lynch -- Analyst

Matthew Phillips -- Guggenheim Partners -- Analyst

John Swearingen -- Chairman

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