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Executives

William Davis - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Chief Financial Officer of Crosstex Energy GP LLC and Executive Vice President of Crosstex Energy GP LLC

Barry Davis - Chairman, Chief Executive Officer, President, Chief Executive Officer of Crosstex Energy GP LLC, President of Crosstex Energy GP LLC and Director of Crosstex Energy GP LLC

Jill McMillan - Director of Public and Industry Affairs

Analysts

John Edwards - Morgan Keegan & Company, Inc.

Sharon Lui - Wells Fargo Securities, LLC

Darren Horowitz - Raymond James & Associates, Inc.

Crosstex Energy (XTXI) Q2 2011 Earnings Call August 5, 2011 11:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Crosstex Energy Second Quarter 2011 Earnings Conference Call. My name is Keith, and I'll be your operator for today. [Operator Instructions] As a reminder, today's conference is being recorded for replay purposes. And I would now like to turn the conference over to your host for today, Ms. Jill McMillan, Director of Public and Industry Affairs. Please proceed, ma'am.

Jill McMillan

Thank you, Keith, and good morning, everyone. Thank you for joining us today to discuss Crosstex Second Quarter 2011 Results. On the call today are Barry Davis, President and Chief Executive Officer; and Bill Davis, Executive Vice President and Chief Financial Officer. Also, Mike Garberding, Senior Vice President of Finance and Business Development; and Steve Spaulding, Senior Vice President of Processing and Natural Gas Liquids, are on the call today as well. Mike and Steve will be available during the Q&A to answer questions about some of the growth projects mentioned on the call. We have posted slides on the Homepage and Investor page of our website that Barry Davis will use as part of his discussion of our growth projects. You can refer to them during this portion of the call or revisit them later.

Our second quarter 2011 earnings release was issued yesterday evening. For those of you didn't receive a copy, it is available on our website at crosstexenergy.com. If you want to listen to a recording of today's call, you have 90 days to access the replay by phone or webcast on our website.

I will remind you that any statements that might include our expectations or predictions should be considered forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to a number of assumptions and uncertainties that may cause our actual results to differ materially from those expressed in these statements. And we undertake no obligation to update or revise any forward-looking statements. We encourage you to review the cautionary statements and other disclosures made in our SEC filings, specifically those under the heading Risk Factors. I will now turn the call over to Barry Davis.

Barry Davis

Thank you, Jill. Good morning, everyone, and thank you all for joining us on the call today to discuss our second quarter 2011 earnings. We're very pleased to deliver strong second quarter results, which demonstrate the continued successful execution of our plans. As I've mentioned before, we have 2 overarching objectives this year. The first objective is to maximize the company's earnings and growth from our existing businesses.

During the second quarter, our assets continued to perform extremely well and we delivered our 10th consecutive quarterly improvement in EBITDA, an increase of about 61% over that same period. Adjusted EBITDA for the second quarter was $55.4 million, up 23% from the second quarter of 2010. Distributable cash flow was $32.9 million, a 44% increase over the same period last year. As part of our first objective, we recently completed 3 projects: 2 sizable gathering system expansions in the Barnett Shale in North Texas, and the restart of our fractionator at Eunice in South Central Louisiana.

Our second objective is to expand our business to increase scale and diversification. We began our pursuit of step out growth opportunities in mid-2010 and our plan is on track.

Now I'd like to focus on our recently announced growth projects and provide more detail around each opportunity and the benefits we expect to realize. Before I discuss each of them in greater detail, let me remind you of our previously stated strategies for expansion, which are noted on Slide 3 of the PowerPoint slides.

The projects that we have announced are exactly the types of opportunities that we have been targeting and they touch on each of these strategies. The first is to acquire assets that serve as a platform for growth in target areas. The second is organic build of new infrastructure in emerging shale plays. And the third is to utilize existing NGL crude infrastructure so that we can provide services in new regions.

The first project we announced recently was the Howard Energy Partners transaction in late June. Please see Slides 5 through 9 in the PowerPoint. This strategic investment provides us with an important growth platform in the rapidly developing Eagle Ford Shale play, a new geographic area for Crosstex.

Slide 6 gives you a great overview of the Eagle Ford area. The investment also brings together a great group of industry leaders with Howard Energy Management, Quanta Services and Crosstex. Howard's experience in large scale and emerging shale developments and Quanta's construction experience provide the group the depth and overall ability to develop and execute midstream projects in the Eagle Ford. Crosstex and Quanta Services, a leading pipeline construction contractor in the industry, each provided an initial capital contribution of $35 million for a combined ownership interest of about 70% in Howard Energy. Crosstex is working closely together with Howard Energy to develop new projects in the Eagle Ford.

To give you some background, Howard Energy began operations with the acquisition of the Texas pipeline and bottom line services for $76 million. Howard provides midstream and construction services to Eagle Ford Shale producers through these subsidiaries. You'll see on the map on Slide 9, that Howard assets are well-positioned and will serve as a platform for growth in the Eagle Ford. Large producers operate more than 900,000 acres in the vicinity of Howard's assets. Most of the base business is fee-based revenue, and it has just executed a very large new central delivery point contract with a major producer.

Howard Energy Chairman and CEO, Mike Howard, and his team are experienced leaders with a strong track record of successful midstream project executions. We know Mike very well as he served as Vice President of Engineering and Operations for Crosstex several years ago, and has had bigger roles with large midstream companies since he left us.

Now turning to our project with Apache, which you can find on Slides 10 through 14. On July 12, we announced a joint venture with Apache Corporation in the Permian Basin in West Texas shown on Slide 11. Both parties will hold a 50% interest in the $85 million gas processing project. If you look at Slide 14, you'll see the project is in Glasscock County. There are approximately 320 rigs running in the Permian Basin today, an increase of 38% from just a year ago. Apache, currently operating approximately 24 rigs in the greater Permian, is one of the largest producers of the region and we are very excited about creating a great working relationship with them.

Crosstex has worked hard to develop a creative solution with Apache to ensure the highest product recoveries and a market outlet for their NGLs in the initial phase of the project, an interim processing solution, compression and residue gas take away for Apache's Deadwood development. We expect this phase to be operational by the fourth quarter 2011. A cryogenic gas processing facility with a capacity of 50 million cubic feet of gas per day is expected to be operational in the second quarter of 2012. Crosstex will be the construction manager and operations manager for each of these facilities.

Separately, we purchased a rail terminal and idle fractionation facilities in nearby Midland County. We refer to this facility as our Mesquite terminal. This facility is connected to the Chevron West Texas NGL pipeline. Initially, we will refurbish the facility and expand and modify it so that we can receive about 7,500 barrels per day of NGLs by pipeline and deliver NGLs and other products by pipeline to Mt. Belvieu and by rail to our Eunice fractionator in South Central Louisiana for fractionation and sales.

The Mesquite terminal should be completed and in operation in the fourth quarter of this year. This facility will provide much-needed NGL take away from the Permian Basin, which is constrained until additional NGL pipeline capacity is built out of the area. The facilities can be easily expanded to handle up to 12,000 barrels of NGLs and we are working hard to add facilities that will allow us to receive crude and condensate by truck and ship -- I'm sorry, by truck and ship it by rail to premium Louisiana and other Gulf Coast markets. We also plan to move purity products to regional demand centers via existing products pipelines that are near the facility.

Together, these 2 transactions create a significant footprint for Crosstex in a new production area of the Permian Basin. Like in the Eagle Ford Shale, producers are very active in the Permian Basin because of the rich gas and crude in the play. The recent development activity has overrun the midstream infrastructure, so we expect to see additional opportunities to grow in this new area. This is exactly the type of investment opportunity that we have been targeting, an entry into a new geographic area that is very active and will create additional growth opportunities for us.

And now moving on to the third project that we announced just last week, the Cajun Sibon NGL pipeline extension and Eunice fractionator expansion. Please refer to Slides 15 through 17. This project will connect the rapidly growing NGL supply that is currently destined for the Mt. Belvieu market area with the South Louisiana petrochemical plants, which have seen significant declines in local supplies due to the production declines that we've experienced in the Gulf of Mexico.

The new pipeline will be an extension of Crosstex's 440-mile Cajun Sibon NGL pipeline that is connected to our fractionation facilities in South Central Louisiana. The approximately 130-mile 12-inch diameter extension will originate from interconnections to major Mt. Belvieu supply pipelines, providing connectivity for NGLs from the Permian Basin, Midcontinent, Barnett Shale, Eagle Ford and Rocky Mountain areas to our NGL fractionation facilities in Southern Louisiana. The extension will have an initial capacity of 70,000 barrels per day of NGLs.

Slide 17 shows the pipeline extension's strategic location. The project also includes the expansion of our Eunice NGL fractionation facilities from 15,000 barrels to 55,000 barrels per day, which will increase our interconnected fractionation capacity in Louisiana of approximately 97,000 barrels per day. Current estimated capital for this project is $180 million to $220 million.

A significant milestone for this project was our execution of a long-term ethane sales agreement with Williams Olefins, a subsidiary of the Williams Companies, which provides us a secure market for the key product in the project.

On the supply side, we have equity supply from our Texas gas plants and commitments for raw mix supply for a select group of NGLs suppliers. And we are negotiating additional long-term commitments for the system expansion. We have also started our right of way in permitting work, and we are completing our design work for the facilities. Assuming that we complete that permitting and commercial arrangements as planned, pipeline construction is expected to begin in the second quarter of 2012 and the facilities are expected to be operational in the first quarter of 2013.

This project is the ideal foundation for expansion of our integrated NGL system and optimization of our existing assets. It creates great optionality for our Louisiana assets, with the ability to take advantage of the increasing demand for fractionation and NGL handling as producer pursued developing liquids rich natural gas shale plays. We will now be able to offer midstream and producer customers and integrated NGL transportation, fractionation and marketing alternative to Mt. Belvieu. We expect each of these projects, Howard Energy, the venture with Apache and our NGL expansion to have a rate of return in the high teens.

Finally, I'd like to update you on our crude terminalling operating opportunity. Please see Slides 18 through 20. We are modifying the rail, truck, pipeline and barge facilities at our Eunice and Riverside fractionators for use as crude oil terminals. They will be able to receive 5,000 to 6,000 barrels per day in Phase 1 of the project, which could be expanded to up to 50,000 barrels per day. This is a low-cost, high-return opportunity to expand the use of these existing facilities. This project puts us in a position to take advantage of the crude pricing differentials that exist in today's market by providing quick access to the premium Louisiana market.

As shown on Slide 19, U.S. crude oil production and supply continues to decline. In 2009, U.S. crude production increased for the first time in 25 years. And the oil rig count has increased from about 365 to almost 900 rigs since the beginning of 2010. Regional infrastructure bottlenecks have created substantial differentials to the Louisiana Gulf Coast Crude, Louisiana Life Suite, LLS markets, a benefit to Crosstex's physical asset position.

You can see that we've been working hard on our growth strategies, expanding into new geographic areas and markets, enhancing scale and diversifying our operations. In fact, our growth capital spend in the first 6 months of 2011 has been approximately $79 million, and we expect to spend another $50 million in the second half of year on the projects that we've announced to date. We are extremely excited that we have strong relationships, the financial flexibility and the right people to pursue these ventures while continuing to look at additional business opportunities.

Now I'll turn the call over to Bill, who will discuss our second quarter 2011 operational and financial results in detail.

William Davis

Thanks, Barry. Good morning, everyone. As Barry said, our operating results are quite robust in this quarter and I'm going to review the details of those results with you. The biggest volume change we see is in North Texas, where throughput on our North Texas gathering systems was 826,000 MMBtus per day, an 18% increase over the volumes that we experienced in the prior quarter. This increase is largely attributable to the Benbrook and Fossil Creek gathering system expansion projects that Barry mentioned.

Similarly, our North Texas plants processed 269,000 MMBtu per day in the second quarter versus 214,000 MMBtu per day in the first quarter. This 55,000 MMBtu per day or 26% increase is also a result of the Benbrook expansion project. It's interesting to note that daily production in the Barnett as a whole hit another all-time high of about 5.8 Bcf per day during the second quarter of 2011, despite considerably fewer rigs running in the play. I think we can say that the reports of the Barnett's demise were greatly exaggerated.

Moving to Louisiana. Our LIG pipeline system provides 465 million per day of fully contracted take away capacity per gas from the Haynesville shale, with a volume weighted average remaining life of approximately 5 years on those contracts. In addition to the Haynesville, we have set exposure to several other plays in various stages of development, including the Austin Chalk and the Tuscaloosa Marine Shale. There continues to be a lot of activity around these plays by producers who are targeting liquids rich production.

Second quarter throughput on our LIG system was about flat with the first quarter of 2011. In our processing business in LIG, as you know, we connected Gibson to the Pelican plant several months ago, allowing us to keep more of the recovered liquids in our fractionation facilities. This accounted for the decline in LIG processing volumes in the quarter from 258,000 MMBtu per day in the first quarter of 2011 to 236,000 MMBtu per day in the second quarter of 2011.

In our PNGL assets, we're seeing strong results from our processing and NGL business. This is primarily due to higher fractionation volumes and higher processing margins. Second quarter 2011 processing volumes were 881,000 MMBtu per day compared to 921,000 MMBtu per day in the first quarter of 2011. The decrease was primarily the result of volume fluctuations at our Blue Water plant. NGLs fractionated during the second quarter 2011 remained about constant with the first quarter 2011, despite the decline in processing volumes due to capturing a somewhat richer stream of gas.

Obviously, there's growing demand for fractionation in NGL marketing as producers make developing liquids rich shale plays including the Eagle Ford, Granite Wash, Marcellus, the Bakken and the Permian a priority. These areas have restricted or undeveloped interest infrastructure which led directly to our Apache, Mesquite and Cajun Sibon projects. We offer producers in these regions interim solutions by transporting our NGLs via truck and rail to our Louisiana fractionators.

Currently, we're receiving truck and rail volumes of approximately 10,000 barrels per day, including about 3,000 barrels per day from the Marcellus. We expect our truck and rail volumes to continue to grow as producer activity increases in these plays and the West Texas Mesquite terminal begins operations.

We restarted our Eunice fractionator in South Central Louisiana in early April at an initial capacity of 15,000 barrels of NGLs per day and plan to add capacity as part of our Cajun Sibon NGL pipeline expansion project. We're also in the process of adding the capability to deliver overflow volumes of NGLs from Riverside to our Plaquemine plant for fractionation. And as Barry discussed earlier, we're making other big changes to increase our capacity to handle NGLs and continue to look for additional opportunities across our entire Louisiana system.

Now I'll turn to our financials for the second quarter. And in our earnings release, you'll find reconciliations of certain non-GAAP items to their GAAP equivalents, which we'll discuss on the call today. Please refer to the earnings release for these reconciliations. In addition, our 10-Q will be on file this morning with the SEC, which you can access for more details on our results.

We're very pleased with our results as you've heard, as we continue to strengthen our balance sheet and reduce leverage. The continuation of strong cash flows enabled us to end the quarter with the debt-to-EBITDA ratio of 3.9:1. In addition, we have approximately $360 million in liquidity available under our credit facility. The continued strong cash flows allowed us to increase our distribution from $0.29 to $0.31 per unit and the dividend from $0.09 to $0.10 per share, increases of 7% and 11%, respectively, over the prior quarter. With distribution coverage of over 1.5x, we're retaining over $11 million of cash this quarter to be reinvested in the business and reduce leverage.

Turning to the second quarter 2011 results, we realized EBITDA of $55.4 million, an increase of almost 23% over the $45.2 million in the same period of 2010. As Barry has said, we've now increased EBITDA for 10 straight quarters. Gross operating margin for the second quarter was $96.6 million, an increase of $12.6 million from the second quarter 2010. The improvement resulted from continuing strong processing economics as evidenced by the strength of natural gas liquids prices and NGL-to-gas ratio and increased gathering and transmission volumes. We had a weighted average NGL price of $1.24 per gallon and an NGL-to-gas ratio of 325% during the second quarter of 2011, compared with NGL prices of $0.98 per gallon and an NGL-to-gas ratio of 261% in 2010.

Fractionated volumes continue to grow, increasing approximately 25% in the second quarter of 2011 over the same period in 2010. We've also continued to add commodity hedges to hedge our percentage of liquids contracts on processing margin contracts. We are 58% hedged of our 2011 hedgeable percentage of liquids volumes, excluding our puts. And if you count the puts, we've hedged over 90% of hedgeable percentage of liquids volumes for the year. In addition, we hedged over 60% of our hedgeable processing margin volumes for 2011. We continue to look at our hedges for 2012 and layer in hedges for both percentage of liquids and processing margin contracts.

Currently, we've hedged about 38% of our target percentage of liquids volumes for the year 2012 and approximately 32% of our 2012 processing margin contracts. As you know, we only used product-specific hedges in the forward liquids markets. And you can find a complete update of our current hedged position in our 10-Q filing.

We received several inquiries about future capital market activities to support our new projects, which totaled almost $300 million in growth capital. As you might expect, we'll be in the market for equity over the next 18 months to continue our deleveraging process and support our growth projects. Since we have so much availability and liquidity under our revolving credit facility, we'll be opportunistic in addressing the timing of accessing that market.

Turning briefly to Crosstex Energy, Inc. The corporation had a second quarter ending cash balance of approximately $4.7 million with no debt. As I previously stated, the corporation declared a dividend of $0.10 per share.

Now I'll turn the call back to Barry.

Barry Davis

Thank you, Bill. I think it's clear that we've made great progress and have accelerated the execution of our growth strategy. Through our recent development projects, we have demonstrated our capability to creative solution for our producers and we've also made strategic steps into 3 new operating areas and services. These are key steps to expand the scale and diversification of our assets and operations. We're excited to be operating in a very robust midstream environment for new midstream infrastructure build, and we intend to see more growth in the future. We are well-positioned with great assets and great people. As I've said before and it's worth saying again, our vision in 2011 and beyond is to be the best midstream energy solutions provider for our customers and to enhance value for our investors. We are confident we will continue to succeed.

Now I'll turn the call back to our operator, Keith, and remind you that Bill, Mike, Steve and I will be happy to answer any questions that you may have.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question is from the line of Darren Horowitz with Raymond James.

Darren Horowitz - Raymond James & Associates, Inc.

Just a couple quick questions. And appreciate the color that you guys provided via the slides for all the different growth projects. But as it relates to the Permian, Bill, can you talk a little bit about the opportunity to kind of increase your scale there? Because just looking at what you've already announced, like at Mesquite, for example, you're right, I mean that's going to give you a lot of NGL pipe capacity. But even if it goes to 12,000 barrels of NGLs, I would still imagine based on the volumetric ramp that you need more capacity than that. So I'd love your thoughts.

Barry Davis

Darren, let's let Mike Garberding respond who has really led us on that project. Mike, go ahead.

Michael Garberding

Yes, Darren. First, we're really pleased about the strategic position of the Permian and associated growth. Second, we are really focused on the successful implementation of the Apache Deadwood project. We believe that we're going to have a long successful relationship with Apache and ultimately, that will lead to additional opportunities with them. When you look at the Deadwood project itself, it is very strategically located in Glasscock County. There are a lot of other producers around there that we have been talking with from a growth perspective. On the Mesquite terminal itself, it does provide additional opportunities beyond just the NGL takeaways as we mentioned. We are looking at truck to rail in crude and condensate. We're looking at moving other purity products in and out of that facility. So I think you'll see as time moves on, how we can expand these services out of that facility beyond just the NGL take away to the Eunice facility.

Barry Davis

And Darren, I would say to the extent that we do expand the capacity, certainly we're very active in the contracting with the new pipelines coming out of West Texas. And we don't expect there would be a shortage of capacity ultimately out of that area if the pipes get built, and we expect that they will get built. So we think it will be there. We think Mesquite is a great interim solution and will fit our needs for not only the Deadwood opportunity, but some other things that we're working on.

Darren Horowitz - Raymond James & Associates, Inc.

Okay. Shifting gears over to the Cajun NGL extension and all the associated projects that you're doing there. When you're looking at kind of breaking that apart as it relates to the total capital cost of $180 million to $220 million. If I'm thinking about expansion of the frac, expanding the connectivity as well as for some of the product lines, am I correct in assuming that, that chunk could be somewhere between $45 million and $75 million, which would leave the price tag on that 130-mile 12-inch line somewhere around $135 million, is that right?

Barry Davis

You're in the ballpark, Darren. It's a great -- the pipe itself is the great majority of the capital associated with the project, and I'd say that $135 million to $150 million range is what we're seeing on the pipeline.

Darren Horowitz - Raymond James & Associates, Inc.

Okay. And then as it relates to Eunice, with that going up to 55,000 barrels a day, correct me if I'm wrong but when you all first that brought that on, it was about 15,000 barrels a day of about 36,000 of installed capacity, right? So really on a net basis, you're adding about 19,000 barrels a day of nameplate capacity, correct?

Barry Davis

That is correct. We will be restarting the other phase of the original capacity, as well as been adding a third train, if you will, for the additional expansion. And Darren on the capital, I mean the reason for us having the range of capital at this point is really some conservativeness on our part as we really get through -- I mean the pipeline is pretty predictable and again, that's the majority of the project. We just got some -- a little less certainty in working through the details, if you will, on the expansion and the start-up of the Eunice facility. But we'll tighten that range up shortly and as we continue to communicate of the projects.

Darren Horowitz - Raymond James & Associates, Inc.

Last question. As you think about leveraging that Eunice footprint, how much of an opportunity do you have out of the tailgate for purity products? I mean I would think that with all the inlet volumes coming in, the raw make coming in, especially given kind of the production profile that you'd laid out from a lot of those volumes moving from west to east, it would seem to me like you've got tremendous opportunity to get a greater downstream connectivity out of that tailgate of that plant, right?

Barry Davis

Yes. Darren, again we think this project, it has been received extremely well in the marketplace. But we think it's a terrific alternative to Mt. Belvieu, essentially having the same product pricing, having the same fractionation pricing, but really offering a geographic diversification and that in itself is really attractive to the producers. Again what we're trying to do is backfill, if you will, the raw make that has declined from the Gulf of Mexico and Steve, I'll let you -- Steven Spaulding comment on anything additional and as far as the opportunities on the market behind the fractionation.

Steven Spaulding

Well, of course, in the capital, we've spent quite a bit of capital developing that infrastructure to make sure that we can get to the market as far as the frac expansion and product deliveries. There are potential expansions which, I believe, we are looking at to really improve product pricing there too to take advantage of that opportunity that we're creating by bringing that product into the market. Just like Barry said, the Gulf of Mexico is seeing declines over the last 10 years and that impacted -- the demand has remained relatively constant over that time. We're very confident in developing and having outlets for our products.

Barry Davis

I would say some of the indications for additional expansions in that area, we certainly would be in a good position to be a part of that and for interconnections to those new facilities. So a great position for us to have. We're excited about the potential commercial development over time.

Operator

And your next question is from the line of Sharon Lui with Wells Fargo.

Sharon Lui - Wells Fargo Securities, LLC

I guess in terms of the projects, can you maybe just talk about the timing on when you would achieve those targeted returns? Is there expected ramp up in the cash flows?

Barry Davis

Yes. Bill, you want to...

William Davis

Yes, there is. On Howard, we don't expect to see any distributions on that for the first year. So about the midpoint of 2012, we expect to start seeing the distributions come from there and so we'd expect to see those targeted returns at that point in time. In the Apache mesquite project, there's going to be a stair step where it gets to its full production run rate in about 2016. And in the Cajun Sibon, it will start cash flowing in 2013 and get to full run rate cash flows in 2015.

Sharon Lui - Wells Fargo Securities, LLC

Okay, great. And also if you could provide some details on the capacity commitments you secured for the NGL extension?

Barry Davis

Yes. Sharon, this is Barry. Let me say first of all, we are very confident in our ability to get this project underwritten. We've got significant or important key commitments to date and are in late-stage negotiations with other key parties on the supply side. As we've said, on the ethane side, we've got the contract with Williams that is really the strategic piece there. We're also negotiating long-term agreements and are in a good position on the additional products off of the fractionators. So we're very confident in our ability to get this to final commercial commitments and feel really good about the project.

Sharon Lui - Wells Fargo Securities, LLC

Great. And all of these projects, do they all generate a fee-based cash flows including processing agreements?

William Davis

They are all fee-based, Sharon. There's no commodity exposure on any of these.

Operator

[Operator Instructions] Your next question is from the line of John Edwards with Morgan Keegan.

John Edwards - Morgan Keegan & Company, Inc.

Just another follow-up on the Cajun Sibon NGL extension and the Eunice fractionator. You're saying they're all fee-based cash flows with no commodity exposure. Would you have any opportunity to participate in commodity exposure if you so chose?

Barry Davis

We do have that opportunity, John. I'd just say our contemplated structure on this, though, is it will be fee-based. And so we'll look at and do have the opportunity to have exposure depending on -- and probably that would be the last few percentages of the commercial commitments, if you will. We'll have it underwritten with a large percentage of fee-based and we could do some things on top to give us some exposure.

John Edwards - Morgan Keegan & Company, Inc.

Okay. And then the ramp through 2015, that's -- about what percentage are you -- I mean what kind of a ramp are you expecting on that? Is it about 25% a year or something?

William Davis

Yes, I'd say it goes from 60% to 80% to 100%.

John Edwards - Morgan Keegan & Company, Inc.

Okay. And then a couple of housekeeping items. What was the growth CapEx spend this quarter so far this year and what are you expecting to spend this year?

Barry Davis

Year-to-date is $79 million, $50 million is expected in the second half based on the commitments that we've made or the announced projects that we've communicated.

John Edwards - Morgan Keegan & Company, Inc.

Okay. And so with the $300 million in growth CapEx, the $50 million, that would be included in that?

William Davis

Yes, most of that spending obviously -- I mean of the $79 million so far this year, John, $35 million is associated with the investment in Howard. The $50 million is mostly related to completion of the Apache Mesquite project and then some of it is in the early phases of the Cajun Sibon expansion. Most of the Cajun Sibon spending takes place in 2012.

John Edwards - Morgan Keegan & Company, Inc.

Okay, so roughly you expect to spend about $150 million next year in round numbers?

William Davis

I would say it's probably closer to $200 million.

John Edwards - Morgan Keegan & Company, Inc.

Okay. And in terms of your sensitivity metric that you guys often update, what's the sensitivity metric looking like now? This is to commodity prices?

William Davis

Well, I'd say that we've got -- as you know, that question gets complicated when you look at the processing margin. When you just look at straight POL exposure, it's still $0.10 roughly and it's as a change in your average liquids price equates to roughly $3 million of margin. Currently, we'd say that about a 5% change in the NGL-to-gas ratio is also about $3 million. I think we'll probably put out some more detailed guidance on that in the coming weeks, John, probably associated with the presentation at the investor conference that we'll be doing in the next couple of weeks. So we'll provide a lot more detail and color on that.

John Edwards - Morgan Keegan & Company, Inc.

Okay. And I think you mentioned something about liquidity in your remarks. I just missed it. If you could repeat that?

William Davis

Yes, it's -- availability under the facility today is a little over $360 million.

Barry Davis

Thanks, John. And John and to others on the call, I think there've been several questions on this. As we get a little further into the project, the Cajun Sibon project, we will give much more detail on the projected cash flow buildup and the CapEx spending. So just be patient with us there for a little bit and we'll give you some more detail on that soon.

Operator

And there are no other questions at this time, so I'd like to hand the call back over to you, Mr. Davis, for closing comments.

Barry Davis

Okay, great. Thank you, Keith. And again to everyone on the call, thank you for your participation today. We do very much appreciate your support and we feel very good about the message we've delivered for you today. We look forward to talking to you next quarter and the continuing the great progress and success that we're having. Have a great day and a great weekend.

Operator

Ladies and gentlemen, that concludes today's conference. Thank you for joining us. And you may now disconnect. Everyone have a great weekend.

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