Fitch Affirms LOOP IDR at 'A-'; First-Stage Debt Upgraded to 'A+'.

CHICAGO -- Fitch Ratings has upgraded the ratings of the first-stage debt of LOOP LLC (LOOP) as follows:

--$60.5 million first-stage deepwater port revenue bonds and refunding revenue bonds (first-stage debt) to 'A+' from 'A'.

In addition, Fitch has affirmed LOOP's existing ratings as follows:

--Long-term Issuer Default Rating (IDR) at 'A-';

--Senior unsecured debt at 'A-';

--$71.1 million deepwater port refunding revenue bonds (unsecured debt), series 1998, 2000 and 2001 at 'A-';

--Short-term IDR at 'F1';

--Commercial paper at 'F1'.

The Rating Outlook is Stable.

LOOP's 'A-' IDR reflects its standalone credit profile absent the direct enhancement provided to first-stage debt through owner-supported throughput and deficiency (T&D) agreements.

The upgrade in the rating of LOOP's outstanding first-stage debt reflects the improvement over time in the blended credit quality of the owners of LOOP which is now the equivalent of 'A+'. LOOP's owners are U.S. subsidiaries of Royal Dutch Shell plc (46.1%; Fitch IDR of 'AA+'), affiliates of Marathon Oil Company (50.7%; Fitch IDR of 'BBB+'), and Murphy Oil Corp. (3.2%). The first-stage debt continues to receive the structural benefits of the right to receive payments under the T&D agreements with LOOP's owners. Under the T&D agreements, the owners are obligated to ship or cause to be shipped through LOOP enough oil to enable LOOP to meet its operating expenses and debt service on all first-stage debt. Alternatively, the owners would make cash payments to LOOP for which they would receive a credit for future throughput. Obligations under the T&D agreements are several, not joint.

The unsecured debt rating of 'A-' reflects the fact that these securities rank pari passu to the first-stage debt but do not share in the extra credit enhancement provided under the T&D agreements. Fitch, however, continues to expect throughput volumes from owner and non-owner shippers to provide sufficient cash flow to support LOOP's non-T&D backed debt. EBITDA should continue to cover interest on unsecured debt by a comfortable margin for the foreseeable future.

LOOP's ratings continue to be supported by the predictable cash flows from the offloading and throughput of crude oil from the deepwater platform and growing storage and rental revenue from the company's underground storage caverns and tank farm near Galliano, Louisiana. Given that U.S. onshore production is in a long-term natural decline, Fitch considers it unlikely that U.S. demand for water-borne imports will deteriorate materially over the foreseeable future as throughput through the offshore platform and main oil line has risen to nearly 1.2 million barrels per day in recent quarters. Storage revenues have also spiked recently as shippers on LOOP have capitalized on the contango markets for crude oil. Although LOOP's storage revenue from the Mars development suffered from the significant damage to the Mars platform from hurricane Katrina in 2005, Mars production has rebounded in recent months to approximately 190,000 barrels per day which is 20% higher than pre-hurricane levels. Additional storage revenues are anticipated in 2008 from the Thunder Horse development, which has been delayed due to structural problems with the development's subsea system.

Credit concerns include ongoing competitive pressures from short-haul tankers capable of bypassing LOOP, the potential for growing deepwater Gulf of Mexico (GOM) oil production to displace portions of foreign imports, increasing competition in Midwest markets from Canadian crudes, and possible operating disruptions resulting from future GOM storm activity.

LOOP's outstanding debt is issued by the Louisiana Offshore Terminal Authority with principal and interest payable from and secured by a pledge of installment payments from LOOP. LOOP's floating-rate debt issues receive the structural support of irrevocable letters of credit from third-party financial institutions and are not rated by Fitch.

LOOP is a Delaware limited liability company (LLC) that owns and operates a deepwater oil port located in the Gulf of Mexico, approximately 18 miles offshore from Louisiana. LOOP operates as a common carrier and is governed by the U.S. Department of Transportation and the Louisiana Offshore Terminal Authority.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.