Research Update: Hilcorp Energy I L.P. ?BB-? Ratings Affirmed On Improved Liquidity Profile After Transaction, Outlook Stable

In S&P Global Ratings' view, a restricted group reserve-based lending facility affirmed at $1.7 billion, receipt of contingent seller financing, and improved expected credit ratios alleviate liquidity pressure on U.S.-based oil and gas exploration and production company Hilcorp Energy I L.P. As a result, we are affirming our 'BB-' issuer credit rating on the company and removing it from CreditWatch, where we placed it with negative implications on August 29, 2019. At the same time, we are affirming our 'BB-' issue-level rating on the company's senior unsecured notes. The '3' recovery rating is unchanged and indicates our expectation for meaningful (50%-70%; rounded estimate: 65%) recovery of principal in the event of a default. The stable outlook reflects our view that

...- In S&P Global Ratings' view, a restricted group reserve-based lending facility affirmed at $1.7 billion, receipt of contingent seller financing, and improved expected credit ratios alleviate liquidity pressure on U.S.-based oil and gas exploration and production company Hilcorp Energy I L.P. - As a result, we are affirming our '##-' issuer credit rating on the company and removing it from CreditWatch, where we placed it with negative implications on August 29, 2019. - At the same time, we are affirming our '##-' issue-level rating on the company's senior unsecured notes. The '3' recovery rating is unchanged and indicates our expectation for meaningful (50%-70%; rounded estimate: 65%) recovery of principal in the event of a default. - The stable outlook reflects our view that financial metrics are in line with our two-year expectations for the rating. While we anticipate Hilcorp will modestly deleverage as oil prices recover under our price deck assumptions, we expect debt to EBTIDA in...

Research Update