Research Update: Hilcorp Energy I L.P. 'BB+' Ratings Affirmed On Solid Cash Flow Generation; Outlook Stable

We expect U.S.-based privately held oil and gas exploration and production company Hilcorp Energy I L.P. (HEI) to generate solid free operating cash flow (FOCF) this year, slightly improving credit measures. We affirmed our 'BB+' issuer credit rating on Hilcorp. At the same time, we affirmed our 'BB+' issue-level and '3' recovery rating on HEI's senior unsecured notes. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default. The stable outlook reflects our view that funds from operations (FFO) to debt will be 35%-40% in 2024, improving to 45%-50% in 2025, driven by relatively supportive commodity prices and a continued reduction in debt-like obligations. The stable outlook on HEI

...- We expect U.S.-based privately held oil and gas exploration and production company Hilcorp Energy I L.P. (HEI) to generate solid free operating cash flow (FOCF) this year, slightly improving credit measures. - We affirmed our '##+' issuer credit rating on Hilcorp. - At the same time, we affirmed our '##+' issue-level and '3' recovery rating on HEI's senior unsecured notes. The '3' recovery rating indicates our expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of a payment default. - The stable outlook reflects our view that funds from operations (FFO) to debt will be 35%-40% in 2024, improving to 45%-50% in 2025, driven by relatively supportive commodity prices and a continued reduction in debt-like obligations....

Research Update