Research Update: Hilcorp Energy I L.P. Upgraded To 'BB' On Price Deck Revision And Financial Policy; Outlook Stable

S&P Global Ratings recently raised its price assumptions for West Texas Intermediate (WTI) oil for the remainder of 2021 and 2022, and its Henry Hub natural gas price assumptions for the remainder of 2021, 2022, and 2023, resulting in meaningful improvement in credit measures and cash flows for private oil and gas exploration and production company Hilcorp Energy I L.P.. We expect this, combined with the company's priority of deleveraging through debt paydown at HE1 and unrestricted subsidiary Hilcorp North Slope LLC (HNS), to result in a much lower debt load and the potential for a more simplified capital structure over time. As a result, we are raising our issuer credit rating to 'BB' from 'BB-'. At the same time,

...- S&P Global Ratings recently raised its price assumptions for West Texas Intermediate (WTI) oil for the remainder of 2021 and 2022, and its Henry Hub natural gas price assumptions for the remainder of 2021, 2022, and 2023, resulting in meaningful improvement in credit measures and cash flows for private oil and gas exploration and production company Hilcorp Energy I L.P.. - We expect this, combined with the company's priority of deleveraging through debt paydown at HE1 and unrestricted subsidiary Hilcorp North Slope LLC (HNS), to result in a much lower debt load and the potential for a more simplified capital structure over time. - As a result, we are raising our issuer credit rating to '##' from '##-'. At the same time, we are raising our '##' issue-level rating on the company's senior unsecured notes. The '3' recovery rating is unchanged. - The stable outlook reflects our view that funds from operations (FFO)/debt will remain above 30% while debt to EBITDA declines below 3.0x on a consolidated...

Research Update