Participation in the highly volatile and capital-intensive exploration and production (E&P) industry Moderate reserve size with a significant exposure to natural gas, for which the price outlook remains unfavorable compared to oil Successful operational strategy Low debt leverage Significant capital spending program Although leverage has remained historically moderate, intense acquisition and divestiture activity could cause volatility in debt ratios The stable outlook on Hilcorp Energy I L.P. reflects Standard&Poor's Ratings Services' expectation that the company will maintain steady operating performance in its core regions while maintaining debt leverage of 2.5x or less. We could lower ratings if Hilcorp's debt leverage exceeded 3.25x with no near-term remedy. This would likely be due a large debt-financed acquisition. Our ratings on
