The rating on Hilcorp Energy I L.P., a private partnership that acquires, develops, and produces crude oil and natural gas, reflects the company's high all-in cost structure, highly leveraged financial profile, and volatile and capital-intensive industry. The rating also reflects the company's focused operational strategy, recently strong industry conditions, and large percentage of company-operated properties. Hilcorp's proved reserve base is small, approximately 150 million barrels of oil equivalent (boe) as of Dec. 31, 2007. Reserves are split between gas (59%) and oil (41%), and 71% are proved developed, located mainly in onshore southern Louisiana and Texas. Standard&Poor's Ratings Services estimates that Hilcorp's all-in cost of finding, developing, and producing reserves is high, greater than $40 per barrel. This
