The ratings on Hilcorp Energy I L.P. reflect a below-average business profile and aggressive financial leverage. Hilcorp is a privately held, small, petroleum limited partnership engaged in the acquisition, development, and production of crude oil and natural gas in Texas and South Louisiana. The cyclical and capital-intensive nature of the petroleum industry contributes to Hilcorp's below-average business profile. Hilcorp's business profile is supported by a proven history of low finding costs, a strong operational record, and control over nearly 90% of its net production. The relatively low decline rates associated with Hilcorp's properties provide a degree of stability to the small reserve base. In addition, the company's aggressive hedging program mitigates commodity price risk. Material price hedging at favorable prices
