The ratings on privately held exploration and production (E&P) company Hilcorp Energy I L.P. reflect its below-average business profile, largely due to the cyclical and capital-intensive nature of the petroleum industry, and aggressive financial leverage. Although Hilcorp has a proven operational track record and low decline rates associated with its properties, its financial profile is strained due to excessive debt incurred to fund various financing activities. Hilcorp is a small limited partnership engaged in the acquisition, development, and production of crude oil and natural gas in Texas and South Louisiana. Geological risk offsets much of Hilcorp's business profile strength. Management's strategy to acquire properties and then augment production through workovers and downhole and surface facility enhancement creates a modest amount
