The ratings on Hilcorp Energy I LP reflect a below-average business profile and aggressive financial leverage. Hilcorp is a small, privately held, petroleum limited partnership (LP) engaged in the acquisition, development, and production of crude oil and natural gas from onshore Texas and South Louisiana properties. The cyclical and capital-intensive nature of the petroleum industry contributes to Hilcorp's below-average business profile. A series of three transactions in the last six months improved the balance sheet, but pared down reserves and production. Hilcorp completed a $193 million volumetric production payment (VPP) in May 2004, carving out about 23 million barrels of oil equivalent (mmboe) of the 101 mmboe reserves reported at the end of 2003. In July, the company used the
