The ratings on Hornbeck Offshore Services Inc. reflect the risks posed by the company's niche position in the highly volatile OSV offshore supply vessel (OSV) industry, an aggressive growth strategy, and elevated debt leverage. These risks are tempered by the diversification provided by its tug and tank barge businesses; a young, technically advanced OSV fleet; and the current robust markets, which mitigate a lack of longer-term contracts. Hornbeck's business risk profile is considered weak, reflecting its participation in the volatile offshore marine services market. Hornbeck generates the majority of its cash flow through its OSV division (nearly 65% of 2006 EBITDA), which is largely in the deepwater Gulf of Mexico and which is susceptible to the oil and gas exploration
