The ratings on Hornbeck Offshore Services Inc. reflect the risks posed by the company's niche position in the highly volatile offshore supply vessel (OSV) industry, an aggressive growth strategy, elevated debt leverage, and a lack of longer term contracts. These risks are tempered by the diversification provided by its tug and tank barge division, a young, technically advanced OSV fleet, and solid liquidity to support fleet expansion. Standard&Poor's Ratings Services considers Hornbeck's business risk profile weak, reflecting its participation in the volatile offshore marine services market. Hornbeck generates the majority of its cash flow through its OSV division (around 65% of EBITDA during the first quarter of 2007). The OSV industry is exposed to the spending levels of
