Moody's rates Hilcorp Energy notes Ba2

Moody's Investors Service said it assigned a Ba2 (LGD 5) rating to Hilcorp Energy I, LP's and co-issuer Hilcorp Finance Co.'s proposed offering of $500 million senior unsecured notes due 2028.

The Ba1 corporate family rating, the Ba1-PD probability of default rating and stable outlook are not affected by this action.

The proceeds of the proposed offering will be used to repay borrowings outstanding under the company's revolving credit facility.

Hilcorp has consistently and profitably executed on its strategy of value creation through the acquisition and exploitation of mature, long-lived oil and gas operating properties, while maintaining a strong credit profile, Moody's said.

The proposed notes issuance will augment Hilcorp's financial flexibility with which to continue to pursue this successful strategy, the agency said.

The rating on the notes reflects the subordinate position to the company's $1.4 billion secured borrowing base revolving credit's priority claim to the company's assets.

The size of the senior secured claims relative to Hilcorp's outstanding senior unsecured notes results in the notes being rated one-notch lower than the Ba1 corporate family rating, Moody's said.

The company's ratings consider its modest leverage and consistent generation of positive free cash flow with operations guided by a disciplined approach that adheres to a cost-focused operating strategy, the agency said.

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