Hilcorp Energy to start roadshow Monday for $200 million 12-year notes

By Paul Deckelman

New York, June 16 - Hilcorp Energy Co. was heard to be selling $200 million of 12-year senior notes, junk bond market sources said Friday.

It will market the deal to investors on a roadshow that starts Monday and runs through Thursday, with pricing expected soon after that.

Joint bookrunners are Lehman Brothers and Deutsche Bank Securities. JP Morgan, Wachovia Securities and Harris Nesbitt are co-managers for the offering.

The notes will be non-callable for the first five years, although there will be an equity clawback provision in effect for the first three years, allowing the redemption of up to 35% of the bonds.

The Houston-based independent oil and gas exploration and development company will issue the bonds through its Hilcorp Energy I and Hilcorp Finance Co. subsidiaries.

The Rule 144A for life deal is expected to carry a B2 rating from Moody's Investors Service and a B rating from Standard & Poor's.

Proceeds will be used to repay bank debt which was incurred to fund acquisitions.

Privately held Hilcorp was formed in 1988 to acquire and exploit producing oil and gas properties. Since its inception, Hilcorp has consummated over 300 acquisitions, generally seeking to acquire properties deemed non-strategic by large oil and gas companies yet still possessing significant profit and upside potential. Hilcorp Energy also owns gas processing and gas gathering facilities.

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