Moody's rates Hilcorp notes Ba3

Moody's Investors Service said it assigned a Ba3 (LGD5, 74%) rating to the senior notes due 2024 of Hilcorp Energy I, LP and Hilcorp Finance Co. The outlook is stable.

Proceeds will be used to help fund some acquisitions that the company is in the process of closing, the largest being a $1.2 billion acquisition from BP plc of interests in three Alaskan North Slope oil fields.

"While debt financing the acquisitions is a leveraging transaction, Hilcorp has ample available debt capacity within its current Ba2 rating to accommodate the proposed increase in debt levels, with debt leverage pro forma for the acquisition financing remaining well below that of its peers," Andrew Brooks, Moody's vice president, said in an agency news release.

"However, notwithstanding its three-year operating presence in Alaska's Cook Inlet, Hilcorp's pending expansion to the North Slope and its harsh operating environment will not be without execution risk, which will initially weigh on the rating."

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