Hilcorp 3Q sales and EBITDA soar on chunky acquisition
Hilcorp Energy’s top and bottom lines jumped year-over-year during 3Q20, in part driven by its recent acquisition of BP’s assets, according to two sources familiar with the situation. The company will hold an investor call tomorrow (20 November) to discuss the results, the sources added.
The company booked roughly USD 230m of unadjusted consolidated EBITDA, up roughly 49% year-over-year from USD 154m, the sources said. On an adjusted basis, EBITDA increased to USD 322m for the quarter — including a USD 90m addback for the realization of hedges — from USD 187m in 3Q19.
Revenue came in at USD 773m, up around 65% YoY from USD 468m, sources said.
The results put LTM leverage in the 4.5x- 5.1x range, based on USD 4.4bn of total debt and adjusted EBITDA of USD 864m- USD 981m, both sources said.
Hilcorp’s improved earnings came after its USD 5.6bn purchase of BP’s midstream and upstream assets in Alaska.
Those assets were deemed attractive because of their 100% oil production and 3% decline rate, as reported. Pro forma production is expected to increase to 230,000-240,000 boe/d, compared to 150,000 boe/d in 3Q19.
While the company planned to issue USD 1bn in bonds to back the transaction, it pivoted to a direct loan with BP amid uncertainties tied to the COVID-19 pandemic.
At 2Q-end, it closed the transaction through a USD 2.1bn term loan with BP. Hilcorp paid a USD 491m deposit and USD 209m in closing.
The USD 5.6bn price tag includes a base price of USD 4bn payable through 2020 and USD 1.6bn of additional earnout consideration after July 2021.
At the time of the acquisition, Hilcorp’s revolver due November 2022 was affirmed at USD 1.7bn.
As of 30 September, liquidity totaled roughly USD 1.1bn through USD 341m of cash and USD 740m of revolver availability.
Hilcorp’s USD 500m 5% senior unsecured notes due 2024 traded yesterday at 96 to yield 6.725%, up slightly from 95.53 to yield 6.838% before earnings were released, according to MarketAxess.
The USD 600m 6.25% senior unsecured notes due 2028 last traded yesterday at 96.72 to yield 6.79%, in line with trades before the earnings report.
Hilcorp did not respond to a request for comment.
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