Hilcorp Energy’s EBITDA grows in 1Q21
Hilcorp Energy’s bottom line continued to grow in 1Q21, driven in part by its recent acquisition of BP’s assets, according to three sources familiar with the situation.
The company provides multiple EBITDA calculations to account for the acquisition. The borrower booked USD 355m of the restricted group’s adjusted EBITDA in 1Q, compared to USD 226m last year. Consolidated adjusted EBITDA totaled USD 660m in the quarter, after including BP assets.
On an LTM basis, the restricted group’s adjusted EBITDA came in at roughly USD 994m, while consolidated adjusted EBITDA skated to USD 1.538bn, sources added.
On a consolidated basis, leverage totals 2.7x through USD 4.187bn of total debt. Leverage skates to 2.27x, based on USD 2.256bn of restricted group’s total debt.
As of 31 March, liquidity for the company totaled roughly USD 1.973bn through USD 54m of restricted group cash, USD 409m of BP Alaska cash and USD 1.51bn of revolver availability.
Hilcorp’s improved earnings trajectory comes 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.
While the company planned to issue USD 1bn in bonds to back the transaction, it pivoted to a USD 2.1bn term loan with BP amid uncertainties tied to the COVID-19 pandemic. At 2Q, 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.
The company tapped the market in January 2021 for dual-tranche USD 1.2bn senior unsecured notes to fund the tender of its 5% notes due 2024 and 5.75% notes due 2025 and repay debt under its senior secured facility.
Hilcorp’s recently placed USD 600m 6% senior unsecured notes due 2031 last traded at 103.346 to yield 5.183%, roughly in line with recent levels, according to MarketAxess.
The USD 600m 5.75% senior unsecured notes due 2029 traded at 101.97 to yield 5.432% on 19 May, down slightly from trades at 103.25 to yield 5.231% in early May, according to MarketAxess.
Messages left with the company were not returned.
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