TIDMRSE
RNS Number : 2075R
Riverstone Energy Limited
27 February 2019
Riverstone Energy Limited
Final results for the year ended 31 December 2018
London, 27 February 2019: Riverstone Energy Limited ("REL" or
the "Company") announces its Year End Results from 1 January 2018
to 31 December 2018.
Summary Performance
31 December 2018
NAV $1,431 million (GBP1,123 million)[1]
NAV per share $17.91 / GBP14.06(1)
Profit/(loss) for year ended $(241.0) million
Basic profit/(loss) per share for (286.87) cents
year ended
Market capitalization $1,095 million (GBP860 million)(1)
Share price $13.71 / GBP10.76(1)
Highlights
-- REL ended 31 December 2018 with an NAV of $17.91
(GBP14.06)(1) per share, a year-on-year decrease in USD of 13 per
cent. (in GBP of 8 per cent.) compared to the 31 December 2017
NAV.
-- Hammerhead and Centennial were the largest drivers of REL's
NAV decline over the year, with almost all of the decrease in value
having occurred during the fourth quarter; however, these declines
were partially offset by increased valuations in Fieldwood, ILX III
and Meritage III.
-- During 2018, REL, through the Partnership, received over $304
million in gross proceeds from realisations, taking advantage of
the ability to monetise positions in two of its investments in the
Permian, Three Rivers III and Centennial, at attractive
valuations.
-- REL's realisation of Three Rivers III, through the
Partnership, generated nearly $203 million in gross proceeds, of
which $200 million has been received to-date, representing a Gross
MOIC[2] of 2.2x (Net MOIC(2) of 1.9x) and a Gross IRR(2) of 48 per
cent. (Net IRR(2) of 40 per cent.).
-- REL's partial realisation of its investment in Centennial,
through the Partnership, from the sale of 4.4 million shares, at a
share price of $19.50, resulted in gross proceeds of $85
million.
-- REL's largest exposure, through the Partnership, is to
Western Canada where it has invested $425 million or 30 per cent.
of its capital, followed by the Permian and Eagle Ford, where it
has invested $377 million or 27 per cent. of its capital.
-- The Company, through the Partnership, invested a total of $84
million during the year, bringing net capital invested as of 31
December 2018 to $1,174 million, or 90 per cent. of net capital
available[3].
-- REL, through the Partnership, withdrew commitments totaling
$112 million to Three Rivers III, RCO and Castex 2005, bringing net
committed capital as of 31 December 2018 to $1,330 million, or 101
per cent. of net capital available(3) .
-- In January 2019, REL, through the Partnership, announced the
sale of Meritage III for gross cash proceeds consistent with its
valuation at 31 December 2018 of $80 million, representing a Gross
MOIC(2) of 2.0x (Net MOIC(2) of 1.8x) on the $40 million investment
and a Gross IRR(2) of approximately 28 per cent. (Net IRR(2) of 23
per cent.). This represents a gross profit of $40 million, which
will be subject to a performance fee upon closing of the sale,
which completed in Q1 2019.
-- In February 2019, REL, through the Partnership, approved up
to a $22 million commitment to fund the acquisition of three
refined product tankers in partnership with the Ridgebury Tankers
LLC management team. This transaction represents REL's first
investment in the energy services sector and provides
diversification for the portfolio.
Portfolio Update
Below is a summary of material activity in the portfolio during
the period.
ILX Holdings III, LLC ("ILX III")
During the year, REL, through the Partnership, invested $35
million in ILX III.
Fieldwood Energy, Inc. ("Fieldwood")
During the year, REL, through the Partnership, invested $22
million in Fieldwood ERO.
Sierra Oil and Gas Holdings, L.P. ("Sierra")
During the year, REL, through the Partnership, invested $10
million in Sierra.
Canadian Non-Operated Resources LP ("CNOR")
During the year, REL, through the Partnership, invested $7
million in CNOR.
Meritage Midstream Services III, L.P. ("Meritage III")
During the year, REL, through the Partnership, invested $6
million in Meritage III.
Castex Energy 2014, LLC ("Castex 2014")
During the year, REL, through the Partnership, invested $4
million in Castex 2014.
Three Rivers Natural Resources Holdings III LLC ("Three Rivers
III")
REL, through the Partnership, received sale proceeds of $200
million.
Centennial Resource Development, Inc. ("Centennial")
REL, through the Partnership, received proceeds of $85 million
from shares sold.
Other Investments
REL, through the Partnership, received proceeds of $3 million
from other investments, including Rock Oil, RCO, Fieldwood, and
Origo.
Manager Outlook
-- REL's $137 million cash balance makes the Company well placed
to make new investments and grow its existing Portfolio.
-- The Investment Manager believes the current market
environment is generating attractive opportunities in midstream,
oilfield services and power, and will continue to seek to invest in
opportunities that span the entire energy value chain to diversify
its E&P exposure.
-- To effect this change in portfolio construction, REL expects
to make more investments independently of Riverstone's private
funds going forward.
-- A continued focus on operational excellence will remain
critical to driving value across the commodity price cycle.
Richard Hayden, Chairman of Riverstone Energy Limited,
commented:
"REL's modified investment approach provides the flexibility to
adapt to the evolving universe of investment opportunities. Our
recent commitment to Handy Tankers is representative of our ability
to capitalise on an opportunity that we believe has an attractive
return profile and provides diversification to the portfolio."
David M. Leuschen and Pierre F. Lapeyre Jr., Co-Founders of
Riverstone, added:
"Despite a difficult market environment, REL was able to achieve
successful monetisations at attractive valuations. The realisations
in Three Rivers III and Centennial, and announced sales of Sierra
and Meritage III, demonstrate the advantages of REL's
differentiated investment strategy and focus on operational
execution."
Appointment of Corporate Broker
The Board of REL is pleased to announce the appointment of Numis
Securities Limited to act as the Company's joint broker, alongside
J.P. Morgan Cazenove.
- Ends -
Riverstone Energy Limited's 2018 Annual Report is available to
view at: www.RiverstoneREL.com.
The Investment Manager will host a conference call with
investors at 12:00 GMT today. Dial-in details are as follows:
Dial-in (UK): 0800 028 8438
Dial-in (Intl.): +44 (0) 203 107 0289
Conference ID: 5834899
4Q18 Quarterly Portfolio Valuation
Previously, on 31 January 2018, REL announced its quarterly
portfolio summary as of 31 December 2018, inclusive of updated
quarterly unaudited fair market valuations:
Current Portfolio
Gross
Realised
Capital
Investment Gross Gross Gross & 31 Dec 30 Sep
(Initial Committed Invested Realised Unrealised Unrealised 2018 2018
Investment Capital Capital Capital Value Value Gross Gross
Date) Target Basin ($mm) ($mm) ($mm)[4] ($mm) ($mm) MOIC(2) MOIC(2)
Hammerhead
Resources Deep Basin
(27 Mar 2014) (Canada) $307 $295 $23 $416 $439 1.5x 1.8x
Centennial Permian
(6 Jul 2016) (U.S.) 268 268 172 167 339 1.3x 1.9x
ILX III Deepwater
(8 Oct 2015) GoM (U.S.) 200 151 - 197 197 1.3x 1.4x
Liberty II Bakken, PRB
(30 Jan 2014) (U.S.) 142 142 - 156 156 1.1x 1.3x
Permian &
Carrier II Eagle Ford
(22 May 2015) (U.S.) 133 110 16 94 110 1.0x 1.2x
RCO[5] (2
Feb 2015) North America 87 87 83 10 93 1.1x 1.1x
Meritage III[6] Western
(17 Apr 2015) Canada 67 40 - 80 80 2.0x 2.0x
CNOR Western
(29 Aug 2014) Canada 90 90 - 72 72 0.8x 1.0x
Fieldwood GoM Shelf
(17 Mar 2014) (U.S.) 82 81 3 55 58 0.7x 0.8x
Gulf Coast
Castex 2014 Region (U.S.) 67 47 - 47 47 1.0x 1.0x
(3 Sept 2014)
Sierra
(24 Sept
2014) Mexico 38 18 - 37 37 2.0x 2.2x
Eagle II Mid-Continent
(18 Dec 2013) (U.S.) 67 62 - 19 19 0.3x 0.5x
Total Current Portfolio[7] $1,547 $1,391 $297 $1,349 $1,646 1.2x 1.4x
---------------------------------------- --------- --------- --------- ---------- ---------- --------- --------
Realisations
Gross
Realised
Capital
Gross Gross Gross & 31 Dec 30 Sep
Investment Committed Invested Realised Unrealised Unrealised 2018 2018
(Initial Investment Target Capital Capital Capital Value Value Gross Gross
Date) Basin ($mm) ($mm) ($mm)(4) ($mm) ($mm) MOIC(2) MOIC(2)
Rock Oil[8] Permian
(12 Mar 2014) (U.S.) 114 114 230 9 239 2.1x 2.1x
Three Rivers
III (7 Apr Permian
2015) (U.S.) 94 94 200 3 203 2.2x 2.1x
Total Realisations(5) $209 $209 $430 $12 $442 2.1x 2.1x
------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Withdrawn Commitments
and Impairments[9] 59 59 1 - 1 0.0x 0.0x
------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Total Investments(7) $1,815 $1,659 $729 $1,360 $2,089 1.3x 1.5x
------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Cash and Cash Equivalents $137
------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Total Investments & Cash
and Cash Equivalents(7) $1,497
------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
About Riverstone Energy Limited:
REL is a closed-ended investment company that invests
exclusively in the global energy industry, with a particular focus
on the exploration & production and midstream sectors. REL aims
to capitalise on the opportunities presented by Riverstone's energy
investment platform. REL is a member of the FTSE 250 and its
ordinary shares are listed on the London Stock Exchange, trading
under the symbol RSE. REL has 12 active investments spanning
conventional and unconventional oil and gas activities in the
Continental U.S., Western Canada, Gulf of Mexico, Mexico and
credit.
For further details, see www.RiverstoneREL.com
Neither the contents of Riverstone Energy Limited's website nor
the contents of any website accessible from hyperlinks on the
websites (or any other website) is incorporated into, or forms part
of, this announcement.
Media Contacts
For Riverstone Energy Limited:
Natasha Fowlie
Fraser Johnston-Donne
+44 20 3206 6300
Note:
The Investment Manager is charged with proposing the valuation
of the assets held by REL through the Partnership. The Partnership
has directed that securities and instruments be valued at their
fair value. REL's valuation policy follows IFRS and IPEV Valuation
Guidelines. The Investment Manager values each underlying
investment in accordance with the Riverstone valuation policy, the
IFRS accounting standards and IPEV Valuation Guidelines. The
Investment Manager has applied Riverstone's valuation policy
consistently quarter to quarter since inception. The value of REL's
portion of that investment is derived by multiplying its ownership
percentage by the value of the underlying investment. If there is
any divergence between the Riverstone valuation policy and REL's
valuation policy, the Partnership's proportion of the total holding
will follow REL's valuation policy. There were no valuation
adjustments recorded by REL as a result of differences in IFRS and
U.S. Generally Accepted Accounting Policies for the period ended 31
December 2018 or in any period to date. Valuations of REL's
investments through the Partnership are determined by the
Investment Manager and disclosed quarterly to investors, subject to
Board approval.
Riverstone values its investments using common industry
valuation techniques, including comparable public market valuation,
comparable merger and acquisition transaction valuation, and
discounted cash flow valuation.
For development-type investments, Riverstone also considers the
recognition of appreciation or depreciation of subsequent financing
rounds, if any. For those early stage privately held companies
where there are other indicators of a decline in the value of the
investment, Riverstone will value the investment accordingly even
in the absence of a subsequent financing round.
Riverstone reviews the valuations on a quarterly basis with the
assistance of the Riverstone Performance Review Team ("PRT") as
part of the valuation process. The PRT was formed to serve as a
single structure overseeing the existing Riverstone portfolio with
the goal of improving operational and financial performance.
The Audit Committee reviews the valuations of the Company's
investments held through the Partnership, and makes a
recommendation to the Board for formal consideration and
acceptance.
[1] GBP:USD FX rate of 1.274 as of 31 December 2018.
[2] Gross Unrealised Value and Gross MOIC (Gross Multiple of
Invested Capital) are before transaction costs, taxes
(approximately 21 to 27.5 per cent. of U.S. sourced taxable income)
and 20 per cent. carried interest on gross profits (without a
hurdle rate). Since there is no netting of losses against gains,
the effective carried interest rate on the portfolio as a whole
will be greater than 20 per cent. In addition, there is a
management fee of 1.5 per cent. of net assets (including cash) per
annum and other expenses. Given these costs, fees and expenses are
in aggregate expected to be considerable, Total Net Value and Net
MOIC will be materially less than Gross Unrealised Value and Gross
MOIC. Local taxes, primarily on U.S. assets, may apply at the
jurisdictional level on profits arising in operating entity
investments. Further withholding taxes may apply on distributions
from such operating entity investments. In the normal course of
business, REL may form wholly-owned subsidiaries, to be treated as
C Corporations for US tax purposes. The C Corporations serve to
protect REL's public investors from incurring U.S. effectively
connected income. The C Corporations file U.S. corporate tax
returns with the U.S. Internal Revenue Service and pay U.S.
corporate taxes on its taxable income.
[3] Net capital available of $1,311 million is based on total
capital raised of $1,320 million, capital utilised for Tender Offer
of $72 million, realised profits and other income net of fees,
expenses and performance allocation. The Board, with consultation
by the Investment Manager, does not expect to fully fund all
commitments in the normal course of business.
[4] Gross realised capital is total gross proceeds realised on
invested capital. Of the $729 million of capital realised to date,
$427 million is the return of the cost basis, and the remainder is
profit.
[5] Credit investment.
[6] Midstream investment.
[7] Amounts may vary due to rounding.
[8] The unrealised value of the Rock Oil investment consists of
rights to mineral acres.
[9] Withdrawn commitments consist of Origo ($9 million) and
CanEra III ($1 million), and impairments consist of Castex 2005
($48 million).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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