TIDMRSE
RNS Number : 9484I
Riverstone Energy Limited
14 August 2019
Riverstone Energy Limited
Final results for the half year ended 30 June 2019
London, UK (14 August 2019) - Riverstone Energy Limited ("REL"
or the "Company") announces its Half Year Results for the 6-month
period ("the "Period") from 1 January 2019 to 30 June 2019.
Summary Performance
30 June 2019
NAV $1,058 million (GBP833 million)([1])
NAV per share $13.24 / GBP10.43(1)
Profit/(loss) during Period $(373.12) million
Basic profit/(loss) per share during (467.01) cents
Period
Market capitalization $874 million (GBP688 million)(1)
Share price $10.93 / GBP8.61(1)
Highlights
-- As of 30 June 2019, REL had a NAV per share of $13.24
(GBP10.43)(1) , representing a decrease in USD and GBP of 26 per
cent. compared to the 31 December 2018 NAV.
-- Hammerhead, Centennial and CNOR were the largest drivers of
REL's NAV decline over the Period.
-- During the Period, REL, through the Partnership, received
$133 million in gross proceeds from the realization of its
investments in Meritage III ($83 million), Sierra ($39 million),
and Three Rivers III ($3 million), as well as distributions from
Carrier II ($6 million) and ILX III ($2 million).
-- The Company, through the Partnership, invested a total of $24
million during the period, bringing net capital invested as of 30
June 2019 to $991 million, or 82 per cent of net capital
available([2]) .
-- During the first half of 2019, REL committed up to $22
million to Ridgebury and withdrew commitments totaling $28 million
to Sierra, Meritage III, and Eagle II, bringing net committed
capital as of 30 June 2019 to $1,116 million, or 92 per cent of net
capital available(2) .
-- REL finished the Period with a cash balance of $219 million
and remaining unfunded commitments of $125 million.
-- On 26 April 2019, Riverstone Holdings LLC ("Riverstone")
announced the formation of Onyx Strategic Investment Management I
BV ("Onyx"), a European independent power producer. The investment
in Onyx will be funded with an initial equity commitment from REL,
Riverstone Global Energy and Power Fund VI, L.P., and other
Riverstone managed vehicles. Further details on REL's commitment of
up to $66 million will be provided upon close of the transaction,
which is expected to occur later this year following the receipt of
regulatory and other approvals.
-- On 28 June 2019, Riverstone announced the signing of an
agreement for REL to invest in Aleph Midstream S.A. ("Aleph"), an
independent Argentine oil and gas gathering and processing-focused
midstream company, in line with REL's previously-stated modified
investment approach. Aleph has received a $103 million commitment
from funds affiliated to Riverstone (comprising $100 million from
REL and $3 million from other investors) alongside commitments of
$54 million from Southern Cross Group, $45 million from Vista Oil
& Gas ("Vista"), and approximately $3 million from the Aleph
and Vista management teams, for a total commitment of approximately
$205 million, expected to be deployed over the next 24 months. Upon
closing of the transaction, which occurred in July 2019, Aleph
began funding the construction of infrastructure necessary to
provide gathering, processing, and evacuation midstream services to
oil and gas producers in the Vaca Muerta.
Portfolio Update
Below is a summary of material activity in the portfolio during
the Period.
Meritage Midstream Services III, L.P. ("Meritage III")
REL, through the Partnership, received sale proceeds of $83
million from Meritage III.
Sierra Oil and Gas Holdings, L.P. ("Sierra")
REL, through the Partnership, received sale proceeds of $39
million from Sierra.
Carrier Energy Partners II, LLC ("Carrier II")
REL, through the Partnership, received income distributions of
$6 million from Carrier II.
Three Rivers Natural Resources Holdings III, LLC ("Three Rivers
III")
REL, through the Partnership, received escrow proceeds of $3
million from Three Rivers III.
ILX Holdings III, LLC ("ILX III")
REL, through the Partnership, received income distributions of
$2 million from ILX III.
Ridgebury H3 LLC ("Ridgebury")
REL, through the Partnership, invested $18 million in
Ridgebury.
ILX Holdings III, LLC ("ILX III")
REL, through the Partnership, invested $4 million in ILX
III.
Castex Energy 2014, LLC ("Castex 2014")
REL, through the Partnership, invested $3 million in Castex
2014.
Manager Outlook
-- REL's $219 million cash balance makes the Company well placed
to make its new investments in Onyx and Aleph, as well as grow its
existing Portfolio. Pro forma for these new commitments, the
Company has remaining unfunded commitments of up to $291 million;
however, the Board, in consultation with the Investment Manager,
does not expect to fully fund all commitments in the normal course
of business.
-- The Investment Manager believes the current market
environment is generating attractive opportunities in midstream,
energy services and power, and will continue to seek to invest in
opportunities that span the entire energy value chain to diversify
its portfolio.
-- 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.
-- The Company's Management Engagement Committee has been
holding discussions with the Investment Manager regarding potential
changes to the terms of the Investment Management Agreement.
Richard Hayden, Chairman of Riverstone Energy Limited,
commented:
"Since the end of last year, REL has announced three new
transactions that reflect its focus on diversifying the portfolio
and implementing its modified investment approach. The most recent
commitment to Aleph Midstream, which is representative of the
modified investment approach, provides an opportunity for REL to
capitalise on the need for infrastructure in one of the most
prolific shale basins outside of North America. We look forward to
continuing to evaluate new opportunities and deploying capital in a
tactical manner across subsectors to actively manage our portfolio
construction."
David M. Leuschen and Pierre F. Lapeyre Jr., Co-Founders of
Riverstone, added:
"While spot prices for oil have improved modestly, the volatile
nature of the geopolitical landscape has continued to negatively
impact energy equities and valuations as investor sentiment remains
weak. Despite the macro environment, we remain focussed on driving
operational performance in order to maximise returns over the
long-term as market conditions stabilise."
- Ends -
Riverstone Energy Limited's 2019 Interim Report is available to
view at: www.RiverstoneREL.com.
2Q19 Quarterly Portfolio Valuation
Previously, on 31 July 2019, REL announced its quarterly
portfolio summary as of 30 June 2019, inclusive of updated
quarterly unaudited fair market valuations:
Current Portfolio
Gross
Realised
Capital
Gross Gross Gross & 30 Jun 31 Mar
Investment Committed Invested Realised Unrealised Unrealised 2019 2019
(Initial Investment Target Capital Capital Capital Value Value Gross Gross
Date) Basin ($mm) ($mm) ($mm)([3]) ($mm) ($mm) MOIC([4]) MOIC(4)
Centennial Permian
(6 Jul 2016) (U.S.) $268 $268 $172 $115 $287 1.1x 1.1x
Hammerhead
Resources Deep Basin
(27 Mar 2014) (Canada) 307 295 23 202 225 0.8x 1.0x
Deepwater
ILX III (8 GoM
Oct 2015) (U.S.) 200 155 2 200 202 1.3x 1.3x
Bakken,
Liberty II PRB
(30 Jan 2014) (U.S.) 142 142 - 128 128 0.9x 1.1x
Permian &
Eagle
Carrier II Ford
(22 May 2015) (U.S.) 133 110 22 66 88 0.8x 1.0x
RCO([5]) (2 North
Feb 2015) America 80 80 79 3 82 1.0x 1.1x
Fieldwood GoM Shelf
(17 Mar 2014) (U.S.) 89 88 8 54 62 0.7x 0.6x
Gulf Coast
Castex 2014 Region
(3 Sept 2014) (U.S.) 67 50 - 35 35 0.7x 0.7x
CNOR (29 Aug Western
2014) Canada 90 90 - 27 27 0.3x 0.5x
Ridgebury
H3 (19 Feb
2019) Global 22 18 - 20 20 1.1x 1.0x
Total Current Portfolio([6]) $1,398 $1,296 $305 $849 $1,154 0.9x 1.0x
------------------------------------ --------- --------- ----------- ---------- ---------- ---------- -------
Realisations
Gross
Realised
Capital
Gross Gross Gross & 30 Jun 31 Mar
Investment Committed Invested Realised Unrealised Unrealised 2019 2019
(Initial Investment Capital Capital Capital Value Value Gross Gross
Date) Target Basin ($mm) ($mm) ($mm)(3) ($mm) ($mm) MOIC(4) MOIC(4)
Rock Oil([7])
(12 Mar 2014) Permian (U.S.) 114 114 231 8 239 2.1x 2.1x
Three Rivers
III (7 Apr
2015) Permian (U.S.) 94 94 203 - 203 2.2x 2.2x
Meritage III([8]) Western
(17 Apr 2015) Canada 62 40 83 - 83 2.1x 2.1x
Sierra (24
Sept 2014) Mexico 18 18 39 - 39 2.1x 2.1x
Total Realisations(6) $290 $267 $557 $8 $565 2.1x 2.1x
------------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Withdrawn Commitments
and Impairments([9]) 121 121 1 - 1 0.0x 0.0x
------------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Total Investments(6) $1,809 $1,683 $862 $857 $1,719 1.0x 1.1x
------------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Cash and Cash Equivalents $219
------------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
Total Investments & Cash
and Cash Equivalents(6) $1,076
------------------------------------------ ---------- --------- ---------- ---------- ---------- --------- --------
About Riverstone Energy Limited:
REL is a closed-ended investment company that invests
exclusively in the global energy industry across all 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 11 active investments spanning oil
and gas, midstream, and energy services in the Continental U.S.,
Western Canada, Gulf of Mexico, Latin America 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
Brian Potskowski
+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 30
June 2019 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.
The unaudited fair market valuations as of 30 June 2019 formed
part of REL's 2019 interim financial statements and were subject to
an interim review under ISRE2410, which was undertaken by Ernst
& Young LLP on behalf of the Directors.
[1] GBP:USD FX rate of 1.270 as of 30 June 2019.
[2] Net capital available of $1,210 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.
[3] Gross realised capital is total gross proceeds realised on
invested capital. Of the $862 million of capital realised to date,
$573 million is the return of the cost basis, and the remainder is
profit.
[4] 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.
[5] Credit investment.
[6] Amounts may vary due to rounding.
[7] The unrealised value of the Rock Oil investment consists of
rights to mineral acres.
[8] Midstream investment.
[9] Withdrawn commitments consist of Origo ($9 million) and
CanEra III ($1 million), and impairments consist of Eagle II ($62
million) and 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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