- THIS
ANNOUNCEMENT INCLUDES INSIDE INFORMATION -
Riverstone Energy Limited
Announces 4Q23 Quarterly Portfolio Valuations & NAV, and $200M
Tender Offer
London, UK (8 February 2024) - Riverstone Energy Limited ("REL" or the "Company") announces
its quarterly unaudited fair market valuations as of 31 December
2023, and a proposed $200 million Tender Offer.
The Company announces that it
proposes to return $200 million (equivalent to approximately £158
million on the basis of the prevailing USD:GBP exchange rate) of
its excess capital to shareholders by means of a tender offer (the
"Tender Offer") at a price of £10.50 per ordinary share. The
Tender Price represents a premium of approximately 31 per cent. to
the closing market price per ordinary share of £8.00 on 7
February 2024 and represents a 16 per cent. discount to the
unaudited net asset value per ordinary share of £12.53 as
at 31 December 2023 (on the basis of the prevailing USD:GBP
exchange rate at 31 December 2023 of 1.2736). The Company expects
to launch the Tender Offer before the end of this month and that
the Tender Offer will close during March. The precise number
of ordinary shares that may be acquired in the Tender Offer will be
determined on launch (on the basis of the then prevailing USD:GBP
exchange rate), but is expected will represent approximately 36 per
cent. of the Company's existing ordinary shares then in issue
(excluding any ordinary shares held in treasury). The Tender
Offer will require shareholder approval at an extraordinary general
meeting of the Company's shareholders, which is anticipated will be
held in March, and will be subject to other legal, regulatory and
customary conditions.
Current Portfolio - Conventional
Investment (Public/Private)
|
Gross Committed Capital
($mm)
|
Invested
Capital
($mm)
|
Gross
Realised
Capital ($mm)[1]
|
Gross Unrealised
Value
($mm)[2]
|
Gross Realised Capital &
Unrealised Value ($mm)
|
30 Sep 2023
Gross
MOIC2
|
31 Dec 2023
Gross
MOIC2
|
Permian Resources[3]
(Public)
|
268
|
268
|
225
|
137
|
362
|
1.36x
|
1.35x
|
Onyx
(Private)
|
66
|
60
|
121
|
70
|
191
|
3.00x
|
3.20x
|
Crescent Point Energy (fka Hammerhead
Resources)3
(Public)
|
308
|
296
|
198
|
58
|
256
|
0.71x
|
0.87x
|
Total Current Portfolio - Conventional - Public[4]
|
$576
|
$564
|
$423
|
$195
|
$618
|
1.02x
|
1.10x
|
Total Current Portfolio - Conventional -
Private4
|
$66
|
$60
|
$121
|
$70
|
$191
|
3.00x
|
3.20x
|
Total Current Portfolio - Conventional - Public &
Private4
|
$642
|
$624
|
$544
|
$265
|
$809
|
1.21x
|
1.30x
|
Current Portfolio - Decarbonisation
|
|
|
|
|
|
|
Investment (Public/Private)
|
Gross Committed Capital
($mm)
|
Invested
Capital
($mm)
|
Gross
Realised
Capital
($mm)1
|
Gross Unrealised
Value
($mm)2
|
Gross Realised Capital &
Unrealised Value ($mm)
|
30 Sep 2023 Gross
MOIC2
|
31 Dec 2023 Gross
MOIC2
|
Infinitum Electric
(Private)
|
27
|
27
|
-
|
30
|
30
|
1.05x
|
1.10x
|
GoodLeap (formerly
Loanpal)
(Private)
|
25
|
25
|
2
|
29
|
31
|
1.50x
|
1.25x
|
T-REX Group
(Private)
|
21
|
21
|
-
|
17
|
17
|
1.00x
|
0.82x
|
Tritium DCFC3
(Public)
|
25
|
25
|
1
|
11
|
12
|
0.47x
|
0.46x
|
Solid
Power3
(Public)
|
48
|
48
|
-
|
11
|
11
|
0.31x
|
0.22x
|
Group14
(Private)
|
4
|
4
|
-
|
4
|
4
|
1.00x
|
1.00x
|
FreeWire
(Private)
|
14
|
14
|
-
|
3
|
3
|
1.00x
|
0.25x
|
Our
Next
Energy
(Private)
|
13
|
13
|
-
|
3
|
3
|
1.00x
|
0.25x
|
Ionic I & II (Samsung
Ventures) (Private)
|
3
|
3
|
-
|
3
|
3
|
1.00x
|
1.00x
|
Enviva3
(Public)
|
22
|
22
|
0
|
1
|
1
|
0.29x
|
0.05x
|
Hyzon
Motors3
(Public)
|
10
|
10
|
-
|
1
|
1
|
0.13x
|
0.09x
|
Anuvia Plant
Nurients
(Private)
|
20
|
20
|
-
|
-
|
-
|
0.00x
|
0.00x
|
Total Current Portfolio - Decarbonisation -
Public4
|
$105
|
$105
|
$1
|
$23
|
$24
|
0.32x
|
0.23x
|
Total Current Portfolio - Decarbonisation -
Private4
|
$127
|
$127
|
$2
|
$90
|
$92
|
0.95x
|
0.73x
|
Total Current Portfolio - Decarbonisation - Public &
Private4
|
$232
|
$232
|
$3
|
$113
|
$116
|
0.66x
|
0.50x
|
Total Current Portfolio - Conventional & Decarbonisation -
Public & Private4
|
$874
|
$855
|
$548
|
$378
|
$926
|
1.06x
|
1.08x
|
Cash and Cash Equivalents
|
|
|
$291
|
|
|
|
Total Liquidity (Cash and Cash Equivalents & Public
Portfolio)
|
$509
|
|
|
|
Total Market Capitalisation
|
|
|
$430
|
|
|
|
Realisations
Investment (Initial Investment
Date)
|
Gross Committed Capital
($mm)
|
Invested
Capital
($mm)
|
Gross
Realised
Capital
($mm)1
|
Gross Unrealised
Value
($mm)2
|
Gross Realised Capital &
Unrealised Value ($mm)
|
30 Sep 2023 Gross
MOIC2
|
31 Dec 2023
Gross
MOIC2
|
Rock Oil[5]
(12 Mar 2014)
|
114
|
114
|
234
|
4
|
238
|
2.08x
|
2.08x
|
Three Rivers III (7 Apr
2015)
|
94
|
94
|
204
|
-
|
204
|
2.17x
|
2.17x
|
ILX
III
(8 Oct 2015)
|
179
|
179
|
172
|
-
|
172
|
0.96x
|
0.96x
|
Meritage III[6]
(17 Apr
2015)
|
40
|
40
|
88
|
-
|
88
|
2.20x
|
2.20x
|
RCO[7] (2
Feb 2015)
|
80
|
80
|
80
|
-
|
80
|
0.99x
|
0.99x
|
Carrier
II
(22 May
2015)
|
110
|
110
|
67
|
-
|
67
|
0.60x
|
0.61x
|
Pipestone Energy (formerly
CNOR)
(29 Aug
2014)
|
90
|
90
|
58
|
-
|
58
|
0.64x
|
0.64x
|
Sierra
(24 Sept
2014)
|
18
|
18
|
38
|
-
|
38
|
2.06x
|
2.06x
|
Aleph
(9 Jul
2019)
|
23
|
23
|
23
|
-
|
23
|
1.00x
|
1.00x
|
Ridgebury
(19 Feb 2019)
|
18
|
18
|
22
|
-
|
22
|
1.22x
|
1.22x
|
Castex 2014
(3
Sep 2014)
|
52
|
52
|
14
|
-
|
14
|
0.27x
|
0.27x
|
Total Realisations4
|
$819
|
$819
|
$1,000
|
$4
|
$1,004
|
1.23x
|
1.23x
|
Withdrawn Commitments and Impairments[8]
|
350
|
350
|
9
|
-
|
9
|
0.02x
|
0.02x
|
Total Investments4
|
$2,042
|
$2,024
|
$1,557
|
$382
|
$1,939
|
0.95x
|
0.96x
|
Total Investments & Cash and Cash
Equivalents
|
$674
|
|
|
|
Draft Unaudited Net Asset Value[9]
|
$674
|
|
|
|
Total Shares Repurchased to-date
|
34,518,746
|
at average price per share of
£4.19 ($5.35)
|
Current Shares Outstanding
|
42,195,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Macroeconomic Improvements on the Horizon
US public equity markets ended 2023
on a strong note with the S&P 500 Index and the Russell 1000
Index each up over 11 per cent. in the fourth quarter and over 24
per cent. on the year. While we had positive returns in
European markets, these were much more subdued. Corporate
earnings results aside, the single most important driver of stock
market performance (after a dismal 2022) was investors' beliefs
that the rate hiking cycle in the US has reached its zenith.
Markets continued to show strength in the first weeks of the new
year as investors' expectation have grown from "no more rate hikes"
to "rate cuts" in the back half of 2024. On 19th
January, the S&P 500 Index set a record close of 4839.81
surpassing its previous record set in January 2022.
While this market strength is a
harbinger of better times for both the portfolio's conventional and
decarbonisation investments, portfolio performance for the last
quarter of 2023 remained essentially flat with positive performance
from the conventional energy portfolio offset by lagging results
from the decarbonisation investments. Growth stage
(pre-profitability) energy transition and decarbonisation
investments continue to lag broader markets, and still face
adversity as the viability of their business plans remain in
question due to a dampening of investor appetite in the face of
higher interest rates. Lower risk appetite presents a
substantial risk for these businesses as they are at a stage in
their growth that relies disproportionately on funding from private
equity, corporate balance sheets and institutional investors. The
Company's decarbonisation investments are not immune from these
headwinds.
On the energy commodity front, West
Texas Intermediate (WTI) crude prices were down 6.5 per cent. in
2023 and 20.8 per cent. in the fourth quarter, Brent Crude was down
6.2 per cent. in 2023 and 19.2 per cent. in the fourth quarter, and
Henry Hub natural gas spot prices were down 29.1 per cent. in 2023
and 3.7 per cent. in the fourth quarter. Consolidation in the US
oil and gas sector has reached levels not seen in a long time with
over $250 billion in acquisitions announced in 2023. The
Permian basin featured prominently in this deal activity and
reflects the acquirers' strong balance sheets due to the sector's
commitment to cash-flow-generation. The most notable transactions
in the "oil patch" included Exxon Mobil's $60 billion deal for
Pioneer Natural Resources, Chevron's $53 billion acquisition of
Hess and Permian Resources' $4.5 billion bid for Earthstone
Energy.
Quarterly Performance Commentary
REL's conventional energy portfolio
performed well, gaining 7.6 per cent. in value over the quarter.
This improvement was driven largely by Crescent Point Energy's (fka
Hammerhead Energy) 21.1 per cent. improvement in share price,
countering slight weakness in Permian Resources' share price in the
fourth quarter. Permian Resources was up 44.7 per cent.
year-over-year in 2023. At the end of December, Crescent Point
Energy finalised its acquisition of REL portfolio company,
Hammerhead Energy, which resulted in a $175 million distribution to
REL and the receipt of 8 million shares of Crescent Point Energy
(NYSE: CPG). In addition, Onyx's valuation also increased from
3.00x to 3.20x Gross MOIC as detailed below.
The decarbonisation portfolio
dropped 22.9 per cent. in value during the quarter, driven
primarily by its position in Enviva, which lost 85.4 per cent. of
its market value due to missed earnings targets, plant-level
operational disruption, and ongoing restructuring. In addition,
FreeWire lost 75 per cent. of its value due to reduced growth
projections as the company works to preserve cash in a challenging
fundraising and growth environment for EV-related businesses. With
the exception of Infinitum, the remainder of the decarbonisation
portfolio continued to suffer from fundraising headwinds caused by
the impact of rates and lower risk appetite from investors. These
businesses will remain susceptible to market volatility until they
reach profitability.
Further information on REL's five
largest positions, which account for ~85 per cent. of the
portfolio's gross unrealised value is set forth below:
Permian Resources
The valuation for Permian Resources
(NYSE: PR) decreased from 1.36x to 1.35x Gross MOIC in the fourth
quarter of 2023. Permian Resources completed the ~$4.5 billion
acquisition of Earthstone Energy, Inc. (NYSE: ESTE) in November
2023. The transaction bolsters PR's leading position in the
Delaware Basin and increases operating size and scale. The
transaction further enhances free cash flow generation and is
expected to generate ~$175 million of annual synergies. The
pro-forma company remains committed to achieving an investment
grade rating. The pro-forma company has hedged approximately 20 per
cent. of forecasted 2024 crude oil production at a weighted average
price of $74.21 per barrel and 22 per cent. of forecasted 2024
natural gas production at a weighted average price of $3.89 per
mcf.
Onyx
The valuation multiple for Onyx
increased in the fourth quarter of 2023 from 3.00x to 3.20x Gross
MOIC. While CDS margins have reduced
materially since the peaks of late 2022 due to low European power
prices, which have adjusted to high gas storage levels, warm winter
weather, and high wind generation, lower profitability margins have
been offset by hedging activities at Onyx. During Q4 2023, Onyx distributed €100mm of cash to
investors (€300mm year-to-date 2023) of which REL received €20mm in
the fourth quarter and $60mm throughout the year. The management
team continues to work on organic growth initiatives, including the
implementation of operational performance improvements and the
development of projects related to the energy
transition.
Crescent Point Energy (fka Hammerhead
Resources)
Crescent Point Energy's valuation
increased from 0.71x to 0.87x Gross MOIC during the fourth quarter
of 2023 reflecting solid share price performance. On 6 November
2023, Crescent Point Energy announced its plan to acquire
Hammerhead for C$21.00 per share (C$15.50 cash, C$5.50 stock). The
transaction closed on 21 December 2023 resulting in REL owning
approximately 1.3 per cent. of Crescent Point Energy. REL received
approximately $175 million in cash from the transaction and 8
million shares which are subject to lock-up. These shares will be
disposed of in time, subject to energy market conditions, operating
performance, and liquidity.
GoodLeap (formerly Loanpal)
The valuation multiple for GoodLeap
fell during the fourth quarter of 2023 from 1.50x Gross MOIC to
1.25x Gross MOIC, largely driven by the impact of interest rates on
the profitability of the business. The company continues to enforce
strategic changes to better navigate market dynamics such as
expanding product partnerships and tightening contractor payment
guidelines. The macroeconomic environment
headwinds are beginning to stabilise, and the industry outlook is
improving.
Infinitum
The valuation multiple for Infinitum
increased from 1.05x Gross MOIC to 1.10x Gross MOIC during the
fourth quarter of 2023 as a result of the increase in their Series
E round led by Just Climate from $160 million to $185 million.
Additionally, the company hired Mike DiNucci (formerly senior Vice
President of Sales at ChargePoint) as Chief Revenue Officer. The
company also appointed Paulo Guedes-Pinto as Chief Technology
Officer and Bhavnesh Patel as Chief Strategy Officer. Overall, in
2023, Infinitum increased revenue and unit volumes sold by nearly 5
times versus the prior year. In 2024, Infinitum plans to continue
investing in its business to fund product innovation, increase
manufacturing, and grow the company to meet demand.
Other Investments
Tritium DCFC
The valuation multiple for Tritium
remained essentially flat from 0.47x Gross MOIC to 0.46x Gross MOIC
during the fourth quarter of 2023. In November 2023, Tritium
implemented a strategic plan to achieve a path to profitability in
2024. The plan improves operational efficiency and margins by
consolidating Tritium's global manufacturing operations into its
plant in Tennessee and reduces SG&A expenses via decreased
headcount and professional fees. The company maintains expectations
on becoming EBITDA positive during the first half of the 2024
calendar year.
In September 2023, Tritium secured a
financing commitment of up to $75 million, with an initial funding
of $25 million. The company plans to use proceeds to continue its
investment in working capital to meet expected continued strong
customer demand in the 2024 calendar year.
In October 2023, Tritium secured a
major order for more than 200 fast chargers from Driveco, a leading
French charging network operator.
Enviva
The valuation multiple for Enviva
fell from 0.29x Gross MOIC to 0.05x Gross MOIC during the fourth
quarter of 2023. Subsequent to the close of
the third quarter, on 9 November 2023, Enviva's management released
its third quarter 2023 earnings results, initiated a comprehensive
review of its capital structure to improve the company's financial
position, and announced a realignment of leadership, including the
appointment of Glenn Nunziata, Chief Financial Officer, as Enviva's
Chief Executive Officer as the company focuses on executing a
multi-faceted restructuring. The company reported lower adjusted
EBITDA for third-quarter 2023 of $36.6 million as compared to $60.6
million for third-quarter 2022, primarily due to lower revenue from
commercial activities.
T-REX
The valuation multiple for T-REX
fell from 1.00x Gross MOIC to 0.82x Gross MOIC during the fourth
quarter of 2023. In November 2023, T-REX successfully executed its
contract with Blackstone's Private Credit group, which is currently
in a "Pilot" phase.
FreeWire
The valuation multiple for FreeWire
fell from 1.00x Gross MOIC to 0.25x Gross MOIC during the fourth
quarter of 2023. The company has curbed its
growth outlook in order to extend cash runway. Despite the
Inflation Reduction Act, Bipartisan Infrastructure Bill, and
growing EV market tailwinds, 2023 was a very challenging
environment for the electrification of transportation and
associated charging infrastructure. Public peer share price
performance and trading multiples steadily declined, amidst broader
automotive OEM EV strategy setbacks affecting charging
infrastructure demand.
Our
Next Energy ("ONE")
The valuation multiple for ONE fell
from 1.00x Gross MOIC to 0.25x Gross MOIC during the fourth quarter
of 2023. Since Q4 2023, the company is in the process of raising an
insider-led round and adjusted its business plan to better align
commercial offtake with factory scale-up and future financing. ONE
continues to demonstrate its compelling technology through
qualification programs with automotive customers. The company plans
to use the proceeds from the insider led financing to continue
operations while achieving further milestones in order to raise a
larger Series C round.
Share Buyback Programme and 2023 Tender
Offer
Since the Company's announcement
on 23 May 2023 of the authorised
increase of £30 million for the share buyback programme through 31
December 2023, 3,126,023 ordinary shares
have been bought back at a total cost of approximately £18
million ($22 million) at an average share price of approximately
£5.67 ($7.13). As of 31 December 2023, £22
million was available for repurchases.
In addition, pursuant to changes to
the Investment Management Agreement announced on 3 January 2020,
the
Investment Manager agreed for the
Company to be required to repurchase shares or pay dividends equal
to 20 per cent. of net gains on dispositions. No further carried
interest will be payable until the $85 million of
realised
and unrealised losses to date at 31
December 2023 are made whole with future gains. REL continues to
seek
opportunities to purchase shares in
the market at prices at or below the prevailing NAV per
share.
On 17 August 2023, REL announced a
tender offer to repurchase up to 13,840,830 shares at £5.78 per share. On 27 September 2023, the Company repurchased
3,182,196 shares representing 7 per cent. of outstanding shares at
that date, and 23 per cent. of the tender offer.
LEI: 213800HAZOW1AWRSZR47
About Riverstone Energy Limited:
REL is a closed-ended investment
company which invests in the energy industry that has since 2020
been exclusively focussed on pursuing and has committed $211
million to a global strategy across decarbonisation sectors
presented by Riverstone's investment platform. REL's ordinary
shares are listed on the London Stock Exchange, trading under
the symbol RSE. REL has 14 active investments spanning
decarbonisation, oil and gas, renewable energy and power in the
Continental U.S., Western Canada, Europe and
Australia.
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:
Josh Prentice
+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 2023 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 Board reviews and considers the
valuations of the Company's investments held through the
Partnership.