Riverstone Energy Limited Final results for the half year ended 30 June 2018 (8163X)

TIDMRSE

RNS Number : 8163X

Riverstone Energy Limited

15 August 2018

Riverstone Energy Limited

Final results for the half year ended 30 June 2018

London, 15 August 2018: Riverstone Energy Limited ("REL" or the "Company") announces its Half Year Results for the 6-month period (the "Period") from 1 January 2018 to 30 June 2018.

Summary performance

 
30 June 2018 
NAV                                    $1,754 million 
NAV per share                          $20.76 / GBP15.721 
Profit/(loss) during period            $10.7 million 
Basic profit/(loss) per share during   12.72 cents 
 period 
Market Capitalisation                  GBP1,078 million / $1,423 
                                        million1 
Share price                            $16.85 / GBP12.76(1) 
 

Highlights

-- As of 30 June 2018, REL had a NAV per share of $20.76, representing an increase of 13 cents or 0.6 per cent. versus NAV per share at 31 December 2017. On a Sterling basis, the NAV per share increased by GBP0.45 or 2.9 per cent. compared with the end of 2017.

-- REL took advantage of favourable market conditions to exit Three Rivers Natural Resources Holdings III LLC and sell 4.4 million shares in Centennial Resource Development, Inc., of which $280 million of gross proceeds were received during the Period, resulting in a Gross IRR of 47 per cent. for shareholders.

-- The Company invested a total of $50 million during the period, bringing net capital invested as of 30 June 2018 to $1,156 million, or 83 per cent of net capital available(2) .

-- During the first half of 2018, REL reduced commitments to two companies, totaling $74 million, bringing net committed capital as of 30 June 2018 to $1,385 million, or 99 per cent of net capital available(2) .

-- REL finished the Period with a cash balance of $236 million and no debt, following repayment of its loan secured against shares in Centennial Resource Development, Inc., in April 2018.

Commitments and Investments

During the Period, the company made the following investments:

-- Invested $22 million in Fieldwood Energy, LLC

-- Invested $15 million in ILX Holdings III LLC

-- Invested $6 million in Sierra Oil and Gas Holdings, L.P.

-- Invested $5 million in Meritage Midstream Services III, L.P.

-- Invested $2 million in Canadian Non-Operated Resources LP

During the Period, the Company made the following realisations:

-- Realised $196 million of gross proceeds for Three Rivers Natural Resources Holdings III, LLC

-- Realised $85 million of gross proceeds for Centennial Resource Development, Inc.

During the Period, the Company reduced the following commitments:

-- Commitment reduction of $72 million to Three Rivers Natural Resources Holdings III LLC

-- Commitment reduction of $2 million to Castex Energy 2005, LLC

Manager Outlook

-- REL's $236 million cash balance makes the Company well placed to make new investments and grow its existing Portfolio.

-- The Investment Manager believes the current cycle is generating attractive opportunities in midstream, oilfield services and power, while energy producers in low-cost basins, with strong operational capabilities and an oil-weighting will continue to outperform.

-- North American energy investments retain an advantage in a global marketplace due to low breakeven costs, short cycle times and high asset liquidity.

-- The portfolio's 12 active investments as a whole are well placed to offer investors resilience and growth in a variety of commodity price environments.

Richard Hayden, Chairman of Riverstone Energy Limited, commented:

"The $280 million of realisations during the Period have strengthened REL's ability to take advantage of new opportunities. The Board continues to evaluate various options to deploy this capital which would be most beneficial for shareholders, including new investments as well as a return of capital."

David M. Leuschen and Pierre F. Lapeyre Jr., Co-Founders of Riverstone, added:

"Oil prices experienced their first sustained period above $60 per barrel since the market downturn in 2014. The improvement in market fundamentals is supportive for REL realising value from its mature investments, while capitalising upon a broader universe of opportunities across the energy value chain."

- Ends -

Riverstone Energy Limited's 2018 Interim Report is available to view at: www.RiverstoneREL.com.

2Q18 Quarterly Portfolio Valuation

Previously, on 31 July 2018, REL announced its quarterly portfolio summary as of 30 June 2018, inclusive of updated quarterly unaudited fair market valuations:

Current Portfolio

 
                                                                                      Gross 
                                   Gross                    Gross       Gross        Realised      30 Jun    31 Mar 
                                 Committed     Invested    Realised   Unrealised     Capital        2018      2018 
                                  Capital       Capital    Capital      Value      & Unrealised     Gross     Gross 
                 Target Basin      ($mm)         ($mm)     ($mm)(3)     ($mm)      Value ($mm)     MOIC(4)   MOIC(4) 
  Hammerhead      Deep Basin 
   Resources        (Canada)        $307         $295        $23         $508          $531         1.8x      1.9x 
                    Permian 
  Centennial         (U.S.)         268          268         172         278           450          1.7x      1.7x 
                   Deepwater 
  ILX III          GoM (U.S.)       200          131          -          183           183          1.4x      1.2x 
                  Bakken, PRB 
  Liberty II         (U.S.)         142          142          -          177           177          1.3x      1.3x 
                   Permian & 
                     Eagle 
                    Permian 
  Carrier II         (U.S.)         133          110          -          131           131          1.2x      1.2x 
  RCO(5)         North America      125           87         82           4             86          1.0x      1.1x 
                    Western 
  CNOR               Canada          90           85          -           85            85          1.0x      1.0x 
  Meritage          Western 
   III(6)            Canada          67           39          -           77            77          2.0x      1.8x 
                   GoM Shelf 
  Fieldwood          (U.S.)          82           81          3           65            68          0.8x      0.2x 
                  Gulf Coast 
                     Region 
  Castex 2014        (U.S.)          67           44          -           44            44          1.0x      1.0x 
                 Mid-Continent 
  Eagle II           (U.S.)          67           62          -           37            37          0.6x      0.8x 
  Sierra            Mexico           38           14          -           33            33          2.4x      2.4x 
  Total Current Portfolio(7)       $1,585       $1,356      $280        $1,623        $1,903        1.4x      1.4x 
------------------------------  ------------  ---------  ----------  ------------  ------------  ---------  -------- 
 

Realisations

 
                                                                                      Gross 
                                  Gross                    Gross       Gross        Realised       30 Jun    31 Mar 
                                Committed     Invested    Realised   Unrealised      Capital        2018      2018 
                                 Capital       Capital    Capital      Value      & Unrealised      Gross     Gross 
                Target Basin      ($mm)         ($mm)     ($mm)(1)     ($mm)       Value ($mm)     MOIC(4)   MOIC(4) 
                   Permian 
  Rock Oil(8)       (U.S.)         114          114         229          11            240          2.1x      2.1x 
  Three Rivers     Permian 
   III              (U.S.)          94           94         196          9             205          2.2x      2.2x 
  Total Realisations(7)            $209         $209       $425         $19           $444          2.1x      2.1x 
-----------------------------  ------------  ---------  ----------  ------------  -------------  ---------  -------- 
  Withdrawn Commitments 
   and Impairments(9)               59           59          1           -              1           0.0x      0.0x 
-----------------------------  ------------  ---------  ----------  ------------  -------------  ---------  -------- 
  Total Investments(7)            $1,853       $1,624      $706        $1,642        $2,348         1.4x      1.4x 
-----------------------------  ------------  ---------  ----------  ------------  -------------  ---------  -------- 
  Cash and Cash Equivalents                                             $236 
-----------------------------  ------------  ---------  ----------  ------------  -------------  ---------  -------- 
  Total Investments & Cash 
   and Cash Equivalents(7)                                             $1,878 
-----------------------------  ------------  ---------  ----------  ------------  -------------  ---------  -------- 
 

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:

Brian Potskowski

Fraser Johnston-Donne

[phone]

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 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 1.321 as of 30 June 2018.

(2) Based on total capital raised of $1,320 million, realised profits and other income net of fees, expenses and performance allocation. The Board 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 $706 million of capital realised to date, $410 million is the return of the cost basis, and the remainder is profit.

(4) Gross MOIC is Multiple of Invested Capital. Gross Unrealised Value and Gross MOIC 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. Following completion of the interim financial statements review process, the valuation of RCO has increased by $8 million to $12 million with a valuation multiple of 1.1x, since the valuations announcement released on 31 July 2018.

(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 and impairments consist of Castex 2005 ($48 million), Origo ($9 million), and CanEra III ($1 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 [e-mail] or visit www.rns.com.

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August 15, 2018 02:00 ET (06:00 GMT)