Riverstone Energy Share Discussion Threads

[hugepants] 11/12/2019 11:47

Its gone a bit pear shaped here. Last stated NAV was 797p I assume its a good deal lower now?

[spectoacc] 13/11/2019 07:36

Thanks @rambutan2, good to see some commentary on it.

Particularly liked:

"The RSE investment has been a difficult one for your Company to date.."

Lol.

[rambutan2] 12/11/2019 22:36

From AVT (5.1% stake) annual report (y/e 30/09) which out today:

Riverstone Energy (‘RSE’) was by far our largest detractor for the year (-293bps) with a share price fall of -54%. A sharp decline in the NAV (-36%) was compounded by a near-doubling of the discount to 42%.

Over the year, the price of West Texas Intermediate oil declined by -26%, with geo-political concerns outweighed by continued strong production levels. Sentiment to the US Oil & Gas sector is at all-time negative levels, with energy’s share of the S&P 500 at just 5% (down from a peak of 13% in 2008). Multiple compression in publicly traded peers (the S&P E&P Index trades at 5x EV/EBITDA vs 12x less than three years ago) has translated into write-downs for RSE’s private investments.

More specific pain has been felt at Canadian holding Hammerhead Resources, RSE’s largest investment, due to government caps placed on production for companies such as Hammerhead that operate in Western Alberta. A shortage of pipelines and other infrastructure has depressed oil prices (when oil cannot be transported out of the Basin, this depresses local oil prices) within the Basin and led to the government action.

Overall, RSE’s holdings were valued at a MOIC (multiple of investment cost) of 0.9x at June 2019 – this compares to a MOIC of 1.4x during the third quarter of 2018. RSE’s woes were further compounded by a -79% decline in the share price of its sole listed holding, Centennial Resources (‘CDEV’, 7% of NAV). CDEV was hit by the decline in oil prices over the period, which was compounded by guidance from management that it would be reducing production estimates by more than expected in response to the oil price slide. While this move is sensible insofar as it leaves oil in the ground when it is priced too low, it also means that CDEV is unlikely to break-even until at least 2022; previously, management had projected break even profitability in 2020.

There were some points of positive news over the past year, including the realisation of two assets – Sierra and Meritage Midstream – accounting for 7% of NAV, and an announcement with the June 2019 results that the board continues to “evaluate options with the goal of reducing the discount”, and that it has been “holding discussions [...] regarding potential changes to the terms of the investment management agreement.”

The RSE investment has been a difficult one for your Company to date, with weak NAV growth since the position was initiated in 2015, and discount widening impairing shareholder returns. While we would not want to pre-judge the announcement of the board’s measures to reduce the discount, we believe that structural solutions will be required to narrow the discount sustainably and we continue to engage with the board and management of RSE in order to achieve a satisfactory outcome for all parties.

[rambutan2] 31/10/2019 13:06

Not encouraging:

[coolen] 29/10/2019 22:19

Was this not a Questor (Telegraph) tip ?

[sludgesurfer] 28/10/2019 20:14

Damn these guys haven't half picked some turkeys.

[spectoacc] 28/10/2019 16:28

Something has to give here eventually. The dcb was bizarre but now back to new lows.

[rambutan2] 11/10/2019 18:35

Unsurprisingly disgruntled:

[spectoacc] 10/10/2019 06:01

BTEM usually so good... Tho I note they do get the odd one wrong.

Not just the problems you mentioned, all of which I'd agree with: "...Costs, fees, taxes, the board, commitments..", but also the size of the NAV writedowns - enormous and continuing.

Still - look at the discount.

But - when would we ever see a return, other than, as you say, the possible continuation vote.

[rambutan2] 09/10/2019 18:26

Hi Specto, I was wondering whether anyone else on here was watching!

A bit like with WPCT, every time since launch I've revisited RSE, I've reminded myself why I didn't like it last time I looked. That jumbo discount got me reading through the website today, and whilst the chairman made a few slightly encouraging comments in the interims, imho it's still a horror show (see note 8, pg 26) with regard to costs, fees, taxes, the board, commitments etc etc. I think I will continue to sit on the sidelines for the time being, but bear in mind that there could be a continuation vote next Oct.


Noted, a wrong call! In its interims (to 31/03), when the share price was circa 940p, BTEM (5% stake) said:

Despite the recent disappointing performance, we continue to view RSE as an attractive asset with strong prospects for NAV growth over the medium to long term which, coupled with returns from discount contraction, holds out the prospect of compelling returns from here.

[spectoacc] 09/10/2019 13:40

You mean nothing since 14th Aug? Got my eye on this one for the sheer size of the discount but - where's the director buys?

[steve73] 17/4/2019 07:30

Riverstone holdings include Talos & Sierra, both of who are partners in the Zama 2 well offshore Mexico.

[coolen] 15/4/2019 21:23

Is there any specialist broker research to explain the large discount, please ?

[rock star] 21/3/2019 05:19

The total expense ratio is 1.9% which is to high.

[rickyl1] 25/2/2019 13:24

Well, NAV discount at 36%, that's double the average. Worth buying just for that maybe.

[llef] 15/10/2018 09:46

any thoughts on the tender offer announced today?

[lionheart79] 01/4/2018 09:43

Still at a 20% discount to nav then

[pillion] 26/2/2018 17:34

annual results, including the updated NAV as at 31 December 2017, on 28 February 2018.

[xxnjr1] 15/2/2018 21:05

11?..... Probably due to this:-

Fieldwood Energy LLC (the “Company”; or “FieldwoodR21;) has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court for the Southern District of Texas as part of a “prepackaged” chapter 11 case. In connection with the filing, the Company entered into a Restructuring Support Agreement (“RSA”) with support from key stakeholders.

The Chapter 11 plan of reorganization (the “Plan”) encompasses a comprehensive restructuring of the Company’s balance sheet and an acquisition of significant revenue-producing assets. Specifically, the proposed restructuring contemplates (a) reducing current debt by approximately $1.6 billion, (b) raising capital of approximately $525 million through an equity rights offering (the “Rights Offering”), and (c) acquiring all deepwater oil and gas assets of Noble Energy, Inc. located in the Gulf of Mexico. The assets complement and enhance the Company’s asset base and operations. The Company will use the proceeds of the Rights Offering to fund the acquisition, fund the costs and expenses of the Chapter 11 cases, and for general working capital after emergence from Chapter 11. The Plan also provides that holders of undisputed general unsecured claims will be paid cash in full.

Background here hxxps://www.fieldwoodenergy.com/wp-content/uploads/2018/02/FW_Employee-FAQs-final-.pdf