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Riverstone Energy Ld (RSE)

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Wednesday 19 August, 2020

Riverstone Energy Ld

Final Results 30 June 2020 & Share Buyback Update

RNS Number : 5120W
Riverstone Energy Limited
19 August 2020
 

Riverstone Energy Limited

Final results for the half year ended 30 June 2020 & update on share buyback programme

London, UK (19 August 2020) - Riverstone Energy Limited ("REL" or the "Company") announces its Half Year Results for the 6-month period (the "Period") 1 January 2020 to 30 June 2020.

Summary Performance

 

30 June 2020

NAV

$379 million (£308 million)1

NAV per share

$5.48 / £4.451

Profit/(loss) for Period ended

$(355.18) million

Basic profit/(loss) per share for Period ended

(457.59) cents

Market capitalization

$319 million (£259 million)1

Share price

$4.62 / £3.751

 

Highlights

§ As of 30 June 2020, REL had a NAV per share of $5.48 (£4.45), representing a decrease in USD and GBP of 43 and 40 per cent., respectively, compared to the 31 December 2019 NAV.

§ Hammerhead, ILX III, and Liberty II were the largest drivers of REL's NAV decline over the Period.

§ During H1 2020, REL, through the Partnership, received $41 million in gross proceeds from the realisation of its investments in Aleph ($23 million) and Castex 2014 ($8 million), as well as distributions from Ridgebury ($9 million) and RCO ($1 million).

§ The Company, through the Partnership, invested a total of $21 million during the Period, bringing net capital invested as of 30 June 2020 to $987 million, or 86 per cent. of net capital available.2

§ REL finished the period with a cash balance of $164 million and remaining potential unfunded commitments of $100 million.

 

Share Buyback Programme

As previously announced on 1 July 2020, with today's publication of the Company's Interim Report and Unaudited Interim Condensed Financial Statements for the six months ended 30 June 2020, the Board will recommence its £50.0 million open market share buyback programme with Numis Securities Limited and J.P. Morgan Securities plc. Since the Company's announcement on 1 May 2020, 10,811,141 ordinary shares have been bought back at a total cost of approximately 30.5 million.

 

 

Portfolio Update

Below is a summary of material activity in the portfolio during the Period. 

 

Aleph Midstream S.A. ("Aleph")

REL, through the Partnership, received return of capital proceeds of $23 million from the unwinding of the commitment to Aleph.

 

Onyx Power ("Onyx")

REL, through the Partnership, invested $16 million in Onyx.

 

Ridgebury H3, LLC ("Ridgebury")

REL, through the Partnership, received proceeds of $8 million from the sale of the Nalini D vessel and income distributions of $1 million.

 

Castex Energy 2014 ("Castex 2014")

REL, through the Partnership, received proceeds of $8 million from the sale of Castex 2014 to Talos Energy.

 

ILX Holdings III, LLC ("ILX III")

REL, through the Partnership, invested $5 million in ILX III.

 

Riverstone Credit Opportunities, L.P. ("RCO")

REL, through the Partnership, received proceeds of $1 million from RCO.

 

 

Subsequent Events

§ In July 2020, REL, through the Partnership, funded $18 million of its $25 million commitment to Enviva in conjunction with the closing of the transaction on 22 July 2020. The company is the world's largest producer of sustainable wood pellets, which provide a low-carbon alternative to coal in power generation. REL's investment in Enviva supports its commitment to diversifying its portfolio away from commodity driven companies such as oil and gas operators.

§ At 31 July 2020, REL's uninvested cash balance at the Partnership had decreased to $135.5 million and potential unfunded commitments had increased to $103.3 million. The expected funding of the remaining unfunded commitments are $30 million in H2 2020, $17 million in 2021 and $1 million in 2022. The residual amounts are to be funded in 2023 and later years.

 

 

 

Manager Outlook

§ REL's $138 million cash balance at 31 July 2020 makes the Company well placed to fund the capital needs of the portfolio. The Company has remaining potential unfunded commitments of up to $103 million at 31 July 2020; however, the Board, in consultation with the Investment Manager, does not expect to fully fund all commitments in the normal course of business.

§ The second quarter of 2020 continued to present a challenging market environment for energy companies.  While spot prices recovered modestly, the coronavirus pandemic continued to pressure global demand. 

§ The Investment Manager is currently working hard with the management teams of REL's portfolio companies to plan for continued uncertainty with a high priority on defensive measures to maximise liquidity including reducing spending and capital expenditures.

§ REL continues to focus on creating value for shareholders, including through pivoting away from E&P investments and remaining focused on executing its modified investment strategy.

 

Richard Hayden, Chairman of Riverstone Energy Limited, commented:

"While commodity prices recovered moderately at the end of Q2 2020, the ongoing spread of coronavirus continues to create significant uncertainty and weigh on the market dynamics for energy.  In addition to portfolio company initiatives, REL has been working to unlock shareholder value through share buybacks, which were executed in May. The Board remains very focussed on working with the Investment Manager to weather through this difficult period and support value creation for shareholders."

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

"As the coronavirus pandemic continues to persist, we remain focused on actively working with each of our management teams to evaluate every operational and strategic alternative to navigate the current environment. We have prioritised strengthening balance sheets and liquidity, while also reducing capital expenditures and SG&A across the board. In addition, we continue to identify investments that can generate attractive returns with downside protective features. REL's recent investment in Enviva demonstrates this effort and also furthers our commitment to ESG and managing climate change risk."

 

- Ends -

 

Riverstone Energy Limited's 2020 Interim Report is available to view at: www.RiverstoneREL.com .

 

 

2Q20 Quarterly Portfolio Valuation

 

Previously, on 31 July 2020, REL announced its quarterly portfolio summary as of 30 June 2020, inclusive of updated quarterly unaudited fair market valuations:

Investment  (Initial Investment Date)

 

Target Basin

Gross Committed Capital  ($mm)

Invested

Capital ($mm)

Gross Realised

Capital ($mm)3

Gross Unrealised Value

($mm)

Gross Realised Capital & Unrealised Value ($mm)

31 Mar 2020 Gross MOIC4

30 Jun 2020

Gross MOIC4

Centennial  (6 Jul 2016)

 

Permian (U.S.)

$268

$268

$172

$13

$185

0.7x

0.7x

ILX III   (8 Oct 2015)

 

Deepwater GoM (U.S.)

200

160

5

107

112

0.7x

0.7x

Onyx  (30 Nov 2019)

 

Europe

66

47

-

47

47

1.0x

1.0x

Carrier II  (22 May 2015)

 

Permian & Eagle Ford (U.S.)

133

110

29

15

44

0.4x

0.4x

Hammerhead Resources  (27 Mar 2014)

 

Deep Basin (Canada)

307

295

23

3

26

0.1x

0.1x

Ridgebury

(19 Feb 2019)

 

Global

22

18

10

13

23

1.2x

1.2x

CNOR   (29 Aug 2014)

 

Western Canada

90

90

16

4

20

0.2x

0.2x

Liberty II  (30 Jan 2014)

 

Bakken, PRB (U.S.)

142

142

-

14

14

0.2x

0.1x

Fieldwood  (17 Mar 2014)

 

GoM Shelf (U.S.)

89

88

8

-

8

0.2x

0.1x

Total Current Portfolio5

$1,317

$1,217

$262

$217

$479

0.4x

0.4x

 

Current Portfolio

 

 

 

 

 

 

 

 

 

Realisations

 

Investment  (Initial Investment Date)

 

Target Basin

Gross Committed Capital  ($mm)

Invested

Capital ($mm)

Gross Realised

Capital ($mm)3

Gross Unrealised Value

($mm)

Gross Realised Capital & Unrealised Value ($mm)

31 Mar 2020 Gross MOIC4

30 Jun 2020

Gross MOIC4

Rock Oil6  (12 Mar 2014)

 

Permian (U.S.)

114

114

231

2

233

2.0x

2.0x

Three Rivers III (7 Apr 2015)

 

Permian (U.S.)

94

94

204

-

204

2.2x

2.2x

Meritage III7     (17 Apr 2015)

 

Western Canada

40

40

83

-

83

2.1x

2.1x

RCO8  (24 Sept 2014)

 

North America

80

80

80

-

80

1.0x

1.0x

Sierra  (24 Sept 2014)

 

Mexico

18

18

39

-

39

2.1x

2.1x

Aleph  (24 Sept 2014)

 

Vaca Muerta (Argentina)

23

23

23

-

23

1.0x

1.0x

Castex 2014  (24 Sept 2014)

 

Gulf Coast Region (U.S.)

52

52

8

3

11

0.2x

0.2x

Total Realisations5

$422

$422

$669

$5

$674

1.6x

1.6x

Withdrawn Commitments and Impairments9

121

121

1

-

1

0.0x

0.0x

Total Investments5

$1,860

$1,760

$932

$222

$1,154

0.7x

0.7x

Cash and Cash Equivalents

 

 

 

$164

 

 

 

Total Investments & Cash and Cash Equivalents5

 

 

 

$386

 

 

 

 

H1 2020 Results

 

 

Quarterly Performance Commentary

ILX III

Onyx

Carrier II

Liberty II

Centennial

Other Investments

Subsequent Events

In July 2020, REL, through the Partnership, funded $18 million of its $25 million commitment to Enviva in conjunction with the closing of the transaction on 22 July 2020, bringing the Partnership's uninvested funds down to $135.5 million and potential unfunded commitments up to $103.3 million. The company is the world's largest producer of sustainable wood pellets, which provide a low-carbon alternative to coal in power generation. REL's investment in Enviva supports its commitment to diversifying its portfolio away from commodity driven companies such as oil and gas operators.

 

Investment Manager Update

REL announces that, in compliance with the laws of the Cayman Islands, the Company and its existing investment manager, Riverstone International Limited ("RIL"), a Cayman Islands exempted company, have agreed that RIL will assign its investment advisory rights and obligations under the Company's investment management agreement (the "IMA") with immediate effect to RIL's immediate parent entity, RIGL Holdings, LP, a Cayman Islands exempted limited partnership ("RIGL"). RIGL is registered under the Cayman Islands Securities Investment Business Law which enables it to act as investment manager under the IMA. RIGL will assume all of RIL's existing rights and obligations under the IMA, which will not otherwise change.

 

Riverstone Investment Group LLC is registered as an investment adviser with the US Securities and Exchange Commission ("SEC") under the US Investment Advisers Act of 1940, as amended (the "Advisers Act"). RIGL is also registered with the SEC as a relying adviser of Riverstone Investment Group LLC. As such, RIGL is subject to Riverstone Investment Group LLC's supervision and control, the advisory activities of RIGL will be subject to the Advisers Act and the rules thereunder, and RIGL will be subject to the examination by the SEC.

 

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's ordinary shares are listed on the London Stock Exchange, trading under the symbol RSE.  REL has 10 active investments spanning oil and gas, renewable energy, power and energy services in the Continental U.S., Western Canada, Gulf of Mexico and Europe.

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:

Jingcai Zhu

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 30 June 2020 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.

 

 

 

                 

 

1 GBP:USD FX rate of 1.231 as of 30 June 2020

2Net capital available of $1,151 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. 

3Gross realised capital is total gross proceeds realised on invested capital. Of the $932 million of capital realised to date, $641 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 applicable gross profits in accordance with the revised terms announced on 3 January 2020, but effective 30 June 2019. Since there was no netting of losses against gains before the aforementioned revised terms, 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 Amounts may vary due to rounding.

6 The unrealised value of the Rock Oil investment consists of rights to mineral acres.

7 Midstream investment.

8 Credit 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 [email protected] or visit www.rns.com.
 
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