TIDMRSE
RNS Number : 4300J
Riverstone Energy Limited
16 August 2023
Riverstone Energy Limited
Financial and Operational Highlights(1)
Investments during the Invested a total of $4.5 million(2)(3)
period ended 30 June 2023 ($4.5 million pursuant to decarbonisation
strategy):
(i) $3.5 million in Enviva, Inc.
(ii) $1.0 million in Our Next Energy, Inc.
Realisations during the Realised a total of $54.3 million(2)(3)
period ended 30 June 2023 ($53.5 million pursuant to legacy conventional
strategy and $0.8 million pursuant to decarbonisation
strategy):
(i) $28.1 million from Permian Resources
Corporation (formerly Centennial Resource
Development, Inc.)
(ii) $20.2 million from Onyx Power
(iii) $4.6 million from Carrier Energy
Partners II LLC
(iv) $0.6 million from Hammerhead Energy,
Inc.
(v) $0.4 million from Tritium DCFC Limited
(vi) $0.4 million from Enviva, Inc.
Key Financials
30 June 2023 31 December 30 June 2022
2022
-------------------------- --------------------- ------------------ ------------------
NAV as at $604 million $739 million $719 million
/ GBP479 million(3) / GBP610 million / GBP593 million
(3) (3)
NAV per Share as at $12.90 / GBP10.23(3) $14.52 / GBP11.99 $13.64 / GBP11.25
(3) (3)
Share price at $7.14 / GBP5.66(3) $8.21 / GBP6.78 $8.07 / GBP6.66
(3) (3)
Share price discount to 44.7 per cent. 43.5 per cent. 40.8 per cent.
NAV
Market capitalisation $334 million $418 million $425 million
at / GBP265 million(3) / GBP345 million / GBP351 million
(3) (3)
Cash and cash equivalents $133 million(4) $120 million $72 million
at / GBP105 million(3) (4) / GBP99 (4) / GBP60
million (3) million( (3)
Marketable securities $142 million(5) $177 million $90 million
(unrestricted) at / GBP113 million(3) (5) / GBP146 (5) / GBP74
million( (3) million( (3)
Marketable securities $111 million(6) $4 million $81 million
(restricted) at / GBP88 million(3) (6) / GBP3 (6) / GBP67
million (3) million( (3)
30 June 2023 30 June 2022
-------------------------------------------- ----------------- ----------------
Total comprehensive (loss)/income for
the six months ended $(105.3) million $55.3 million
Basic and diluted (loss)/earnings per (213.18) cents 103.19 cents
share for the six months ended
Number of Shares repurchased and average 4,091,145 2,223,312
price per repurchased Share for the
period ended(7)
$7.30/GBP5.78 $8.27/GBP6.54
Number of Shares outstanding at period
ended 46,800,513 52,714,287
Per cent. change in US Dollar and Sterling $ (13 per cent.) $28.5 per
Share price for the period ended GBP (16.5 per cent.
cent.) GBP 43.2 per
cent.
(1) Amounts shown reflect investment-related activity at the
Partnership, not the Company.
(2) Amounts may vary due to rounding.
(3) Based on exchange rate of 1.2614 $/GBP at 30 June 2023
(1.2103 $/GBP at 31 December 2022, 1.2119 $/GBP at 30 June 2022 and
1.606 $/GBP at IPO on 29 October 2013).
(4) At 30 June 2023, 31 December 2022 and 30 June 2022,
respectively, amounts are comprised of $12.3 million, $15.8 million
and $6.4 million held at the Company, $54.7 million, $68.4 million
and $14.9 million held at the Partnership and $65.8 million, $35.3
million and $51 million held at REL US Corp.
(5) At 30 June 2023, unrestricted marketable securities held by
the Partnership consist of publicly-traded shares of Permian
Resources (formerly Centennial), Enviva, Solid Power, Tritium and
Hyzon f or which the aggregate fair value was $142 million (31
December 2022: Permian Resources (formerly Centennial), Enviva,
Solid Power, Tritium and Hyzon and 30 June 2022: Enviva, Solid
Power, Tritium and Hyzon).
(6) At 30 June 2023, restricted marketable securities held by
the Partnership consist of publicly-traded shares of Hammerhead
Energy, Inc. for which the aggregate fair value was $ 111 million
(31 December 2022: Tritium and DCRD and 30 June 2022: Solid Power,
Permian Resources (formerly Centennial), Tritium and DCRD).
(7) Inception to date total number of shares repurchased were
33,096,218 at an average price per share of GBP 4.12 ($ 5.28 ).
Chair's Statement
Dear Shareholder,
Battling inflation and navigating market uncertainties
After the political upheaval created by the war in Ukraine in
2022 and the significant price moves in energy markets that
resulted, the first half of 2023 has seen a retrenchment of energy
prices towards or below pre-invasion levels. WTI crude oil prices
ended on 30 June 2023 at $70.66, down around 12 per cent. from
where they ended 2022 and 43 per cent. down from the peak of
$123.64 in March 2022. Henry Hub gas prices followed a similar
trajectory and are down to $2.48 at 30 June 2023, or around 30 per
cent. from the end of 2022 and 75 per cent. from their peak in
August 2022.
That has not necessarily meant the environment has become
easier, simply that the challenges are different. The new year has
seen a return of significant and sustained inflation in developed
economies for the first time in a generation. Central Banks have
responded by raising rates aggressively back towards, or beyond,
levels not seen since before the Financial Crisis of 2008-9 in
their efforts to reign in those inflationary pressures.
The situation has been further complicated by mixed data showing
slowing economic growth set against a still tight labour market,
leading to persistent wage growth and labour supply pressures.
Central bank actions to tighten monetary policy have yet to fully
feed through leaving uncertainty about their ultimate economic
effect and the impact they will have on growth. Economies are
slowing, with growth in Europe and the UK flat-lining while US
growth has pushed ahead at about 2 per cent. Asset prices have also
been impacted and most global assets have seen prices come under
pressure in the face of rising interest rates. Alongside that the
crisis in the global banking system, which saw the failures of
Silicon Valley Bank, Signature Bank and Silvergate Bank in the US,
and the dissolution of Credit Suisse in Europe, has exacerbated
market nervousness.
What does this all mean for energy prices? Despite the continued
uncertain outlook for the global economy, the IEA expects oil
demand to grow by 2.2 mb/d in 2023, which was 99.9 mb/d in 2022.
However, the demand picture contrasts sharply with the outlook for
global oil supplies which are expected to see fractional growth for
the full year. This weak performance is due to the energy landscape
still being impacted by continued tight production following
decades of Upstream under-investment and reduced supplies from
OPEC+ led by Saudi Arabia. In addition, Russia's invasion of
Ukraine has resulted in oil volumes being diverted to India and
China.
As the world grapples with geopolitical instability, global
efforts to curb inflation and the herculean task of weaning itself
off fossil fuels, REL's portfolio stands to benefit from these
factors as they represent tailwinds to our conventional energy and
decarbonisation strategies. Tight and uncertain supply supports
stable energy commodity prices over the mid-to-long term, while the
need to address climate change and energy security support our
decarbonisation and energy transition investments.
Balancing security, affordability, and sustainability will have
structural market implications
The theme that succinctly captures the challenge for society and
our industry is the imperative to balance the competing demands of
the energy trilemma: sustainability, security and
affordability.
While decarbonising the energy system as the world transitions
to net zero must remain the core aim, the recent volatility in
energy markets serve as an important reminder that the transition
also needs to take account of the security and affordability of
energy for the end consumer.
With that in mind, hydrocarbons will continue to play an
important role in the energy system for the next decade or two at
least. The past 12 months have demonstrated the need for an orderly
energy transition. If the world transitions away from hydrocarbons
too quickly, as the impact of Russian volumes exiting the market
has served to illustrate, the result will be energy shortages,
price spikes and economic damage. It is critical, therefore, that
demand for, and available supply of, hydrocarbons are consistent.
We have seen some tepid increases in Upstream investment this year,
but the rate of natural declines in existing production sources
mean there needs to be greater investment.
At the same time, the necessity for decarbonisation is becoming
more urgent, as evidenced by the unprecedented high temperatures
during the month of July 2023. At the same time, CO2 emissions have
increased every year since the Paris COP in 2015, except in 2020
when they decreased due to the impact of the Covid-19 pandemic. We
have seen some progress on Government support for the energy
transition, including passing the Inflation Reduction Act last year
in the US. The war in Ukraine has undoubtedly changed the energy
system for the long term with heightened focus on energy security
increasing demand for domestically produced energy. This will
hasten investment into renewables and other non-fossil fuels and
technologies such as bioenergy, carbon capture and energy storage
providing REL with further opportunities.
But while the decarbonisation of the global power system
continues at pace, there are potential challenges ahead. The growth
in highly cost competitive variable power sources such as wind and
solar means there needs to be an acceleration in the financing and
building of new grid capacity, as well as reform in planning and
regulation. In the UK for example, network owners are under
pressure to reduce multi-year delays for new projects wanting to
connect to the grid. These delays threaten to derail the UK's
target to decarbonise electricity supplies by 2035 and similar
pressures exist in the US and EU.
I believe that the general public market malaise and sentiment
toward decarbonisation stocks in 2023 thus far is transitory and is
not reflective of the inherent long-term value creation occurring
within this segment of REL's portfolio. Fundamentally, the need to
balance security, affordability, and sustainability will continue
to drive strong operating performance across REL's portfolio and
will underpin our ability to continue to drive returns for
shareholders.
Board changes and AGM
After nearly ten years as a REL Non-Executive Director and as
Chair of the Company for almost seven of those, Richard Hayden
retired from the Board after the AGM in May 2023. Under his
stewardship, Richard has overseen the strengthening of REL's
governance through the implementation of significant adjustments to
the Investment Management Agreement, over the last few years. These
have included: the Investment Manager's representatives voluntarily
leaving the Board; amending the Investment Management Agreement to
stop performance fees until there is 100 per cent. make-whole from
prior realised and unrealised losses; instituting an 8 per cent.
hurdle for each deal as well as the requirement of full capital
return on individual deals before a performance fee is payable. I
want to thank Richard for his commitment to REL over the last
decade and I wish him all the best for the future.
Peter Barker also retired as a Non-Executive Director after the
AGM after nearly ten years and I extend my warm thanks to him for
his excellent contribution to the Board. Mr Barker brought a huge
amount of experience from a long career in investment banking,
including with Goldman Sachs and JPMorgan.
We are pleased to welcome Karen A. McClellan to the Board as a
Non-Executive Director. Ms McClellan is an advisory board member of
TT International's Environmental Solutions Fund and serves as an
appointed expert for the UK Accelerated Climate Transitions
programme, on the Global SDG Council for Alternative Fuels, and on
the Climate Tech Council (London). Prior to becoming a
non-executive director, Ms McClellan has worked over the last two
decades in carbon policy, clean infrastructure finance and
zero-carbon technologies, having raised and deployed more than
GBP700 million in renewable energy and carbon funds and
transactions. During two decades as an investment banker at Lehman
Brothers, Robert Fleming and the EBRD, Ms McClellan structured
investment funds backed by emission reductions and energy savings
and served on their investment committees.
I was pleased that, at the tenth AGM held on 23 May 2023, each
of the Resolutions were duly passed without amendment.
Investment portfolio summary and performance
The first half of the year saw some challenging conditions,
particularly for small cap, high growth companies in emerging
technology fields. As a result the portfolio was negatively
impacted and during the period NAV decreased by 11 per cent. to
$12.90 per share (or 15 per cent. to GBP10.23 per share).
REL's portfolio comprises twelve investments in the
decarbonisation and energy transition space and three conventional
assets. The decarbonisation portfolio was most impacted with
declines in the total value of our investments of $72.0 million,
which consisted of $71.2 million of changes in fair value and $0.8
million in realisations. On the conventional side we saw a decrease
of $70.0 million, which consisted of $53.5 million in realisations
and $16.5 million of changes in fair value. In addition, REL will
continue to look for opportunities to realise value from its
conventional portfolio where possible.
In H1 2023, REL, through the Partnership invested an aggregate
amount of $4.5 million in energy transition and decarbonisation
investments, bringing the total invested in this area to $214
million across twelve investments, which in aggregate were valued
at $156 million, or 0.73x Gross MOIC, at 30 June 2023.
In February, REL announced a $12.5 million commitment to Our
Next Energy's (ONE) $300 million Series B round. ONE is a
Michigan-based energy storage technology company working to develop
batteries for mobility and large-scale storage applications. ONE
will use the proceeds of the round to complete ONE Circle, its
first Lithium Iron Phosphate (LFP) battery manufacturing plant.
There were other developments in the portfolio during the
period. A number of our portfolio companies continued to make good
progress on their strategic growth goals. These included Group14
Technologies and Infinitum. These milestones are explained more
fully below in the Investment Manager's Report and ensure these
companies remain well positioned to capture the sizeable
opportunities ahead of them.
Elsewhere, Enviva missed its Q1 earnings estimates and
subsequently revised its full year outlook for 2023. The main
reasons for the miss were related to higher input prices (inflation
across wages, diesel and power prices in the US) as well as lower
than expected production volumes caused by operating outages.
Nonetheless, fundamentals for biomass as an alternative to coal in
Europe and Asia remain very strong as substantiated by RED III in
Europe. I am confident that concerns regarding biomass's viability
in the mix of European power generation have been addressed and the
fundamentals for the business and the order backlog remain as
strong as ever. Enviva is a fast-growing company that is executing
on an ambitious plan of expanding its production while meeting very
strong demand from its existing customer base.
Also during the period, REL was informed that Anuvia had ceased
operations and is undergoing liquidation. The Company invested $20
million in Anuvia in March 2022, with its investment being written
down to $14 million at the time of the Company's Q1 2023 quarterly
portfolio valuations. Anuvia is in the process of realising its
assets and whilst the Series D Investors, including the Company,
are first equity in line to receive proceeds from Anuvia, the
Company's Investment Manager has informed the Board on 10 July 2023
that no such proceeds can now be reasonably expected given the debt
burden on the business and therefore, was marked down to nil as of
30 June 2023.
Lastly, the current interest rate environment, underpinned by
dynamically rising rates, has negatively impacted loan origination
businesses such as GoodLeap by increasing borrowing costs, reducing
demand for loans, and creating uncertainty in the capital markets
ecosystem.
Buyback programme and capital returns
In the first half of 2023, REL continued with its buyback
programme to capitalise on NAV accretion, returning GBP23.6 million
to shareholders through the purchase of 4,091,145 shares at a
weighted average price of GBP5.78 ($7.30) per share.
As of 30 June 2023, REL has returned GBP136.5 million ($174.8
million) to Shareholders by purchasing 33,096,218 shares through
the buyback programme, representing 41.4 per cent. of the total
outstanding shares at commencement in May 2020, at a weighted
average price of GBP4.12 ($5.28) per share.
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 investment
disposals. No further carried interest will be payable until the
$192.6 million of realised and unrealised losses to date at 30 June
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.
Outlook for the remainder of 2023 and beyond
As I wrote at the beginning, this year has seen significant
inflationary pressures that will impact the future path of the
global energy system. I am saddened by the terrible consequences of
the Russia-Ukraine war and my thoughts and hopes are with all those
affected. Because a resolution to the conflict is unclear at time
of writing, it remains challenging to make definitive predictions
about the future of conventional assets given the still sizeable
role that Russia plays in global energy supply.
Fundamentally, though, I believe that the increased focus on
energy security as a result of Russia's actions will mean that
advanced economies will seek to reduce their dependency on
conventional imported energy. As we have seen in Europe, it is
likely that campaigns and initiatives to improve energy efficiency
and demand at peak times will be utilised more often. With
globalisation and the efficiency of the global trade system under
scrutiny it is possible that we now enter a period of tepid global
growth, despite China's seemingly renewed focus on economic
prosperity. We have also seen the beginnings of GDP growth
decoupling from oil demand: prior to the pandemic, GDP growth of 1
per cent. a year implied about half a per cent growth in oil demand
but that elasticity has now fallen - and the fall might get
sharper. The most certain outcome of all this is the likely
positive structural shift towards locally produced non-fossil fuels
and technologies, sustaining and accelerating the energy
transition.
Looking ahead, while Europe weathered the 2022/23 winter well,
the coming winter could well be challenging, especially if a lack
of alternatives to Russian gas makes it hard to fill European
storage during the summer months. I am hopeful that a combination
of continued gains in energy efficiency, including investment in
storage technologies, the rapid growth of wind and solar power and
increasing electrification of final energy consumption means that
the signs are encouraging but significantly more investment is
still needed to fill the gap entirely. The EU's supply-side
measures supporting low-carbon energy sources and decarbonisation
technologies in response to the US' Inflation Reduction Act (IRA),
is yet to materialise formally - although REPowerEU is a welcome
first step. Suggestions that Europe could be included on some of
the IRA's subsidies in exchange for rethinking its carbon border
tax are interesting, as is The G7's 'climate club' concept on
trade.
In summary, while energy markets, both fossil and renewable,
have continued to be volatile, I believe the global energy mix will
change and demand for energy will grow. This demand will have to be
met by a combination of different types of energy. There is no one
solution and so REL will continue to invest in a range of different
opportunities. It is also important that we do not shift away from
the current energy system faster than we are able to build the net
zero energy system of the future. This means continued investment
in hydrocarbons to address natural decline rates and the
underinvestment of recent years. This means improving productivity
and efficiency of existing output. This means introducing
government policy which is more favourable to clean energy
investment, reducing barriers and bureaucracy. This means
incentives to change consumer and industrial behaviour and demand.
All this means the development of new technologies.
Your Board will continue to allocate capital where it expects
the highest risk adjusted long term returns - challenging the
Investment Manager to balance between capital investments and share
repurchases as appropriate. The Board will also maintain its
regular discussions with the Investment Manager to make further
shareholder friendly changes to the Investment Management
Agreement, which will require the consent of the Investment Manager
and possibly the Cornerstone investors as well. This approach
should give the Directors and Shareholders confidence that REL will
continue to update the Investment Management Agreement in line with
current market practices.
Let me end by thanking you for your continued support. REL has
repositioned its investments and portfolio over recent years to
capitalise on the shift towards the energy transition. The
long-term trends and demand driving our decarbonisation investments
remain strong and we see the opportunity for profitable capital
deployment. At the same time the Investment Management team and the
teams running our portfolio companies have taken the necessary
steps to reduce leverage, improve cash generation and improve
liquidity.
Finally, I would like to once again thank our previous Chair,
Richard Hayden for his service and dedication to your Company, as
well as Peter Barker for being a valued Non-Executive Independent
Director since the Company's IPO in 2013. I am delighted to serve
as the new Chair, and I am excited by the prospect of REL's
investments benefiting from the tailwinds that renewed policy
support are expected to provide to the entire energy sector.
Richard Horlick
Chair of Riverstone Energy Limited
15 August 2023
Investment Manager's Report
The battle between interest rates, inflation and the outlook for
economic growth has dominated the first half of 2023. Central Banks
have raised interest rates at a rapid clip and to their highest
levels for over a decade. Economies have so far held up relatively
well but forward-looking expectations for future GDP growth have
cooled as the impact of higher input costs and purchase prices
combine with higher financing costs and a tight global labour
market. In addition, after the rapid ascent of energy prices
through to their peak in the middle of 2022, this year has been
notable for the pullback we have seen in both oil and gas
prices.
This has made for a mixed and challenging environment. On the
one hand the conventional assets in the portfolio, namely Permian
Resources, Onyx and Hammerhead Energy have continued to perform
well operationally and their valuations have also held up well in
the face of volatile and declining energy prices. The conventional
portfolio has seen its total value decrease by $70.0 million over
the period, which consisted of $53.5 million of realisations and
$16.5 million of changes in fair value, with an unrealised value of
$319.7 million at 30 June 2023.
On the other hand, the decarbonisation and transition portfolio
has been impacted by the macro environment, which has seen
valuations of small cap and high growth stocks come under pressure
in general across the market, including in the emerging technology
and green energy spaces. In addition, despite the strategic
progress a number of our portfolio companies have made, there have
been write-downs on Anuvia, GoodLeap and Enviva. In aggregate, the
decarbonisation portfolio has declined in total value by $72.0
million over the period, which consisted of $71.2 million of
changes in fair value and $0.8 million of realisations, with
unrealised value of $152.1 million at period-end.
During the period the NAV for REL as a whole decreased by 11 per
cent. to $12.90 per share (or 15 per cent. to GBP10.23 per share at
30 June 2023) with share buybacks contributing positively during
the period.
The geopolitical impact of the Russian invasion of Ukraine and
increased tensions between the US and China have shifted attitudes
towards both globalisation and energy security. Countries are
increasingly looking at ways to decrease their reliance on imported
conventional energy sources and for many the only alternative is to
invest in domestic green energy opportunities. This will of course
take time but is an added supportive factor to decarbonisation.
This process has been given further impetus by the US Inflation
Reduction Act which has encouraged the EU and other developed
countries to respond with additional support for green energy. This
is strengthening global green energy subsidies which has created an
investment environment that is of potential benefit to REL.
REL invested an aggregate amount of $4.5 million in H1 2023 into
the decarbonisation portfolio; with $3.5 million invested into
Enviva and $1.0 million in Our Next Energy (ONE). This latter
investment was part of a $12.5 million commitment to ONE's $300
million Series B Preferred Equity Round. ONE is a Michigan-based
energy storage technology company working to develop batteries for
mobility and large-scale storage applications. ONE will use the
proceeds of the round to complete ONE Circle, its Van Buren
Township, Michigan facility, which will be its first Lithium Iron
Phosphate (LFP) battery manufacturing plant.
Given the challenging environment, REL has remained very focused
on managing its existing portfolio and ensuring the portfolio
companies have sufficient liquidity to continue fuelling their
growth. Positive progress continues to be made with companies
building manufacturing capacity, raising capital to support growth,
international expansion and the development of new technologies. As
a result, there have been a number of positive milestones for
existing portfolio companies to report on.
Hyzon Motors has announced the successful completion and testing
of the first nine single-stack 200kW Fuel Cell System (FCS) B
samples at its production and innovation centre in Bolingbrook,
Illinois. This validates Hyzon's design, equipment and operating
procedures and it is now looking to increase its rate of
production. Hyzon remains on course to declare Start of Production
and commercialisation of its innovative FCS in 2024.
Group14 Technologies announced the construction of a second
one-million-square-foot factory in Moses Lake, Washington. This
development will use funding from private investors as well as
Government funds. It will be the world's largest factory of
advanced silicon battery materials for electric vehicle programs.
The factory will join Group14's existing factory in manufacturing
SC55 which is an advanced silicon battery technology to deliver
higher energy density and charge rates than traditional lithium-ion
batteries.
Solid Power received over $5 million of funding from the United
States Department of Energy to further scale and develop its
nickel- and cobalt-free cells for its Solid-State battery
technology that could significantly lower the price of EV
batteries. The technology is intended to produce cells that are
more energy-dense as well as lighter, thinner and less volatile
than lithium-ion cells.
FreeWire Technologies announced a new headquarters in Banbury,
Oxfordshire in the UK as it expands beyond the US and into Europe.
Initially the company will focus on the UK, Ireland and the Benelux
region, followed by Spain and Italy later this year. The company
already has some Boost Chargers deployed in the EU through its
partnership with BP and is positioned to capitalise on the growth
in demand for ultrafast EV charging solutions.
Infinitum announced the acquisition of Circuit Connect, a
printed circuit board (PCB) fabricator based in Nashua, New
Hampshire. This will immediately allow for substantially higher
production capacity of PCB stators and will allow a framework for
continuous volume growth to help meet the high demand for
Infinitum's innovative air core motor technology.
Tritium announced record results for the first four months of
2023 with a new production and revenue record, a $40 million
capital investment from two existing backers and an expectation it
will be EBITDA positive in the first half of calendar 2024. The
company raised its forward-looking growth guidance as it continues
to invest to meet strong customer demand for its EV fast
chargers.
Negative events during the period impacted three portfolio
companies Anuvia, Enviva and GoodLeap. REL was informed that Anuvia
had ceased operations and is undergoing liquidation. The Company
invested $20 million in Anuvia in March 2022, with its investment
being written down to $14 million at the time of the Company's Q1
2023 quarterly portfolio valuations. Anuvia is in the process of
realising its assets through bankruptcy and it is unlikely that REL
will recover any of its investment and therefore the investment has
been fully written down as at the period end. Enviva missed its Q1
2023 earnings estimates and subsequently revised its full year
outlook for 2023. The main reasons for the miss were related to
higher input prices as well as lower than expected production
volumes caused by operating outages. Nonetheless, the fundamentals
for the business and the order backlog remain as strong as ever.
Lastly, the current interest rate environment, underpinned by
dynamically rising rates, has negatively impacted loan origination
businesses such as GoodLeap by increasing borrowing costs, reducing
demand for loans, and creating uncertainty in the capital markets
ecosystem.
On the conventional assets side performance has continued to be
strong. In February 2023 the combination between Hammerhead and
DCRD closed resulting in the conversion of REL's existing
Hammerhead ownership into 15.4 million shares of Hammerhead Energy
Inc. REL remains focused on executing its strategy of realising
value from its conventional assets and continuing to reorient the
portfolio towards decarbonisation and energy transition assets. As
a result total net realisations and distributions were $54.3
million from Permian Resources ($28.1 million), Onyx ($20.2
million), Carrier II ($4.6 million), Hammerhead Energy Inc. ($0.6
million), Tritium DCFC Loan ($0.4 million) and Enviva Inc. ($0.4
million) in the first half of 2023.
Cash on the balance sheet held by REL and the Partnership
structure totalled $133 million (GBP105 million) at 30 June 2023,
with unfunded commitments of $18 million.
REL has maintained a focus on shareholder returns and has bought
back a total of 4,091,145 ordinary shares during the period,
representing 8.0 per cent. of the total outstanding at an average
share price of GBP5.78 ($7.30) per share.
The Investment Manager remains committed to transitioning the
portfolio further towards decarbonisation and energy transition
assets where it continues to see strong structural drivers for
growth and value creation.
Current Portfolio - Conventional
Gross
Gross Gross Gross Realised
Committed Invested Realised Unrealised Capital & 30 Jun 2023
Investment Capital Capital Capital Value Unrealised Gross 31 Dec 2022
(Public/Private) ($mm) ($mm) ($mm)(1) ($mm)(2) Value ($mm) MOIC(2) Gross MOIC(2)
------------------- ------------ ------------ ------------ ------------ ------------ ------------ -------------
Permian Resources
(4) (Public) 268 268 223 110 333 1.24x 1.17x
Onyx (Private) 66 60 81 98 179 3.00x 3.00x
Hammerhead Energy
Inc. (4)
(Public) 308 296 24 111 135 0.46x 0.60x
Total Current
Portfolio -
Conventional -
Public(3) 576 564 247 222 468 0.83x 0.87x
------------------- ------------ ------------ ------------ ------------ ------------ ------------ -------------
Total Current
Portfolio -
Conventional -
Private(3) 66 60 81 98 179 3.00x 3.00x
------------------- ------------ ------------ ------------ ------------ ------------ ------------ -------------
Total Current
Portfolio -
Conventional -
Public &
Private(3) 642 624 328 320 647 1.04x 1.07x
------------------- ------------ ------------ ------------ ------------ ------------ ------------ -------------
Current Portfolio - Decarbonisation
Gross
Gross Gross Gross Realised
Committed Invested Realised Unrealised Capital & 30 Jun 2023 31 Dec 2022
Investment Capital Capital Capital Value Unrealised Gross Gross
(Public/Private) ($mm) ($mm) ($mm)(1) ($mm)(2) Value ($mm) MOIC(2) MOIC(2)
--------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
GoodLeap (formerly
Loanpal) (Private) 25 25 2 36 38 1.50x 2.20x
FreeWire (Private) 10 10 - 20 20 2.00x 2.00x
Infinitum
(Private) 18 18 - 18 18 1.05x 1.30x
DCRC/Solid Power
(4) (Public) 48 48 - 18 18 0.39x 0.39x
T-REX Group
(Private) 18 18 - 18 18 1.00x 1.00x
DCRN/Tritium DCFC
(4) (Public) 25 25 1 13 14 0.56x 0.60x
Our Next Energy
(Private) 13 13 - 13 13 1.00x 1.00x
Enviva (Public) (4) 22 22 - 8 9 0.41x 1.93x
Group14 4 4 - 4 4 1.00x 1.00x
(Private)
Ionic I & II
(Samsung Ventures)
(Private) 3 3 - 3 3 1.00x 1.00x
Hyzon Motors (4)
(Public) 10 10 - 1 1 0.10x 0.16x
Anuvia
(Private) 20 20 - - - 0.00x 1.00x
Total Current
Portfolio -
Decarbonisation -
Public(3) 105 105 1 41 43 0.41x 0.69x
--------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
Total Current
Portfolio -
Decarbonisation -
Private(3) 109 109 2 111 113 1.03x 1.51x
--------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
Total Current
Portfolio -
Decarbonisation -
Public &
Private(3) 214 214 3 152 155 0.73x 1.08x
--------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
Total Current
Portfolio -
Conventional &
Decarbonisation -
Public &
Private(3) 856 837 331 472 803 0.96x 1.08x
--------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
Cash and Cash
Equivalents(9) $133
--------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
Total Liquidity
(Cash and Public
Investments) $396
Total Market
Capitalisation $334
--------------------- ------------ -------------------------- ------------ ----------- ------------ ------------
Realisations
Investment Gross
(Initial Investment Gross Gross Gross Realised 31 Dec
Date) Committed Realised Unrealised Capital & 30 Jun 2023 2022
Capital Invested Capital Value Unrealised Gross Gross
($mm) Capital ($mm) ($mm)(1) ($mm)(2) Value ($mm) MOIC(2) MOIC(2)
Rock Oil(5) 114 114 233 3 236
(12 Mar 2014) 2.06x 2.07x
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) 40 40 88 - 88
(17 Apr 2015) 2.20x 2.20x
RCO(7) 80 80 80 - 80
(2 Feb 2015) 0.99x 0.99x
Carrier II
(22 May 2015) 110 110 67 - 67 0.61x 0.60x
Pipestone Energy
(formerly CNOR) 90 90 58 - 58 0.64x 0.64x
Sierra
(24 Sept 2014) 18 18 38 - 38 2.06x 2.06x
Aleph Midstream(6) 23 23 23 - 23
(9 Jul 2019) 1.00x 1.00x
Ridgebury H3 18 18 22 - 22
(19 Feb 2019) 1.22x 1.22x
Castex 2014 52 52 14 - 14
(3 Sep 2014) 0.27x 0.27x
Total
Realisations(3) 819 819 1,000 3 1,002 1.22x 1.22x
-------------------- ------------ ------------- ------------ ------------ ------------ ----------- ------------
Withdrawn
Commitments and
Impairments(8) 350 350 9 - 9 0.02x 0.02x
-------------------- ------------ ------------- ------------ ------------ ------------ ----------- ------------
Total Investments(3) 2,024 2,006 1,339 475 1,813 0.90x 0.95x
-------------------- ------------ ------------- ------------ ------------ ------------ ----------- ------------
Total Investments &
Cash and Cash
Equivalents(3), (9) 607
-------------------- ------------ ------------- ------------ ------------ ------------ ----------- ------------
(1) Gross realised capital is total gross proceeds realised on
invested capital. Of the $1,339 million of capital realised to
date, $1,016 million is the return of the cost basis and the
remainder is profit.
(2) 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. No further carried interest will be
payable until the $192.6 million of realised and unrealised losses
to date at 30 June 2023 are made whole with future gains, so the
earned carried interest of $0.8 million at 30 June 2023 has been
deferred and will expire in October 2023 if the aforementioned
losses are not made whole. Since REL has not yet met the
appropriate Cost Benchmark at 30 June 2023, $29.6 million in
Performance Allocation fees that would have been due under the
prior agreement were not accrued. 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.
(3) Amounts may vary due to rounding.
(4) Represents closing price per share in USD for publicly
traded shares Permian Resources Corporation (formerly Centennial
Resource Development, Inc.) (NASDAQ:PR - 30-06-2023: $10.96 per
share / 31-03-2023: $10.50 price per share); Enviva, Inc. (NYSE:EVA
- 30-06-2023: $10.85 per share / 31-03-2023: $28.88 price per
share); Solid Power, Inc. (NASDAQ:SLDP - 30-06-2023: $2.54 per
share / 31-03-2023: $3.01 price per share); Hyzon Motors, Inc.
(NASDAQ:HYZN - 30-06-2023: $0.96 per share / 31-03-2023: $0.82
price per share); Tritium DCFC Limited (NASDAQ:DCFC - 30-06-2023:
$1.09 price per share / 31-03-2023 $1.28 price per share); and
Hammerhead Energy, Inc. (NASDAQ: HHRS - 30-06-2023: $7.25 per share
/ 31-03-2023: $7.75 per share).
(5) The unrealised value of the Rock Oil investment consists of
rights to mineral acres.
(6) Midstream investment.
(7) Credit investment.
(8) Withdrawn commitments consist of Origo ($9 million) and
CanEra III ($1 million), and impairments consist of Liberty II
($142 million), Fieldwood ($80 million, net of realisations of $8
million), Eagle II ($62 million) and Castex 2005 ($48 million).
(9) This figure is comprised of $12.3 million held at the
Company, $54.7 million held at the Partnership and $65.8 million
held at REL US Corp.
Investment Portfolio Summary
As of 30 June 2023, REL's portfolio comprised fifteen active
investments including two E&P investments, twelve
decarbonisation investments and one power investment.
Onyx
As of 30 June 2023, REL, through the Partnership, has invested
$60 million of its $66 million commitment to Onyx. Onyx is a
European-based independent power producer that was created through
the successful acquisition of 2,350MW of gross installed capacity
(1,941MW of net installed capacity) of five coal- and biomass-fired
power plants in Germany and the Netherlands from Engie SA. Two of
the facilities in the current portfolio are among Europe's most
recently constructed thermal plants, which benefit from high
efficiencies, substantial environmental controls, low emissions
profiles and the potential use of sustainable biomass.
As of 30 June 2023, REL's interest in Onyx, through the
Partnership, was valued at 3.00x Gross MOIC(1) or $179 million
(Realised: $81 million, Unrealised: $98 million). The Gross MOIC(1)
remained flat over the period.
Hammerhead
As of 30 June 2023, REL, through the Partnership, has invested
$295 million of its $308 million commitment to Hammerhead, a
company focused on liquids-rich unconventional resources in the
Montney and Duvernay resource play in Western Canada. Since its
establishment in 2010, Hammerhead has aggregated one of the largest
and most advantaged land positions in the emerging Montney and
Duvernay formations of Western Canada's Deep Basin. The company
controls and operates 100 per cent. of this asset base, which
comprises over 1,800 net drilling locations across approximately
112,000 Montney net acres. Since Riverstone's initial investment,
Hammerhead has increased production almost ten-fold and has
significantly grown reserves to 314 mboe. In the Q1 2023, the
Company reported a realised record production rate of over 39,992
boe/d (47 per cent. liquids), in line with guidance for 2023. The
recent nine-well pad at North Karr continues to materially exceed
performance expectations and averaged 14,733 boe/d (58 per cent.
liquids) in Q1 2023.
Hammerhead plans to have higher capital expenditures in 2023
than in 2022 in order to increase development activities.
Hammerhead has hedged approximately 39 per cent. of forecasted 2023
crude oil production at a weighted average price of $74.31 per
barrel and 44 per cent. of forecasted 2023 natural gas production
at a weighted average price of $3.34 per MMBtu.
As of 30 June 2023, REL's interest in Hammerhead, through the
Partnership, was valued at 0.46x Gross MOIC(1) or $135 million
(Realised: $24 million, Unrealised: $111 million). The Gross
MOIC(1) decreased over the period.
Permian Resources (formerly Centennial)
As of 30 June 2023, REL, through the Partnership, has invested
in full its $268 million commitment to Permian Resources /
Centennial. Headquartered in Midland, Texas, Permian Resources is
the largest pure-play E&P company in the Delaware Basin.
In Q3 2022, Centennial closed its merger with Colgate and began
its first day of trading as Permian Resources (NYSE: PR) on 12
September 2022.
In Q2 2023, Permian Resources announced a special variable
dividend of $0.05 / share in addition to its quarterly base
dividend of $0.05 / share, maintaining its commitment to returning
>50 per cent. of free cash flow to shareholders. The company
closed on a series of portfolio management transactions, which
consisted of a bolt-on acquisition in New Mexico for $98 million, a
sizable acreage swap in New Mexico, and a divestiture of a portion
of its saltwater disposal wells and associated produced water
infrastructure in Texas for $125 million, with another $60 million
subject to an earnout.
REL, through the Partnership, owns approximately 10.1 million
shares which are publicly traded (NYSE: PR).
As of 30 June 2023, REL's interest in Permian Resources, through
the Partnership, was valued at 1.24x Gross MOIC(1) or $333 million
(Realised: $223 million, Unrealised: $110 million). The Gross
MOIC(1) , which reflects the mark-to-market value of REL's
shareholding, increased over the period.
GoodLeap (formerly Loanpal)
As of 30 June 2023 , REL, through the Partnership, has invested
in full its $25 million commitment to GoodLeap. The company is a
technology-enabled sustainable home improvement loan originator,
providing a point-of-sale lending platform used by key residential
contractors. GoodLeap does not take funding risk. The company
presells its originated loans via forward purchase agreements to
large asset managers. The company's attractive unit economics and
asset-light business model allow for rapid growth and the ability
to scale faster than its competitors, while generating free cash
flow by capitalising on upfront net cash payments on the flow of
loan originations and avoiding costly SG&A and capital
expenditures incurred by other portions of the value chain.
As of 30 June 2023, REL's interest in GoodLeap, through the
Partnership, was valued at 1.50x Gross MOIC(1) or $38 million
(Realised: $2 million, Unrealised: $36 million). The Gross MOIC(1)
decreased over the period.
FreeWire
As of 30 June 2023, REL, through the Partnership, has fully
invested its $10 million commitment to FreeWire. FreeWire is the
leading provider of battery-integrated DC fast chargers (DCFCs) and
their associated software. Riverstone led the company's $50 million
Series C round in January 2021.
Freewire's primary hardware product is the Boost Charger, which
offers charging speeds of up to 200kW with only a 25kW grid
connection by using a 160kWh battery. These specifications support
15-24 fast charging sessions per day. In addition to hardware
sales, FreeWire's software platform offers recurring revenues,
enabling charger management and third-party platform integration
with plans to offer energy management and grid services.
As of 30 June 2023, REL's interest in FreeWire, through the
Partnership, was valued at 2.00x Gross MOIC(1) or $20 million
(Realised: nil, Unrealised: $20 million). The Gross MOIC(1) has
remained flat over the period.
Infinitum
As of 30 June 2023, REL, through the Partnership, has fully
invested its $17.5 million commitment to Infinitum. Infinitum's
patented air-core motors offer superior performance in half the
weight and size, at a fraction of the carbon footprint of
traditional motors, making them pound for pound one of the most
efficient in the world. Infinitum motors open up sustainable design
possibilities for the machines we rely on to be smaller, lighter
and quieter, improving our quality of life while also saving
energy.
As of 30 June 2023, REL's interest in Infinitum, through the
Partnership, was valued at 1.05x Gross MOIC(1) or $18.4 million
(Realised: nil, Unrealised: $18.4 million).The Gross MOIC((1) has
decreased over the period.
Ionic I & II (Samsung Ventures)
On 17 August 2021, REL announced the purchase of an interest in
one of Samsung Ventures' battery technology focused venture capital
portfolios (the "Samsung Portfolio") for $30.0 million. The
majority of the Samsung Portfolio consists of 1.66 million shares
of Solid Power, Inc., which successfully completed its business
combination with DCRC on 8 December 2021. Gross proceeds to Solid
Power from the transaction amounted to $542.9 million from a fully
committed $195 million PIPE and $347.9 million of cash held in
trust net of redemptions; only 0.6 per cent. of shares held by
public stockholders of DCRC were redeemed. Of the shares voted at
the special meeting of DCRC's stockholders, over 99.9 per cent.
voted to approve the business combination.
The remainder of the portfolio is held in shares of Ionic
Materials (Ionic I & II), a material science company that
manufactures transformative polymers for use in solid-state
batteries, healthcare and 5G applications. Ionic Materials' solid
polymer is believed to be the first of its kind to conduct ions at
room temperature, a critical enabler of solid-state batteries.
As of 30 June 2023, REL's aggregate investment in the Samsung
Portfolio, through the Partnership, was marked at 0.50x Gross
MOIC(1) or $15 million (Realised: nil, Unrealised: $15 million).
The Gross MOIC(1) remained flat over the period.
DCRC/Solid Power
As of 30 June 2023, REL, through the Partnership, has fully
invested its $ 20.6 million commitment to DCRC/Solid Power.
Riverstone sponsored DCRC's $350 million IPO on 23 March 2021. REL
made a $0.6 million investment in DCRC at the time of the IPO, as
the blank check company began to pursue merger candidates. On 15
June 2021, DCRC announced its business combination agreement with
Solid Power, a Louisville, Colorado based producer of all
solid-state batteries for electric vehicles, to which REL, through
the Partnership, committed an additional $20 million to the $165
million PIPE that was raised.
In addition to the announcement late last year that Solid Power
closed on a $130 million Series B investment raise led by BMW
Group, Ford Motor Company, and Volta Energy Technologies, earlier
this year, the company announced that it received an award from the
U.S. Department of Energy (DOE) to continue its development of
nickel- and cobalt-free solid-state battery cells. Solid Power
expects to receive up to $5.6 million to develop battery cells
containing a lithium metal anode and sulphur composite cathode to
enable improved energy and charging performance. The DOE announced
$42 million in funding for 12 projects to strengthen the domestic
supply chain for advanced batteries that power electric vehicles
(EVs), with Solid Power's award being a portion of this funding.
Projects selected aim to expand US domestic EV adoption by
developing batteries that last longer, charge faster, perform
efficiently in freezing temperatures and have better overall range
retention. The company continues to meet its milestones and has
demonstrated a track record of partnering with leading companies
and investors globally.
The business combination between DCRC and Solid Power closed on
8 December 2021, with Solid Power beginning to trade on NASDAQ
under the ticker "SLDP".
As of 30 June 2023, REL's interest in Solid Power, through the
Partnership, consisted of the $0.6 million sponsor investment,
which was valued at 2.12x Gross MOIC(1) or $ 1 million (Realised:
nil, Unrealised: $1 million), and the $20 million PIPE investment,
which was valued at 0.25x Gross MOIC(1) or $5 million (Realised:
nil, Unrealised: $5 million).
T-REX Group
As of 30 June 2023, REL, through the Partnership, has fully
invested its $17.5 million commitment to T-REX Group. T-REX Group,
a SaaS provider supporting the asset-backed financing industry,
brings together asset class expertise, critical data management
capabilities, and a platform for deal structuring, cash flow
modeling, scenario analysis, real-time performance tracking, and
reporting.
T-REX Group combines sophisticated cloud-based SaaS technology
with big data and asset class expertise to drive down operating and
capital expense, reduce risk exposure, and enhance performance for
complex investments.
As of 30 June 2023, REL's interest in T-REX Group, through the
Partnership, was valued at 1.00x Gross MOIC(1) or $17.5 million
(Realised: nil, Unrealised: $17.5 million).
DCRN/Tritium DCFC
In February 2021, REL, through the Partnership, invested $0.6
million in the Founder Shares and Warrants of Decarbonisation Plus
Acquisition Corp. II (NASDAQ: DCRN) at the time of its IPO. In May
2021, DCRN announced it would combine with Tritium, a Brisbane
based pioneer in e-mobility and EV charging infrastructure. On 4
January 2022, Tritium announced record breaking Q4'21 and FY'21
financial performance results. The merger vote to approve the
combination of Tritium and DCRN occurred and closed on 12 January
2022.
In February 2022, REL funded an additional $15 million
commitment to Tritium. The funding event occurred three days after
the company met with President Biden to announce the construction
of the Company's Lebanon, Tennessee manufacturing plant. The plant
will employ 500 over the next five years, produce over 10,000 DC
fast chargers units annually, and will ultimately reach peak
production capacity of 30,000 units annually.
On 17 January 2023, Tritium announced its largest single
customer order from BP plc (NYSE: BP) for deployment across the
U.S., UK, Europe, and Australia.
Tritium set a new production record of 3,200 units, 90 per cent.
of the company's FY 2022 production in just the first four months
of CY 2023. Tritium re-affirmed its 2023E production goal of 11,000
units and to become EBITDA positive during the first half of
2024.
In July 2023, Tritium announced it will provide all fast
chargers for Phase I of Hawaii's National Electric Vehicle
Infrastructure ("NEVI") funding program, becoming the first
manufacturer to secure a fast-charging order through the NEVI
program.
As of 30 June 2023, REL's interest in Tritium, through the
Partnership, consisted of the $0.6 million sponsor investment,
which was valued at 1.00x Gross MOIC(1) or $ 1 million (Realised:
nil, Unrealised: $ 1 million), the $15 million equity investment,
which was valued at 0.18x Gross MOIC(1) or $3 million (Realised:
nil, Unrealised: $3 million), and the $9.7 million loan investment,
which was valued at 1.04x Gross MOIC(1) or $10 million (Realised:
$0.6 million, Unrealised: $10.0 million).
Our Next Energy (ONE)
In December 2022, REL invested $11.5 million of its $12.5
million commitment (remaining $1 million funded in January 2023) to
Our Next Energy's (ONE) $300 million Series B round, valuing the
company at over $1 billion. ONE is a Michigan-based energy storage
technology company working to develop batteries for mobility and
large-scale storage applications. ONE will use the proceeds of the
round to complete ONE Circle, its Van Buren Township, Michigan
facility, which will be its first Lithium Iron Phosphate (LFP)
battery manufacturing plant.
As of 30 June 2023, REL's interest in ONE, through the
Partnership, was valued at 1.00x Gross MOIC(1) or $13 million
(Realised: nil, Unrealised: $13 million).
Enviva
As of 30 June 2023, REL, through the Partnership, has invested
$22 million of its $22 million commitment to Enviva. Enviva, based
in Bethesda, Maryland, is the world's largest supplier of wood
pellets to major utilities and heat and power generators,
principally in Europe and Japan. Through its subsidiaries, Enviva
owns and operates ten plants with a combined wood pellet production
capacity of approximately 6.2 million MTPY.
On 31 December 2021, Enviva completed its conversion from a
master limited partnership to a corporation following approval by
Enviva unitholders on 17 December 2021. Enviva's decline in stock
price from Q1 2023 to Q2 2023 was driven primarily by challenging
performance in first-quarter 2023, which was approximately $50
million below management's expectations for adjusted EBITDA. Given
the impact of Q1 performance, Enviva revised its full year 2023
EBITDA guidance downward from a range of $305-335 million to a
range of $200-250 million. On 5 May 2023, Enviva changed capital
allocation priorities, eliminating its dividend to manage
liquidity, improve operating and cost productivity of existing
assets, repurchase shares, and accelerate investments in new pellet
production assets.
As of 30 June 2023, REL's interest in Enviva, through the
Partnership, was valued at 0.41x Gross MOIC(1) or $9 million
(Realised: $0.3 million, Unrealised: $8 million). The Gross MOIC(1)
decreased over the period.
Group14
In April 2022, REL, through the Partnership, invested $4 million
into Group14 Technologies, Inc.'s $400 million Series C funding
round. The Series C round was led by Porsche AG, with participation
from OMERS Capital Markets, Decarbonisation Partners, Vsquared
Ventures, and others. Group14 is a battery materials technology
company founded in 2015. The company has developed a proprietary
silicon-based anode battery material to replace graphite in
conventional lithium-ion batteries.
In Q4 2022, the company raised an additional $214mm as a second
close to its Series C transaction; bringing total Series C capital
raised to $614mm, fully funding the business plan through 2023.
As of 30 June 2023, REL's interest in Group14, through the
Partnership, was valued at 1.00x Gross MOIC(1) or $4 million
(Realised: nil, Unrealised: $4 million).
Hyzon
In connection with the closing of the previously announced
merger between DCRB and Hyzon Motors Inc. (NASDAQ: HYZN), REL
purchased $10 million of DCRB common stock in a private placement
transaction at $10 per share in July 2021. Hyzon, headquartered in
Rochester, New York, is the industry-leading global supplier of
zero-emissions hydrogen fuel cell powered commercial vehicles.
As of 30 June 2023, REL's interest in Hyzon, through the
Partnership, was valued at 0.10x Gross MOIC(1) or $1 million
(Realised: nil, Unrealised: $1 million). The Gross MOIC(1)
decreased over the period.
Anuvia
Anuvia Plant Nutrients, Inc. has ceased operations and is
undergoing liquidation. Anuvia engaged Evercore to advise on a
fundraising or sale process beginning in Q3 2022. The capital raise
effort was ultimately unsuccessful subsequent to the 31 March 2023
valuation. The investment was marked down from $20 million to $14
million at the 31 March 2023 valuation to reflect uncertainty
around the potential success of the capital raise. As is often the
case, the capital raise had pathways to be successful until the
very end, but ultimately did not materialize. Anuvia is in the
process of realising its assets. Whilst Series D equity holders are
first equity in line to receive proceeds from Anuvia, the
Investment Manager has informed the Board on 10 July 2023 that no
such proceeds can now be reasonably expected given the debt burden
on the business.
Valuation
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 is compliant with IFRS and IPEV
Valuation Guidelines and has been applied consistently from period
to period since inception. As some of the Partnership's investments
are generally not publicly quoted, valuations require meaningful
judgement to establish a range of values, and the ultimate value at
which an investment is realised may differ from its most recent
valuation and the difference may be significant.
The Investment Manager values each underlying investment in
accordance with the Riverstone valuation policy, the IFRS
accounting standards and IPEV Valuation Guidelines. 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. 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.
Uninvested Cash
As of 30 June 2023, REL had a cash balance of $12.3 million and
the Partnership, including its wholly-owned subsidiaries, REL
Cayman Holdings, LP, REL US Corp and REL US Centennial Holdings,
LLC, had uninvested funds of over $120.5 million held as cash and
money market fixed deposits, gross of the accrued Management Fee of
$2.3 million. After the accrued Management Fee, REL's aggregate
cash balance is $130.5 million. As in prior years, in accordance
with the Partnership Agreement, if the Company requires additional
funds for working capital, it is entitled to receive another
distribution from the Partnership. The Partnership maintains
deposit accounts with several leading international banks. In
addition, the Partnership invests a portion of its cash deposits in
short-term money market fixed deposits. REL's treasury policy seeks
to protect the principal value of cash deposits utilising low risk
investments with top-tier counterparts. Uninvested cash earned
approximately 140 basis points during the period ended 30 June
2023. All cash deposits referred to in this paragraph are
denominated in U.S. dollars.
On 15 May 2023, the Board was pleased to allocate an additional
GBP30.0 million to the Share Buyback Programme. During the period,
the Company had repurchased 4,091,145 shares, in aggregate, for
GBP23.6 million ($29.8 million) at an average share price of
GBP5.78 ($7.30). Since REL started the buyback programme in May
2020, the Company has purchased 33,096,218 shares, in aggregate,
for GBP136.5 million ($174.8 million) at an average share price of
GBP4.12 ($5.28). As of 30 June 2023, GBP29.5 million remains
available for repurchasing.
As of 30 June 2023, REL, through the Partnership, had potential
unfunded commitments of $18 million. In connection with the listing
of REL on the London Stock Exchange, all proceeds of the offering
were converted to U.S. dollars at an average rate of 1.606 at
inception. All cash deposits referred to above are denominated in
U.S. dollars. Additionally, REL's functional currency and Financial
Statements are all presented in U.S. dollars. The Partnership's
commitments are denominated in U.S. dollars, except Hammerhead
which is denominated in Canadian dollars.
RIGL Holdings, LP
15 August 2023
REPORT OF THE BOARD OF DIRECTORS
For the period ended 30 June 2023
General Information
The Board submits its report, together with the Interim
Condensed Financial Statements, of Riverstone Energy Limited ("REL"
or the "Company") for the six-month period ended 30 June 2023.
REL is a company limited by shares, which was incorporated on 23
May 2013 in Guernsey with an unlimited life and registered with the
Commission as a Registered Closed-ended Collective Investment
Scheme pursuant to the POI Law. It has been listed on the London
Stock Exchange since 29 October 2013. The registered office of the
Company is PO Box 286, Floor 2, Trafalgar Court, Les Banques, St
Peter Port, Guernsey, GY1 4LY.
Principal Activities
The principal activity of the Company is to act as an investment
entity through the Partnership and make investments in the energy
sector. The Company's investment objective is to generate long-term
capital growth by investing in the global energy sector.
Business Review
A review of the Company's business and its likely future
development is provided in the Board Chair's Statement and in the
Investment Manager's Report above.
Results and Dividend
The results of the Company for the period ended 30 June 2023 are
shown in the Condensed Statement of Comprehensive Income below. The
Net Asset Value of the Company as at 30 June 2023 was $604 million
(31 December 2022: $ 739 million). The Directors do not recommend
the payment of a dividend in respect of the period ended 30 June
2023 (30 June 2022: $nil).
Principal Risk and Uncertainties
The Company's assets consist of listed and private equity
investments, held through the Partnership, in the conventional and
decarbonisation portfolios. Initially, there was a particular focus
on opportunities in the global E&P and midstream energy
sub-sectors, but since 2020 REL has been exclusively focussed on
pursuing a global strategy across decarbonisation sectors presented
by Riverstone's investment platform. Its principal risks are
therefore related to market conditions in the energy and energy
transition sectors in general, but also to the particular
circumstances of the businesses in which it is invested through the
Partnership. The Investment Manager, through the Partnership, seeks
to mitigate these risks through active asset management initiatives
and carrying out due diligence work on potential targets before
entering into any investments.
Each Director is fully aware of the risks inherent in the
Company's business and understands the importance of identifying,
evaluating and monitoring these risks. The Board has adopted
procedures and controls that enable it to carry out a robust
assessment of the risks facing the Company, manage these risks
within acceptable limits and meet all of its legal and regulatory
obligations.
The Board thoroughly considers the process for identifying,
evaluating and managing any significant risks faced by the Company
on an ongoing basis and these risks are reported and discussed at
Audit Committee and Board meetings. The Board ensures that
effective controls are in place to properly mitigate these risks to
the greatest extent possible and that a satisfactory compliance
regime exists to ensure all applicable local and international laws
and regulations are upheld.
The process which the Company follows in order to identify and
mitigate its principal risks and uncertainties is set out in the
Corporate Governance Section of the Annual Report and Financial
Statements for the year ended 31 December 2022 (the "2022 Annual
Report"), a copy of which is available on the Company's website
https://www.riverstoneREL.com//investors/reports-and-presentations/
. The Directors have reviewed the principal risks and uncertainties
for the remaining six months of the Company's financial year and
the risks identified are the same as those set out in the 2022
Annual Report and are summarised as follows:
Investment Concentration Risk
The Company initially intended to only invest in the global
energy sector, with a particular focus on oil and gas exploration
and production, and midstream investments, which exposed it to
industry and sector concentration risk. Under the modified
investment strategy, since 2020, the Company has pivoted to focus
on energy transition and decarbonisation and this provides an
element of diversification for the portfolio, albeit with
additional investment risks.
Ordinary Shares Trading at a Discount to NAV per Share
The Company's shares have, for a considerable period of time,
been trading at a discount to NAV per share for reasons, including,
but not limited to, general market conditions in the energy sector,
liquidity concerns, perceived issues with the terms of the
Investment Management Agreement and actual or expected Company
performance as the Company transitions to maximise value from the
conventional portfolio allowing investment into its decarbonisation
strategy.
Inherent Risks Associated with the Conventional and
Decarbonisation Investments
The investment portfolio held by the Company in both the
conventional and decarbonisation strategies exposes the Company to
a number of specific investment and valuation risks, the most
notable ones being: risks and judgements associated with fair
valuing private equity investments, potential changes to domestic
policy, banking, regulatory or tax environment of existing or
potential investments, early/development stage investment risk in
the decarbonisation portfolio, global conflict/imposition of
sanctions/operating in hazardous environments etc.
The Company is Heavily Reliant on the Services Provided by the
Investment Manager
The Investment Management Agreement requires the Investment
Manager to provide competent, attentive, and efficient services and
personnel to the Company. If the Investment Manager was not able to
do this or if there was an unacceptable reduction in the service
received or investment competence levels of the personnel employed
by the Investment Manager, then the Company would not able to
terminate the Investment Management Agreement as it does not
expressly provide for termination on notice without specific cause,
and poor investment performance, the departure of key Riverstone
executives or a change of control of Riverstone do not constitute
cause for these purposes. Furthermore, it would be costly for the
Company to terminate the Investment Management Agreement as the
Company would be required to make significant payments.
Vote on any Discontinuance Resolution that may be Proposed
Affiliates of the Investment Manager and the Company's
Cornerstone Investors would be entitled to vote on any
Discontinuation Resolution that may be proposed. As the Investment
Manager and its affiliates (and, indirectly, the Cornerstone
Investors) receive fees from the Company, they will most probably
be incentivised to vote against such resolution.
Climate Change
The effects of climate change and the transition to a low carbon
economy could possibly reduce demand for some of the Company's
existing investments, as well as impact their valuations, and may
limit future growth opportunities. General sentiment may affect
investor appetite and hence may lead to a depression of the
Company's share price.
Related Parties
Details of related party transactions that have taken place
during the period and any material changes, if any, are set out in
Note 7 of the Interim Condensed Financial Statements. There are no
material changes in the related party transactions that are
disclosed when compared to those noted in the 2022 Annual
Report.
Shareholdings of the Directors
The current Directors with beneficial interests in the shares of
the Company as at 30 June 2023 (31 December 2022) are detailed
below:
Ordinary Per cent. Ordinary Per cent.
Shares held Holding at Shares held Holding at
30 June 30 June 31 December 31 December
Director 2023 2023 2022 2022
---------------------- ------------- ------------ ------------- -------------
Richard Horlick(1) 10,000 0.021 10,000 0.020
Patrick Firth(2) 8,000 0.017 8,000 0.016
Jeremy Thompson(1) 3,751 0.008 3,751 0.007
Claire Whittet(1)(3) 2,250 0.005 2,250 0.004
John Roche(1) 2,201 0.005 2,201 0.004
Karen McClellan(1) - - - -
(1) Non-executive Independent Director.
(2) Senior Independent Director.
(3) Ordinary Shares held indirectly with spouse.
There have been no changes to the current Directors'
shareholdings post period end.
Going Concern
The Audit Committee has reviewed the appropriateness of the
Company's unaudited interim condensed financial statements being
prepared in accordance with "IAS 34 Interim Financial Reporting as
adopted by the EU" and presented on a going concern basis, which it
has recommended to the Board. The unaudited interim condensed
financial statements have been prepared on a going concern basis
for the reasons set out below and as the Directors, with
recommendation from the Audit Committee, have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future, which is defined
as the period from the date of approval of these unaudited interim
condensed financial statements up until 30 September 2024.
In reaching this conclusion, that the unaudited interim
condensed financial statements are prepared on a going concern
basis, the Directors have considered the principal risks faced by
the Company, the substantial level of cash/cash equivalent balances
held as at 30 June 2023, the liquidity of certain listed
investments held, the cash flow forecasts for the Company outlining
the requirements to settle current and expected liabilities
(including the funding of the Company's share buyback programme)
and the potential unfunded commitments of the Partnership.
Post Period End Updates
Subsequent to the period end, there have been no material
updates noted for the Company.
By order of the Board
Richard Horlick
Chair of the Board
15 August 2023
Directors' Responsibilities Statement
The Directors are responsible for preparing this Interim Report
in accordance with applicable law and regulations. The Directors
confirm that to the best of their knowledge:
-- The unaudited interim condensed financial statements have
been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU; and
-- The Chair's Statement, the Investment Manager's Report and
the Report of the Board of Directors include a fair review of the
information required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the unaudited interim condensed financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the financial year and that have materially
affected the financial position and performance of the entity
during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
On behalf of the Board
Richard Horlick
Chair
15 August 2023
Condensed Statement of Financial Position
As at 30 June 2023 (Unaudited)
30 June 31 December
2023 2022
$'000 $'000
Notes (Unaudited) (Audited)
------------------------------------------ ------- -------------- ------------
Assets
Non-current assets
Investment at fair value through
profit or loss 6 593,009 723,102
Total non-current assets 593,009 723,102
------------------------------------------ ------- -------------- ------------
Current assets
Trade and other receivables 61 598
Cash and cash equivalents 12,267 15,755
Total current assets 12,328 16,353
------------------------------------------ ------- -------------- ------------
Total assets 605,337 739,455
------------------------------------------ ------- -------------- ------------
Current liabilities
Trade and other payables 1,416 665
Total current liabilities 1,416 665
------------------------------------------ ------- -------------- ------------
Total liabilities 1,416 665
------------------------------------------ ------- -------------- ------------
Net assets 603,921 738,790
------------------------------------------ ------- -------------- ------------
Equity
Share capital 1,072,056 1,101,674
Retained deficit (468,135) (362,884)
Total equity 603,921 738,790
------------------------------------------ ------- -------------- ------------
Number of Shares in issue at period/year
end 9 46,800,513 50,891,658
------------------------------------------ ------- -------------- ------------
Net Asset Value per Share ($) 9 12.90 14.52
------------------------------------------ ------- -------------- ------------
The unaudited interim condensed financial statements were
approved and authorised for issue by the Board of Directors on 15
August 2023 and signed on their behalf by:
Richard Horlick Patrick Firth
Chair Director
The accompanying notes form an integral part of these unaudited
interim condensed financial statements.
Condensed Statement of Comprehensive Income
For the six months ended 30 June 2023 (Unaudited)
1 January 2023 1 January 2022
to 30 June 2023 to 30 June 2022
Notes $'000 $'000
Unaudited Unaudited
------------------------------------ ------ ---------------- ------------------------
Investment (loss)/gain
Change in fair value of investment
at fair value through profit
or loss 6 (102,711) 58,746
------------------------------------ ------ ---------------- ------------------------
Expenses
Directors' fees and expenses 7 (476) (345)
Legal and professional fees (354) (319)
Other operating expenses (1,747) (1,761)
------------------------------------ ------ ---------------- ------------------------
Total expenses (2,577) (2,425)
------------------------------------ ------ ---------------- ------------------------
Operating (loss)/profit for
the financial period (105,288) 56,321
Finance income and expenses
Foreign exchange gain/(loss) 37 (981)
Total finance income and expenses 37 (981)
------------------------------------ ------ ---------------- ------------------------
(Loss)/profit for the period
(1) (105,251) 55,340
Basic and Diluted (Loss)/Earnings
per Share (cents) 9 (213.18) 103.19
------------------------------------ ------ ---------------- ------------------------
(1) A separate statement of other comprehensive income is not
required as the Company has no such income .
All activities derive from continuing operations.
The accompanying notes form an integral part of these unaudited
interim condensed financial statements.
Condensed Statement of Changes in Equity
For the six months ended 30 June 2023 (Unaudited)
Share Retained Total
capital deficit Equity
$'000 $'000 $'000
------------------------------- ---------- ----------- ----------
As at 1 January 2023 1,101,674 (362,884) 738,790
Loss for the financial period - (105,251) (105,251)
Buyback and cancellation
of shares (29,618) - (29,618)
------------------------------- ---------- ----------- ----------
As at 30 June 2023 1,072,056 (468,135) 603,921
------------------------------- ---------- ----------- ----------
For the six months ended 30 June 2022 (Unaudited)
Share Retained Total
capital deficit Equity
$'000 $'000 $'000
-------------------------- ------------------ ----------------- --------------
As at 1 January 2022 1,133,854 (451,813) 682,041
Profit for the financial
period - 55,340 55,340
Buyback and cancellation
of shares (18,396) - (18,396)
-------------------------- ------------------ ----------------- --------------
As at 30 June 2022 1,115,458 (396,473) 718,985
-------------------------- ------------------ ----------------- --------------
The accompanying notes form an integral part of these unaudited
interim condensed financial statements.
Condensed Statement of Cash Flows
For the six months ended 30 June 2023 (Unaudited)
1 January 1 January
2023 2022
to 30 June to 30 June
2023 2022
$'000 $'000
Unaudited Unaudited
------------------------------------------------ ----------- -----------
Cash flows generated from operating activities
Operating (loss)/profit for the financial
period (105,288) 56,321
------------------------------------------------ ----------- -----------
Adjustments for:
Change in fair value of investment at fair
value through profit or loss 102,711 (58,746)
Movement in trade receivables 537 557
Movement in trade payables 207 33
Net cash used in operating activities (1,833) (1,835)
------------------------------------------------ ----------- -----------
Cash flows generated from investing activities
Distributions from the Partnership 27,382 18,365
Net cash generated from investing activities 27,382 18,365
------------------------------------------------ ----------- -----------
Cash flow used in financing activities
Buyback of shares (29,074) (16,480)
Net cash used in financing activities (29,074) (16,480)
------------------------------------------------ ----------- -----------
Net movement in cash and cash equivalents
during the period (3,525) 50
------------------------------------------------ ----------- -----------
Cash and cash equivalents at the beginning
of the period 15,755 7,296
Effect of foreign exchange rate changes 37 (981)
Cash and cash equivalents at the end of
the period 12,267 6,365
------------------------------------------------ ----------- -----------
The accompanying notes form an integral part of these unaudited
interim condensed financial statements
Notes to the UNAUDITED Interim Condensed Financial
Statements
For the six months ended 30 June 2023 (Unaudited)
1. General information
Riverstone Energy Limited is a company limited by shares, which
was incorporated on 23 May 2013 in Guernsey with an unlimited life
and registered with the GFSC as a Registered Closed-ended
Collective Investment Scheme pursuant to the POI Law. The Company's
Ordinary Shares were admitted to the UK Listing Authority's
Official List and to trading on the London Stock Exchange as part
of its IPO which completed on 29 October 2013. The registered
office of the Company is PO Box 286, Floor 2, Trafalgar Court, Les
Banques, St Peter Port, Guernsey, GY1 4LY.
The Company makes its investments through the Partnership, a
Cayman Islands registered exempted limited partnership, in which
the Company is the sole limited partner. The principal place of
business of the Partnership is the Cayman Islands. Both the Company
and the Partnership are subject to the Investment Management
Agreement with the Investment Manager, a partnership registered in
the Cayman Islands.
The Partnership has the right to invest alongside the Private
Riverstone Funds in all Qualifying Investments in which the Private
Riverstone Funds participate. These funds are managed and advised
by affiliates of the Investment Manager. Further detail of these
investments is provided in the Investment Manager's Report.
The unaudited interim condensed financial statements of the
Company for the six months ended 30 June 2023 have been prepared on
a going concern basis in accordance with the Disclosure and
Transparency Rules of the United Kingdom Financial Conduct
Authority and in accordance with International Accounting Standard
34 ("IAS 34") Interim Financial Reporting as adopted by the
European Union. These unaudited interim condensed financial
statements do not comprise statutory financial statements within
the meaning of The Companies (Guernsey) Law, 2008, and should be
read in conjunction with the financial statements of the Company as
at and for the year ended 31 December 2022, which were prepared in
accordance with International Financial Reporting Standards as
adopted by the EU. The statutory financial statements for the year
ended 31 December 2022 were approved by the Board of Directors on
28 February 2023. The opinion of the auditors on those financial
statements was not qualified and did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying the report. The accounting policies adopted in
these interim condensed financial statements are consistent with
those of the previous financial year and the corresponding interim
reporting period. New and amended standards have been considered in
Note 2. These interim condensed financial statements for the period
ended 30 June 2023 have been reviewed by the Company's Auditors,
Ernst & Young LLP, but not audited and their review report
appears earlier in this document. The financial information for the
year ended 31 December 2022 has been derived from the audited
annual financial statements of the Company for that year, which
were reported on by Ernst & Young LLP in the Company's 2022
Annual Report.
The accounting policies adopted in the preparation of the
unaudited interim condensed financial statements for the period
ended 30 June 2023 are consistent with those followed in the
preparation of the Company's annual financial statements for the
year ended 31 December 2022, which were prepared in accordance with
IFRS as adopted by the European Union.
Certain prior period amounts have been adjusted for consistency
and to reflect the current period presentation.
These unaudited interim condensed financial statements are
presented in U.S. dollars, which is also the Company's functional
currency. The amounts are rounded to the nearest $'000, unless
otherwise stated.
Going Concern
The unaudited interim condensed financial statements have been
prepared on a going concern basis for the reasons set out in the
Report of the Board of Directors and the Directors have a
reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future, which
is defined as the period from the date of approval of the unaudited
interim condensed financial statements up until 30 September
2024.
2. New standards, interpretations and amendments adopted by the Company
The Company has not early adopted any standard, interpretation
or amendment that has been issued but is not yet effective. Several
amendments apply for the first time in 2023, but do not have a
material impact on the Company's interim condensed financial
position or on the presentation of the Company's statements.
3. Critical accounting judgements, estimates and assumptions
The estimates and judgements made by management are consistent
with those made in the Financial Statements for the year ended 31
December 2022.
The preparation of Financial Statements requires management to
make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Judgements
In the process of applying the Company's accounting policies,
management has made the following critical judgements, which have
the most significant effect on the amounts recognised in the
interim condensed financial statements:
Assessment as an Investment Entity
The Company meets the definition of an investment entity on the
basis of the following criteria:
1. the Company obtains funds from multiple investors for the
purpose of providing those investors with investment management
services;
2. the Company commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
3. the Company measures and evaluates the performance of
substantially all of its investments on a fair value basis.
To determine that the Company meets the definition of an
investment entity, further consideration is given to the
characteristics of an investment entity, which are that:
-- it should have more than one investment, to diversify the
risk portfolio and maximise returns;
-- it should have multiple investors, who pool their funds to
maximise investment opportunities;
-- it should have investors that are not related parties of the entity; and
-- it should have ownership interests in the form of equity or similar interests.
The Directors are of the opinion that the Company meets the
essential criteria and typical characteristics of an Investment
Entity.
Assessment of control over the Partnership
The Company makes its investments through the Partnership in
which it is the sole limited partner.
The Board has assessed whether the Company has all the elements
of control as prescribed by IFRS 10 in relation to the Company's
investment in the Partnership and has concluded that although the
Company is the sole limited partner, it does not control the
Partnership but instead has significant influence and therefore
accounts for the Partnership as an investment in associate at fair
value in accordance with IAS 28.
Assessment of Partnership as a structured entity
The Company considers the Partnership to be a structured entity
under IFRS 12. Transfer of funds by the Partnership to the Company
is determined by the General Partner (see Note 7). The risks
associated with the Company's investment in the Partnership are
disclosed in Note 10 of the annual financial statements. The
summarised financial information for the Company's investment in
the Partnership is disclosed in Note 6.
Contingent Liabilities - Performance Fee Allocation
In the ordinary course of business, we monitor the performance
fee allocation and provide for anticipated costs where an outflow
of resources is considered probable and a reasonable estimate can
be made of the likely outcome.
Where an outflow is not probable, but is possible, a contingent
liability may still exist and its relevant details will be
disclosed.
In January 2020, the management engagement committee of REL,
consisting of REL's independent directors, agreed with RIGL
Holdings, LP (formerly Riverstone International Limited), REL's
Investment Manager (the "Investment Manager"), to amend the terms
on which REL is required to pay a performance allocation (the
"Performance Allocation") in respect of REL's investments. These
terms are disclosed in Note 7; Related Party Transactions.
At the reporting date we are not aware of any evidence to
indicate that a present obligation exists, nor is it probable that
an outflow of resources will be required such that any amount
should be provided for, even though there were realisations of
certain investments during the period. This is due to the Portfolio
Level Cost Benchmark and 8 per cent. Hurdle Rate not being met.
Estimates and Assumptions
Fair valuation of investment in the Partnership
The area involving a high degree of judgement or complexity and
where assumptions and estimates are significant to the interim
condensed financial statements has been identified as the risk of
misstatement of the valuation of the investment in the Partnership
(see Note 5). Revisions to accounting estimates are recognised in
the period in which the estimate is revised and in any future
periods affected. The Board's determination that no discount or
premium should be applied to the net asset value of the Partnership
involves a degree of judgement due to the nature of the
Partnership's investments and other assets and liabilities and the
valuation techniques and procedures adopted by the Partnership.
The resulting accounting estimates will, by definition, seldom
equal the related actual results.
Climate change
In preparing the interim condensed financial statements, the
Directors have considered the impact of climate change,
particularly in the context of the climate change risks identified
in the ESG Report from the 2022 REL Annual Report.
The Directors have considered the medium and longer term cash
flow impacts of climate change on a number of key estimates within
the interim condensed financial statements, including the estimates
of future cash flows and future profitability used in the
assessment of the fair value of the underlying investments held by
the Partnership.
These considerations did not have a material impact on the
financial reporting estimates and assumptions in the period. This
reflects the conclusion that climate change is not expected to have
a significant impact on the recognition and separate measurement
considerations of the assets or the Company's short-term cash flows
including those considered in the going concern assessment.
4. Taxation
The taxation basis of the Company remains consistent with that
disclosed in the Financial Statements for the year ended 31
December 2022.
The Company has made an election to, and currently expects to
conduct its activities so as to be treated as a partnership for
U.S. federal income tax purposes. Therefore, the Company expects
that it generally will not be liable for U.S. federal income taxes.
In the normal course of business, REL may form wholly owned
subsidiaries, to be treated as C Corporations for U.S. tax
purposes. The C Corporations serve to protect REL's public
investors from incurring U.S. ECI. The C Corporations file U.S.
corporate tax returns with the U.S. IRS and pay U.S. corporate
taxes on its income. Each of the Company's Shareholders who are
liable for U.S. taxes will take into account their respective share
of the Company's items of income, gain, loss and deduction in
computing its U.S. federal income tax liability as if such
Shareholder had earned such income directly, even if no cash
distributions are made to the Shareholder.
The Company is exempt from taxation in Guernsey under the
provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
2008 and is charged an annual exemption fee of GBP1,200.
The Cayman Islands at present impose no taxes on profit, income,
capital gains or appreciations in value of the Partnership. There
are also currently no taxes imposed in the Cayman Islands by
withholding or otherwise on the Company as a limited partner of the
Partnership on profit, income, capital gains or appreciations in
respect of its partnership interest nor any taxes on the Company as
a limited partner of the Partnership in the nature of estate duty,
inheritance or capital transfer tax.
Local taxes may apply at the jurisdictional level on profits
arising in operating entity investments. Further taxes may apply on
distributions from such operating entity investments. The company
is structured, and has structured its investments, to eliminate the
incurrence of ECI by REL's investors. Based upon the current
commitments and investments held through REL US Corp., the future
U.S. tax liability on profits is expected to be in the range of 21
to 27.5 per cent. (31 December 2022: 21 to 27.5 per cent.).
5. Fair value
IFRS 13 'Fair Value Measurement' requires disclosure of fair
value measurement by level. The level in the fair value hierarchy
within which the financial assets or financial liabilities are
categorised is determined on the basis of the lowest level input
that is significant to the fair value measurement, adjusted if
necessary.
Financial assets and financial liabilities are classified in
their entirety into only one of the three levels:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or liabilities, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices).
-- Level 3 - inputs for the assets or liabilities that are not
based on observable market data (unobservable inputs).
The Company's only financial instrument carried at fair value is
its investment in the Partnership which has been classified within
Level 3 as it is derived using unobservable inputs. Amounts
classified under Level 3 for the period ended 30 June 2023,
consisting of only the Company's investment in the Partnership,
were $593 million (31 December 2022: $723 million).
The fair value of all other financial instruments approximates
to their carrying value.
Transfers during the period
There have been no transfers between levels during the period
ended 30 June 2023 and the year ended 31 December 2022. Any
transfers between the levels will be accounted for on the last day
of each financial period. Due to the nature of the investment in
the Partnership, it is always expected to be classified under Level
3.
Valuation methodology and process
The same valuation methodology and process was deployed at 30
June 2023 and 31 December 2022.
The Directors base the fair value of the investment in the
Partnership on the value of its limited partnership capital account
received from the General Partner, which is determined on the basis
of the fair value of its assets and liabilities, adjusted if
necessary, to reflect liquidity, future commitments, and other
specific factors of the Partnership and Investment Manager. This is
based on the components within the Partnership, principally the
value of the Partnership's investments in addition to cash and
short-term money market fixed deposits. Any fluctuation in the
value of the Partnership's investments in addition to cash and
short-term money market fixed deposits held will directly impact on
the value of the Company's investment in the Partnership.
The Directors have considered whether a discount or premium
should be applied to the net asset value of the Partnership. In
view of the investment in the Partnership and the nature of the
Partnership's assets, no adjustment to the net asset value of the
Partnership has been deemed to be necessary.
The Partnership's investments are valued using the techniques
described in the Company's valuation policy. The Investment
Manager's assessment of fair value of investments held by the
Partnership, through Investment Undertakings, is determined in
accordance with IPEV Valuation Guidelines. When valuing the
Partnership's investments, the Investment Manager reviews
information provided by the underlying investee companies and other
business partners and applies IPEV methodologies, to estimate a
fair value as at the date of the Statement of Financial Position,
subject to Board approval. It is the opinion of the Directors, that
the IPEV valuation methodology used in deriving a fair value is
generally not different from the fair value requirements of IFRS
13. In the event that there is a difference, the requirements of
IFRS 13 override the IPEV requirements.
The Investment Manager values the investments on a quarterly
basis using common industry valuation techniques, including
comparable public market valuation, comparable merger and
acquisition transaction valuation and discounted cash flow
valuation. For early stage private investments, Riverstone's
investment due diligence process includes assumptions about
short-term financial results in determining the appropriate
purchase price for the investment. For the SPAC Sponsor
investments, the Investment Manager applies discounts to the
closing price of the publicly traded shares for lack of identified
target, risk of unsuccessful closing of the business combination
and applicable lock-up periods post-closing. The techniques used in
determining the fair value of the Company's investments through the
Partnership are selected on an investment by investment basis so as
to maximise the use of market based observable inputs.
REL's valuation policy is compliant with both IFRS and IPEV
Valuation Guidelines and is applied consistently from period to
period. As some of the Partnership's investments are generally not
publicly quoted, valuations require meaningful judgement to
establish a range of values and the ultimate value at which an
investment is realised may differ from its most recent valuation
and the difference may be significant.
For the period ended 30 June 2023, the valuations of the
Company's investments, through the Partnership, are detailed in the
Investment Manager's Report.
The Board reviews and considers the fair value of the
Partnership's investments arrived at by the Investment Manager
before incorporating such values into the fair value of the
Partnership. The variety of valuation bases adopted, quality of
management information provided by the underlying investee
companies and the lack of liquid markets for the investments mean
that there are inherent difficulties in determining the fair value
of these investments and such difficulties cannot be eliminated.
Therefore, the amounts realised on the sale of investments may
differ from the fair values reflected in these unaudited interim
condensed financial statements and the differences may be
significant.
The Investment Manager monitors the range of reasonably possible
changes in significant unobservable inputs on a regular basis with
consultation from the Investment Manager . Using its extensive
industry experience, the Investment Manager provides the Board with
its determination of the reasonably possible changes in significant
unobservable inputs in the market conditions as of the period
end.
6. Investment at fair value through profit or loss
The movement in fair value is derived from the fair value
movements in the underlying investments held by the Partnership,
net of income, expenses and distributions of the Partnership and
its related Investment Undertakings, including any Performance
Allocation and applicable taxes.
30 June 31 December
2023 2022
$'000 $'000
---------------------------------------- ---------- ------------
Cost
Brought forward 1,046,814 1,094,090
Distributions from the Partnership (27,382) (47,276)
Carried forward 1,019,432 1,046,814
---------------------------------------- ---------- ------------
Fair value adjustment through profit
or loss
Brought forward (323,712) (419,651)
Fair value movement during period/year
- see Summary Income Statement below (102,711) 95,939
Carried forward (426,423) (323,712)
---------------------------------------- ---------- ------------
Fair value at period/year end 593,009 723,102
---------------------------------------- ---------- ------------
Summary financial information for the Partnership's investments
and its related Investment Undertakings
30 June 31 December
2023 2022
Summary Balance Sheet $'000 $'000
--------------------------------------- -------- ------------
Investments at fair value (net) 540,313 657,040
Cash and cash equivalents (1) 54,670 68,483
Management fee payable - see Note 7 (2,265) (2,682)
Other net (liabilities)/assets 291 261
Fair value of REL's investment in the
Partnership 593,009 723,102
--------------------------------------- -------- ------------
(1) These figures, together with the $65.8 million held at REL
US Corp (31 December 2022: $35.3 million), comprise the $120.5
million cash held in the Partnership (31 December 2022: $103.8
million).
30 June 31 December
2023 2022
Reconciliation of Partnership's investments $'000 $'000
at fair value
---------------------------------------------- -------- ------------
Investments at fair value - Level 1 252,893 177,136
Investments at fair value - Level 3 -
see Note 5 221,615 444,592
---------------------------------------------- -------- ------------
Investments at fair value 474,508 621,728
Cash and cash equivalents 65,805 35,312
Partnership's investments at fair value 540,313 657,040
---------------------------------------------- -------- ------------
1 January 1 January
2023 2022
to 30 June to 30 June
2023 2022
Summary Income Statement $'000 $'000
----------------------------------------------- ----------- --------------------------
Unrealised and realised gain on Partnership's
investments (net) (100,104) 66,702
Interest and other income 3,851 29
Management fee expense - see Note 7 (4,768) (5,774)
Other operating expenses (1,690) (2,211)
----------------------------------------------- ----------- --------------------------
Portion of the operating profit for the
period attributable to REL's investment in
the Partnership (102,711) 58,746
----------------------------------------------- ----------- --------------------------
1 January 1 January
2023 2022
to 30 June to 30 June
2023 2022
Reconciliation of unrealised and realised $'000 $'000
gain/(loss) on Partnership's investments
----------------------------------------------- ----------- --------------------------------
Unrealised gain on investments (gross) (56,352) 106,109
Realised loss on Partnership's investments
(gross) (43,745) (36,827)
General Partner's Performance Allocation -
- see Note 7 -
Provision for taxation (7) (2,580)
----------------------------------------------- ----------- --------------------------------
Unrealised and realised gain on Partnership's
investments (net) (100,104) 66,702
----------------------------------------------- ----------- --------------------------------
The Board reviews the valuations performed by the Investment
Manager and monitors the range of reasonably possible changes in
significant unobservable inputs on a regular basis with
consultation from the Investment Manager. Using its extensive
industry experience, the Investment Manager provides the Board with
its determination of the reasonably possible changes in significant
unobservable inputs in the market conditions as of the period
end.
Quantitative information about Level 3 fair value measurements
in the Partnership as at 30 June 2023
Industry: Energy
Range
Fair value of Level 3 Sensitivity of
Investments (in thousands) the
input to fair Fair value of Level 3
value of Investments affected by
Valuation Unobservable Low Weighted Level 3 unobservable input (3) (in
technique(s) input(s) (1) High(1) Average (1) investments(2) thousands)
--------------------------- --------------- ----------------- ------- --------- ---------------- ---------------- ---------------------------------
25 per cent.
weighted
average change
in the input
would result
in 1 per cent.
change in the
total fair
Public 2023E EV / value of Level
$189,749 comparables EBITDA Multiple 16.0x 36.0x 35.1x 3 investments 35,656
2024E EV / 1.0x 3.0x 1.3x 25 per cent. weighted average change in the input would 98,134
EBITDA result in 3 per cent. change in the
Multiple(4) total fair value of Level 3 investments
2023E EV / 3.0x 20.5x 11.8x 20 per cent. weighted average change in the input would 74,115
Revenue result in 3 per cent. change in the
Multiple(4) total fair value of Level 3 investments
2024E EV / 1.8x 10.4x 3.0x 20 per cent. weighted average change in the input would 17,500
Revenue result in 1 per cent. change in the
Multiple(4) total fair value of Level 3 investments
Transaction Asset Value $56 $182 $72 50 per cent. weighted average change in the 98,134
comparables ($m/kW) input would result in 3 per cent. change
in the
total fair value of Level 3 investments
EV / Revenue 14.5x 26.0x 16.8x 20 per cent. weighted average change in the input would 17,500
Multiple result in 3 per cent. change in the
total fair value of Level 3 investments
----------------- ------- --------- ---------------- ------------------------------------------------------------ ---------------------------------
Discounted Discount Rate 30% 10% 27% +/-50 per cent. Weighted average change in 98,134
cash flow the input would result in -/+3 per cent.
change
in the total fair value of Level 3
investments
--------------- ----------------- ------- --------- ---------------- -------------------------------------------- ---------------------------------
$31 ,866 Other(5)
$ 221,615 Total
(1) Calculated based on fair values of the Partnership's Level 3
investments.
(2) Based on its professional experience and recent market
conditions, the Investment Manager has provided the Board with
these weighted average changes in the inputs with a forecasted time
period of 6 to 12 months.
(3) The Partnership's Level 3 investments are valued using one
or more of the techniques which utilise one or more of the
unobservable inputs, so the amounts in the "Fair value of Level 3
investments" column will not aggregate to the total fair value of
the Partnership's Level 3 investments.
(4) As at 30 June 2023, the sensitivity of this unobservable
input to the total fair value of Level 3 investments was determined
to be significant by applying the same methodology that determined
it to be significant as at 31 December 2022.
(5) 'Other' include certain investments that are not subject to
a sensitivity analysis because they are insensitive to the changes
in inputs set out above as at 30 June 2023.
Quantitative information about Level 3 fair value measurements
in the Partnership as at 31 December 2022
Industry: Energy
Range
Fair value of Fair value of
Level 3 Sensitivity of Level 3
Investments (in the Investments
thousands) input to fair affected by
Weighted value of unobservable
Valuation Unobservable High Average Level 3 input (3) (in
technique(s) input(s) Low (1) (1) (1) investments(2) thousands)
---------------- -------------- -------------- -------- -------- ----------- ---------------- ---------------
25 per cent.
weighted
average change
in the input
would result
in 1 per cent.
change in the
2023E EV / total fair
Public EBITDA value of Level
$ 255,797 comparables Multiple 16.0x 36.0x 34.1x 3 investments 53,156
2024E EV / 1.0x 3.0x 1.0x 25 per cent. weighted average change in the 118,348
EBITDA input would result in 6 per cent. change in
Multiple(4) the
total fair value of Level 3 investments
2022 2.0x 12.4x 7.2x 20 per cent. weighted average change in the 40,043
EV/Revenue input would result in 1 per cent. change in
Multiple the
total fair value of Level 3 investments
2023E 2.0x 19.1x 10.9x 20 per cent. weighted average change in the 113,406
EV/Revenue input would result in 1 per cent. change in
Multiple(4) the
total fair value of Level 3 investments
Transaction Asset Value $56 $182 $58 50 per cent. weighted average 118,348
comparables ($m/kW) change in the input would
result in 1 per cent. change in
the
total fair value of Level 3
investments
Discounted Discount Rate 30% 10% 30% +/-50 per cent. weighted average 138,348
cash flow change in the input would
result in -/+ 1 per cent.
change
in the total fair value of
Level 3 investments
$188,795 Other(5)
$444,592 Total
(1) Calculated based on fair values of the Partnership's Level 3
investments.
(2) Based on its professional experience and recent market
conditions, the Investment Manager has provided the Board with
these weighted average change in the inputs with a forecasted time
period of 6 to 12 months.
(3) The Partnership's Level 3 investments are valued using one
or more of the techniques which utilise one or more of the
unobservable inputs, so the amounts in the "Fair value of Level 3
investments" column will not aggregate to the total fair value of
the Partnership's Level 3 investments.
(4) As at 31 December 2022, the sensitivity of this unobservable
input to the total fair value of Level 3 investments was determined
to be significant by applying the same methodology that determined
it not to be significant as at 31 December 2021.
(5) 'Other' include certain investments that are not subject to
a sensitivity analysis because they are insensitive to the changes
in inputs set out above as at 31 December 2022 and 31 December
2021, respectively.
7. Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the party in making financial or operational
decisions.
Directors
The Company has six non-executive Directors (31 December 2022:
seven).
Directors' fees and expenses for the period ended 30 June 2023
amounted to $ 476,141 , (30 June 2022: $ 341,749 ), none of which
was outstanding at period end (31 December 2022: $Nil).
Partnership
In accordance with section 4.1(a) of the Partnership Agreement,
the Company received distributions in aggregate of $27,382,638 (30
June 2022: $ 18,365,317 ) from the Partnership through the 6 month
period to 30 June 2023. In accordance with section 4.1(a) of the
Partnership Agreement, in the event of the Company requiring
additional funds for working capital, it is entitled to receive
another distribution from the Partnership.
Investment Manager
For the provision of services under the Investment Management
Agreement, the Investment Manager is paid in cash out of the assets
of the Partnership an annual Management Fee equal to 1.5 per cent.
per annum of the Company's Net Asset Value (including cash). The
fee is payable quarterly in arrears and each payment is calculated
using the quarterly Net Asset Value as at the relevant quarter end
as further outlined in Note 9 in the Financial Statements to 31
December 2022. During the period to 30 June 2023, the Partnership
incurred Management Fees of $4,767,640 (30 June 2022: $ 5,773,552 )
of which $2,264,688 remained outstanding as at the period end (31
December 2022: $2,681,729). In addition, the Company and
Partnership, in aggregate, reimbursed the Investment Manager
$2,067,503 in respect of amounts paid on their behalf for the
period (30 June 2022: $1,024,264), of which $2,005,549 related to
legal and professional fees of the Company and Partnership
($400,128 specific to the Company), $80,663 related to travel and
other operating expenses of the Investment Manager (all specific to
the Company), and ($18,709) related to reimbursable expenses of the
portfolio companies (all specific to the Partnership).
The circumstances in which the Company and the Investment
Manager may terminate the Investment Management Agreement are as
follows (Please refer to Note 9 of the 2022 Annual Report for full
disclosure. There have been no changes since the year end):
Event Notice period Consequences of termination
By the Company if the 12 months The General Partner is
Investment Manager is entitled to receive a payment
in material breach which equal to four times the
has not been rectified quarterly Management Fee
payable to the Investment
Manager on the basis of
the Company's most recent
Net Asset Value and an
amount equal to the Performance
Allocation due on the Company's
investments on the basis,
at the Company's option,
of the latest quarterly
valuation or the actual
realisation value for each
investment.
-------------- ---------------------------------
By the Investment Manager 12 months The General Partner is
if the Company is in material entitled to receive a payment
breach which has not been equal to twenty times the
rectified quarterly Management Fee
payable to the Investment
Manager on the basis of
the Company's most recent
Net Asset Value and an
amount equal to the Performance
Allocation due on the Company's
investments on the basis,
at the General Partner's
option, of the latest quarterly
valuation or the actual
realisation value for each
investment.
-------------- ---------------------------------
By the Company if the Immediate No payment to be made to
Investment Manager becomes the Investment Manager
insolvent or resolves or the General Partner.
to wind up or if the Investment
Manager or General Partner
commits an act of fraud
or wilful default in relation
to the Company which results
in material harm to the
Company
-------------- ---------------------------------
The Investment Management Agreement cannot be terminated by
either the Company or the Investment Manager without cause.
Following the seventh anniversary of the Company's London
listing on 29 October 2020, a discontinuation resolution was
proposed and not passed, therefore the Investment Management
Agreement will continue in perpetuity subject to the termination
for cause provisions described above. However, either the Board or
Shareholders holding in aggregate at least 10 per cent. of the
Company's voting securities can call an EGM at any time to vote on
the liquidation of the Company (75 per cent. of the votes cast in
favour required) or run-off of its portfolio (50 per cent. of the
votes cast in favour required). Under both these scenarios, the
Investment Manager would be entitled to twenty times the most
recent quarterly Management Fee.
General Partner
The General Partner makes all management decisions, other than
investment management decisions, in relation to the Partnership and
controls all other actions by the Partnership and is entitled to
receive a Performance Allocation, calculated and payable at the
underlying investment holding subsidiary level, equal to 20 per
cent. of the gross realised profits (if any) in respect of a
disposal, in whole or in part, of any underlying asset of the
Company.
The General Partner is entitled to receive its Performance
Allocation in cash, all of which, after tax, Riverstone, through
its affiliate RELCP, reinvests in Ordinary Shares of the Company on
the terms summarised in Part I and Part VIII of the IPO
Prospectus.
In accordance with the revised terms announced on 3 January
2020, but effective 30 June 2019, no further carried interest will
be payable until the $192.6 million of realised and unrealised
losses to date at 30 June 2023 are made whole with future gains.
The earned carried interest of $ 0.8 million at 30 June 2023 has
been deferred and will expire in October 2023 if the aforementioned
losses are not made whole. Since REL has not yet met the
appropriate Cost Benchmark at 30 June 2023, $ 29.6 million in
Performance Allocation was not accrued in accordance with the terms
of the current agreement, which would have been accrued under the
prior agreement.
Cornerstone Investors
Each of the Cornerstone Investors has acquired an indirect
economic interest in each of the General Partner and the Investment
Manager depending on the size of their commitment and the total
issue size, up to an aggregate maximum indirect economic interest
of 20 per cent. in each, for nominal consideration. These interests
entitle the Cornerstone Investors to participate in the economic
returns generated by the General Partner, including from the
Performance Allocation, and the Investment Manager, which receives
the Management Fee.
8. Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole. The key measure of performance used by the Board to assess
the Company's performance and to allocate resources is the Total
Return on the Company's Net Asset Value, as calculated under IFRS,
and therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in the
Financial Statements and Interim Report.
For management purposes, the Company is organised into one main
operating segment, which invests in one limited partnership.
All of the Company's income is derived from within Guernsey and
the Cayman Islands.
All of the Company's non-current assets are located in the
Cayman Islands.
Due to the Company's nature, it has no customers.
9. Earnings per Share and Net Asset Value per Share
Earnings per Share
1 January 2023 1 January 2022
to 30 June 2023 to 30 June 2022
------------------------------ ----------------- -----------------
(Loss)/Profit for the period
($'000) (105,251) 55,340
Weighted average numbers of
Shares in issue 49,371,476 53,629,141
EPS (cents) (213.18) 103.19
------------------------------ ----------------- -----------------
The Earnings per Share is based on the profit or loss of the
Company for the period and on the weighted average number of Shares
the Company had in issue for the period.
There are no dilutive Shares in issue as at 30 June 2023 (30
June 2022: none).
Net Asset Value per Share
30 June 2023 31 December 30 June
2022 2022
----------------------------- --------------- -------------- -----------
NAV ($'000) 603,921 738,790 718,985
Number of Shares in issue 46,800,513 50,891,658 52,714,287
Net Asset Value per Share
($) (1) 12.90 14.52 13.64
Net Asset Value per Share
(GBP) 10.23 11.99 11.25
Discount to NAV (per cent.)
(2) 44.65 43.46 40.84
----------------------------- --------------- -------------- -----------
(1) The GBP:USD FX rate is 1.2614 as at 30 June 2023.
(2) The share price used to calculate the Discount to NAV (per
cent.) is $7.14 (GBP5.66).
The Net Asset Value per Share is arrived at by dividing the net
assets as at the date of the Condensed Statement of Financial
Position by the number of Ordinary Shares in issue at that date.
The Discount to NAV is arrived at by calculating the percentage
discount of the Company's Net Asset Value per Share to the
Company's closing Share price as at the date of the Condensed
Statement of Financial Position.
10. Post-Period End Updates
Subsequent to period end, there have been no material updates
for the Company.
Glossary of Capitalised Defined Terms
"Administrator" means Ocorian Administration (Guernsey)
Limited;
"Aleph Midstream" means Aleph Midstream S.A;
"Annual General Meeting" or "AGM" means the general meeting of
the Company;
"Annual Report and Financial Statements" means the annual
publication of the Company provided to the Shareholders to describe
their operations and financial conditions, together with their
Financial Statements;
"Anuvia" means Anuvia Plant Nutrients Inc.;
"Audit Committee" means a formal committee of the Board with
defined terms of reference;
"Board" or "Directors" means the directors of the Company;
"CanEra III" means CanEra Inc.;
"Carrier II" means Carrier Energy Partners II LLC;
"Castex 2005" means Castex Energy 2005 LLC;
"Castex 2014" means Castex Energy 2014 LLC;
"Centennial" means Centennial Resource Development, Inc.;
"CNOR" means the Canadian Non-Operated Resources LP;
"Company" or "REL" means Riverstone Energy Limited;
"Company Secretary" means Ocorian Administration (Guernsey)
Limited;
"Cornerstone Investors" means those investors who have acquired
Ordinary Shares and acquired a minority economic interest in the
General Partner and in the Investment Manager, being AKRC
Investments LLC, Casita, L.P., KFI and McNair;
"Corporate Brokers" means JP Morgan Cazenove and Numis
Securities Limited;
"C Corporations" means a C Corporation, under U.S. federal
income tax law, being a corporation that is taxed separately from
its owners;
"DCRB" means Decarbonization Plus Acquisition Corporation;
"DCRC" means Decarbonization Plus Acquisition Corporation
III;
"DCRN" means Decarbonization Plus Acquisition Corporation
II;
"DCRD" means Decarbonization Plus Acquisition Corporation
IV;
"Disclosure Guidance and Transparency Rules" or "DTRs" mean the
disclosure guidance published by the FCA and the transparency rules
made by the FCA under section 73A of FSMA;
"Discontinuation Resolution" means a special resolution that was
proposed and not passed by the Company's Shareholders to
discontinue the Company within six weeks of the seventh anniversary
of the Company's first Admission if the trading price has not met
the Target Price, and the Invested Capital Target Return has not
been met;
"Discount to NAV" means the situation where the Ordinary shares
of the Company are trading at a price lower than the Company's Net
Asset Value;
"E&P" means exploration and production;
"Eagle II" means Eagle Energy Exploration, LLC;
"Earnings per Share" or "EPS" means the Earnings per Ordinary
Share and is expressed in U.S. dollars;
"EBITDA" means earnings before interest, taxes, depreciation and
amortisation;
"ECI" means effectively connected income, which refers to all
income from sources within the United States connected with the
conduct of a trade or business;
"EGM" means an Extraordinary General Meeting of the Company;
"Enviva" means Enviva Holdings, L.P.;
"EU" means the European Union;
"EV" means enterprise value;
"FCA" means the UK Financial Conduct Authority (or its successor
bodies);
"Fieldwood" means Fieldwood Energy LLC;
"Financial Statements" means the audited financial statements of
the Company, including the Statement of Financial Position, the
Statement of Comprehensive Income, the Statement of Cash Flows, the
Statement of Changes in Equity and associated notes;
"FreeWire" means FreeWire Technologies, Inc.;
"Fund V" means Riverstone Global Energy & Power Fund V,
L.P.;
"General Partner" means REL IP General Partner LP (acting
through its general partner, REL IP General Partner Limited), the
general partner of the Partnership and a member of the Riverstone
group;
"GFSC" or "Commission" means the Guernsey Financial Services
Commission;
"GoodLeap" means GoodLeap, LLC;
"Gross MOIC" means gross multiple of invested capital;
"Group14" means Group14 Technologies Inc.;
"Hammerhead" means Hammerhead Energy, Inc.;
"Henry Hub" means a pipeline interchange of natural gas in North
America used as a benchmark in gas pricing;
"Hyzon" means Hyzon Motors, Inc.;
"IAS" means international accounting standards as issued by the
Board of the International Accounting Standards Committee;
"IFRS" means the International Financial Reporting Standards,
being the principles-based accounting standards, interpretations
and the framework by that name issued by the International
Accounting Standards Board, as adopted by the EU;
"ILX III" means ILX Holdings III LLC;
"Infinitum" means Infinitum Electric Inc.;
"Interim Report" means the Company's half yearly report and
unaudited interim condensed financial statements for the period
ended 30 June;
"Investment Manager" means RIL (effective through 17 August
2020) and RIGL (effective after 17 August 2020) which are both
majority-owned and controlled by Riverstone;
"Investment Management Agreement" means the investment
management agreement dated 24 September 2013 between RIL, the
Company and the Partnership (acting through its General Partner)
under which RIL is appointed as the Investment Manager of both the
Company and the Partnership (effective through 17 August 2020), the
2(nd) Amended & Restated investment management agreement
effective after 17 August 2020 between RIGL, the Company and the
Partnership (acting through its General Partner) under which RIGL
is appointed as the Investment Manager of both the Company and the
Partnership and the 3(rd) Amended & Restatement investment
management agreement effective 9 December 2020 between RIGL, the
Company and the Partnership (acting through its General
Partner);
"Investment Undertaking" means the Partnership, any intermediate
holding or investing entities that the Company or the Partnership
may establish from time to time for the purposes of efficient
portfolio management and to assist with tax planning generally and
any subsidiary undertaking of the Company or the Partnership from
time to time;
"IPEV Valuation Guidelines" means the International Private
Equity and Venture Capital Valuation Guidelines;
"IPO" means the initial public offering of shares by a private
company to the public;
"IRS" means the Internal Revenue Service, the revenue service of
the U.S. federal government;
"ISIN" means an International Securities Identification
Number;
"KFI" means Moore Capital Management, formerly known as Kendall
Family Investments, LLC, a cornerstone investor in the Company;
"Liberty II" means Liberty Resources II LLC;
"Loanpal" means Loanpal, LLC;
"London Stock Exchange" or "LSE" means London Stock Exchange
Plc;
"Management Engagement Committee" means a formal committee of
the Board with defined terms of reference;
"Management Fee" means the management fee to which RIL is
entitled;
"McNair" means RCM Financial Services, L.P. for the purposes of
acquiring Ordinary Shares and Palmetto for the purposes of
acquiring a minority economic interest in the General Partner and
the Investment Manager;
"Meritage III" means Meritage Midstream Services III, L.P.;
"mmboe" means million barrels of oil equivalent;
"NASDAQ" means National Association of Securities Dealers
Automated Quotations Stock Market;
"NAV per Share" means the Net Asset Value per Ordinary
Share;
"Net Asset Value" or "NAV" means the value of the assets of the
Company less its liabilities as calculated in accordance with the
Company's valuation policy and expressed in U.S. dollar
"Net MOIC" means gross multiple of invested capital net of taxes
and carried interest on gross profit;
"NYSE" means The New York Stock Exchange;
"Official List" is the list maintained by the Financial Conduct
Authority (acting in its capacity as the UK Listing Authority) in
accordance with Section 74(1) of the Financial Services and Markets
Act 2000;
"ONE" or "Our Next Energy" means Our Next Energy, Inc;
"Onyx Power" means Onyx Strategic Investment Management I
BV;
"OPEC" means Organisation of the Petroleum Exporting
Countries;
"Ordinary Shares" means redeemable ordinary shares of no par
value in the capital of the Company issued and designated as
"Ordinary Shares" and having the rights, restrictions and
entitlements set out in the Articles;
"Origo" means Origo Exploration Holding AS;
"Partnership" or "RELIP" means Riverstone Energy Investment
Partnership, LP, the Investment Undertaking in which the Company is
the sole limited partner;
"Partnership Agreement" means the partnership agreement in
respect of the Partnership between inter alios the Company as the
sole limited partner and the General Partner as the sole general
partner dated 23 September 2013;
"Performance Allocation" means the Performance Allocation to
which the General Partner is entitled;
" PIPE " means private investment in public entity;
"POI Law" means the Protection of Investors (Bailiwick of
Guernsey) Law, 2020, as amended;
"Private Riverstone Funds" means Fund V and all other private
multi-investor, multi-investment funds that are launched after
Admission and are managed or advised by the Investment Manager (or
one or more of its affiliates) and excludes Riverstone employee
co-investment vehicles and any Riverstone managed or advised
private co-investment vehicles that invest alongside either Fund V
or any multi-investor multi-investment funds that the Investment
Manager (or one or more of its affiliates) launches after
Admission;
"PRT" means Riverstone Performance Review Team;
"Qualifying Investments" means all investments in which Private
Riverstone Funds participate which are consistent with the
Company's investment objective where the aggregate equity
investment in each such investment (including equity committed for
future investment) available to the relevant Private Riverstone
Fund and the Company (and other co-investees, if any, procured by
the Investment Manager or its affiliates) is $100 million or
greater, but excluding any investments made by Private Riverstone
Funds where both (a) a majority of the Company's independent
directors and (b) the Investment Manager have agreed that the
Company should not participate;
"RCO" means Riverstone Credit Opportunities, L.P.;
"RELCP" means Riverstone Energy Limited Capital Partners, LP
(acting by its general partner Riverstone Holdings II (Cayman)
Ltd.) a Cayman exempted limited partnership controlled by
affiliates of Riverstone;
"Ridgebury H3" means Ridgebury H3, LLC;
"RIGL" means RIGL Holdings, LP;
"RIL" means Riverstone International Limited;
"Riverstone" means Riverstone Holdings LLC and its affiliated
entities (other than the Investment Manager and the General
Partner), as the context may require;
"Rock Oil" means Rock Oil Holdings, LLC;
"SaaS" means Software as a Service;
"Sierra" means Sierra Oil and Gas Holdings, L.P.;
"Shareholder" means the holder of one or more Ordinary
Shares;
"Solid Power" means Solid Power, Inc.;
"SPAC" means special purpose acquisition company;
"Target Price" means, as defined in the Articles, GBP15.00,
subject to (a) downward adjustment in respect of the amount of all
dividends and other distributions, stock splits and equity
issuances below the prevailing NAV per Ordinary Share made
following the first Admission and (b) upward adjustment to take
account of any share consolidations made following the first
Admission;
"Three Rivers III" means Three Rivers Natural Resources Holdings
III LLC;
"Total Return on the Company's Net Asset Value" means the
capital appreciation of the Company's Net Asset Value plus the
income received from the Company in the form of dividends;
"T-REX Group" means T-REX Group, Inc.;
"Tritium" means Tritium DCFC Limited;
"UK" or "United Kingdom" means the United Kingdom of Great
Britain and Northern Ireland;
"UK Listing Authority" or "UKLA" means the Financial Conduct
Authority;
"U.S." or "United States" means the United States of America,
its territories and possessions, any state of the United States and
the District of Columbia;
"WTI" means West Texas Intermediate which is a grade of crude
oil used as a benchmark in oil pricing;
"GBP" or "Pounds Sterling" or "Sterling" means British pound
sterling and "pence" means British pence; and
"$" means United States dollars and "cents" means United States
cents.
DIRECTORS AND GENERAL INFORMATION
Directors Administrator and English solicitors
Richard Hayden (Chair of Company Secretary to the Company
the Board until 1 March 2023) Ocorian Administration Hogan Lovells International
Richard Horlick (Chair of (Guernsey) Limited LLP
the Board from 1 March 2023) PO Box 286 Atlantic House
Peter Barker (until 23 May Floor 2 Holborn Viaduct
2023) Trafalgar Court London
Patrick Firth Les Banques EC1A 2FG
Karen McClellan (from 24 St Peter Port United Kingdom
May 2023) Guernsey
John Roche GY1 4LY Guernsey advocates
Jeremy Thompson Channel Islands to the Company
Claire Whittet Carey Olsen (Guernsey)
Registered office LLP
Audit Committee PO Box 286 Carey House
Patrick Firth (Chair) Floor 2 PO Box 98
Peter Barker (until 23 May Trafalgar Court Les Banques
2023) Les Banques St Peter Port
Richard Hayden (until 23 St Peter Port Guernsey
May 2023) Guernsey GY1 4BZ
Richard Horlick GY1 4LY Channel Islands
Karen McClellan (from 24 Channel Islands
May 2023) U.S. legal advisors
John Roche Registrar to the Company
Jeremy Thompson Link Asset Services Vinson & Elkins LLP
Claire Whittet 65 Gresham Street 1001 Fannin Street
London Suite 2500
Management Engagement Committee EC2V 7NQ Houston, Texas
Claire Whittet (Chair) United Kingdom TX 77002
Peter Barker (until 23 May United States of America
2023) Principal banker
Patrick Firth and custodian Independent auditor
Richard Hayden (until 23 Barclays Bank PLC Ernst & Young LLP
May 2023) PO Box 41 PO Box 9, Royal Chambers
Richard Horlick Le Marchant House St Julian's Avenue
Karen McClellan (from 24 Le Truchot St Peter Port
May 2023) St Peter Port Guernsey
John Roche Guernsey GY1 4AF
Jeremy Thompson GY1 3BE Channel Islands
Channel Islands
Nomination Committee Corporate Brokers
Jeremy Thompson (Chair) JP Morgan Cazenove
Peter Barker (until 23 May 25 Bank Street
2023) Canary Wharf
Patrick Firth London
Richard Hayden (until 23 E15 5JP
May 2023) United Kingdom
Richard Horlick
Karen McClellan (from 24 Numis Securities Limited
May 2023) The London Stock Exchange
John Roche Building
Claire Whittet 10 Paternoster Square
London
Investment Manager EC4M 7LT
RIGL Holdings, LP United Kingdom
190 Elgin Avenue
George Town
Grand Cayman
KY1-9005
Cayman Islands
Investment Manager's Performance
Review Team
Pierre Lapeyre
David Leuschen
Baran Tekkora
Robert Tichio
Website: www.RiverstoneREL.com
ISIN: GG00BBHXCL35
Ticker: RSE
SWISS SUPPLEMENT
ADDITIONAL INFORMATION FOR INVESTORS IN SWITZERLAND
This Swiss Supplement is supplemental to, forms part of and
should be read in conjunction with the Interim Report and Unaudited
Interim Condensed Financial Statements ended 30 June 2023 for
RIVERSTONE ENERGY LIMITED (the "Company").
Effective from 20th July 2015, the Company had appointed Société
Générale as Swiss Representative and Paying Agent. The current
Prospectus, the Memorandum and Articles of Association and the
annual report of the Company can be obtained free of charge from
the representative in Switzerland, Société Générale, Paris, Zurich
Branch, Talacker 50, P.O. Box 5070, CH-8021 Zurich. The paying
agent of the Company in Switzerland is Société Générale, Paris,
Zurich Branch, Talacker 50, P.O. Box 5070, CH-8021 Zurich. The
Company may offer Shares only to qualified investors in
Switzerland. In respect of the Shares distributed in and from
Switzerland, the place of performance and jurisdiction is the
registered office of the Swiss Representative.
Cautionary Statement
The Chair's Statement, the Investment Manager's Report and the
Report of the Board of Directors have been prepared solely to
provide additional information for shareholders to assess the
Company's strategies and the potential for those strategies to
succeed. These should not be relied on by any other party or for
any other purpose.
The Chair's Statement, Investment Manager's Report and the
Report of the Board of Directors may include statements that are,
or may be deemed to be, "forward-looking statements". These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology.
These forward-looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Adviser, concerning, amongst other things, the investment
objectives and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, and distribution policy of the Company and the markets
in which it invests.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance.
The Company's actual investment performance, results of
operations, financial condition, liquidity, distribution policy and
the development of its financing strategies may differ materially
from the impression created by the forward-looking statements
contained in this document.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward-looking statement contained herein to
reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based.
Riverstone Energy Limited
PO Box 286, Floor 2,
Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 4LY,
Channel Islands.
T 44 (0) 1481 742742
F 44 (0) 1481 742698
Further information available online:
www.RiverstoneREL.com
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR EAFPSFLDDEAA
(END) Dow Jones Newswires
August 16, 2023 02:01 ET (06:01 GMT)
Riverstone Energy (LSE:RSE)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Riverstone Energy (LSE:RSE)
Gráfica de Acción Histórica
De May 2023 a May 2024
