TIDMRSE
RNS Number : 9892G
Riverstone Energy Limited
30 July 2021
- THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION -
LEI: 213800HAZOW1AWRSZR47
Riverstone Energy Limited Announces 2Q21 Quarterly Portfolio
Valuations & NAV
London, UK (30 July 2021) - Riverstone Energy Limited ("REL" or
the "Company") announces its quarterly portfolio summary as of 30
June 2021, inclusive of updated quarterly unaudited fair market
valuations.
Current Portfolio - Private
Gross
Investment Gross Gross Realised
(Initial Gross Invested Realised Unrealised Capital & 31 Mar 2021
Investment Committed Capital Capital Value Unrealised Gross MOIC 30 Jun 2021
Date) Capital ($mm) ($mm) ($mm) [1] ($mm)(2) Value ($mm) [2] Gross MOIC(2)
ILX III
(8 Oct 2015) 200 179 4 168 172 0.9x 1.0x
Hammerhead
Resources
(27 Mar 2014) 307 295 23 65 88 0.2x 0.3x
Carrier
II (22 May
2015) 133 110 29 37 66 0.6x 0.6x
Onyx (30
Nov 2019) 66 60 - 60 60 1.0x 1.0x
Enviva (22
Jul 2020) 25 18 - 31 31 1.6x 1.7x
GoodLeap
(formerly
Loanpal)
(13 Jan 2021) 25 25 1 24 25 1.0x 1.0x
FreeWire
(20 Jan 2021) 10 10 - 10 10 1.0x 1.0x
Fieldwood
(17 Mar 2014) 89 88 8 - 8 0.1x 0.1x
Total Current
Portfolio
- Private
[3] $856 $784 $64 $395 $459 0.5x 0.6x
---------------- ------------- --------- -------------- ------------- ------------- ------------ --------------
Current Portfolio - Public
31 Mar 2021 30 Jun 2021
Gross
Realised Closing
Gross Gross Gross Capital & Price Closing
Investment Committed Invested Realised Unrealised Unrealised per Price
(Initial Investment Capital Capital Capital Value Value Gross Share Gross per
Date) ($mm) ($mm) ($mm)(1) ($mm)(2) ($mm) MOIC(2) [4] MOIC(2) Share(4)
Centennial
(6 Jul 2016) $268 $268 $172 $103 $275 0.9x $4.20 1.0x $6.78
CNOR (29
Aug 2014) 90 90 16 22 38 0.3x $1.27 0.4x $1.68
DCRN [5]
(3 Feb 2021) 1 1 - 4 4 1.0x n/a 7.3x $9.87
DCRC(5) (22
Mar 2021) 1 1 - 4 4 1.0x n/a 8.2x $10.37
---------------------- --------- --------- --------- ---------- ---------- ------- -------- -------- --------
Total Current
Portfolio
- Public(3
[6]) $359 $359 $188 $133 $321 0.7x 0.9x
---------------------- --------- --------- --------- ---------- ---------- ------- -------- -------- --------
Cash and Cash
Equivalents $53
---------------------- --------- --------- --------- ---------- ---------- ------- -------- -------- --------
Cash and Cash Equivalents
(pro forma for ILX III sale) $221
-------------------------------------------- --------- ---------- ---------- ------- -------- -------- --------
Total Liquidity $186
---------------------- --------- --------- --------- ---------- ---------- ------- -------- -------- --------
Total Liquidity (pro forma for
ILX III sale) $354
------------------------------------------------------- ---------- ---------- ------- -------- -------- --------
Total Market
Capitalisation $295
---------------------- --------- --------- --------- ---------- ---------- ------- -------- -------- --------
Realisations
Gross
Gross Gross Gross Realised
Investment Committed Invested Realised Unrealised Capital & 31 Mar 2021
(Initial Investment Capital Capital Capital Value Unrealised Gross 30 Jun 2021
Date) ($mm) ($mm) ($mm)(1) ($mm)(2) Value ($mm) MOIC(2) Gross MOIC(2)
Rock Oil
[7] (12 Mar
2014) 114 114 232 3 235 2.0x 2.1x
Three Rivers
III (7 Apr
2015) 94 94 204 - 204 2.2x 2.2x
Meritage
III [8] (17
Apr 2015) 40 40 86 - 86 2.1x 2.2x
RCO [9] (2
Feb 2015) 80 80 80 - 80 1.0x 1.0x
Sierra (24
Sept 2014) 18 18 38 - 38 2.1x 2.1x
Aleph (9
Jul 2019) 23 23 23 - 23 1.0x 1.0x
Ridgebury
(19 Feb 2019) 18 18 22 - 22 1.2x 1.2x
Castex 2014 52 52 14 - 14 0.2x 0.3x
(3 Sep 2014)
Total
Realisations(3) $440 $440 $699 $3 $702 1.8x 1.6x
---------------------- ------------ --------- ------------ ------------ ------------ ------------ -------------
Withdrawn
Commitments
and Impairments
[10] 262 262 1 - 1 0.0x 0.0x
---------------------- ------------ --------- ------------ ------------ ------------ ------------ -------------
Total Investments(3) $1,917 $1,846 $952 $531 $1,483 0.8x 0.8x
---------------------- ------------ --------- ------------ ------------ ------------ ------------ -------------
Total Investments & Cash and Cash Equivalents(3) $584
------------------------------------------------------------- ------------ ------------ ------------ -------------
Draft Unaudited Net Asset Value $582
------------------------------------------------------------- ------------ ------------ ------------ -------------
Quarterly Performance Commentary
Following a significantly challenged macro environment for
energy during 2020, the market has experienced a strong recovery
during the first half of the year as oil demand picked up globally
following the rollout of coronavirus vaccines. These positive
developments led to an increase in WTI of approximately 24 per
cent. during the second quarter of 2021. Additionally, the S&P
Oil and Gas Index and S&P Energy Select Index increased by
approximately 19 per cent. and 10 per cent. during the same period,
respectively. REL continues to remain focussed on managing
liquidity at the portfolio company level, while continuing to
execute on its modified investment programme, which includes a
pivot from E&P investments towards energy transition and
decarbonisation assets, including its recent investments in
GoodLeap (formerly Loanpal), FreeWire, Decarbonization Plus
Acquisition Corp II, and Decarbonization Plus Acquisition Corp III.
Further detail on REL's five largest positions, which account for
approximately 81 per cent. of the portfolio's gross unrealised
value, is set forth below:
ILX III
The Gross MOIC for ILX III increased from 0.9x to 1.0x during
the second quarter supported by the increased commodity price
environment. As of 30 June 2021, the company has participated in
nine commercial discoveries, of which five are currently producing
oil, and one is temporarily shut in. As of 30 June 2021, ILX III
has approximately 1.9 MMbbl hedged through October 2024 at a
weighted average price of $49/bbl. As of 30 June 2021, ILX III was
producing approximately 5,058 boepd.
In July 2021, REL sold its one-third ownership interest in ILX
III to an institutional investment fund managed by Ridgewood Energy
Corporation for net proceeds of $168 million. As of 30 June 2021,
pro forma for this sale, REL holds total cash of $221 million. With
this transaction, REL no longer owns any interest in ILX III (11)
.
Centennial Resource Development
The Gross MOIC for Centennial increased from 0.9x to 1.0x during
the second quarter. Centennial is running two rigs and one
completion crew as part of their "maintenance program", which is
expected to generate strong free cash flow at current strip prices.
As of 30 April 2021, Centennial has hedged approximately 33 per
cent. of forecasted oil production in 2H 2021 with WTI swaps at a
weighted average price of $45.74/bbl, Brent swaps at a weighted
average price of $48.38/bbl and WTI collars at a weighted average
price of $44.60/bbl / $53.28/bbl, and has hedged approximately 37
per cent. of forecasted 2H 2021 gas production at a weighted
average price of $2.92/mmbtu.
Onyx
The Gross MOIC for Onyx remained flat during the second quarter
at 1.0x. The company's Rotterdam plant recommenced operations in
April 2021 following an unplanned outage after damage to the
boiler. The plant returned to service for a couple of weeks before
being pre-emptively shut down due to pipe blockages. The unit
returned to service in July 2021. The management team continues to
work on several key value creation opportunities and improving
operational performance.
Carrier II
The Gross MOIC for Carrier II remained the same at 0.6x during
the second quarter. The company continues to operate prudently and
remains focused on continuing to pay down outstanding indebtedness
on the company's term loan. Carrier II has hedged approximately 54
per cent. of forecasted oil production in 2021 at a weighted
average price of $60.32 per barrel WTI. As of 30 June 2021, the
company was producing approximately 3,431 boepd.
Hammerhead
The Gross MOIC for Hammerhead increased during the second
quarter from 0.2x to 0.3x. While Hammerhead remains focussed on the
pay down of outstanding indebtedness, the company does have a
modest drilling program planned for 2021 and expects the majority
of drilling activity to occur during the second half of 2021.
Hammerhead has hedged approximately 75 per cent. of forecasted 2H
2021 oil production at a weighted average price of CAD$56 per
barrel and has hedged approximately 55 per cent. of forecasted 2021
gas production at a weighted average price of CAD$2.50 per
gigajoule. As of 30 June 2021, Hammerhead was producing
approximately 29,000 boepd.
Other Investments
In other developments, Fieldwood Energy continues to negotiate
its restructuring with lenders, after the company filed for Chapter
11 bankruptcy on 3 August 2020. REL does not expect any recovery to
its equity position, and as such, Fieldwood's remaining value has
been marked at zero.
The company's investments in GoodLeap (formerly Loanpal) and
FreeWire remain unchanged at 1.0x given the early nature of these
investments.
About Riverstone Energy Limited:
REL is a closed-ended investment company that invests
exclusively in the global energy industry across all sectors. REL
aims to capitalise on the opportunities presented by Riverstone's
energy investment platform. REL's ordinary shares are listed on the
London Stock Exchange, trading under the symbol RSE. REL has 12
active investments spanning decarbonisation, oil and gas, renewable
energy and power in the Continental U.S., Western Canada, Gulf of
Mexico and Europe.
For further details, see www.RiverstoneREL.com
Neither the contents of Riverstone Energy Limited's website nor
the contents of any website accessible from hyperlinks on the
websites (or any other website) is incorporated into, or forms part
of, this announcement.
Media Contacts
For Riverstone Energy Limited:
Jingcai Zhu
Natasha Fowlie
+44 20 3206 6300
Note:
The Investment Manager is charged with proposing the valuation
of the assets held by REL through the Partnership. The Partnership
has directed that securities and instruments be valued at their
fair value. REL's valuation policy follows IFRS and IPEV Valuation
Guidelines. The Investment Manager values each underlying
investment in accordance with the Riverstone valuation policy, the
IFRS accounting standards and IPEV Valuation Guidelines. The
Investment Manager has applied Riverstone's valuation policy
consistently quarter to quarter since inception. The value of REL's
portion of that investment is derived by multiplying its ownership
percentage by the value of the underlying investment. If there is
any divergence between the Riverstone valuation policy and REL's
valuation policy, the Partnership's proportion of the total holding
will follow REL's valuation policy. There were no valuation
adjustments recorded by REL as a result of differences in IFRS and
U.S. Generally Accepted Accounting Policies for the period ended 30
June 2021 or in any period to date. Valuations of REL's investments
through the Partnership are determined by the Investment Manager
and disclosed quarterly to investors, subject to Board
approval.
Riverstone values its investments using common industry
valuation techniques, including comparable public market valuation,
comparable merger and acquisition transaction valuation, and
discounted cash flow valuation.
For development-type investments, Riverstone also considers the
recognition of appreciation or depreciation of subsequent financing
rounds, if any. For those early stage privately held companies
where there are other indicators of a decline in the value of the
investment, Riverstone will value the investment accordingly even
in the absence of a subsequent financing round.
Riverstone reviews the valuations on a quarterly basis with the
assistance of the Riverstone Performance Review Team ("PRT") as
part of the valuation process. The PRT was formed to serve as a
single structure overseeing the existing Riverstone portfolio with
the goal of improving operational and financial performance.
The Board reviews and considers the valuations of the Company's
investments held through the Partnership.
[1] Gross realised capital is total gross proceeds realised on
invested capital. Of the $952 million of capital realised to date,
$656 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 $362 million of realised and unrealised losses to
date at 30 June 2021 are made whole with future gains, so the
earned carried interest of $0.8 million at 30 June 2021 has been
deferred and will expire in October 2023 if the aforementioned
losses are not made whole. 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 of Centennial Resource Development, Inc. (NASDAQ:CDEV
- 30 June 2021: $6.78 price per share) for Centennial investment,
as well as USD-equivalent closing price per share for Pipestone
Energy Corp. (TSX-V:PIPE - 30 June 2021: $1.68 price per share) for
CNOR investment.
[5] SPAC Sponsor investment for Decarbonization Plus Acquisition
Corporation II (NASDAQ:DCRN) and Decarbonization Plus Acquisition
Corporation III (NASDAQ:DCRC).
[6] This figure reflects REL's holding of $125 million of freely
marketable securities as at 30 June 2021. An REL RNS announcement
dated 22 July 2021 incorrectly referred to a figure of $86 million
of freely marketable securities as of 30 June 2021. This was based
on a preceding date's closing share price and should have referred
to as $125 million using the closing share price as of 30 June
2021.
[7] The unrealised value of the Rock Oil investment consists of
rights to mineral acres.
[8] Midstream investment.
[9] Credit investment.
[10] Withdrawn commitments consist of Origo ($9 million) and
CanEra III ($1 million), and impairments consist of Liberty II
($142 million), Eagle II ($62 million) and Castex 2005 ($48
million).
(11) REL will continue to own 43,333 shares of Talos Energy Inc
stock (NYSE:TALO) in connection with its former investment in ILX
III.
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END
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