TIDMRSE
RNS Number : 9602I
Riverstone Energy Limited
18 August 2021
Interim Report and Unaudited Interim Condensed Riverstone
Financial Statements Energy
for the six months ended 30 June 2021 Limited
(LSE: RSE)
A shift in focus towards the energy transition
Financial and Operational Highlights(1)
Commitments during the Commitments increased by a total of $ 66
period ended 30 June 2021 million:
(i) $ 25 million in GoodLeap, LLC (formerly
Loanpal, LLC)
(ii) $2 0.5 million in Decarbonization
Plus Acquisition Corp. III
(iii) $ 10 million in FreeWire Technologies,
Inc.
(iv) $10 million in Decarbonization Plus
Acquisition Corp.
(v) $ 0.6 million in Decarbonization Plus
Acquisition Corp. II
Remaining potential unfunded $43 million(2)(3) :
commitments at 30 June (i) $20 million in Decarbonization Plus
2021 Acquisition Corp. III
(ii) $10 million in Decarbonization Plus
Acquisition Corp.
(iii) $ 7 million in Enviva Holdings, LP
(iv) $6 million in Onyx Strategic Investment
Management I BV
Investments during the Invested a total of $47 million(4) :
period ended 30 June 2021 (i) $25 million in GoodLeap, LLC (formerly
Loanpal, LLC)
(ii) $10 million in FreeWire Technologies,
Inc.
(iii) $7 million in Onyx Power
(iv) $4 million in ILX Holdings III, LLC
(v) $0.6 million in Decarbonization Plus
Acquisition Corp. II
(vi) $0.5 million in Decarbonization Plus
Acquisition Corp. III
Realisations during the Realised a net total of $7.6 million(4)
period ended 30 June 2021 :
(i) $6.1 million in Castex Energy 2014,
LLC
(ii) $2.3 million in Meritage Midstream
Services III, L.P.
(iii) ($1.7 million) in Sierra Oil & Gas
Holdings, L.P.
(iv) $0.9 million in aggregate from GoodLeap,
LLC (formerly Loanpal, LLC) and Ridgebury
H3 LLC
Key Financials
30 June 2021 31 December 30 June 2020
2020
-------------------------- -------------------- ---------------- --------------------
NAV as at $ 582 million $390 million $ 379 million
/ / /
GBP420 million GBP286 million GBP 308 million
(4) (4) (4)
NAV per Share as at $ 9.46 / GBP $6.20 / GBP4.55 $ 5.48 / GBP
6.83 (4) (4) 4.45 (4)
Market capitalisation $ 295 million $255 million $ 319 million
at / / /
GBP 213 million(4) GBP187 million GBP 259 million(4)
(4)
Cash and cash equivalents $53 million $99 million $164 million
at (5) / (5) / (5) /
GBP38 million GBP73 million GBP133 million
(4) (4) (4)
Marketable securities $125 million $31 million $17 million
at (6) / (6) / (6) /
GBP90 million GBP23 million GBP14 million
(4) (4) (4)
Share price at $ 4.79 / GBP $4.05 / GBP2.97 $ 4.62 / GBP
3.46 (4) (4) 3.75 (4)
30 June 2021 30 June 2020
---------------------------------- ---------------- -------------------
Total comprehensive income/(loss) $198.13 million ($ 355.18) million
for the six months ended
Basic and diluted Earnings/(Loss) 316.29 cents (457.59) cents
per Share for the six months
ended
(1) Amounts shown reflect investment-related activity at the
Partnership, not the Company
(2) Amounts may vary due to rounding
(3) Excludes the remaining unfunded commitments for Carrier II,
Hammerhead and Fieldwood of $37 million, in aggregate, which are
not expected to be funded, as well as the $21 million remaining
unfunded commitment to ILX III, which was relieved through the sale
transaction post-half year end. The expected funding of the
remaining unfunded commitments at 30 June 2021 are $30 million for
the remainder of 2021, nil in 2022, and the residual amounts to be
funded in 2023 and later years, if needed
(4) Based on exchange rate of 1.386 $/GBP at 30 June 2021 (1.364
$/GBP at 31 December 2020, 1.231 $/GBP at 30 June 2020 and 1.606
$/GBP at IPO on 29 October 2013)
(5) At 30 June 2021, 31 December 2020 and 30 June 2020,
respectively, amounts are comprised of $5.7 million, $8.8 million
and $6.4 million held at the Company, $38.8 million, $90.3 million
and $135.5 million held at the Partnership and $8.2 million, $nil
and $21.7 million held at REL US Corp
(6) At 30 June 2021, unrestricted marketable securities held by
the Partnership consist of publicly-traded shares of Centennial,
Pipestone and Talos for which the aggregate fair value was $125
million. (31 December 2020: Centennial, Pipestone and Talos and 30
June 2020: Centennial, Pipestone and Talos)
Chairman's Statement
The recovery in commodity prices that we saw in the first
quarter has continued into the second quarter. Increased economic
activity and rising oil demand helped push the WTI price up in the
six months ending 30 June 2021 to an average $62.21 per barrel, an
increase of 70 per cent versus the same period in 2020. While
demand remains below pre-pandemic levels, a disciplined approach
from OPEC+ in unwinding the cuts made at the height of the crisis
have helped manage a supply overhang and support prices.
However, the pace of the global recovery from the pandemic
remains uneven. While we have seen great strides in the rollout of
vaccinations across North America and portions of Europe, other
regions are still working hard to catch up. At the same time, new
variants threaten to slow or reverse the recovery. Attempting to
predict how the next few months will play out, let alone the year
ahead, is challenging.
Continued uncertainty means that, despite a recovery in global
commodity prices, REL has adopted a cautious approach. Our focus
remains on cost control and maintaining our liquidity, providing
REL with the resilience to see through this period of global
turbulence and volatility. But it also positions our portfolio to
take advantage of the recovery and to invest in the energy
transition as we seek to diversify away from assets that are
sensitive to commodity price volatility.
Growing momentum on climate action
It has been an exciting six months in terms of action on climate
change. While momentum has been building at the government as well
as corporate level globally over the past few years, what we have
seen in the first half of 2021 has accelerated the switch from
rhetoric to action. The build-up to COP 26 in Glasgow later this
year has no doubt been a catalyst, but so too has the recovery from
the global pandemic and commitments to build back better.
President Biden's Leaders' Summit on Climate in April saw over
40 heads of state come together and announce a series of new
climate commitments, including China's decision to begin phasing
out coal use over the 2026-2030 period. Other major economies
including the US, Japan, EU, UK and Australia announced new
mid-term CO2 reduction targets, accelerating the rate of change for
investors and corporates. The IEA also launched a new "Net Zero by
2050" scenario, highlighting the need for urgent action if the
world is serious about tackling climate change, while the EU
announced its "Fit for 55" package in early July.
Our view is that the transition to a low carbon economy, while
undoubtedly challenging, also provides opportunities. We believe
that decarbonisation will need $6 trillion a year of investment by
2030, with $3 trillion needed in the core focus areas of grid
flexibility and resilience (e.g., battery storage), electrification
of transport (e.g., EVs), next generation liquid fuels (e.g.,
hydrogen), next horizon resource use (e.g., smart buildings), and
agriculture and natural resource plays (e.g., indoor agriculture).
$4 trillion of this $6 trillion annual investment will be in
infrastructure. Taken together this represents an enormous capital
requirement which will have to be met from both public and private
companies, as well as investors.
Riverstone is uniquely positioned to benefit from this
opportunity. Our expertise and experience in backing infrastructure
and renewables stretches back more than a decade and, combined with
our global outlook, means we are well placed to invest at an early
stage in the companies that will deliver the transition while
creating value for our shareholders.
New investments position REL to benefit from the energy
transition
Against this context, our strategy to reposition REL away from
commodity price exposed oil and gas investments and towards the
opportunities offered by the energy transition strategy progressed
well in the period. REL committed to six new investments during the
half year ended 30 June 2021 in this area, which we believe will
support long-term value creation for Shareholders while having a
positive impact on climate change. During the half year ended 30
June 2021, the Company invested $36 million in four new energy
transition investments, bringing the total invested in this area to
$54 million, which, in aggregate, were valued at $74 million, or
1.4x Gross MOIC, at 30 June 2021. In accordance with the Company's
investment policy, as the Private Riverstone Funds did not
participate pro rata in these investments, except for GoodLeap
(formerly Loanpal), the Investment Manager consulted and obtained
approval from the Board for each of these new, energy transition
investments.
In January, REL invested $25 million in GoodLeap (formerly
Loanpal), a technology-enabled sustainable home improvement loan
originator, and the leading point-of-sale platform for sustainable
home solutions in America. Also in January, REL invested $10
million in FreeWire Technologies. Based in the San Francisco Bay
Area, FreeWire is the leading provider of battery-integrated DC
fast chargers and plays a significant role in expediting DC fast
charger deployments.
In February, REL committed to purchase $10 million of DCRB
common stock in a PIPE transaction. The purchase was concurrent
with DCRB's merger with Hyzon Motors Inc. (NASDAQ: HYZN), the
industry-leading global supplier of zero-emissions hydrogen fuel
cell powered commercial vehicles. The transaction closed on 16 July
2021.
Again in February, REL invested $0.6 million in the Founder
Shares and Warrants of Decarbonization 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.
Similarly, in March, REL invested $0.5 million in the Founder
Shares and Warrants of Decarbonization Plus Acquisition Corp. III
(NASDAQ: DCRC). In June, DCRC announced its combination with Solid
Power, a Colorado based producer of solid-state batteries for
electric vehicles. Concurrent with the merger, REL committed to
purchase $20 million of DCRC common stock in a PIPE transaction.
The merger is expected to close in the second half of 2021.
Finally, subsequent to half year end, we announced REL was
exiting from ILX III, in an all cash transaction with Ridgewood
Energy Corporation. Net proceeds from the sale are $168 million, in
addition to prior realised distributions of $4 million,
representing approximately a 1.0x Gross MOIC. ILX III is focused on
acquiring non-operated working interests in oil focused exploration
projects in the Gulf of Mexico. The sale further shifts our
portfolio away from E&P and provides additional funds to
accelerate our investments in the energy transition.
Focus on shareholder returns
In March, we completed a GBP50 million share buyback programme,
during which a total of 17,214,197 ordinary shares were bought back
at an average price of approximately GBP2.90 per ordinary
share.
The Board and Investment Manager continue to believe in the
attractiveness of buybacks to return excess cash to Shareholders,
and a further GBP20 million programme was announced in May. Between
12 May 2021 and 30 June 2021, a total of 1,185,808 ordinary shares
were bought back at an approximate cost of GBP4 million ($5.6
million) at an average share price of approximately GBP3.36
($4.72). This leaves GBP16 million remaining and we expect the
buyback programme to restart after the publication of the Interim
Report.
The Company's fully independent Board is supportive of the
continuation of the Investment Manager's modified investment
strategy for the immediate future and will continue to monitor the
Investment Manager's success in repositioning the Company's
existing investment policy through the modified investment
strategy. At the EGM last year, the Board committed to review the
Investment Manager's performance and, before 31 December 2022,
decide whether or not it would be in the best interests of all
Shareholders to request an EGM to vote on a run-off of its
portfolio.
Valuation and Performance
REL ended the period to 30 June 2021 with a NAV of $9.46
(GBP6.83) per share, a 73 per cent and 53 per cent increase in USD
and GBP, respectively, compared to the 30 June 2020 NAV of $5.48
(GBP4.45) per share. REL ended the period with an aggregate gross
cash balance of $52.7 million (GBP38.1 million) across the Company,
Partnership and REL US Corp. Reflecting the improved commodity
price environment and the extension of the share buyback programme,
shares traded up 16 per cent during the first half of 2021.
Recovering demand for oil and gas and the corresponding higher
commodity price environment have led to an improvement in REL's
portfolio company valuations, albeit that the E&P portfolio
remains sensitive to further price volatility.
Centennial, ILX III, Carrier II, Hammerhead Resources and CNOR
all recorded increases in value during the first half of 2021. The
Gross MOIC for both Centennial and ILX III increased to 1.0x from
0.7x and 0.8x, respectively, by 30 June 2021. The Gross MOIC for
Carrier II increased from 0.4x to 0.6x by 30 June 2021.
Hammerhead's Gross MOIC rose from 0.2x to 0.3x in the period and
CNOR went from 0.2x to 0.4x Gross MOIC. The Gross MOIC for Enviva
increased from 1.6x to 1.7x at 30 June 2021, reflecting the recent
dropdowns, strong operational performance, and EVA unit price
performance. The valuation for REL's power investment, Onyx,
remained flat.
The valuation of REL's investments is conducted quarterly by the
Investment Manager and is subject to approval by the independent
Directors. In addition, the valuations of REL's investments are
audited by Ernst & Young LLP in connection with the annual
audit of the Company's Financial Statements. The Company's
valuation policy is compliant with both IFRS and IPEV Valuation
Guidelines and has been applied consistently from period to period
since inception. As the Company's investments are generally not
publicly quoted, valuations require meaningful judgement to
establish a range of values. The ultimate value at which an
investment is realised may differ from its most recent valuation
and the difference may be significant. Further information on the
Company's valuation policy can be found in the Investment Manager's
Report.
During the first half of 2021, through the Partnership, REL
received approximately $8 million in gross proceeds from its
portfolio, principally as a result of the sale of the Talos shares
received from the prior sale of the Castex 2014 investment. In
addition, subsequent to half year end, REL received net proceeds of
$168 million from the sale of ILX III.
REL invested a total of $47 million during the period, $25
million of which was used for the GoodLeap (formerly Loanpal)
investment, while $10 million and $7 million were invested in
FreeWire and Onyx, respectively. As of 30 June 2021, the Company
had an aggregate gross cash balance of $52.7 million, or
approximately $221 million pro forma for the ILX III exit.
The Management Engagement Committee continues to have
discussions with the Investment Manager regarding additional
changes to the Investment Management Agreement. Following revised
terms announced on 3 January 2020 (but effective 30 June 2019),
approximately $5.9 million in Performance Fees that would have been
due under the prior agreement were not accrued, since REL did not
meet the appropriate Cost Benchmark at year end. A Performance
Allocation will only be accrued for payment upon the realisation of
an investment if the proceeds from that investment exceed an amount
equal to its acquisition cost plus an 8 per cent. annual cumulative
hurdle rate calculated from the date of investment to the date of
realisation. Other changes have been made to the Investment
Management Agreement which will stop payments of Performance Fees
until the $362 million of realised and unrealised losses to date at
30 June 2021 are made whole with future gains. If, at any time
during the next three years from the respective accrual date, the
Cost Benchmark is satisfied for four continuous quarters, the
relevant Performance Allocation will then become distributable
without interest. Any accrued but undistributed Performance
Allocation that has been deferred due to the portfolio level Cost
Benchmark test will expire after 36 months.
During the half year period to 30 June 2021, REL, through the
Partnership, incurred Management Fees of $3.9 million (30 June
2020: $3.0 million). This increase was due to the improvement in
the NAV over that period. Of the $3.9 million, $2.2 million
remained outstanding at the period end.
There is no question that the past eighteen months have been
some of the most challenging and volatile the global economy has
faced for decades. Through this period our focus has been on
maintaining resilience and improving our portfolio companies. While
we have exercised caution, we have also accelerated our
diversification into decarbonisation, renewables and low carbon
energy. This shift in focus, progress in executing against our
strategy and the steady increase in commodity prices over the last
six months means we are well positioned for the remainder of 2021.
REL's aggregate cash balance ($178 million), including net proceeds
from the ILX III sale ($168 million), and marketable securities at
16 August 2021 ($86 million), as well as the expected reduction in
several potential unfunded commitments, provide the Company with
the liquidity to fund new decarbonisation investments, as well as
continuing share repurchases while valuations are below intrinsic
value.
Richard Hayden
Chairman
17 August 2021
Investment Manager's Report
Early signs of recovery
After a very challenging economic environment in 2020 there have
been signs of recovery in the first half of 2021. Strong government
support throughout the pandemic has so far limited the economic
impact of the virus. Economic activity has been stimulated
following the rollout of vaccination programmes, which have been
moving at different speeds in different regions, and the gradual
easing of lockdown restrictions in many countries. Pent up demand
and the easing of travel restrictions have also helped drive an
increase in economic activity and growth, as well as energy
demand.
This has fed through to oil prices with a recovery in WTI of
approximately 24 per cent. during Q1, accelerating to nearer 52 per
cent. during 1H 2021. WTI has now recovered towards levels
consistent with the upper end of the range it has traded within
over the last few years. Forward prices, though, are indicating
headwinds remain for oil prices as current indications anticipate a
decline into the second half of 2021.
We have previously re-positioned our legacy commodity-linked
portfolio in order to reduce costs, preserve liquidity and
reposition for oil prices around $45-60+. This puts the current
price of oil closer to the levels our portfolio is positioned for
but we continue to work closely with our portfolio companies to
help them through a difficult environment. It is too early to say
whether the oil rally will be sustained but it is encouraging to
see the way the oil price has recovered, despite the ongoing
challenges and headwinds to commodity-based stories that persist in
terms of market valuations, asset demand and wider societal
perception.
REL remains focused on managing liquidity at the portfolio
company level and the recent sale of our stake in ILX III
(announced after the period end on 22 July 2021), provides us with
an additional $168 million in liquidity and additional capital to
invest. This is important as we look to transition the portfolio
away over time from E&P investments towards energy transition
and decarbonisation assets. This is a secular, global and growing
trend which is accelerating in the scale and range of investment
opportunity. We see this continuing to be the case and this is why
we are confident in the investment opportunity and returns that
will be available as a result of our transition.
Riverstone more broadly has been active in the decarbonisation
and renewables space for over 10 years, amounting to approximately
$4B of invested capital. We have identified five proven and
investable areas that we want to invest in to capture the
opportunity presented by decarbonisation which include: grid
flexibility and resilience (e.g., battery storage), electrification
of transport (e.g., EVs), next generation liquid fuels (e.g.,
hydrogen), next horizon resource use (e.g., smart buildings), and
agriculture and natural resource plays (e.g., indoor agriculture).
Together we expect these will constitute a $3tn opportunity by
2030, up from $1.2tn in 2020, a circa two and a half fold increase
over that timeframe. This is the future of REL's portfolio.
We have made good progress in the first half of 2021 in
investing behind these themes and have deployed over $75m in five
different investments during that time period including GoodLeap
(formerly Loanpal), FreeWire, DCRN and DCRC. Additionally,
subsequent to half year end, we also closed on our PIPE in DCRB
concurrent with its merger with Hyzon Motors Inc.
Investment Strategy
Historically, the Investment Manager's objective was to achieve
superior risk adjusted after tax returns by making privately
negotiated investments in the E&P, midstream, services and
power (including renewable energy) sectors, which are a significant
component of virtually all major economies. Long-term market
drivers of economic expansion, population growth, development of
markets, deregulation, and privatisation allied to near-term
commodity price volatility are expected to continue to create
opportunities globally for Riverstone.
However, the Investment Manager continues to reposition the
Company's focus away from commodity price sensitive oil and gas
investments in the exploration and production sector and to
increase its focus on renewable, decarbonisation and selective
infrastructure investments as part of the pivot in the energy
industry, in each case with strong ESG processes in place. This
includes the Company's $25 million commitment announced in July
2020 to participate in the recapitalisation of Enviva Holdings, LP,
and the Company's $25 million and $10 million commitments announced
in January 2021 to GoodLeap, LLC (formerly Loanpal, LLC) and
FreeWire Technologies, Inc., respectively. Further, in February
2021, REL announced a $10 million commitment to DCRB, via a private
placement, and a $0.6 million commitment to DCRN, via an initial
public offering . Similarly, in March 2021, REL announced a $0.5
million commitment to DCRC, via an initial public offering, and a
further $20 million commitment, via a private placement, in June
2021. The Company believes that each of these commitments provides
an opportunity to create shareholder value while supporting REL's
long-term focus on ESG and energy transition investments. Going
forward, REL expects to continue to increase its exposure in areas
that support decarbonisation across the entire investment spectrum,
from traditional power generation to technology-enabled solutions
that reduce the impacts of global climate change.
The Company's fully independent Board is supportive of the
continuation of the Investment Manager's modified investment
strategy for the immediate future and will continue to monitor the
Investment Manager's success in repositioning the Company's
existing investment policy through the modified investment
strategy. At the EGM last year, the Board committed to review the
Investment Manager's performance and, before 31 December 2022,
decide whether or not it would be in the best interests of all
shareholders to request an EGM to vote on a run-off of its
portfolio.
Key Drivers:
-- Capital constraints among companies with high levels of
leverage and/or limited access to public markets;
-- Industry distress and pressures to rationalise assets;
-- Increases in ability to extract hydrocarbons from oil and gas-rich shale formations;
-- Historical under-investment in energy infrastructure; and
-- Rapid growth in electricity consumption and energy transition.
The Investment Manager, through its affiliates, has a strong
track record of building businesses with management teams. The
Company aims to capitalise on the opportunities presented by
Riverstone's pipeline of investments, as well as through its
modified investment strategy implemented in 2019. This can be seen
through the Partnership's investments in Ridgebury H3 in 2019,
Enviva in 2020 and DCRB, DCRN & DCRC SPAC investments in 2021
as the Private Riverstone Funds did not participate .
The Investment Manager, having made over 200 investments
globally in the energy sector since being founded in 2000, utilises
its extensive industry expertise and relationships to thoroughly
evaluate investment opportunities and uses its significant
experience in conducting due diligence, valuing assets and all
other aspects of deal execution, including financial and legal
structuring, accounting and compensation design. The Investment
Manager also draws upon its extensive network of relationships with
industry-focussed professional advisory firms to assist with due
diligence in other areas such as accounting, tax, legal, employee
benefits, environmental, engineering and insurance.
Current Portfolio - Private
Investment Gross Invested Gross Gross Gross 30 Jun 2021 31 Dec 2020
(Initial Investment Committed Capital Realised Unrealised Realised Gross Gross
Date) Capital ($mm) Capital Value Capital & MOIC(2) MOIC(2)
($mm) ($mm)(1) ($mm)(2) Unrealised
Value ($mm)
ILX III
(8 Oct 2015) $200 $179 $4 $168 $172 1.0x 0.8x
Hammerhead
Resources
(27 Mar 2014) 307 295 23 65 88 0.3x 0.2x
Carrier II
(22 May 2015) 133 110 29 37 66 0.6x 0.4x
Onyx
(30 Nov 2019) 66 60 - 60 60 1.0x 1.0x
Enviva
(22 Jul 2020) 25 18 - 31 31 1.7x 1.6x
GoodLeap
(formerly
Loanpal) 25 25 1 24 25 1.0x n/a
(13 Jan 2021)
FreeWire
(20 Jan 2021) 10 10 - 10 10 1.0x n/a
Fieldwood
(17 Mar 2014) 89 88 8 - 8 0.1x 0.1x
Total Current
Portfolio
-Private (3) $856 $784 $64 $395 $459 0.6x 0.4x
-------------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Current Portfolio - Public
30 Jun 2021 31 Dec
2020
Investment Gross Invested Gross Gross Gross Gross Closing Gross Closing
(Initial Investment Committed Capital Realised Unrealised Realised MOIC(2) Price MOIC(2) Price
Date) Capital ($mm) Capital Value Capital & per per
($mm) ($mm)(1) ($mm)(2) Unrealised Share(4) Share(4)
Value
($mm)
Centennial
(6 Jul 2016) $268 $ 268 $172 $103 $275 1.0x $6.78 0.7x $1.50
CNOR
(29 Aug 2014) 90 90 16 22 38 0.4x $1.86 0.2x $0.53
DCRN (5) 1 1 - 4 4 7.3x $9.87 n/a n/a
(3 Feb 2021)
DCRC (5) 1 1 - 4 4 8.2x $10.37 n/a n/a
(22 Mar 2021)
Total Current
Portfolio-Public
(3) $359 $359 $188 $133 $321 0.9x 0.6x
-------------------- --------- -------- -------- ---------- ---------- ------- -------- ------- --------
Cash and Cash
Equivalents
(10) $53
-------------------- --------- -------- -------- ---------- ---------- ------- -------- ------- --------
Total Liquidity $186
-------------------- --------- -------- -------- ---------- ---------- ------- -------- ------- --------
Total Market
Capitalisation $295
-------------------- --------- -------- -------- ---------- ---------- ------- -------- ------- --------
Realisations
Investment Gross Invested Gross Gross Gross 30 Jun 2021 31 Dec 2020
(Initial Investment Committed Capital Realised Unrealised Realised Gross MOIC(2) Gross MOIC(2)
Date) Capital ($mm) Capital Value Capital &
($mm) ($mm)(1) ($mm)(2) Unrealised
Value ($mm)
Rock Oil (6) $114 $114 $232 $3 $235 2.1x 2.0x
(12 Mar 2014)
Three Rivers III
(7 Apr 2015) 94 94 204 - 204 2.2x 2.2x
Meritage III (7) 40 40 86 - 86 2.2x 2.1x
(17 Apr 2015)
RCO (8) 80 80 80 - 80 1.0x 1.0x
(2 Feb 2015)
Sierra
(24 Sept 2014) 18 18 38 - 38 2.1x 2.1x
Aleph Midstream
(9 Jul 2019) 23 23 23 - 23 1.0x 1.0x
Ridgebury H3 18 18 22 - 22 1.2x 1.2x
(19 Feb 2019)
Castex 2014 52 52 14 - 14 0.3x 0.2x
(3 Sep 2014)
-------------------- ------------- -------- --------- ------------- ------------- -------------- --------------
Total Realisations
(3) $440 $440 $699 $3 $702 1.6x 1.6x
-------------------- ------------- -------- --------- ------------- ------------- -------------- --------------
Withdrawn
Commitments
and Impairments
(9) 262 262 1 - 1 0.0x 0.0x
-------------------- ------------- -------- --------- ------------- ------------- -------------- --------------
Total Investments
(3)(11) $1,917 $1,846 $952 $531 $1,483 0.8x 0.7x
-------------------- ------------- -------- --------- ------------- ------------- -------------- --------------
Total Investments
& Cash and Cash
Equivalents (3) $584
-------------------- ------------- -------- --------- ------------- ------------- -------------- --------------
( [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 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 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: $1.86 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) (see note 11 below for further
information regarding the SPAC PIPE commitment for DCRC)
(6) The unrealised value of the Rock Oil investment consists of
rights to mineral acres
(7) Midstream investment
(8) Credit investment
(9) Withdrawn commitments consist of Origo ($9 million) and
CanEra III ($1 million), and impairments consist of Liberty II
($142 million), Eagle II ($62 million) and Castex 2005 ($48
million)
(10) This figure is comprised of $5.7 million held at the
Company, $38.8 million held at the Partnership and $8.2 million
held at REL US Corp
(11) As the funding of the DCRB and DCRC PIPE commitments of $10
million and $20 million, respectively, will occur in conjunction
with the respective business combination during 2021, they have not
been included in this table of the Company's investments at 30 Jun
2021
Investment Portfolio Summary
As of 30 June 2021, REL's portfolio comprised twelve active
investments including six E&P investments, five decarbonisation
investments and one power investment.
Centennial
As of 30 June 2021 , REL, through the Partnership, has invested
in full its $268 million commitment to Centennial. Centennial is an
E&P company focussed on the acquisition and development of oil
and liquids-rich natural gas resources in the Permian Delaware
Basin, West Texas. The company has rapidly aggregated an 81,657 net
acre position in its targeted basin.
Centennial is currently running two rigs and one completion crew
as part of their "maintenance program". In the first quarter of
2021, Centennial issued an exchangeable note to redeem the 8.00%
second lien senior secured notes which extended Centennial's debt
maturity profile from notes due 2025 to 2028, strengthened
liquidity, and reduced annual interest expense. Centennial has
hedged approximately 33% of forecasted 2H 2021 oil production with
WTI swaps at a weighted average price of $45.74, 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.
REL, through the Partnership, owns approximately 15.2 million
shares which are publicly traded (NASDAQ:CDEV), at a weighted
average purchase price of $11.21.
As of 30 June 2021 , REL's interest in Centennial, through the
Partnership, was valued at 1.0x Gross MOIC(1) or $275 million
(Realised: $172 million, Unrealised: $103 million) . The Gross MOIC
(1) , which reflects the mark-to-market value of REL's
shareholding, increased over the period.
ILX III
As of 30 June 2021, REL, through the Partnership, has invested
approximately $179 million of its $200 million commitment to ILX
III. ILX III, based in Houston, Texas, is a joint-venture with
Ridgewood Energy Corporation and pursues a strategy of acquiring
non-operated working interests in oil-focussed exploration projects
in the Gulf of Mexico. To date, the company has participated in
nine commercial discoveries, of which five are currently producing
oil, and one is temporarily shut-in.
In 2019, ILX III divested its interest in ten undrilled
prospects through transactions with Ridgewood Energy Corporation
and Murphy Oil Corporation (NYSE: MUR). Additionally, in February,
ILX III closed the sale of its 18 remaining undrilled exploration
leases to Talos for cash proceeds and Talos shares.
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. With this
transaction, REL no longer owns any interest in ILX III, but will
continue to own 43,333 shares of Talos Energy Inc stock (NYSE:TALO)
in connection with its former investment in ILX III.
As of 30 June 2021, REL's interest in ILX III, through the
Partnership, was valued at 1.0x Gross MOIC(1) or $172 million
(Realised: $4 million, Unrealised: $168 million). The Gross MOIC(1)
increased over the period.
Carrier II
As of 30 June 2021, REL, through the Partnership, has invested
$110 million of its $133 million commitment to Carrier II . Carrier
II is focussed on the acquisition and exploitation of upstream oil
and gas assets by partnering with select operators that are
developing both unconventional and conventional reservoirs in North
America. Shortly after its establishment in May 2015, Carrier II
entered into a joint venture agreement with a highly experienced
operator group made up of Henry Resources, LLC and PT Petroleum,
LLC, targeting 19,131 net acres for development in the southern
Midland Basin (subsequently increased to 20,260 net acres). In
addition, through three separate acquisitions, the company has
acquired 3,892 net acres in Karnes County in the Eagle Ford basin,
targeting the Sugarloaf Project and the Chisholm Project, both
operated by Marathon Oil Corp.
During the fourth quarter of 2019, Carrier successfully
completed the sale of its Southern Midland Basin assets and brought
six additional Eagle Ford wells online, resulting in a total of 34
new wells in 2019. As at 30 June 2021, Carrier II was producing
approximately 3,431 boepd and the company had hedged approximately
75 per cent. of forecasted remaining 2021 PDP oil production at a
weighted average price of $60.32 per barrel.
Since inception, Carrier II has distributed $29 million through
dividends to REL, through the Partnership, representing
approximately 26 per cent. of REL's invested capital. As of 30 June
2021, REL's interest in Carrier II, through the Partnership, was
valued at 0.6x Gross MOIC(1) or $66 million (Realised: $29 million,
Unrealised: $37 million) . The Gross MOIC (1) increased over the
period.
Onyx Power
As of 30 June 2021, 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, very low
emissions profiles and the potential use of sustainable
biomass.
Since early 2020, Rotterdam had been in an unplanned outage
after damage was caused to the boiler. As a result of
complications, the prior Rotterdam outage lasted until April. The
plant returned to service for a couple of weeks before management
preemptively shut down the plant due to pipe blockages and is
looking to restart as soon as possible. Insurance is covering 60%
of the further repairs. Since December 2019, margins for coal
generation have weakened significantly due to lower gas prices
(record warm weather, high gas inventories, ample LNG flows into
Europe), increased carbon prices (EU regulatory developments,
speculative trading from Investment Funds), and impact of
Coronavirus on demand. However, spreads have started to improve
into 2H 2021, with a sharp rise in gas prices. While the company
faces these near-term market headwinds, the newly installed
management team has been working on several key value creation
opportunities related to regulatory developments, potential
partnerships, and working capital optimisation.
As of 30 June 2021, REL's interest in Onyx, through the
Partnership, was valued at 1.0x Gross MOIC(1) or $60 million.
Hammerhead
As of 30 June 2021, REL, through the Partnership, has invested
$295 million of its $307 million commitment to Hammerhead.
Hammerhead is a private E&P company focussed 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 2,000 net drilling locations
across approximately 145,000 Montney net acres. Since Riverstone's
initial investment, Hammerhead has increased production almost
ten-fold and has significantly grown reserves to 309 mmboe. As at
30 June 2021, the company was currently producing approximately
29,000 boepd.
The company continues to focus on paying down debt, the company
has elected to reduce capital expenditures, curbing production
growth for the remainder of 2021. As at 30 June 2021, Hammerhead
had hedged approximately 78 per cent. of forecasted 2021 oil
production at a weighted average price of CAD$56/bbl.
As of 30 June 2021, REL's interest in Hammerhead, through the
Partnership, was valued at 0.3x Gross MOIC(1) or $88 million
(Realised: $23 million, Unrealised: $65 million). The Gross MOIC(1)
increased over the period.
CNOR
As of 30 June 2021, REL, through the Partnership, has invested
in full its $90 million commitment to CNOR. CNOR is a Calgary-based
oil and gas company focussed on the Western Canadian Sedimentary
Basin. The company invested in a joint venture with Tourmaline Oil
Corp. targeting the Peace River High area (126,000 net acres),
which it sold in 3Q19 for C$175 million. Earlier in 2019, CNOR
closed on a strategic combination with publicly-traded Blackbird
Energy to consolidate its 25,000 net acre Pipestone Montney
position with that of Blackbird's offsetting 73,000 acres. The pro
forma company is named Pipestone Energy Corporation and trades
under TSX-V: PIPE. Through 2019 and 2020, Pipestone brought
incremental production online, following the completion of required
infrastructure. During the first quarter of 2021, the company
averaged production of 21,697 boepd.
As of 30 June 2021, REL's interest in CNOR, through the
Partnership, was valued at 0.4x Gross MOIC(1) or $20 million
(Realised: $16 million, Unrealised: $22 million). The Gross MOIC(1)
increased over the period.
Enviva
As of 30 June 2021, REL, through the Partnership, has invested
$18 million of its $25 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.
In July 2021, Enviva closed the dropdown of the Lucedale plant
and Pascagoula port, increasing the scale and diversification of
Enviva Partners. The company continues with engineering and
development on the Epes plant, progressing its organic growth
projects, and expanding its sales pipeline in Europe and Asia. The
company's revenue backlog for the second quarter of 2021 was $20.0
billion and the weighted average remaining term was 14.2 years.
As of 30 June 2021, REL's interest in Enviva, through the
Partnership, was valued at 1.7x Gross MOIC(1) or $30 million
(Realised: $0 million, Unrealised: $30 million). The Gross MOIC(1)
increased over the period.
GoodLeap (formerly Loanpal)
As of 30 June 2021, REL, through the Partnership, has invested
$25 million of its $25 million commitment to GoodLeap. GoodLeap 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.
In June 2021, Loanpal formally rebranded as GoodLeap, signifying
the company's growth into a broader sustainable solutions
marketplace. This followed GoodLeap's entrance into the broader
market for sustainable home upgrades in early 2021.
As of 30 June 2021, REL's interest in GoodLeap, through the
Partnership, was valued at 1.0x Gross MOIC or $25 million.
FreeWire Technologies
As of 30 June 2021, REL, through the Partnership, has fully
invested its $10 million commitment to FreeWire Technologies, Inc.
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.
Their primary hardware product is the Boost Charger, a unitised,
turnkey DCFC that offers charging speeds of up to 120kW with only a
20kW grid connection by using a 160kWh battery. These
specifications support 15-24 fast charging sessions per day. The
current software platform, AMP Connect, allows for charger
management and integration with existing customer platform with
broader services in development. In December 2020, bp pulse, one of
the UK's leading providers of electric vehicle (EV) charging
infrastructure, signed an exclusive MOU for bp pulse to deploy
FreeWire's Boost Charger(TM) in its operations across the UK. The
agreement is valued at more than $50 million.
As of 30 June 2021, REL's interest in FreeWire, through the
Partnership, was valued at 1.0x Gross MOIC(1) or $10 million
(Realised: $0 million, Unrealised: $10 million).
DCRN/Tritium
As of 30 June 2021, REL, through the Partnership, has fully
invested its $0.6 million commitment to DCRN/Tritium. Riverstone
sponsored DCRN's $402.5 million IPO on 2 February 2021. REL made
its investment in DCRN at the time of the IPO, as the blank check
company began to pursue merger candidates. On 26 May 2021, DCRN
announced its business combination agreement with Tritium, a
Brisbane, Australia based pioneer in e-mobility and EV charging
infrastructure.
Since announcement of a business combination with DCRN, Tritium
has entered into a collaboration agreement with Loop, a California
based EV charging network operator, which involves the installation
of Tritium's DC fast charger in Los Angeles. The Company is looking
to expand its partnership with Loop to Arizona, New York, and New
Jersey, along with further installations in California.
Additionally, Revel, a Brooklyn, NY based electric transportation
company, opened its first EV fast charging station Superhub in
Bed-Stuy, Brooklyn on 29 June 2021. Revel chose Tritium's 75kW DC
fast chargers for the 25-charger development, and is the first
network of Superhubs planned by Revel across New York City. This
represents the first time the Tritium model is available in North
America and at 75kW, the chargers provide EV drivers with 100
additional miles in 20 minutes.
The business combination between DCRN and Tritium is anticipated
to close in 2H'21.
As of 30 June 2021, REL's interest in DCRN/Tritium, through the
Partnership, was valued at 7.3x Gross MOIC(1) or $4 million
(Realised: $0 million, Unrealised: $4 million).
DCRC/Solid Power
As of 30 June 2021, REL, through the Partnership, has invested
$0.5 million of its $20.5 million commitment to DCRC/Solid Power.
Riverstone sponsored DCRC's $350 million IPO on 23 March 2021. REL
made a $0.5 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 committed
an additional $20 million to the $165 million PIPE that was
raised.
Between DCRC's IPO and announcing the business combination with
Solid Power, Solid Power closed on a $130 million Series B
investment raise led by BMW Group, Ford Motor Company, and Volta
Energy Technologies. In conjunction with the Series B raise, BMW
and Ford expanded their existing joint development agreements with
the Company to secure all solid-state batteries for future electric
vehicles.
Both Ford and BMW will receive full-scale 100 Ah cells for
automotive qualification testing and vehicle integration beginning
in 2022. Solid Power's all solid-state platform technology allows
for the production of unique cell designs expected to meet
performance requirements for each automotive partner.
The business combination between DCRC and Solid Power is
anticipated to close in 2H'21.
As of 30 June 2021, REL's interest in DCRC/Solid Power, through
the Partnership, was valued at 8.2x Gross MOIC(1) or $4 million
(Realised: $0 million, Unrealised: $4 million).
Fieldwood
As of 30 June 2021, REL, through the Partnership, has invested
$88 million of its $89 million commitment to Fieldwood. Riverstone
formed Fieldwood in partnership with Chief Executive Officer Matt
McCarroll and his team in December 2012. REL made its investment in
Fieldwood in 2014, as the company acquired the Gulf of Mexico
interests from Apache Corporation and SandRidge Energy, Inc.
Fieldwood underwent a restructuring that concluded in April 2018
and resulted in the acquisition of Noble Energy's deepwater Gulf of
Mexico portfolio.
To alleviate liquidity concerns, and in response to the oil
price downturn during the period, Fieldwood sought to reduce
expenses and liquidate its in-the-money hedges. The company
negotiated extensively with its lenders to provide near-term
covenant and interest relief while seeking a more permanent
solution to its capital structure challenges. Matt McCarroll
stepped down to pursue other opportunities and was replaced by an
Executive Leadership Team comprised of Michael Dane, Chief
Financial Officer, Thomas Lamme, General Counsel, and Gary
Mitchell, Senior Vice President of Production. Fieldwood filed for
Chapter 11 restructuring on August 3, 2020.
As of 30 June 2021, REL's interest in Fieldwood, through the
Partnership, was valued at 0.1x Gross MOIC(1) or $8 million
(Realised: $8 million, Unrealised: $- million). The Gross MOIC(1)
remained constant over the period.
Realised Investments
Castex 2014
Castex 2014 is a Houston-based oil and gas company focussed on
gas exploration opportunities in the U.S. Gulf Coast Region. In Q4
2019, the company was sold to Talos for cash proceeds and Talos
shares. In June 2021, REL, through the Partnership, sold the Talos
shares through a block trade resulting in $6 million of incremental
cash proceeds and a 0.3x Gross MOIC(1) on the overall investment
(100 per cent. realised).
Liberty II
Established in the fourth quarter of 2013, Liberty II focused on
advanced well completion design and execution in the Bakken where
it has an 100,000 net acre position in the Williston Basin. REL,
through the Partnership, invested in full its $142 million
commitment to Liberty II. As part of the restructuring of Liberty
II's reserve-based lending facility in Q2 2021, REL elected to not
participate in the required new equity contribution, which fully
diluted REL's existing equity position and resulted in a 0.0x Gross
MOIC(1) for nil (100 per cent. realised).
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 the Company'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.
The unaudited fair market valuations as of 30 June 2021 formed
part of REL's 2021 Interim Report and were subject to an interim
review under ISRE 2410, which was undertaken by Ernst & Young
LLP on behalf of the Directors.
Uninvested Cash
As of 30 June 2021, REL had a cash balance of $5.7 million,
gross of the accrued share buyback transactions of $0.8 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 $47.0 million held as cash and money
market fixed deposits, gross of the accrued Management Fee of $2.2
million. As in prior years, in accordance 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 26
basis points during the six months ended 30 June 2021.
On 9 March 2021, the Board was pleased to confirm that the Share
Buyback Programme had successfully completed with a total of
17,214,197 ordinary shares having been bought back at an average
price of approximately GBP2.90 per ordinary share. On 11 May 2021,
the Company announced a further buyback programme with the
intention of returning an additional GBP20 million to Shareholders
via on market buybacks over the next 12 months. Since the
announcement, the Company has purchased 1,185,808 shares, in
aggregate, for GBP4.0 million ($5.6 million) at an average share
price of GBP3.36 ($4.72). After payment of the accrued Management
Fee ($2.2 million) and the unsettled portion of these share
buybacks ($0.8 million), REL's aggregate cash balance is $49.7
million.
As of 30 June 2021, REL, through the Partnership, had potential
unfunded commitments of $101.9 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 and CNOR which are denominated in Canadian dollars.
Going Concern
The Company's 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. In reaching this conclusion, the Directors,
with recommendation from the Audit Committee, have considered the
risks that could impact the Company's liquidity over the next
period from the date of approval of the unaudited interim condensed
financial statements up until 30 September 2022, as well as taken
into account the following four key considerations, which are
discussed further below.
1. Available liquid resources and potential proceeds from
investment realisations versus current and expected liabilities of
the Company over the period from the date of approval of the
unaudited interim condensed financial statements up until 30
September 2022;
2. Available liquid resources and potential proceeds from
investment realisations versus potential unfunded commitments of
the Partnership;
3. Discount to NAV of the Company; and
4. COVID-19.
1. Available liquid resources and potential proceeds from
investment realisations versus current and expected liabilities of
the Company over the period from the date of approval of the
unaudited interim condensed financial statements up until 30
September 2022
The Audit Committee has recommended to the Directors that they
should have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the period from
the date of approval of the unaudited interim condensed financial
statements up until 30 September 2022, as explained below. The
Company retained $11.5 million of cash in the IPO and Placing and
Open Offer, and has requested and received seven distributions for
working capital needs in aggregate of $24.3 million from the
Partnership cumulatively through 30 June 2021, of which $5.7
million remains at 30 June 2021 (31 December 2020: $8.8 million).
This cash balance is sufficient to cover the Company's existing
liabilities at 30 June 2021 of $1.3 million and the Company's
forecasted annual expenses of approximately $4.0 million.
Additionally, as GBP4.0 million ($5.6 million) of the previously
announced GBP20.0 million share repurchase programme had been
completed as of 30 June 2021, the Company will require an
additional distribution of GBP16 million ($22 million) from the
Partnership to complete the remaining portion, subject to Board
approval. As in prior years, in accordance with the Partnership
Agreement, if the Company requires additional funds for working
capital or the share buyback programme, it is entitled to receive
another distribution from the Partnership. In order to do so, the
Company would submit a distribution request approved by the Board
to the Partnership, which would then be required to arrange for the
payment of the requested amount. Since REL's inception, the Company
has requested and received seven distributions from the Partnership
for working capital needs. As detailed further in section 2 below,
at 30 June 2021, REL, through the Partnership had total potential
unfunded commitments of $101.9 million, which exceeded its
available liquid resources of $52.7 million, but, as of the date of
this report, currently has available liquid resources in excess of
its total potential unfunded commitments of $102.2 million, which
enables the Partnership to satisfy the Company's aforementioned
distribution requirement of GBP16 million ($22 million) for
completion of the previously announced share buyback programme.
2. Available liquid resources and potential proceeds from
investment realisations versus total potential unfunded commitments
of the Partnership
As at 30 June 2021, REL and the Partnership, including its
wholly-owned subsidiaries, REL Cayman Holdings, LP, REL US Corp and
REL US Centennial Holdings, LLC, had $ 52.7 million of uninvested
funds held as cash and money market fixed deposits (31 December
2020: $99.1 million). This amount is comprised of $47.0 million
held at the Partnership and $ 5.7 million held at REL. Since 30
June 2021 and up to the date of this report, the Company, through
the Partnership, realised $168.5 million in aggregate proceeds from
the sale of its investment in ILX III and a distribution from Rock
Oil, as well as invested $40.6 million, in aggregate, in the
Samsung Ventures portfolio ($30.0 million), DCRB PIPE ($10.0
million) and DCRD ($0.6 million) transactions, along with the
payment of the accrued Management Fee of $2.2 million, bringing the
uninvested funds at the Partnership level up to $172.7 million. In
accordance with the revised terms for REL's GP Performance
Allocation announced in January 2020, REL did not meet the
portfolio level cost benchmark at 30 June 2021; therefore, any
unrealised performance allocation has been deferred. If these
changes had not been accepted, then the accrued GP Performance
Allocation would have been $ 5.9 million as of 30 June 2021. No
performance fees will be payable until the $ 362 million realised
and unrealised losses to date at 30 June 2021 are offset with
future gains. If these realised and unrealised losses have not been
offset, any such accrued fees will no longer be payable after three
years from each respective accrual date.
The Company's total potential unfunded commitments of $ 101.9
million as at 30 June 2021 (31 December 2020: $83.2 million),
through the Partnership, did exceed its available liquid resources
as at 30 June 2021. Since 30 June 2021 and up to the date of this
report, the Company, through the Partnership, realised its
investment in ILX III thereby relieving the remaining unfunded
commitment of $21.3 million and funded its $10.0 million DCRB PIPE
commitment, bringing the total potential unfunded commitments at
the Partnership level down to $ 70.6 million. It is not expected
that all potential unfunded commitments will be drawn due to a
variety of factors, such as the ability for the commitment to be
reduced and/or cancelled by the Investment Manager with
consideration from the Board, the present market conditions do not
warrant presently further capital expenditure as the returns would
not be incrementally positive, a portfolio company being sold
earlier than anticipated or a targeted investment opportunity
changing or disappearing. Based on the Investment Manager's cash
flow forecast for the next three years to 30 June 2024, the
expectation is that, if needed, the Partnership will only fund the
remaining commitments to the DCRC PIPE, Onyx and Enviva, which
aggregate to $33.2 million of the above mentioned $70.6 million
potential unfunded commitments as of the date of this report.
However, if the Board decides to fund any of the Partnership's
unfunded commitments to the other active investments, the
Partnership can execute a reactionary measure to provide liquidity
as discussed further below.
As at 30 June 2021, the Company, through the Partnership, has
realised eight investments for $ 699 million of gross proceeds on
invested capital of $ 440 million, respectively in aggregate,
resulting in an average Gross MOIC of approximately 1.6 x. The
initial commitments to these eight investments were in excess of
$734 million, so approximately 60 per cent. had been funded before
realisation. In addition, the board of each underlying portfolio
company, more often than not are controlled by Riverstone, which
has discretion over whether or not that capital is ultimately
invested. Moreover, REL's arrangements with Riverstone allow the
Company's potential unfunded commitments to be reduced and/or
cancelled by the Investment Manager with consideration from the
Board, although this has yet to happen. Moreover, any proposed
investments outside of those made with Fund V and Fund VI can be
unilaterally declined by the Board.
Finally, as a reactionary measure, the Partnership's investments
in the publicly-traded shares of the portfolio companies could
always be sold, or used as collateral to secure asset-backed
financing. The Partnership holds marketable securities consisting
of unrestricted, publicly-traded shares of Centennial, Pipestone
and Talos for which the aggregate fair value was $125 million at 30
June 2021 and $ 86 million as of 1 6 August 2021.
3. Discount to NAV of the Company
Since its inception, the Company's trading discount to NAV
percentage has remained consistent with a population of comparable
publicly -- traded PE funds as their life to date average trading
discount percentages are 22.4 per cent. and 21.5 per cent.,
respectively. However, from December 2015 to January 2016 and
November 2018 to December 2018, as well as from December 2019 to
November 2020, declines in the price of oil adversely impacted the
market sentiment for energy companies, which resulted in the
Company's trading discount percentage increasing at a faster rate
than the population of comparable publicly-traded PE funds, as it
is mainly invested in the global energy industry across all
sectors. In order to return uninvested capital to Shareholders and
attempt to reduce REL's trading discount percentage, on 9 March
2021, the Company announced the successful completion of the GBP50
million share buyback programme with 17,214,197 shares, in
aggregate, having been bought back at an average share price of
GBP2.90 ($3.67). Additionally, on 11 May 2021, the Company
announced a further buyback programme with the intention of
returning an additional GBP20 million to shareholders via on market
buybacks. Since the announcement, the Company has purchased
1,185,808 shares, in aggregate, for GBP4.0 million ($5.6 million)
at an average share price of GBP3.36 ($4.72), which has attributed
to the narrowing of the Company's trading discount from 66.1 per
cent. at 31 March 2020 to 49.3 per cent. at 30 June 2021 (or from
131.7 per cent. to 54.3 per cent., respectively, on a cash-adjusted
basis). From period-end through to 1 6 August 2021 , the Company's
pro-forma trading discount has remained relatively unchanged and
was 43.4 per cent. as of 1 6 August 2021 (or 62.4 per cent. on a
cash-adjusted basis).
The Board, with consultation of the Investment Manager,
regularly monitors the Company's trading discount percentage and,
when possible, executes corporate actions aimed at managing it,
such as the aforementioned share buyback programmes (GBP50 million
programme announced in 2020 and GBP20 million programme announced
on 11 May 2021) and Tender Offer share repurchase in November 2018,
which attributed to a 1.5 per cent. increase in the Company's NAV,
and partially offset the increase of the trading discount
percentage. As announced on 1 July 2021 , the Board intends to
recommence the aforementioned GBP20 million share buyback programme
after publication of the Interim Report.
4. COVID-19
The Board and Investment Manager have been in continuous
dialogue regarding the impact of COVID-19 and appropriate
disclosures within the Company's interim unaudited condensed
financial statements, given that it's an evolving situation. The
Company's Management Engagement Committee requested and received
updates from REL's key service providers, including the Investment
Manager, regarding their response to COVID-19, including an update
on their respective business continuity plans.
The Investment Manager activated its business continuity plan
and its regular working pattern changed to remote working. Whilst
staff had assumed their day-to-day responsibilities remotely, a
significant proportion had begun transitioning back to the
in-person work environment and weekly calls across teams were
taking place. The Investment Manager has contacted its portfolio
companies to make sure that they have the appropriate plans and
resources in place to prioritise the health and safety of their
employees, as well as to assess supply chain disruptions and ensure
the normal operations of their businesses.
Directors' Assessment of Going Concern
Based on the reasons outlined above, on balance, the Directors
are satisfied, as of today's date, that it is appropriate to adopt
the going concern basis in preparing the unaudited interim
condensed financial statements.
Principal Risks and Uncertainties
The Company's assets consist of investments, through the
Partnership, within the global energy industry, with a particular
focus on opportunities in the global exploration and production,
midstream energy and renewable energy sub-sectors. Its principal
risks are therefore related to market conditions in the energy
sector in general, but also the particular circumstances of the
businesses in which it is invested through the Partnership. The
Investment Manager to 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.
The key areas of risk faced by the Company are the following: 1)
concentration risk from investing only in the global energy sector,
2) Ordinary Shares trading at a Discount to NAV per Share, 3)
inherent risks associated with the exploration and production and
midstream energy subsectors, including the ongoing impact of the
coronavirus pandemic, 4) difficulty for the Company to terminate
its Investment Management Agreement, 5) conflicts regarding the
allocation of investment opportunities between the Company and
Private Riverstone Funds and 6) a change in the general sentiment
regarding climate change and the transition to a lower carbon
economy.
The principal risks and uncertainties of REL were identified in
further detail in the 2020 Annual Report and Financial
Statements.
The principal risks outlined above remain the most likely to
affect the Company and its investments in the second half of the
year.
Subsequent Events
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 . With this
transaction, REL no longer owns any interest in ILX III, but will
continue to own 43,333 shares of Talos Energy Inc stock (NYSE:TALO)
in connection with its former investment in ILX III.
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.
In August 2021, REL purchased an interest in one of Samsung
Ventures' battery technology focused venture capital portfolios for
$30.0 million. The remaining interest was purchased by Riverstone
affiliates. The portfolio consists of seven unrealised investments
with the majority of value deriving from over 1.6 million shares of
Solid Power, Inc.
Also, in August 2021, REL announced an investment of $0.6
million in DCRD, a special purpose acquisition vehicle sponsored by
an affiliate of REL's investment manager which raised over $316
million in its IPO.
Outlook
The outlook for oil prices and the global economy in the second
half of 2021 remains difficult to forecast. Economic recovery is
feeding through but the efficacy of vaccine programmes and the
appearance of new variants of COVID-19 remain risk factors that are
difficult to assess. We remain cautiously optimistic that demand
for oil and energy will continue to recover and this will be
moderately supportive for prices. We also note the recent agreement
from OPEC to raise production limits for certain countries and
believe this may help reduce some longer-term uncertainty
surrounding the outlook for supply. We expect to continue to look
for opportunities to reduce our exposure to legacy commodity-based
assets where it is possible to do so at acceptable valuations,
generating additional liquidity and enabling the continued
expansion of our decarbonisation investment portfolio.
RIGL Holdings, LP
17 August 2021
(1) Gross Unrealised Value and Gross MOIC (Gross Multiple of
Invested Capital) are before transaction costs, taxes
(approximately 21 to 27.5 per cent. of U.S. sourced taxable income)
and 20 per cent. carried interest on applicable gross profits in
accordance with the revised terms announced on 3 January 2020, but
effective 30 June 2019. Since there was no netting of losses
against gains before the aforementioned revised terms, the
effective carried interest rate on the portfolio as a whole will be
greater than 20 per cent.. In addition, there is a Management Fee
of 1.5 per cent. of net assets (including cash) per annum and other
expenses. Given these costs, fees and expenses are in aggregate
expected to be considerable, Total Net Value and Net MOIC will be
materially less than Gross Unrealised Value and Gross MOIC. Local
taxes, primarily on U.S. assets, may apply at the jurisdictional
level on profits arising in operating entity investments. Further
withholding taxes may apply on distributions from such operating
entity investments. In the normal course of business, REL may form
wholly-owned subsidiaries, to be treated as C Corporations for 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 taxable income
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 Chairman's Statement and Investment Manager's Report
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 Hayden
Chairman
17 August 2021
Independent Review Report to Riverstone Energy Limited
Conclusion
We have been engaged by the Company to review the Unaudited
Interim Condensed Financial Statements for the six months ended 30
June 2021 which comprise the Condensed Statement of Financial
Position, the Condensed Statement of Comprehensive Income, the
Condensed Statement of Changes in Equity, the Condensed Statement
of Cash Flow and related Notes 1 to 10. We have read the other
information contained in the Interim Report and considered whether
it contains any apparent misstatements or material inconsistencies
with the information in the Unaudited Interim Condensed Financial
Statements.
Based on our review, nothing has come to our attention that
causes us to believe that the Unaudited Interim Condensed Financial
Statements for the six months ended 30 June 2021 are not prepared,
in all material respects, in accordance with International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with IFRSs as adopted by the
European Union. The Unaudited Interim Condensed Financial
Statements have been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting".
Responsibilities of the directors
The Directors are responsible for preparing the Interim Report
and Unaudited Interim Condensed Financial Statements in accordance
with the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Auditor's Responsibilities for the review of the financial
information
In reviewing the Interim Report and Unaudited Interim Condensed
Financial Statements, we are responsible for expressing to the
Company a conclusion on the Unaudited Interim Condensed Financial
Statements. Our conclusion, is based on procedures that are less
extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Guernsey, Channel Islands
17 August 2021
Condensed Statement of Financial Position
As at 30 June 2021
30 June 31 December
2021 2020
$'000 $'000
Notes (Unaudited) (Audited)
-------------------------------------------------- ------ -------------- ------------
Assets
Non-current assets
Investments at fair value through profit or loss 6 576,906 383,589
Total non-current assets 576,906 383,589
-------------------------------------------------- ------ -------------- ------------
Current assets
Trade and other receivables 488 1,137
Cash and cash equivalents 5,732 8,807
Total current assets 6,220 9,944
-------------------------------------------------- ------ -------------- ------------
Total assets 583,126 393,533
-------------------------------------------------- ------ -------------- ------------
Current liabilities
Trade and other payables 1,338 3,190
Total current liabilities 1,338 3,190
-------------------------------------------------- ------ -------------- ------------
Total liabilities 1,338 3,190
-------------------------------------------------- ------ -------------- ------------
Net assets 581,788 390,343
-------------------------------------------------- ------ -------------- ------------
Equity
Share capital 1,177,418 1,184,100
Retained deficit (595,630) (793,757)
Total equity 581,788 390,343
-------------------------------------------------- ------ -------------- ------------
Number of Shares in issue at period/year end 9 61,496,726 62,938,466
-------------------------------------------------- ------ -------------- ------------
Net Asset Value per Share ($) 9 9.46 6.20
-------------------------------------------------- ------ -------------- ------------
The interim condensed financial statements were approved and
authorised for issue by the Board of Directors on 17 August 2021
and signed on their behalf by:
Richard Hayden Patrick Firth
Chairman Director
The accompanying notes form an integral part of these interim
condensed financial statements.
Condensed Statement of Comprehensive Income
For the six months ended 30 June 2021 (Unaudited)
1 January 2021 1 January 2020
to 30 June 2021 to 30 June 2020
Notes $'000 $'000
------------------------------------------------------ ------ -------------------------- --------------------------
Investment gain/(loss)
Change in fair value of investment at fair value
through profit or loss 6 200,353 (353,927)
------------------------------------------------------ ------ -------------------------- --------------------------
Expenses
Directors' fees and expenses 7 (349) (409)
Legal and professional fees (250) 313
Other operating expenses (1,597) (1,159)
------------------------------------------------------ ------ -------------------------- --------------------------
Total expenses (2,196) (1,255)
------------------------------------------------------ ------ -------------------------- --------------------------
Operating profit/(loss) for the period 198,157 (355,182)
Finance income and expenses
Foreign exchange (loss)/gain (30) 2
Total finance income and expenses (30) 2
------------------------------------------------------ ------ -------------------------- --------------------------
Profit/(loss) for the period 198,127 (355,180)
Total comprehensive income/(loss) for the period 198,127 (355,180)
-------------------------------------------------------------- -------------------------- --------------------------
Basic Earnings/(Loss) per Share (cents) 9 316.29 (457.59)
------------------------------------------------------ ------ -------------------------- --------------------------
Diluted Earnings/(Loss) per Share (cents) 9 316.29 (457.59)
------------------------------------------------------ ------ -------------------------- --------------------------
All activities derive from continuing operations.
The accompanying notes form an integral part of these interim
condensed financial statements.
Condensed Statement of Changes in Equity
For the six months ended 30 June 2021 (Unaudited)
Share Retained Total
capital deficit Equity
$'000 $'000 $'000
------------------------------------ ------------------ ---------------- ----------------
As at 1 January 2021 1,184,100 (793,757) 390,343
Profit for the financial period - 198,127 198,127
Buyback and cancellation of shares (6,682) - (6,682)
------------------------------------ ------------------ ---------------- ----------------
As at 30 June 2021 1,177,418 (595,630) 581,788
------------------------------------ ------------------ ---------------- ----------------
For the six months ended 30 June 2020 (Unaudited)
Share Retained Total
capital deficit Equity
$'000 $'000 $'000
------------------------------------ ---------- ---------- ----------
As at 1 January 2020 1,246,559 (474,867) 771,692
Loss for the period - (355,180) (355,180)
Buyback and cancellation of shares (37,741) - (37,741)
As at 30 June 2020 1,208,818 (830,047) 378,771
------------------------------------ ---------- ---------- ----------
The accompanying notes form an integral part of these interim
condensed financial statements.
Condensed Statement of Cash Flows
For the six months ended 30 June 2021 (Unaudited)
1 January 2021 1 January 2020
to 30 June 2021 to 30 June 2020
$'000 $'000
--------------------------------------------------------- ----------------------------- ----------------------------
Cash flows generated from/(used in) operating activities
Operating profit/(loss) for the financial period 198,157 (355,182)
--------------------------------------------------------- ----------------------------- ----------------------------
Adjustments for:
Change in fair value of investment at fair value through
profit or loss (200,353) 353,927
Movement in trade receivables 649 352
Movement in trade payables (80) (1,264)
Net cash used in operating activities (1,627) (2,167)
--------------------------------------------------------- ----------------------------- ----------------------------
Cash flows generated from investing activities
Distribution from the Partnership 7,036 41,980
Net cash generated from investing activities 7,036 41,980
--------------------------------------------------------- ----------------------------- ----------------------------
Cash flow used in financing activities
Buyback of shares (8,454) (33,595)
Net cash used in financing activities (8,454) (33,595)
--------------------------------------------------------- ----------------------------- ----------------------------
Net movement in cash and cash equivalents during the
period (3,045) 6,218
--------------------------------------------------------- ----------------------------- ----------------------------
Cash and cash equivalents at the beginning of the period 8,807 211
Effect of foreign exchange rate changes (30) 2
Cash and cash equivalents at the end of the period 5,732 6,431
--------------------------------------------------------- ----------------------------- ----------------------------
The accompanying notes form an integral part of these interim
condensed financial statements.
Notes to the UNAUDITED Interim Condensed Financial
Statements
For the six months ended 30 June 2021
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. The Partnership's
investment in Ridgebury H3 in 2019 demonstrates its modified
investment strategy as the Private Riverstone Funds did not
participate . Further detail of these investments is provided in
the Investment Manager's Report.
2. New standards, interpretations and amendments adopted by the Company
The accounting policies adopted in the preparation of the
interim condensed financial statements are consistent with those
followed in the preparation of the Company's annual financial
statements for the year ended 31 December 2020, which were prepared
in accordance with IFRS as adopted by the European Union.
The Company has not early adopted any standard, interpretation
or amendment that has been issued but is not yet effective. It is
not anticipated that any standard which is not yet effective, will
have a material impact on the Company's financial position or on
the performance of the Company's statements.
These interim condensed financial statements are presented in
U.S. dollars and are rounded to the nearest $'000, unless otherwise
indicated.
3. Significant accounting judgements, estimates and assumptions
The estimates and judgements made by the Investment Manager are
consistent with those made in the Financial Statements for the year
ended 31 December 2020. The going concern assessment has been
updated for the 6 months ended 30 June 2021, which is outlined
below.
Going concern
The Company's 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. In reaching this conclusion, the Directors,
with recommendation from the Audit Committee, have considered the
risks that could impact the Company's liquidity over the next
period from the date of approval of the unaudited interim condensed
financial statements up until 30 September 2022, as well as taken
into account the following four key considerations, which are
discussed further below.
1. Available liquid resources and potential proceeds from
investment realisations versus current and expected liabilities of
the Company over the period from the date of approval of the
unaudited interim condensed financial statements up until 30
September 2022;
2. Available liquid resources and potential proceeds from
investment realisations versus potential unfunded commitments of
the Partnership;
3. Discount to NAV of the Company; and
4. COVID-19.
1. Available liquid resources and potential proceeds from
investment realisations versus current and expected liabilities of
the Company over the period from the date of approval of the
unaudited interim condensed financial statements up until 30
September 2022
The Audit Committee has recommended to the Directors that they
should have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the period from
the date of approval of the unaudited interim condensed financial
statements up until 30 September 2022, as explained below. The
Company retained $11.5 million of cash in the IPO and Placing and
Open Offer, and has requested and received seven distributions for
working capital needs in aggregate of $24.3 million from the
Partnership cumulatively through 30 June 2021, of which $ 5.7
million remains at 30 June 2021 (31 December 2020: $8.8 million).
This cash balance is sufficient to cover the Company's existing
liabilities at 30 June 2021 of $1.3 million and the Company's
forecasted annual expenses of approximately $4.0 million.
Additionally, as GBP4.0 million ($5.6 million) of the previously
announced GBP20.0 million share repurchase programme had been
completed as of 30 June 2021, the Company will require an
additional distribution of GBP16 million ($22 million) from the
Partnership to complete the remaining portion, subject to Board
approval. As in prior years, in accordance with the Partnership
Agreement, if the Company requires additional funds for working
capital or the share buyback programme, it is entitled to receive
another distribution from the Partnership. In order to do so, the
Company would submit a distribution request approved by the Board
to the Partnership, which would then be required to arrange for the
payment of the requested amount. As detailed further in section 2
below, at 30 June 2021, REL, through the Partnership, had potential
unfunded commitments of $101.9 million, which exceeded its
available liquid resources of $52.7 million, but, as of the date of
this report, currently has available liquid resources in excess of
potential unfunded commitments of $102.2 million, which enables the
Partnership to satisfy the Company's aforementioned distribution
requirement of GBP16 million ($22 million) for completion of the
previously announced share buyback programme.
2. Available liquid resources and potential proceeds from
investment realisations versus total potential unfunded commitments
of the Partnership
As at 30 June 2021, REL and the Partnership, including its
wholly-owned subsidiaries, REL Cayman Holdings, LP, REL US Corp and
REL US Centennial Holdings, LLC, had $ 52.7 million of uninvested
funds held as cash and money market fixed deposits (31 December
2020: $99.1 million). This amount is comprised of $ 47.0 million
held at the Partnership and $ 5.7 million held at REL. Since 30
June 2021 and up to the date of this report, the Company, through
the Partnership, realised $168.5 million in aggregate proceeds from
the sale of its investment in ILX III and a distribution from Rock
Oil, as well as invested $40.6 million, in aggregate, in the
Samsung Ventures portfolio ($30.0 million), DCRB PIPE ($10.0
million) and DCRD ($0.6 million) transactions, along with the
payment of the accrued Management Fee of $2.2 million, bringing the
uninvested funds at the Partnership level up to $172.7 million. In
accordance with the revised terms for REL's GP Performance
Allocation announced in January 2020, REL did not meet the
portfolio level cost benchmark at 30 June 2021; therefore, any
unrealised performance allocation has been deferred. If these
changes had not been accepted, then the accrued GP Performance
Allocation would have been $5.9 million as of 30 June 2021. No
performance fees will be payable until the $362 million realised
and unrealised losses to date at 30 June 2021 are offset with
future gains. If these realised and unrealised losses have not been
offset, any such accrued fees will no longer be payable after three
years from each respective accrual date.
The Company's total potential unfunded commitments of $ 101.9
million as at 30 June 2021 (31 December 2020: $83.2 million),
through the Partnership, did not exceed its available liquid
resources as at 30 June 2021. Since 30 June 2021 and up to the date
of this report, the Company, through the Partnership, realised its
investment in ILX III thereby relieving the remaining unfunded
commitment of $21.3 million and funded its $10.0 million DCRB PIPE
commitment, bringing the total potential unfunded commitments at
the Partnership level down to $ 70.6 million. It is not expected
that all potential unfunded commitments will be drawn due to a
variety of factors, such as the ability for the commitment to be
reduced and/or cancelled by the Investment Manager with
consideration from the Board, the present market conditions do not
warrant presently further capital expenditure as the returns would
not be incrementally positive, a portfolio company being sold
earlier than anticipated or a targeted investment opportunity
changing or disappearing. Based on the Investment Manager's cash
flow forecast for the next three years to 30 June 2024, the
expectation is that, if needed, the Partnership will only fund the
remaining commitments to the DCRC PIPE, Onyx and Enviva, which
aggregate to $33.2 million of the above mentioned $70.6 million
potential unfunded commitments as of the date of this report.
However, if the Board decides to fund any of the Partnership's
unfunded commitments to the other active investments, the
Partnership can execute a reactionary measure to provide liquidity
as discussed further below.
As at 30 June 2021, the Company, through the Partnership, has
realised eight investments for $699 million of gross proceeds on
invested capital of $440 million, respectively in aggregate,
resulting in an average Gross MOIC of approximately 1.6 x. The
initial commitments to these eight investments were in excess of
$734 million, so approximately 60 per cent. had been funded before
realisation. In addition, the board of each underlying portfolio
company, more often than not are controlled by Riverstone, which
has discretion over whether or not that capital is ultimately
invested. Moreover, REL's arrangements with Riverstone allow the
Company's potential unfunded commitments to be reduced and/or
cancelled by the Investment Manager with consideration from the
Board, although this has yet to happen. Moreover, any proposed
investments outside of those made with Fund V and Fund VI can be
unilaterally declined by the Board.
Finally, as a reactionary measure, the Partnership's investments
in the publicly-traded shares of the portfolio companies could
always be sold, or used as collateral to secure asset-backed
financing. The Partnership holds marketable securities consisting
of unrestricted publicly-traded shares of Centennial, Pipestone and
Talos for which the aggregate fair value was $125 million at 30
June 2021 and $ 86 million as of 1 6 August 2021.
3. Discount to NAV of the Company
Since its inception, the Company's trading discount to NAV
percentage has remained consistent with a population of comparable
publicly -- traded PE funds as their life to date average trading
discount percentages are 22.4 per cent. and 21.5 per cent.,
respectively. However, from December 2015 to January 2016 and
November 2018 to December 2018, as well as from December 2019 to
November 2020, declines in the price of oil adversely impacted the
market sentiment for energy companies, which resulted in the
Company's trading discount percentage increasing at a faster rate
than the population of comparable publicly-traded PE funds, as it
is mainly invested in the global energy industry across all
sectors. In order to return uninvested capital to Shareholders and
attempt to reduce REL's trading discount percentage, on 9 March
2021, the Company announced the successful completion of the GBP50
million share buyback programme with 17,214,197 shares, in
aggregate, having been bought back at an average share price of
GBP2.90 ($3.67). Additionally, on 11 May 2021, the Company
announced a further buyback programme with the intention of
returning an additional GBP20 million to shareholders via on market
buybacks. Since the announcement, the Company has purchased
1,185,808 shares, in aggregate, for GBP4.0 million ($5.6 million)
at an average share price of GBP3.36 ($4.72), which has attributed
to the narrowing of the Company's trading discount from 66.1 per
cent. at 31 March 2020 to 49.3 per cent. at 30 June 2021 (or from
131.7 per cent. to 54.3 per cent., respectively, on a cash-adjusted
basis). From period-end through to 1 6 August 2021 , the Company's
pro-forma trading discount has remained relatively unchanged and
was 43.4 per cent. as of 1 6
August 2021 (or 62.4 per cent. on a cash-adjusted basis).
The Board, with consultation of the Investment Manager,
regularly monitors the Company's trading discount percentage and,
when possible, executes corporate actions aimed at managing it,
such as the Tender Offer share repurchase in November 2018, which
attributed to a 1.5 per cent. increase in the Company's NAV, and
partially offset the increase of the trading discount percentage
and the aforementioned share buyback programmes (GBP50 million
programme announced in 2020 and GBP20 million programme announced
on 11 May 2021). As announced on 1 July 2021 , the Board intends to
recommence the aforementioned GBP20 million share buyback programme
after publication of the Interim Report.
4. COVID-19
The Board and Investment Manager have been in continuous
dialogue regarding the impact of COVID-19 and appropriate
disclosures within the Company's interim unaudited condensed
financial statements, given that it's an evolving situation. The
Company's Management Engagement Committee requested and received
updates from REL's key service providers, including the Investment
Manager, regarding their response to COVID-19, including an update
on their respective business continuity plans.
The Investment Manager activated its business continuity plan
and its regular working pattern changed to remote working. Whilst
staff had assumed their day-to-day responsibilities remotely, a
significant proportion had begun transitioning back to the
in-person work environment and weekly calls across teams were
taking place. The Investment Manager has contacted its portfolio
companies to make sure that they have the appropriate plans and
resources in place to prioritise the health and safety of their
employees, as well as to assess supply chain disruptions and ensure
the normal operations of their businesses.
Directors' Assessment of Going Concern
Based on the reasons outlined above, on balance, the Directors
are satisfied, as of today's date, that it is appropriate to adopt
the going concern basis in preparing the unaudited interim
condensed financial statements.
4. Taxation
The taxation basis of the Company remains consistent with that
disclosed in the Financial Statements for the year ended 31
December 2020.
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 in Rock Oil, Fieldwood, Carrier II,
Castex 2014, ILX III, Enviva, GoodLeap (formerly Loanpal) and
FreeWire, the future U.S. tax liability on profits is expected to
be in the range of 21 to 27.5 per cent. (31 December 2020: 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 2021 were
$577 million (31 December 2020: $384 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 2021 and the year ended 31 December 2020. 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 in June
2021 and December 2020.
For the period ended 30 June 2021, 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 interim condensed
financial statements and the differences may be significant.
Quantitative information about Level 3 fair value measurements
as at 30 June 2021
Industry: Energy
Fair value of Sensitivity of Fair value of
Level 3 the Level 3
Investments Investments
affected by
Weighted Average input to fair unobservable
Valuation Unobservable Range (1) value of input (3)
(in thousands) Level 3
technique(s) input(s) Low (1) High (1) investments(2) (in thousands)
--------------- --------------- ------------- ---------- --------- ----------------- ------------------- -----------------
10 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
2021 EV / total fair value
Public EBITDA of Level 3
$217,359 comparables Multiple 4.3x 13.1x 6.2x investments 126,900
4.2x 12.1x 5.9x 20 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
2022 EV / total fair value
EBITDA of Level 3
Multiple investments 149,482
10 per cent.
weighted average
change in the
input would result
in 1 per cent.
EV / 2021E change in the
Production total fair value
Multiple of Level 3
($/Boepd) $26,000 $35,700 $29,500 investments 102,511
30 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
1P Reserve total fair value
multiple of Level 3
($/Boe) $6 $10 $7 investments 37,214
10 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
2P Reserve total fair value
multiple of Level 3
($/Boe ) $3 $4 $3 investments 65,297
--------------- ------------- ---------- --------- ----------------- ------------------- -----------------
10 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
total fair value
Transaction Asset Value of Level 3
comparables ($m/kW) $56 $182 $132 investments 59,796
--------------- ------------- ---------- --------- ----------------- ------------------- -----------------
20 per cent.
weighted average
change in the
input would result
in 9 per cent.
change in the
Oil Price total fair value
Discounted Curve of Level 3
cash flow ($/bbl)(4) $56 $62 $60 investments 102,511
15 per cent.
weighted average
change in the
input would result
in 4 per cent.
change in the
Gas Price total fair value
Curve of Level 3
($/mcfe)(4) $3 $3 $3 investments 102,511
+/-50 per cent.
weighted average
change in the
input would result
in -/+1 per cent.
change
in the total fair
Discount value of Level 3
Rate 30% 10% 18% investments 59,796
+/-25 per cent.
weighted average
change in the
input would result
in -/+1 per cent.
GP change
Distribution in the total fair
Yield Per value of Level 3
cent. 8% 5% 6% investments 30,663
--------------- --------------- ------------- ---------- --------- ----------------- ------------------- -----------------
$181,224(5)
$398,583 Total
Quantitative information about Level 3 fair value measurements
as at 31 December 2020
Industry: Energy
Fair value of Sensitivity of Fair value of
Level 3 the Level 3
Investments Investments
affected by
Weighted input to fair unobservable
Valuation Unobservable Range Average (1) value of input (3)
(in thousands) High Level 3
technique(s) input(s) Low (1) (1) investments(2) (in thousands)
--------------- ------------- ------------------- -------- -------- ------------- ------------------- ---------------
10 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
total fair value
Public 2020 EV / EBITDA of Level 3
$254,017 comparables Multiple 4.0x 6.0x 4.3x investments 22,124
10 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
total fair value
2021 EV / EBITDA of Level 3
Multiple(6) 3.8x 3.9x 3.9x investments 37,423
30 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
total fair value
2022 EV / EBITDA of Level 3
Multiple(6) 3.5x 6.5x 5.0x investments 52,740
10 per cent.
weighted average
change in the
input would result
in 1 per cent.
EV / 2020E change in the
Production total fair value
Multiple of Level 3
($/Boepd) $16,500 $29,200 $21,700 investments 37,423
30 per cent.
weighted average
change in the
input would result
in 1 per cent.
EV / 2021E change in the
Production total fair value
Multiple of Level 3
($/Boepd)(6) $16,500 $29,200 $21,700 investments 37,423
30 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
total fair value
1P Reserve of Level 3
multiple ($/Boe) $4 $8 $6 investments 15,299
10 per cent.
weighted average
change in the
input would result
in 2 per cent.
change in the
total fair value
2P Reserve of Level 3
multiple ($/Boe ) $2 $4 $2 investments 22,124
10 per cent.
weighted average
change in the
input would result
in 2 per cent.
change in the
Acreage Multiple total fair value
Transaction ($/Boepd per Acre of Level 3
comparables ) $2,900 $4,000 $3,000 investments 22,124
30 per cent.
weighted average
change in the
input would result
in 9 per cent.
change in the
total fair value
2P / 2C Reserve of Level 3
multiple ($/Boe) $5 $10 $7 investments 135,040
50 per cent.
weighted average
change in the
input would
result in 2 per
cent. change in
the
total fair value
Asset Value of Level 3
($m/kW)(6) $56 $182 $119 investments 52,740
------------- ------------------- -------- -------- ------------- ------------------- ---------------
20 per cent.
weighted average
change in the
input would result
in 12 per cent.
change in the
total fair value
Discounted Oil Price Curve of Level 3
cash flow ($/bbl)(4) $38 $43 $43 investments 172,462
15 per cent.
weighted average
change in the
input would result
in 2 per cent.
change in the
total fair value
Gas Price Curve of Level 3
($/mcfe)(4) $2 $2 $2 investments 172,462
50 per cent.
weighted average
change in the
input would result
in 2 per cent.
change in the
total fair value
of Level 3
Discount Rate(6) 30% 10% 20% investments 52,740
20 per cent.
weighted average
change in the
input would result
in 1 per cent.
change in the
total fair value
GP Distribution of Level 3
Yield Per cent.(6) 7% 5% 6% investments 28,815
--------------- ------------- ------------------- -------- -------- ------------- ------------------- ---------------
$8,552
$262,569 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) Discounted cash flow technique involves the use of a
discount factor of 10 per cent.
(5) Amount represents the Partnership's Level 3 investments for
which the input sensitivity has been determined not to be
significant to the total fair value, which consist primarily of ILX
III that is the agreed-upon sale proceeds ($168 million)
(6) As at 31 December 2020, 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 2019
The Board approves 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 normal market conditions as of the period
end.
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.
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 and expenses of the Partnership and its related
Investment Undertakings, including any Performance Allocation and
applicable taxes.
30 June 31 December
2021 2020
$'000 $'000
----------------------------------------------------------------------------- ------------------------- ------------
Cost
Brought forward 1,149,917 1,223,171
Distribution from the Partnership (7,036) (73,254)
Carried forward 1,142,881 1,149,917
----------------------------------------------------------------------------- ------------------------- ------------
Fair value adjustment through profit or loss
Brought forward (766,328) (450,449)
Fair value movement during period/year - see Summary Income Statement below 200,353 (315,879)
Carried forward (565,975) (766,328)
----------------------------------------------------------------------------- ------------------------- ------------
Fair value at period/year end 576,906 383,589
----------------------------------------------------------------------------- ------------------------- ------------
Summary financial information for the Partnership's investments
and its related Investment Undertakings
30 June 31 December
2021 2020
Summary Balance Sheet $'000 $'000
-------------------------------------------------------------------- ------------------------- ---------------------
Investments at fair value (net) 539,705 288,237
Cash and cash equivalents (1) 22,071 13,666
Money market fixed deposits (1) 16,685 76,675
Management fee payable - see Note 7 (2,182) (1,181)
Other net assets 627 6,192
Fair value of REL's investment in the Partnership's investments and
its related Investment
Undertakings 576,906 383,589
-------------------------------------------------------------------- ------------------------- ---------------------
(1) These figures, together with the $8.2 million held at REL US
Corp (31 December 2020: $Nil), comprise the $47 million cash held
in the Partnership (31 December 2020: $90.3).
30 June 31 December
2021 2020
Reconciliation of Partnership's investments $'000 $'000
and its related Investment Undertakings
investments at fair value
---------------------------------------------- --------- -------------------------
Investments at fair value - Level 1
(gross) 132,886 25,668
Investments at fair value - Level 3
(gross) - see Note 5 398,583 262,569
---------------------------------------------- --------- -------------------------
Investments at fair value (gross) 531,469 288,237
Cash and cash equivalents 8,236 -
Partnership's investments and its related
Investment Undertakings investments
at fair value (net) 539,705 288,237
---------------------------------------------- --------- -------------------------
1 January 1 January
2021 2020
to 30 June to 30 June
2021 2020
Summary Income Statement $'000 $'000
---------------------------------------- ------------------------- -----------------------
Unrealised and realised gain/(loss)
on Partnership's investments (net) 204,906 (351,007)
Interest and other income 147 1,616
Management fee expense - see Note 7 (3,941) (3,010)
Other operating expenses (759) (1,526)
---------------------------------------- ------------------------- -----------------------
Portion of the operating profit/(loss)
for the period attributable to REL's
investment in the Partnership 200,353 (353,927)
---------------------------------------- ------------------------- -----------------------
1 January 1 January
2021 2020
to 30 June to 30 June
2021 2020
Reconciliation of unrealised and realised $'000 $'000
gain/(loss) on Partnership's investments
-------------------------------------------- --------------------------- -------------------------
Unrealised gain/(loss) on investments
(gross) 379,937 (351,007)
Realised loss on Partnership's investments (174,996) -
(gross)
Income from Partnership's investments - -
(gross)
General Partner's performance allocation 50 -
- see Note 7
Provision for taxation (85) -
Unrealised and realised gain/(loss)
on Partnership's investments (net) 204,906 (351,007)
-------------------------------------------- --------------------------- -------------------------
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 five non-executive Directors (31 December 2020:
five).
Directors' fees and expenses for the period ended 30 June 2021
amounted to $ 349,271 , (30 June 2020: $ 408,992 ), $Nil of which
was outstanding at period end (31 December 2020: $Nil).
Partnership
In accordance with section 4.1(a) of the Partnership Agreement,
the Company received distributions in aggregate of $ 7.0 million
(30 June 2020: $ 42 million) from the Partnership through the 6
month period to 30 June 2021. 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 half year
end as further outlined on page 74 in the Financial Statements to
31 December 2020. During the period to 30 June 2021, the
Partnership incurred Management Fees of $3,940,544 (30 June 2020:
$3,010,359) of which $ 2,181,705 remained outstanding as at the
period end (31 December 2020: $1,181,324). In addition, the Company
and Partnership, in aggregate, reimbursed the Investment Manager
$704,323 in respect of amounts paid on their behalf for the period
(30 June 2020: $1,055,203), of which $446,046 related to legal and
professional fees of the Company and Partnership, $61,285 related
to travel and other operating expenses of the Investment Manager,
and $196,992 related to reimbursable expenses of the portfolio
companies.
The circumstances in which the Company and the Investment
Manager may terminate the Investment Management Agreement are as
follows:
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 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 Manager Agreement
will continue in perpetuity subject to the termination for cause
provisions described above. However, either the Board or
Shareholders holding in aggregate 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.
During the period to 30 June 2021, the Partnership was refunded
Performance Allocations of $50,081 (30 June 2020: $nil) of which
$nil remained outstanding as at the period end (31 December 2020:
$nil).
On 3 January 2020, the Company announced amendments to
Performance Allocation arrangements under the Investment Management
Agreement that were effective from 30 June 2019. The amended terms
on which the Company is required to pay a Performance Allocation in
respect of its investment are further outlined on pages 75 and 76
in the Financial Statements for the year ended 31 December
2020.
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/Loss per Share and Net Asset Value per Share
Earnings/Loss per Share
1 January 2021 to 1 January 2020 to
30 June 2021 30 June 2020
------------------ ------------------
Profit for the period ($'000) 198,127 (355,180)
Weighted average numbers of Shares in issue 62,641,626 77,619,083
EPS (cents) 316.29 (457.59)
------------------ ------------------
The Earnings/(Loss) 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 2021 (30
June 2020: none).
Net Asset Value per Share
30 June 31 December 30 June
2021 2020 2020
----------- ------------ -----------
NAV ($'000) 581,788 390,343 378,771
Number of Shares in issue 61,496,726 62,938,466 69,085,590
Net Asset Value per Share ($) 9.46 6.20 5.48
Net Asset Value per Share (GBP) 6.83 4.55 4.45
Discount to NAV (per cent.) 49.37 34.68 15.69
----------- ------------ -----------
The Net Asset Value per Share is arrived at by dividing the net
assets as at the date of the 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. Subsequent events
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 . With this
transaction, REL no longer owns any interest in ILX III, but will
continue to own 43,333 shares of Talos Energy Inc stock (NYSE:TALO)
in connection with its former investment in ILX III.
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.
In August 2021, REL purchased an interest in one of Samsung
Ventures' battery technology focused venture capital portfolios for
$30.0 million. The remaining interest was purchased by Riverstone
affiliates. The portfolio consists of seven unrealised investments
with the majority of value deriving from over 1.6 million shares of
Solid Power, Inc.
Also, in August 2021, REL announced an investment of $0.6
million in DCRD, a special purpose acquisition vehicle sponsored by
an affiliate of REL's investment manager which raised over $316
million in its IPO.
Glossary of Capitalised Defined Terms
"1P reserve" means proven reserves;
"2P reserve" means proven and probable reserves;
"Administrator" means Ocorian Administration (Guernsey)
Limited;
"Admission" means admission, on 29 October 2013, to the Official
List and/or admission to trading on the London Stock Exchange, as
the context may require, of the Ordinary Shares becoming effective
in accordance with the Listing Rules and/or the LSE Admission
Standards as the context may require;
"AEOI Rules" means Automatic Exchange of Information;
"AIC" means the Association of Investment Companies;
"AIC Code" means the AIC Code of Corporate Governance;
"AIF" means Alternative Investment Funds;
"AIFM" means AIF Manager;
"AIFMD" means EU Alternative Investment Fund Managers Directive
(No. 2011/61EU);
"Aleph Midstream" means Aleph Midstream S.A;
"Annual General Meeting" or "AGM" means the general meeting of
the Company;
"Annual Report and Financial Statements" means the annual
publication of the Company provided to the Shareholders to describe
their operations and financial conditions, together with their
Financial Statements;
"Articles of Incorporation" or "Articles" means the articles of
incorporation of the Company, as amended from time to time;
"Audit Committee" means a formal committee of the Board with
defined terms of reference;
"bbl" means barrel of crude oil;
"Board" or "Directors" means the directors of the Company;
"boepd" means barrels of equivalent oil per day;
"bopd" means barrels of oil per day;
"bw/d" means barrels of water per day;
"CAD" or "C$" means Canadian dollar;
"CanEra III" means CanEra Inc.;
"CAR" means Capital Adequacy Ratio;
"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;
"Companies Law" means the Companies (Guernsey) Law, 2008, (as
amended);
"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;
"CRAR" means Capital to Risk (Weighted) Assets Ratio;
"CRS" means Common Reporting Standard;
"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;
"DEA" means Deutsche Erdoel AG, an international independent
exploration and production company headquartered in Germany;
"Depositary" means Ocorian Depositary Company (UK) Limited;
"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;
"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;
"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;
"ECL" means expected credit loss;
"EEA" means European Economic Area;
"EGM" means an Extraordinary General Meeting of the Company;
"EIA" means the U.S. Energy Information Administration;
"Enviva" means Enviva Holdings, L.P.;
"EU" means the European Union;
"EV" means enterprise value;
"FATCA" means Foreign Account Tax Compliance Act;
"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;
"FRC" means Financial Reporting Council;
"Freewire" means FreeWire Technologies, Inc.;
"Fund V" means Riverstone Global Energy & Power Fund V,
L.P.;
"Fund VI" means Riverstone Global Energy & Power Fund VI,
L.P.;
"FVTPL" means Fair Value through the profit or loss;
"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;
"GFSC Code" means the GFSC Finance Sector Code of Corporate
Governance;
"GoodLeap" means GoodLeap, LLC;
"GoM" means the Gulf of Mexico;
"Gross IRR" means an aggregate, annual, compound, gross internal
rate of return on investments. Gross IRR does not reflect expenses
to be borne by the relevant investment vehicle or its investors
including, without limitation, carried interest, management fees,
taxes and organisational, partnership or transaction expenses;
"Gross MOIC" means gross multiple of invested capital;
"Hammerhead" means Hammerhead Resources Inc.;
"Hunt" means Hunt REL Holdings LLC together with various members
of Ray L. Hunt's family and their
related entities;
"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;
"IMO" means the International Maritime Organization (IMO), an
agency of the United Nations which has been formed to promote
maritime safety;
"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);
"Invested Capital Target Return" means, as defined in the
Articles, the Gross IRR of 8 per cent. on the portion of the
proceeds of the Issue (as such term is defined in the Company's
Prospectus) that have been invested or committed to an investment
("Invested Capital") in respect of the period from the dates of
investment or commitment of that Invested Capital (being the dates
from which a Management Fee has been paid in respect of that
Invested Capital) to the seventh anniversary of the first
Admission, calculated by reference to the prevailing U.S. dollar
valuations (as of the seventh anniversary of the first Admission
(or earlier disposal)) of the investment acquired with that
Invested Capital and sales proceeds of investments that have been
disposed of prior to such seventh anniversary and taking account of
any distributions made on those investments prior to the seventh
anniversary of the first Admission;
"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;
"ISAE 3402" means International Standard on Assurance
Engagements 3402, "Assurance Reports on Controls at a Service
Organisation";
"ISA" means International Standards on Auditing (UK and
Ireland);
"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;
"Listing Rules" means the listing rules made by the UK Listing
Authority under section 73A Financial Services and Markets Act
2000;
"Loanpal" means Loanpal, LLC;
"London Stock Exchange" or "LSE" means London Stock Exchange
Plc;
"LSE Admission Standards" means the rules issued by the London
Stock Exchange in relation to the admission to trading of, and
continuing requirements for, securities admitted to the Official
List;
"M&A" means mergers and acquisitions;
"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;
"mcfe" means thousand cubic feet equivalent (natural gas);
"mmcfepd" means million cubic feet equivalent (natural gas) per
day;
"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. dollars;
"Net IRR" means an aggregate, annual, compound, gross internal
rate of return on investments, net of taxes and carried interest on
gross profit;
"Net MOIC" means gross multiple of invested capital net of taxes
and carried interest on gross profit;
"Net Profits" means the proceeds received from each realised
investment (after the expenses related to its disposal) minus the
acquisition price of that realised investment;
"Nomination Committee" means a formal committee of the Board
with defined terms of reference;
"NURS" means non-UCITS retail schemes;
"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;
"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;
"Other Riverstone Funds" means other Riverstone-sponsored,
controlled or managed entities, including Fund V/VI, which are or
may in the future be managed or advised by the Investment Manager
or one or more of its affiliates, excluding the Partnership;
"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;
"Placing and Open Offer" means the issuance of 8,448,006 new
Ordinary Shares at GBP8.00 per Ordinary Share on 11 December
2015;
"POI Law" means the Protection of Investors (Bailiwick of
Guernsey) Law, 1987, 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;
"Prospectuses" means the prospectus published on 24 September
2013 by the Company in connection with the IPO of Ordinary Shares
and further prospectus published on 23 November 2015;
"PRT" means Riverstone Performance Review Team;
"PSA" means a public service announcement;
"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;
"S&P Index" means the Standard & Poor's 500 Index;
"S&P Oil & Gas E&P Index" means the Standard &
Poor's Oil & Gas Exploration & Production Select Industry
Index;
"SCOOP" means South Central Oklahoma Oil Province;
"SEC" means the U.S. Securities and Exchange Commission;
"Sierra" means Sierra Oil and Gas Holdings, L.P.;
"SIFI" means Systemically Important Financial Institutions;
"Shareholder" means the holder of one or more Ordinary
Shares;
"SPPI" means solely payments of principal and interest;
"Standing Committee" means a formal committee of the Board with
defined terms of reference;
"Stewardship Code" means the UK Stewardship Code;
"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;
"Tender Offer" means up to GBP55,000,000 in value of Ordinary
Shares made by the Company in 2018;
"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;
"TRIF" means Total Recordable Incident Frequency;
"TSX" means Toronto Stock Exchange;
"UCITS" means undertakings for collective investment in
transferable securities;
"United States Bankruptcy Code" means the source of bankruptcy
law in the United States Code;
"United States Code" means the consolidation and codification by
subject matter of the general and permanent laws of the United
States;
"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;
"US GAAP" means the accounting principles generally accepted in
the United States;
"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 Company English solicitors to
Richard Hayden (Chairman) Secretary the Company
Peter Barker Ocorian Administration Hogan Lovells International
Patrick Firth (Guernsey) Limited LLP
Jeremy Thompson PO Box 286 Atlantic House
Claire Whittet Floor 2 Holborn Viaduct
Trafalgar Court London
Audit Committee Les Banques EC1A 2FG
Patrick Firth (Chairman) St Peter Port United Kingdom
Peter Barker Guernsey
Richard Hayden GY1 4LY Guernsey advocates to
Jeremy Thompson Channel Islands the Company
Claire Whittet Carey Olsen (Guernsey)
Registered office LLP
Management Engagement PO Box 286 Carey House
Committee Floor 2 PO Box 98
Claire Whittet (Chair) Trafalgar Court Les Banques
Peter Barker Les Banques St Peter Port
Patrick Firth St Peter Port Guernsey
Richard Hayden Guernsey GY1 4BZ
Jeremy Thompson GY1 4LY Channel Islands
Channel Islands
Nomination Committee U.S. legal advisors
Richard Hayden (Chairman) Registrar to the Company
Peter Barker Link Asset Services Vinson & Elkins LLP
Patrick Firth 65 Gresham Street 1001 Fannin Street
Jeremy Thompson London Suite 2500
Claire Whittet EC2V 7NQ Houston, Texas
United Kingdom TX 77002
Investment Manager United States of America
RIGL Holdings, LP Principal banker and
190 Elgin Avenue custodian Independent auditor
George Town Barclays Bank PLC Ernst & Young LLP
Grand Cayman PO Box 41 PO Box 9, Royal Chambers
KY1-9005 Le Marchant House St Julian's Avenue
Cayman Islands Le Truchot St Peter Port
St Peter Port Guernsey
Investment Manager's Guernsey GY1 4AF
Performance Review Team GY1 3BE Channel Islands
Bartow Jones Channel Islands
Pierre Lapeyre Corporate Brokers
David Leuschen JP Morgan Cazenove
Baran Tekkora 25 Bank Street
Canary Wharf
Website: www.RiverstoneREL.com London
ISIN: GG00BBHXCL35 E15 5JP
Ticker: RSE United Kingdom
Numis Securities Limited
The London Stock Exchange
Building
10 Paternoster Square
London
EC4M 7LT
United Kingdom
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 2021 for
RIVERSTONE ENERGY LIMITED (the "Fund").
Effective from 20th July 2015, the Fund 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 Fund 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 Fund 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 Chairman's Statement, the Investment Manager's Report and
the Report of the 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 Chairman's Statement, Investment Manager's Report and the
Report of the 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
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END
IR EANPXFLLFEFA
(END) Dow Jones Newswires
August 18, 2021 02:00 ET (06:00 GMT)
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