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RNS Number : 1639G
Riverstone Energy Limited
28 February 2018
 

Riverstone Energy Limited

Final results for the year ended 31 December 2017

London, 28 February 2018: Riverstone Energy Limited ("REL" or the "Company") announces its Year End Results from 1 January 2017 to 31 December 2017.

Summary performance

31 December 2017

 

NAV

$1,743 million

NAV per share

$20.63 / £15.27

Profit/(loss) during period

$44.6 million[1]

Basic profit/(loss) per share during period

52.82 cents

Market Capitalisation

£1,043 million / $1,409 million1 

Share price

£12.35 / $16.681

Highlights

§ As of 31 December 2017, REL had a NAV per share of $20.63, representing an increase of 52 cents or 2.6 per cent. versus NAV per share at 31 December 2016. On a Sterling basis, the NAV per share decreased by £1.02 or 6.2 per cent. compared with the end of 2016.

§ Liberty II and Meritage III were the main positive contributors within the portfolio to NAV over the year, while Fieldwood was the largest detractor to performance.

§ The passage of the United States Tax Cuts and Jobs Act had a positive impact for investors, resulting in a $31 million (37 cents per share) benefit to NAV, and will improve net returns for REL's future realisations in the United States.

§ REL made a partial realisation of its investment in Centennial Resource Development, Inc. through the sale of 4.3 million shares, resulting in gross proceeds of $87 million, at a Gross MOIC[2] of 1.8x (Net MOIC of 1.6x) and a Gross IRR2 of 74 per cent. (Net IRR of 59 per cent.). REL retains a substantial holding in Centennial, which has a gross unrealised value of $393 million as of 31 December 2017.

§ REL's largest exposure is to the Permian basin and Eagle Ford, where it has invested $472 million or 33 per cent. of its capital, followed by Western Canada where it has invested $412 million or 28 per cent. of its capital.

§ The Company invested a total of $194 million during the year, bringing net capital invested as of 31 December 2017 to $1,316 million, or 90 per cent. of net capital available[3].

§ REL withdrew commitments totaling $116 million to Origo and CanEra II, bringing net committed capital as of 31 December 2017 to $1,669 million, or 114 per cent. of net capital available3.

§ Subsequent to year end, REL announced the sale of Three Rivers III for gross cash proceeds of approximately $205 million, representing a Gross MOIC2 of 2.2x (Net MOIC of 1.9x) on the $94 million investment and a Gross IRR2 of 49 per cent. (Net IRR of 41 per cent.). This represents a gross profit of $111 million, which will be subject to a performance fee upon closing of the sale, which is expected to occur in April 2018 and is subject to customary closing conditions. The realised gain from this transaction was fully offset by net operating losses from prior years, resulting in no tax due.

 

Portfolio Update 

During the year, the Company made the following investments: 

Hammerhead Resources Inc. ("Hammerhead") (formerly Canadian International Oil Corporation "CIOC")

During the year, REL, through the Partnership, invested $64 million in Hammerhead.

 

ILX Holdings III, LLC ("ILX III")

During the year, REL, through the Partnership, invested $49 million in ILX III.

 

Liberty Resources II, LLC ("Liberty II")

During the year, REL, through the Partnership, invested $21 million in Liberty II.

 

Three Rivers Natural Resources Holdings III, LLC ("Three Rivers III")

During the year, REL, through the Partnership, invested $18 million in Three Rivers III.

 

Canadian Non-Operated Resources LP ("CNOR")

During the year, REL, through the Partnership, invested $10 million in CNOR.

 

Castex Energy 2014, LLC ("Castex 2014")

During the year, REL, through the Partnership, invested $8 million in Castex 2014.

 

Sierra Oil and Gas Holdings, L.P. ("Sierra")

During the year, REL, through the Partnership, invested $7 million in Sierra.

 

Other Investments

Invested $17 million to other investments including Eagle Energy Exploration, LLC, Carrier Energy Partners II, LLC, Meritage Midstream Services III, L.P., Origo Exploration AS and Fieldwood Energy, LLC.

Manager Outlook

§ The improvement in energy market sentiment provides a favourable environment for realisations.

§ The Investment Manager believes that energy producers in low-cost basins, with strong operational capabilities and an oil-weighting will continue to outperform.

§ North American energy investments retain an advantage in a global marketplace due to low breakeven costs, short cycle times and high asset liquidity.

§ The portfolio's 14 active investments as a whole are well placed to offer investors resilience and growth in a variety of commodity price environments.

Richard Hayden, Chairman of Riverstone Energy Limited, commented:

"2017 was another good year for REL as its investments continued to execute upon their strategies and the Company grew NAV. The improvement in oil market fundamentals offers a positive tailwind for the portfolio and provides an accommodative environment for REL to exit some of its more mature investments in 2018, as evidenced by the recent sale of Three Rivers III."

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

"REL delivered a number of operational successes over the course of 2017, including discoveries in the Gulf of Mexico from Sierra and ILX III and the completion of Meritage III's second gas processing plant. Our two largest investments, Hammerhead and Centennial, continue to experience strong well results and grow production. The combination of best-in-class operators, along with Riverstone's proven investment strategy, has resulted in a portfolio which is concentrated in North America's most attractive basins for oil production and is well placed to take advantage of the improvement in oil markets."    

- Ends -

 

Riverstone Energy Limited's 2017 Annual Report is available to view at: www.RiverstoneREL.com.

The Investment Manager will host a conference call with investors at 12:00 GMT today. Dial-in details are as follows:

Dial-in (UK): 0800 028 8438

Dial-in (Intl.): +44 (0) 203 107 0289

Conference ID: 5998205



 

4Q17 Quarterly Portfolio Valuation

 

Previously, on 5 February 2018, REL announced its quarterly portfolio summary as of 31 December 2017, inclusive of updated quarterly unaudited fair market valuations:

 

Current Portfolio

 

 

Target Basin

Gross Committed Capital  ($mm)

Invested

Capital ($mm)

Realised

Capital ($mm)[4]

 

 

Net Invested Capital

($mm)[5]

 

Gross Realised & Unrealised Value ($mm)2

 

Gross MOIC2

Hammerhead Resources (formerly CIOC)

 

Deep Basin (Canada)

$307

$295

$23

$275

$561

1.9x

Centennial

 

Permian (U.S.)

268

268

87

219

479

1.8x

Three Rivers III

 

Permian (U.S.)

167

94

-

94

206

2.2x

Liberty II

 

Bakken, PRB (U.S.)

142

142

-

142

177

1.3x

ILX III

 

Deepwater GoM (U.S.)

200

116

-

116

139

1.2x

Carrier II

 

Permian (U.S.)

133

110

-

110

131

1.2x

RCO[6]

 

North America

125

87

82

23

99

1.1x

CNOR

 

Western Canada

90

83

-

83

83

1.0x

Meritage III[7]

 

Western Canada

67

34

-

34

59

1.8x

Eagle II

 

Mid-Continent (U.S.)

67

62

-

62

56

0.9x

Castex 2014

 

Gulf Coast Region (U.S.)

67

44

-

44

44

1.0x

Sierra

 

Mexico

38

8

-

8

20

2.4x

Fieldwood

 

GoM Shelf (U.S.)

82

59

3

59

12

0.2x

Castex 2005

 

Gulf Coast Region (U.S.)

50

48

-

48

5

0.1x

Total Current Portfolio[8]

$1,802

$1,449

$195

$1,316

$2,071

1.4x

Percentage of REL net capital available3      

 

 

 

90%

 

 

 

 

 

 

 

Realisations

 

 

 

 

 

 

 

 

 

 

 

Target Basin

Gross Committed Capital  ($mm)

Invested

Capital ($mm)

Realised

Capital ($mm)4

 

Unrealised Value

($mm)

Gross Realised & Unrealised Value ($mm)2

Gross MOIC2

 

Rock Oil[9]

 

Permian (U.S.)

-

114

229

11

240

2.1x

 

CanEra III

 

Western Canada

-

1

1

-

1

0.4x

Origo

 

North Sea (Norway, U.K.)

-

9

-

-

-

0.0x

Total Investments8

 

$1,574

$425

 

$2,311

1.5x

 

About Riverstone Energy Limited:

REL is a closed-ended investment company that invests exclusively in the global energy industry, with a particular focus on the exploration & production and midstream sectors.  REL aims to capitalise on the opportunities presented by Riverstone's energy investment platform.  REL is a member of the FTSE 250 and its ordinary shares are listed on the London Stock Exchange, trading under the symbol RSE.  REL has 14 active investments spanning conventional and unconventional oil and gas activities in the Continental U.S., Western Canada, Gulf of Mexico, Mexico and credit.

For further details, see www.RiverstoneREL.com

Neither the contents of REL's website nor the contents of any website accessible from hyperlinks on the websites (or any other website) is incorporated into, or forms part of, this announcement.

 

Media Contacts

For Riverstone Energy Limited:

Brian Potskowski

Natasha Fowlie

+44 20 3206 6300

 

 

 

 

 

 

 

 

 

 

 

Note: 

The Investment Manager is charged with proposing the valuation of the assets held by REL through the Partnership. The Partnership has directed that securities and instruments be valued at their fair value. REL's valuation policy follows IFRS and IPEV Valuation Guidelines. The Investment Manager values each underlying investment in accordance with the Riverstone valuation policy, the IFRS accounting standards and IPEV Valuation Guidelines. The Investment Manager has applied Riverstone's valuation policy consistently quarter to quarter since inception. The value of REL's portion of that investment is derived by multiplying its ownership percentage by the value of the underlying investment. If there is any divergence between the Riverstone valuation policy and REL's valuation policy, the Partnership's proportion of the total holding will follow REL's valuation policy. There were no valuation adjustments recorded by REL as a result of differences in IFRS and U.S. Generally Accepted Accounting Policies for the year ended 31 December 2017 or in any period to date. Valuations of REL's investments through the Partnership are determined by the Investment Manager and disclosed quarterly to investors, subject to Board approval.

Riverstone values its investments using common industry valuation techniques, including comparable public market valuation, comparable merger and acquisition transaction valuation, and discounted cash flow valuation.

For development-type investments, Riverstone also considers the recognition of appreciation or depreciation of subsequent financing rounds, if any. For those early stage privately held companies where there are other indicators of a decline in the value of the investment, Riverstone will value the investment accordingly even in the absence of a subsequent financing round.

Riverstone reviews the valuations on a quarterly basis with the assistance of the Riverstone valuation committee as part of the valuation process.

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.



[1] GBP:USD Fx rate of 1.351 as of 31 December 2017.

                    [2] Gross MOIC is Gross Multiple of Invested Capital. Gross Unrealised Value and Gross MOIC 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 gross profits (without a hurdle rate). Since there is no netting of losses against gains, 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 per annum and other expenses. Given these costs, fees and expenses are in                       aggregate expected to be considerable, Total Net Value, Net MOIC and Net IRR will be materially less than Gross Unrealised Value, Gross MOIC and Gross IRR. 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] Net capital available of $1,464 million is based on total capital raised of $1,320 million, bank loan of $100 million (maturing 27 June 2018), realised profits                          and      other    income  net of fees,     expenses and performance allocation. The Board does not expect to fully fund all commitments in the normal course of business.

    [4] Realised capital is total gross proceeds realised on invested capital. Of the $425 million of capital realised to date, $248 million is the return of the cost basis, and the remainder is profit.

[5] Net invested capital is total invested capital less cost basis of the realised capital.

[6] Credit investment.

[7] Midstream investment.

[8] Amounts may vary due to rounding.

[9] The unrealised value of the Rock Oil investment consists of rights to mineral acres.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 

END

 
 

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