2Q19 Quarterly Portfolio Valuations | Riverstone Energy Limited

RNS Number : 2775H

Riverstone Energy Limited

31 July 2019

- THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION -

Riverstone Energy Limited Announces 2Q19 Quarterly Portfolio Valuations

London, UK (31 July 2019) - Riverstone Energy Limited ("REL") announces its quarterly portfolio summary as of 30 June 2019, inclusive of updated quarterly unaudited fair market valuations:

Current Portfolio

Investment (Initial Investment Date)	Target Basin	Gross Committed Capital ($mm)	Invested Capital ($mm)	Gross Realised Capital ($mm)[1]	Gross Unrealised Value ($mm)	Gross Realised Capital & Unrealised Value ($mm)	30 Jun 2019 Gross MOIC2	31 Mar 2019 Gross MOIC²
Centennial (6 Jul 2016)	Permian (U.S.)	$268	$268	$172	$115	$287	1.1x	1.1x
Hammerhead Resources (27 Mar 2014)	Deep Basin (Canada)	307	295	23	202	225	0.8x	1.0x
ILX III (8 Oct 2015)	Deepwater GoM (U.S.)	200	155	2	200	202	1.3x	1.3x
Liberty II (30 Jan 2014)	Bakken, PRB (U.S.)	142	142	-	128	128	0.9x	1.1x
Carrier II (22 May 2015)	Permian & Eagle Ford (U.S.)	133	110	22	66	88	0.8x	1.0x
RCO3 (2 Feb 2015)	North America	80	80	79	3	82	1.0x	1.1x
Fieldwood (17 Mar 2014)	GoM Shelf (U.S.)	89	88	8	54	62	0.7x	0.6x
Castex 2014 (3 Sept 2014)	Gulf Coast Region (U.S.)	67	50	-	35	35	0.7x	0.7x
CNOR (29 Aug 2014)	Western Canada	90	90	-	27	27	0.3x	0.5x
Ridgebury H3 (19 Feb 2019)	Global	22	18	-	20	20	1.1x	1.0x
Total Current Portfolio⁴		$1,398	$1,296	$305	$849	$1,154	0.9x	1.0x

Realisations

Investment (Initial Investment Date)	Target Basin		Gross Committed Capital ($mm)	Invested Capital ($mm)	Gross Realised Capital ($mm)¹	Gross Unrealised Value ($mm)	Gross Realised Capital & Unrealised Value ($mm)	30 Jun 2019 Gross MOIC²	31 Mar 2019 Gross MOIC²
Rock Oil5 (12 Mar 2014)	Permian (U.S.)		114	114	231	8	239	2.1x	2.1x
Three Rivers III (7 Apr 2015)	Permian (U.S.)		94	94	203	-	203	2.2x	2.2x
Meritage III6 (17 Apr 2015)		Western Canada	62	40	83	-	83	2.1x	2.1x
Sierra (24 Sept 2014)		Mexico	18	18	39	-	39	2.1x	2.1x
Total Realisations⁴			$290	$267	$557	$8	$565	2.1x	2.1x
Withdrawn Commitments and Impairments7			121	121	1	-	1	0.0x	0.0x
Total Investments⁴			$1,809	$1,683	$862	$857	$1,719	1.0x	1.1x
Cash and Cash Equivalents						$219
Total Investments & Cash and Cash Equivalents⁴						$1,076

About Riverstone Energy Limited:

REL is a closed-ended investment company that invests exclusively in the global energy industry across all sectors. REL aims to capitalise on the opportunities presented by Riverstone's energy investment platform. REL 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 11 active investments spanning oil and gas, midstream, and energy services in the Continental U.S., Western Canada, Gulf of Mexico, Latin America and credit.

For further details, see www.RiverstoneREL.com

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

Media Contacts

For Riverstone Energy Limited:

Natasha Fowlie

Brian Potskowski

+44 20 3206 6300

Note:

The Investment Manager is charged with proposing the valuation of the assets held by REL through the Partnership. The Partnership has directed that securities and instruments be valued at their fair value. REL's valuation policy follows IFRS and IPEV Valuation Guidelines. The Investment Manager values each underlying investment in accordance with the Riverstone valuation policy, the IFRS accounting standards and IPEV Valuation Guidelines. The Investment Manager has applied Riverstone's valuation policy consistently quarter to quarter since inception. The value of REL's portion of that investment is derived by multiplying its ownership percentage by the value of the underlying investment. If there is any divergence between the Riverstone valuation policy and REL's valuation policy, the Partnership's proportion of the total holding will follow REL's valuation policy. There were no valuation adjustments recorded by REL as a result of differences in IFRS and U.S. Generally Accepted Accounting Policies for the period ended 30 June 2019 or in any period to date. Valuations of REL's investments through the Partnership are determined by the Investment Manager and disclosed quarterly to investors, subject to Board approval.

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

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

Riverstone reviews the valuations on a quarterly basis with the assistance of the Riverstone Performance Review Team ("PRT") as part of the valuation process. The PRT was formed to serve as a single structure overseeing the existing Riverstone portfolio with the goal of improving operational and financial performance.

The 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 2019 will form part of REL's 2019 interim financial statements, which are scheduled to be released on 14 August 2019, and are subject to an interim review under ISRE2410, which will be undertaken by Ernst & Young LLP on behalf of the Directors.

[1] Gross realised capital is total gross proceeds realised on invested capital. Of the $862 million of capital realised to date, $573 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 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 (including cash) per annum and other expenses. Given these costs, fees and expenses are in aggregate expected to be considerable, Total Net Value and Net MOIC will be materially less than Gross Unrealised Value and Gross MOIC. Local taxes, primarily on U.S. assets, may apply at the jurisdictional level on profits arising in operating entity investments. Further withholding taxes may apply on distributions from such operating entity investments. In the normal course of business, REL may form wholly-owned subsidiaries, to be treated as C Corporations for US tax purposes. The C Corporations serve to protect REL's public investors from incurring U.S. effectively connected income. The C Corporations file U.S. corporate tax returns with the U.S. Internal Revenue Service and pay U.S. corporate taxes on its taxable income.

3 Credit investment.

4 Amounts may vary due to rounding.

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

6 Midstream investment.

7 Withdrawn commitments consist of Origo ($9 million) and CanEra III ($1 million), and impairments consist of Eagle II ($62 million) and Castex 2005 ($48 million).

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

END

STRVBLFXKDFEBBX

Press release