Press release

Riverstone Energy Limited

Final results for the half year ended 30 June 2019

London, UK (14 August 2019) - Riverstone Energy Limited ("REL" or the "Company") announces its Half Year Results for the 6-month period ("the "Period") from 1 January 2019 to 30 June 2019.

Summary Performance

30 June 2019

Highlights

§ As of 30 June 2019, REL had a NAV per share of $13.24 (£10.43)¹, representing a decrease in USD and GBP of 26 per cent. compared to the 31 December 2018 NAV.

§ Hammerhead, Centennial and CNOR were the largest drivers of REL's NAV decline over the Period.

§ During the Period, REL, through the Partnership, received $133 million in gross proceeds from the realization of its investments in Meritage III ($83 million), Sierra ($39 million), and Three Rivers III ($3 million), as well as distributions from Carrier II ($6 million) and ILX III ($2 million).

§ The Company, through the Partnership, invested a total of $24 million during the period, bringing net capital invested as of 30 June 2019 to $991 million, or 82 per cent of net capital available^[2].

§ During the first half of 2019, REL committed up to $22 million to Ridgebury and withdrew commitments totaling $28 million to Sierra, Meritage III, and Eagle II, bringing net committed capital as of 30 June 2019 to $1,116 million, or 92 per cent of net capital available².

§ REL finished the Period with a cash balance of $219 million and remaining unfunded commitments of $125 million.

§ On 26 April 2019, Riverstone Holdings LLC ("Riverstone") announced the formation of Onyx Strategic Investment Management I BV ("Onyx"), a European independent power producer. The investment in Onyx will be funded with an initial equity commitment from REL, Riverstone Global Energy and Power Fund VI, L.P., and other Riverstone managed vehicles. Further details on REL's commitment of up to $66 million will be provided upon close of the transaction, which is expected to occur later this year following the receipt of regulatory and other approvals.

§ On 28 June 2019, Riverstone announced the signing of an agreement for REL to invest in Aleph Midstream S.A. ("Aleph"), an independent Argentine oil and gas gathering and processing-focused midstream company, in line with REL's previously-stated modified investment approach. Aleph has received a $103 million commitment from funds affiliated to Riverstone (comprising $100 million from REL and $3 million from other investors) alongside commitments of $54 million from Southern Cross Group, $45 million from Vista Oil & Gas ("Vista"), and approximately $3 million from the Aleph and Vista management teams, for a total commitment of approximately $205 million, expected to be deployed over the next 24 months. Upon closing of the transaction, which occurred in July 2019, Aleph began funding the construction of infrastructure necessary to provide gathering, processing, and evacuation midstream services to oil and gas producers in the Vaca Muerta.

Portfolio Update

Below is a summary of material activity in the portfolio during the Period.

Meritage Midstream Services III, L.P. ("Meritage III")

REL, through the Partnership, received sale proceeds of $83 million from Meritage III.

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

REL, through the Partnership, received sale proceeds of $39 million from Sierra.

Carrier Energy Partners II, LLC ("Carrier II")

REL, through the Partnership, received income distributions of $6 million from Carrier II.

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

REL, through the Partnership, received escrow proceeds of $3 million from Three Rivers III.

ILX Holdings III, LLC ("ILX III")

REL, through the Partnership, received income distributions of $2 million from ILX III.

Ridgebury H3 LLC ("Ridgebury")

REL, through the Partnership, invested $18 million in Ridgebury.

ILX Holdings III, LLC ("ILX III")

REL, through the Partnership, invested $4 million in ILX III.

Castex Energy 2014, LLC ("Castex 2014")

REL, through the Partnership, invested $3 million in Castex 2014.

Manager Outlook

§ REL's $219 million cash balance makes the Company well placed to make its new investments in Onyx and Aleph, as well as grow its existing Portfolio. Pro forma for these new commitments, the Company has remaining unfunded commitments of up to $291 million; however, the Board, in consultation with the Investment Manager, does not expect to fully fund all commitments in the normal course of business.

§ The Investment Manager believes the current market environment is generating attractive opportunities in midstream, energy services and power, and will continue to seek to invest in opportunities that span the entire energy value chain to diversify its portfolio.

§ To effect this change in portfolio construction, REL expects to make more investments independently of Riverstone's private funds going forward.

§ A continued focus on operational excellence will remain critical to driving value across the commodity price cycle.

§ The Company's Management Engagement Committee has been holding discussions with the Investment Manager regarding potential changes to the terms of the Investment Management Agreement.

Richard Hayden, Chairman of Riverstone Energy Limited, commented:

"Since the end of last year, REL has announced three new transactions that reflect its focus on diversifying the portfolio and implementing its modified investment approach.  The most recent commitment to Aleph Midstream, which is representative of the modified investment approach, provides an opportunity for REL to capitalise on the need for infrastructure in one of the most prolific shale basins outside of North America. We look forward to continuing to evaluate new opportunities and deploying capital in a tactical manner across subsectors to actively manage our portfolio construction."

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

"While spot prices for oil have improved modestly, the volatile nature of the geopolitical landscape has continued to negatively impact energy equities and valuations as investor sentiment remains weak. Despite the macro environment, we remain focussed on driving operational performance in order to maximise returns over the long-term as market conditions stabilise."

- Ends -

Riverstone Energy Limited's 2019 Interim Report is available to view at: www.RiverstoneREL.com.

2Q19 Quarterly Portfolio Valuation

Previously, on 31 July 2019, REL announced its quarterly portfolio summary as of 30 June 2019, inclusive of updated quarterly unaudited fair market valuations:

Current Portfolio

Realisations

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 formed part of REL's 2019 interim financial statements and were subject to an interim review under ISRE2410, which was undertaken by Ernst & Young LLP on behalf of the Directors.