Interim Report and Unaudited Interim Condensed Financial Statementsfor the six months ended 30 June 2016
A focus on long-term capital growth | Riverstone Energy Limited (LSE: RSE) |
Financial and Operational Highlights
· Total capital committed as of
· Total invested capital as of
· NAV per Share as at
Commitments during the period ended 30 June 2016
| Committed a total of $142 million: (i) $100 million to Carrier Energy Partners II LLC (ii) $42 million to Liberty Resources II LLC |
Art. 105 of the Delegated Regulation 213/2013 - Overview of the Investments as of 30 June 2016 | Invested a total of $203(2) million during the period to 30 June 2016: (i) $73 million in Carrier Energy Partners II LLC (ii) $45 million in Three Rivers Natural Resources Holdings III LLC (iii) $18 million in ILX Holdings III LLC (iv) $17 million in Liberty Resources II LLC (v) $17 million in Rock Oil Holdings LLC (vi) $11 million in Riverstone Credit Opportunities, L.P. (vii) $7 million in Meritage Midstream Services III, L.P. (viii) $6 million in Castex Energy 2014 LLC (ix) $4 million in Fieldwood Energy LLC (x) $3 million in Eagle Energy Exploration LLC (xi) $1 million in Origo Exploration Holding AS |
Key Financials
30 June 2016 | 31 December 2015 | 30 June 2015 | |
NAV as at | $1,372 million/ £1,035 million(3) | $1,347 million/ £915 million(3) | $1,244 million/ £791 million(3) |
NAV per Share as at | $16.24/£12.25(3) | $15.95/£10.83(3) | $16.36/£10.40(3) |
Market capitalisation at | $1,006 million/ £756 million(3) | $985 million/ £668 million(3) | $1,220 million/ £776 million(3) |
Share price at | $11.91/£8.95 (3) | $11.65/£7.91(3) | $16.04/£10.20(3) |
30 June 2016 | 30 June 2015 | |
Total comprehensive profit for the six months ended | $25.23 million | $4.06 million |
Basic earnings per Share for the six months ended | 29.86 cents | 5.33 cents |
(1) Based on total capital raised of
(2) Amounts may vary due to rounding
(3) Based on exchange rate of 1.326 $/£ at
Chairman's Statement
Well placed to profit from market rebalancing
Energy markets have continued to prove volatile over the past year, with the oil price climbing 30 per cent. in the past six months ending in June, following a 38 per cent. decline over the prior six months. However, the initial signs of rebalancing are now emerging as producers in
During the first half of the year, REL committed an additional
Although REL's commitments exceed capital raised, the portfolio remains relatively young due to its strategy of gradually deploying capital across the cycle. Because of this "build-up" approach, where Riverstone controls the pace and deployment of capital, the Board is comfortable with current commitment levels. The history of Riverstone investments has shown that not all of the commitments made to portfolio companies are ultimately funded and in some cases are cancelled altogether. For example, as of
REL's portfolio companies' management teams continued to make solid operational progress in the first half of the year. Meritage III's gathering and processing infrastructure became operational at the end of April, which will support CIOC as it continues to increase production from its extensive land position in Canada's
Valuations for some of the earlier investments made by REL continue to face challenges due to weak energy prices. However, the Company's build-up strategy, where capital is deployed gradually over time, has allowed several of its portfolio companies to benefit from industry distress, resulting in value accretion for Shareholders as evidenced by three of REL's four largest investments (CIOC, Rock Oil and Carrier II), being valued above cost. Throughout the portfolio, Riverstone continues to work with its portfolio companies' management teams to reduce operating expenses, hedge commodity price exposure where appropriate and maintain maximum capital flexibility to thrive in a variety of commodity price environments.
The recent announcement of the UK's exit from the EU has not impacted the portfolio, which is concentrated in
At our AGM in May, I was elected non-executive Chairman of the Board following Sir
Performance
REL made a profit of
per share at
As mentioned above, during the first half of the year, the Company made additional commitments of
As of
In the
In addition to acquisitions, REL invested approximately
Subsequent to the period ending on
In addition, REL announced an investment of up to
REL's activity over the past six months demonstrates the strength of Riverstone's "build-up" approach. This has resulted in REL developing a high-quality portfolio with best-in-class management teams focused on highly attractive basins for hydrocarbon production. With 16 investment platforms, and over
Chairman
(1) Based on total capital raised of
(2) Gross MOIC is Gross Multiple of
Investment Manager's Report
Well Positioned for Long Term Value Creation and Near Term Resiliency
It has been nearly two years since WTI traded over
Over the past 24 months, the energy market has gone through extreme turbulence, with oil prices declining by over 70 per cent. from peak to trough, resulting in significant financial stress and a dramatic decline in capital expenditure by industry participants. It is in times like these, that Riverstone's scale, experience and diversified investment approach serves to differentiate us from industry peers, particularly those who are less experienced in the energy sector. Riverstone has the benefit of a sixteen year history of private investing in energy, and its investment professionals have experience successfully investing in, and operating energy businesses through multiple commodity price cycles. The firm applies a disciplined approach to maintain maximum operational and capital flexibility under any commodity price environment.
One key element of Riverstone's strategy is the "build-up" approach, from which REL has particularly benefitted. REL began committing capital and establishing investment platforms soon after its formation. However the pace of capital actually invested has been markedly slower with the most attractive opportunities emerging after the decline in commodity prices, resulting in the REL portfolio being invested at a weighted average oil price of approximately
As well as creating an opportunity to acquire assets at attractive valuations, the decline in oil prices has driven a general high-grading of the energy sector. With energy companies having less capital to invest, there has been an increasing drive for efficiency and lowering cost of production. This is particularly notable in the North American upstream sector, where well costs have declined and production rates increased, resulting in materially lower breakeven costs and significant divergence in the economics of different basins. Riverstone has always focused on high quality assets, and the REL portfolio is favorably exposed to the basins which we see has having the most attractive economics, in particular the Permian, Eagle Ford and
While we are confident that the long term outlook for the sector remains favorable, we expect the energy market to continue to be volatile in the short term given uncertainties over global economic growth and North American oil production. We continue to manage risk through diversifying across geographies and energy segments, focusing on build-up strategies, partnering with experienced, operationally-focused management teams, hedging cash flows from producing assets, using moderate levels of debt with flexible covenant structures, and maintaining sufficiently high levels of liquidity to take advantage of attractive acquisition opportunities. With 15 management teams and substantial positions in North America's most attractive basins, REL is well placed to reward patient investors.
Investment Strategy
The Investment Manager's objective is to achieve superior risk adjusted, after tax, returns by making privately negotiated control investments primarily in the exploration and production and midstream energy sectors, which is 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.
Key Drivers:
• Capital constraints among companies with high levels of leverage;
• Industry distress and pressures to rationalise assets;
• Growing success rates of deepwater exploration and other technology-driven sources of reserves; and
• Historical under-investment in energy infrastructure.
The Investment Manager, through its affiliates, has an outstanding track record of building businesses with exceptional management teams and of delivering consistently strong returns and significant outperformance against both crude oil and natural gas benchmarks. The Company aims to capitalise on the opportunities presented by Riverstone's pipeline of investments.
The Investment Manager 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-focused professional advisory firms to assist with due diligence in other areas such as accounting, tax, legal, employee benefits, environmental, engineering and insurance.
Investment Portfolio Summary
As of
CIOC
As of
As of
Rock Oil
As of
As of
Liberty II
As of
As of
CNOR
As of
As of
Castex 2005
As of
As of
Fieldwood
As of
As of
Eagle II
As of
As of
Carrier II
As of
As of
Castex 2014
As of
As of
ILX III
As of
As of
RCO
As of
As of
Meritage III
As of
As of
Three Rivers III
As of
As of
Origo
As of
As of
Sierra
As of
As of
CanEra III
As of
As of
Going Concern
Of the
As at
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 and midstream energy sectors. Its principal risks are therefore related to market conditions in the energy sector in general, but also the particular circumstance of the businesses in which it is invested through the Partnership. The Investment Manager, through 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 and 3) inherent risks associated with the exploration and production and midstream energy subsectors.
The principal risks and uncertainties of REL were identified in further detail in the 2015 Annual Report and Financial Statements. There have been no changes to REL's principal risks and uncertainties in the six-month period to
Subsequent Events and Outlook
In
In
Also in
(1) Gross MOIC is Gross Multiple of
(2) Amount is subject to additional taxes up to approximately
Directors' Responsibilities Statement
The Directors are responsible for preparing this Interim Financial 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 meet the requirements of an interim management report, and include a fair review of the information required by:
(i) DTR 4.2.7R of the Disclosure 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 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
Chairman
Independent Review Report to
We have been engaged by the Company to review the condensed set of financial statements in the Interim Financial Report for the six months ended
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (
Directors' Responsibilities
The Interim Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Interim Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's
As disclosed in Note 2, the Financial Statements of the Company are prepared in accordance with IFRSs as adopted by the
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Interim Financial Report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Financial Report for the six months ended
(1) The maintenance and integrity of the Company's website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website
(2) Legislation in
Condensed Statement of Financial Position
As at
Notes | 30 June 2016 $'000 (Unaudited) | 31 December 2015 $'000 (Audited) | |
ASSETS | |||
Non-current assets | |||
Investment at fair value through profit or loss | 6 | 1,367,148 | 1,345,150 |
Total non-current assets | 1,367,148 | 1,345,150 | |
Current assets | |||
Trade and other receivables | 252 | 683 | |
Cash and cash equivalents | 5,490 | 2,539 | |
Total current assets | 5,742 | 3,222 | |
TOTAL ASSETS | 1,372,890 | 1,348,372 | |
Current liabilities | |||
Trade and other payables | 516 | 1,183 | |
Total current liabilities | 516 | 1,183 | |
TOTAL LIABILITIES | 516 | 1,183 | |
NET ASSETS | 1,372,374 | 1,347,189 | |
EQUITY | |||
Share capital | 1,317,495 | 1,317,537 | |
Retained earnings | 54,879 | 29,652 | |
TOTAL EQUITY | 1,372,374 | 1,347,189 | |
Number of Shares in issue at period/year end | 10 | 84,480,064 | 84,480,064 |
Net Asset Value per Share ($) | 10 | 16.24 | 15.95 |
Net Asset Value per Share (£) | 10 | 12.25 | 10.83 |
The interim condensed financial statements were approved and authorised for issue by the Board of Directors on
Richard Hayden Chairman |
Patrick Firth Director |
Condensed Statement of Comprehensive Income
For the six months ended
Notes | 1 January 2016 to 30 June 2016 $'000 | 1 January 2015 to 30 June 2015 $'000 | |
Investment gain | |||
Change in fair value of investment at fair value through profit or loss | 6 | 27,498 | 5,892 |
Expenses | |||
Directors' fees and expenses | (384) | (495) | |
Legal and professional fees | (252) | (229) | |
Other operating expenses | (1,376) | (1,110) | |
Total expenses | (2,012) | (1,834) | |
Operating profit for the period | 25,486 | 4,058 | |
Finance income and expenses | |||
Foreign exchange loss | (259) | (3) | |
Interest income | - | 1 | |
Total finance income and expenses | (259) | (2) | |
Profit for the period | 25,227 | 4,056 | |
Other comprehensive income | - | - | |
Total comprehensive income for the period | 25,227 | 4,056 | |
Basic and Diluted Earnings per Share (cents) | 10 | 29.86 | 5.33 |
All activities derive from continuing operations.
Condensed Statement of Changes in Equity
For the six months ended
Share capital $'000 | Retained earnings $'000 | Total Equity $'000 | |
As at 1 January 2016 | 1,317,537 | 29,652 | 1,347,189 |
Profit for the period | - | 25,227 | 25,227 |
Total comprehensive income for the period | - | 25,227 | 25,227 |
Transactions with owners | |||
Share issue costs | (42) | - | (42) |
Total transactions with owners | (42) | - | (42) |
As at 30 June 2016 | 1,317,495 | 54,879 | 1,372,374 |
For the six months ended
Share capital $'000 | Retained earnings $'000 | Total Equity $'000 | |
As at 1 January 2015 | 1,218,811 | 21,211 | 1,240,022 |
Profit for the period | - | 4,056 | 4,056 |
Total comprehensive income for the period | - | 4,056 | 4,056 |
As at 30 June 2015 | 1,218,811 | 25,267 | 1,244,078 |
Condensed Statement of Cash Flows
For the six months ended
1 January 2016 to 30 June 2016 $'000 | 1 January 2015 to 30 June 2015 $'000 | |
Cash flows from operating activities | ||
Operating profit for the financial period | 25,486 | 4,058 |
Adjustments for: | ||
Net finance income | - | 1 |
Change in fair value on investment at fair value through profit or loss | (27,498) | (5,892) |
Movement in trade receivables | 431 | 273 |
Movement in trade payables | (667) | (157) |
Net cash used in operating activities | (2,248) | (1,717) |
Cash flow generated from investing activities | ||
Distribution from the Partnership | 5,500 | - |
Net cash generated from investing activities | 5,500 | - |
Cash flow used in financing activities | ||
Share issue costs | (42) | - |
Net cash used in financing activities | (42) | - |
Net movement in cash and cash equivalents during the period | 3,210 | (1,717) |
Cash and cash equivalents at the beginning of the period | 2,539 | 5,726 |
Effect of foreign exchange rate changes | (259) | (3) |
Cash and cash equivalents at the end of the period | 5,490 | 4,006 |
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
1. General information
The Company makes its investments through the Partnership, a
The Partnership invests alongside 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. Further detail of these investments is provided in the Investment Manager's Report.
2. Accounting policies
Basis of preparation
The Financial Statements for the year ended
These interim condensed financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting". They do not contain all the information and disclosures presented in the Financial Statements and should be read in conjunction with the Financial Statements for the year ended
The same accounting policies and methods of computation have been followed in the preparation of these interim condensed financial statements as were followed in the Financial Statements for the year ended
These interim condensed financial statements are presented in U.S. dollars and are rounded to the nearest $'000, unless otherwise indicated.
The Company's results do not vary significantly during reporting periods as a result of seasonal activity.
3. Critical accounting judgement and estimation uncertainty
The estimates and judgements made by management are consistent with those made in the Financial Statements for the year ended
4. Taxation
The taxation basis of the Company remains consistent with that disclosed in the Financial Statements for the year ended
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. Instead, each of the Company's Shareholders who are liable to U.S. taxes will take into account its 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. Neither the Company nor the Partnership are subject to
Local taxes 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. Based upon the current commitments and investments in Liberty II, Eagle II, Rock Oil, Fieldwood, Castex 2014, Castex 2005, Three Rivers III, Carrier II and ILX III, the future U.S. tax liability on profits is expected to be in the range of 35 to 41.5 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
The fair value of all other financial instruments approximates their carrying value.
Transfers during the period
There have been no transfers between levels during the period ended
Valuation methodology and process
The same valuation methodology and process was deployed in
For the period ended
Quantitative information about Level 3 fair value measurements as at
The table summarises the most significant valuation techniques and unobservable inputs used in those techniques together with relevant ranges and averages. The Board considers the inputs to be within a reasonable expected range based on their understanding of market transactions. This is not intended to imply that the likelihood of change or that possible changes in value would be restricted to this range.
Fair value | |||||||
(In Thousands) | Range | ||||||
Industry | 30/06/2016 | Valuation technique(s) | Unobservable input(s) | Low | High | Weighted average (a) | # of investments (b) |
Energy | $967,501 | Public comparables | 1P/2P Reserve multiple ($/Boe) | $9 | $23 | $15 | 3 |
EV / 2016E EBITDA multiple | 7.0x | 18.4x | 9.0x | 4 | |||
Transaction comparables | Valuation Multiple ($/Boepd) | $40,000 | $110,000 | $63,776 | 4 | ||
NAV Analysis | Oil Price Curve ($/bbl) | $40 | $70 | $46 | 6 | ||
Gas Price Curve ($/mcfe) | $2 | $3 | $3 | 6 | |||
$109,660 | Last round of financing | n/a | n/a | n/a | n/a | 3 | |
$61,369 | Other | Various | n/a | n/a | n/a | 4 | |
Total | $1,138,530 | (see Note 6) |
Quantitative information about Level 3 fair value measurements as at
Fair value | |||||||
(In Thousands) | Range | ||||||
Industry | 31/12/2015 | Valuation technique(s) | Unobservable input(s) | Low | High | Weighted average (a) | # of investments (b) |
Energy | $800,197 | Public comparables | 1P Reserve multiple ($/Boe) | $8 | $20 | $13 | 3 |
EV / 2015 EBITDA multiple | 3.7x | 9.3x | 6.1x | 4 | |||
Transaction comparables | Valuation Multiple ($/Boepd) | $18,837 | $97,500 | $62,582 | 4 | ||
NAV Analysis | Oil Price Curve ($/bbl) | $40 | $70 | $44 | 6 | ||
Gas Price Curve ($/mcfe) | $3 | $3 | $3 | 6 | |||
$58,929 | Last round of financing | n/a | n/a | n/a | n/a | 4 | |
$33,055 | Other | Various | n/a | n/a | n/a | 3 | |
Total | $892,181 | (see Note 6) |
(a) Calculated based on fair values
(b) Each of the Partnership's investments are valued using one or more of the techniques which utilise one or more of the unobservable inputs, so the amounts in the "# of investments" column will not aggregate to the total number of the Partnership's investments
The significant unobservable inputs used in the fair value measurement of the Partnership's investments at
The Board reviews and considers the fair value of the Partnership's investments arrived at by the Investment Manager before incorporating 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 that 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.
The Board approves the valuations performed by the Investment Manager and monitors the range of reasonably possible changes in significant observable inputs on a quarterly basis, as well as when needed due to changes in market conditions.
6. Investment at fair value through profit or loss
30 June 2016 $'000 | 31 December 2015 $'000 | |
Cost | ||
Brought forward at 1 January | 1,308,935 | 1,210,818 |
Investment in the Partnership | - | 98,117 |
Distribution from the Partnership | (5,500) | - |
Carried forward | 1,303,435 | 1,308,935 |
Fair value movement through profit or loss | ||
Brought forward at 1 January | 36,215 | 23,478 |
Fair value movement during period/year | 27,498 | 12,737 |
Carried forward | 63,713 | 36,215 |
Fair value at period/year end | 1,367,148 | 1,345,150 |
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.
Summary financial information for the Partnership
30 June 2016 $'000 | 31 December 2015 $'000 | |
Net Asset Value | ||
Investments at fair value before performance allocation(1) (see Note 5) | 1,138,530 | 892,181 |
General Partner's performance allocation | (36,387) | (26,159) |
Investments at fair value (net) | 1,102,143 | 866,022 |
Cash and cash equivalents | 92,605 | 349,458 |
Money market fixed deposits | 171,178 | 205,392 |
Investments payable | - | (74,008) |
Management fee payable - see Note 8 | (5,146) | (5,052) |
Other net assets | 6,368 | 3,338 |
Fair value of REL's investment in the Partnership | 1,367,148 | 1,345,150 |
(1) Investments at fair value after deferred tax on investment of $Nil (
Summary Income Statement
1 January 2016 to 30 June 2016 $'000 | 1 January 2015 to 30 June 2015 $'000 | |
Unrealised gain on investments(1) | 45,914 | 16,334 |
Realised gain and income on investment | 1,314 | 2,188 |
Other income | 1,075 | 1,154 |
Management fee expense - see Note 8 | (10,168) | (8,159) |
Other operating expenses | (409) | (1,134) |
Partnership's operating profit for the period | 37,726 | 10,383 |
General Partner's performance allocation | (10,228) | (4,491) |
Portion of the operating profit for the period attributable to REL's investment in the Partnership | 27,498 | 5,892 |
(1) Unrealised gain on investments after deferred tax on investment of $Nil (
7. Contingent liabilities
The Company's existing contingent liabilities in relation to the formation and initial expenses was
8. 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 eight non-executive Directors (
Mr
Mr
Directors' fees and expenses for the period ended
Partnership
In accordance with section 4.1(a) of the Partnership Agreement, the Company received a distribution from the Partnership of
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. The fee is payable quarterly in arrears and each payment is calculated using the quarterly Net Asset Value as at the relevant quarter end as further outlined on page 72 in the Financial Statements to
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 undertaking level, equal to 20 per cent. of the realised profits (if any) on the sale of any underlying asset of the Company. During the period to
The General Partner is entitled to receive its Performance Allocation in cash, all of which, after tax, Riverstone, through its affiliate RELCP, intends to reinvest in Ordinary Shares of the Company on the terms summarised in Part I and Part VIII of the IPO Prospectus.
Each of the
9. 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 Financial 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
All of the Company's non-current assets are located in the
Due to the Company's nature, it has no customers.
10. Earnings per Share and Net Asset Value per Share
Earnings per Share
1 January 2016 to 30 June 2016 | 1 January 2015 to 30 June 2015 | |||
Basic | Diluted | Basic | Diluted | |
Profit for the period ($'000) | 25,227 | 25,227 | 4,056 | 4,056 |
Weighted average numbers of Shares in issue | 84,480,064 | 84,480,064 | 76,032,058 | 76,032,058 |
EPS (cents) | 29.86 | 29.86 | 5.33 | 5.33 |
The Earnings 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
Net Asset Value per Share
30 June 2016 | 31 December 2015 | 30 June 2015 | |
NAV ($'000) | 1,372,374 | 1,347,189 | 1,244,078 |
Number of Shares in issue | 84,480,064 | 84,480,064 | 76,032,058 |
Net Asset Value per Share ($) | 16.24 | 15.95 | 16.36 |
Net Asset Value per Share (£)(1) | 12.25 | 10.83 | 10.40 |
(1) Based on exchange rate of 1.326 $/£ at
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.
11. Subsequent events
In
In
Also in
(2) Gross MOIC is Gross Multiple of
(3) Amount is subject to additional taxes up to approximately
Glossary of Capitalised Defined Terms
"1P reserve" means proven reserves;
"2P reserve" means proven and probable reserves;
"Administrator" means
"Admission" means admission, on
"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;
"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;
"CAD" means Canadian dollar;
"CanEra III" means
"Carrier II" means
"Castex 2005" means Castex Energy 2005 LLC;
"Castex 2014" means Castex Energy 2014 LLC;
"Centennial" means
"CIOC" means
"CNOR" means the
"Companies Law" means the Companies (
"Company" or "REL" means
"
"Corporate Brokers" means
"Corporate Governance Code" means The UK Corporate Governance Code 2014 as published by the
"E&P" means exploration and production;
"Eagle II" means
"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;
"EBITDAX" means earnings before interest, taxes, depreciation, amortisation and exploration expenses;
"ECI" means effectively connected income;
"EEA" means European Economic Area;
"EU" means the
"EV" means enterprise value;
"farm-in" means an arrangement whereby an operator buys in or acquires an interest in a lease owned by another operator on which oil or gas has been discovered or is being produced;
"FATCA" means Foreign Account Tax Compliance Act;
"FCA" means the
"Fieldwood" means
"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;
"Fund V" means
"Fund VI" means
"General Partner" means
"GFSC" or "Commission" means the
"GFSC Code" means the GFSC Finance Sector Code of Corporate Governance;
"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;
"Hunt" means
"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
"ILX III" means
"Interim Financial Report" means the Company's half-yearly report and unaudited interim condensed financial statements for period ended 30 June;
"Investment Manager" or "RIL" means
"Investment Management Agreement" means the investment management agreement dated
"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;
"ISIN" means an International Securities Identification Number;
"KFI" means
"Liberty II" means
"Listing Rules" means the listing rules made by the
"
"LSE Admission Standards" means the rules issued by the
"LTM" means last twelve months;
"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
"Meritage III" means
"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
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;
"Nomination Committee" means a formal committee of the Board with defined terms of reference;
"Official List" is the list maintained by the
"
"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
"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
"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
"POI Law" means the Protection of Investors (Bailiwick of
"Private Riverstone Funds" means Fund V, Fund VI 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
"PV-10" means present value of estimated future oil and gas revenues, net of estimated direct expenses, at an annual discount rate of 10 per cent.;
"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
"RCO" means
"recompletions" means the action and techniques of re-entering a well and redoing or repairing the original completion to restore a well's productivity;
"RELCP" means
"RIL" or "Investment Manager" means
"Riverstone" means
"Rock Oil" means
"SCOOP" means
"Sierra" means
"Shareholder" means the holder of one or more Ordinary Shares;
"Stewardship Code" means the UK Stewardship Code;
"Three Rivers III" means
"
"
"U.S." or "
"workover" means an oil well intervention involving invasive techniques, such as wireline, coiled tubing or snubbing, to pull and replace a completion;
"WTI" means West Texas Intermediate which is a grade of crude oil used as a benchmark in oil pricing;
"£" or "Pounds Sterling" means British pound sterling and "pence" means British pence; and
"$" means
Directors and General Information
Directors Richard Hayden (Chairman, effective from 19 May 2016) Claire Whittet Peter Barker Patrick Firth Pierre Lapeyre David Leuschen Ken Ryan (Appointed 19 May 2016) Jeremy Thompson (Appointed 19 May 2016)
Sir Robert Wilson (Resigned 19 May 2016) James Hackett (Resigned 19 May 2016)
Audit Committee Patrick Firth (Chairman, effective from 19 May 2016) Richard Hayden Peter Barker Claire Whittet Jeremy Thompson (Appointed 10 August 2016)
Management Engagement Committee Claire Whittet (Chairman, effective from 19 May 2016) Richard Hayden (effective from 19 May 2016) Peter Barker Patrick Firth Jeremy Thompson (Appointed 10 August 2016)
Nomination Committee Richard Hayden (Chairman, effective 19 May 2016) Peter Barker Patrick Firth Claire Whittet Jeremy Thompson (Appointed 10 August 2016)
Investment Manager Riverstone International Limited Clifton House 75 Fort Street P.O. Box 1350 George Town Grand Cayman KY1-1108 Cayman Islands
Investment Manager's Valuation Committee Pierre Lapeyre David Leuschen Tom Walker (effective from 31 March 2016) Mark Papa (effective from 31 March 2016) Ken Ryan (effective from 19 May 2016) | Administrator and Company Secretary Heritage International Fund Managers Limited Heritage Hall PO Box 225 Le Marchant Street St Peter Port Guernsey GY1 4HY Channel Islands
Registered office Heritage Hall PO Box 225 Le Marchant Street St Peter Port Guernsey GY1 4HY Channel Islands
Registrar Capita Registrars (Guernsey) Limited Longue Hougue House St Sampson Guernsey GY2 4JN Channel Islands
Principal banker ABN AMRO (Guernsey) Limited PO Box 253 Martello Court Admiral Park St. Peter Port Guernsey GY1 3QJ Channel Islands
English solicitors to the Company Freshfields Bruckhaus Deringer LLP 65 Fleet Street London EC4Y 1HS United Kingdom
Guernsey advocates to the Company Carey Olsen Carey House PO Box 98 Les Banques St Peter Port Guernsey GY1 4BZ Channel Islands | U.S. legal advisors to the Company Vinson & Elkins LLP 1001 Fannin Street Suite 2500 Houston, Texas TX 77002 United States of America
Independent auditor Ernst & Young LLP PO Box 9, Royal Chambers St Julian's Avenue St Peter Port Guernsey GY1 4AF Channel Islands
Website: www.RiverstoneREL.com ISIN: GG00BBHXCL35 Ticker: RSE
Public relations advisor Scott Harris UK Limited 71 Queen Victoria Street London EC4V 4BE United Kingdom
Corporate Brokers Goldman Sachs International Peterborough Court 133 Fleet Street London EC4A 2BB United Kingdom
JP Morgan Cazenove 25 Bank Street Canary Wharf London E15 5JP United Kingdom
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Cautionary Statement
The Chairman's Statement and Investment Manager's Report 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 and Investment Manager's Report 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 Manager, 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.
Heritage Hall, PO Box 225,
T +44 (0) 1481 716000
F: +44 (0) 1481 730617
Further information available online:
This information is provided by RNS