Press release

23 November 2015

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

This announcement is an advertisement and not a prospectus. It does not constitute an offer of securities for sale or subscription in any jurisdiction. Investors should not subscribe for or purchase any securities referred to in this announcement except in compliance with applicable securities laws and only on the basis of information in the prospectus (the "Prospectus") intended to be published today by Riverstone Energy Limited (the "Company") in connection with the issue and the proposed admission of new ordinary shares (the "New Ordinary Shares") to listing on the Premium Segment of the Official List (the "Official List") of the Financial Conduct Authority (the "FCA") and to trading on the main market for listed securities of London Stock Exchange plc (the "London Stock Exchange") (together, "Admission"). A copy of the Prospectus will be available for inspection, subject to applicable securities laws, from the Company's website at www.RiverstoneREL.com.

Launch of Proposed Placing and Open Offer

·     Riverstone Energy Limited (the "Company" or "REL") intends to raise approximately £65 million through a placing and open offer (the "Placing and Open Offer")

·     The Company intends to increase its stake in Canadian International Oil Corp. ("CIOC"), an existing portfolio company, by up to US$67 million, equivalent to approximately 20% of REL's enlarged gross assets, pursuant to a tender offer for outstanding shares and warrants of CIOC (the "Tender Offer")

·     The Company currently owns, indirectly through an entity ultimately controlled by Riverstone Holdings LLC ("Riverstone"), 14% of CIOC. This will increase to 16% as a result of recent investments due to complete in early December 2015. In total, Riverstone-managed funds currently own 41% of CIOC, rising to 49% following the recent investments 

·     An open offer (the "Open Offer") for approximately £65 million will be launched later today on the basis of 1 New Ordinary Share for every 9 REL ordinary shares in issue 

·     AKRC Investments, LLC ("AKRC"), a cornerstone investor from REL's initial public offering ("IPO"), has irrevocably committed to take up its pro rata holding of 26.15% in the Open Offer.  In addition, AKRC has irrevocably committed to subscribe for shares in the excess application facility of the Open Offer such that its shareholding of the enlarged Company, following the Placing and Open Offer, will be 27.5%

·     As part of the capital raise of approximately £65 million, an underwritten placing of approximately £48 million of New Ordinary Shares (the "Placing") is being launched immediately following this announcement

·     Certain investors from REL's IPO (including REL Coinvestment LP) holding, in aggregate, approximately 26 % of the Ordinary Shares currently in issue, have irrevocably undertaken not to take up their Open Offer entitlements such that under the Placing there will be an opportunity for new investors to gain immediate exposure to the existing investment portfolio.  This amounts to approximately £17 million of New Ordinary Shares ("Non-Claw Back Shares").  The remaining shares in the Placing will be subject to clawback under the Open Offer

·     The number of New Ordinary Shares to be issued under the Placing and the issue price of the Placing and Open Offer will be determined at the close of the bookbuild for the Placing expected later this morning and announced shortly thereafter 

·     To the extent that all of the net proceeds of the Placing and Open Offer are not utilised to acquire CIOC securities tendered under the Tender Offer, the Investment Manager will invest the remaining proceeds of the Placing and Open Offer  in accordance with the Company's investment objective and investment policy

·     The Company has agreed not to issue further shares for 6 months following Admission pursuant to a lock-up arrangement with J.P. Morgan Cazenove and Goldman Sachs (the "Joint Sponsors")

Sir Robert Wilson, Chairman of REL commented:

"This is a unique opportunity to increase our ownership in one of our best performing portfolio companies, as evidenced by CIOC's rapid production growth. The capital we are raising and investing will allow us to take advantage of this specific opportunity offering significant long-term value enhancement for REL investors. Furthermore, the additional capital will enable us to continue to participate in attractive investments within our portfolio."

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

"The investment opportunity in Western Canada's Deep Basin is sizable, very robust even in a low oil and gas price environment, and consistent with Riverstone's strategy of partnering with great management teams to drive top line growth while managing risks carefully. We are pleased that REL will be able to continue to participate materially in this investment."

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) and Goldman Sachs International ("Goldman Sachs") have been appointed as Joint Global Co-Ordinators, Joint Bookunners and Joint Sponsors in respect of the Placing and Open Offer. 

Expected Timetable of Principal Events

Each of the times and dates in the above timetable is subject to change. References to times are to London time unless otherwise stated. Temporary documents of title will not be issued.

The Opportunity in CIOC

Canadian International Oil Corp. is a Calgary-based upstream oil and gas company focused on the delineation and development of its Deep Basin position in West Central Alberta. It is a widely held private Canadian company which is not listed on a stock exchange. Since its establishment in 2009, CIOC has aggregated one of the largest and most advantaged land positions in the emerging Montney and Duvernay formations of Western Canada's Deep Basin. CIOC controls and operates approximately 94 % of this asset base, which comprises approximately 192,000 acres prospective for the Montney and 219,000 acres prospective for the Duvernay. CIOC's management team focuses their substantial technical expertise on growing production organically and delineating the company's resource base through a combination of development and step-out pilot drilling.

At the time of the Company's initial investment in CIOC, CIOC was producing 3,000 BoE/d from 14 wells. CIOC has been successful in rapidly growing production and has tripled production capacity to over 10,000 BoE/d as at November 2015. By year-end 2015, CIOC is expected to have drilled 42 wells compared with over 2,000 risked potential future drilling locations. REL valued CIOC at 1.3 times the cost of investment as at 30 September 2015.  

REL's Investment in CIOC

Prior to the Tender Offer the Company owns, indirectly through a Riverstone-controlled entity, 14% of CIOC's issued share capital (and including Fund V, a Riverstone-controlled fund, Riverstone managed funds own 41%).  This will increase to 16% for REL (and 49% for Riverstone-managed funds in total) as a result of recent investments due to complete in early December 2015. A Riverstone-controlled entity has obtained a binding commitment from a shareholder of CIOC pursuant to which it will acquire the shareholder's 2.9% equity interest for a total consideration of US$18.8 million. In order to acquire these and further shares in CIOC, the entity is required under applicable Canadian securities laws, to offer to purchase all outstanding shares in CIOC on the same terms.  The cash consideration is CAD$1.675 per common share of CIOC and CAD$0.475 per warrant.  Each warrant has an exercise price of CAD$1.20 per warrant.  The Company may acquire additional shares and warrants of CIOC up to a maximum amount which ensures that the fair market value of the Company's indirect holding in CIOC shall not exceed 20 % of the gross assets of the Company as enlarged by the Placing and Open Offer.

Were the Company to acquire such number of the issued shares and warrants of CIOC that are not owned by the Company or Fund V so that the market value of its holding equals 20% of the Company's gross assets as enlarged by the Placing and Open Offer, the Company's indirect investment into CIOC, pursuant to the Tender Offer, would amount to an investment of approximately US$67 million. The balance of the investment into tendered shares to be acquired indirectly by other entities managed or controlled by Riverstone and its affiliates would be approximately US$244 million (excluding fees and expenses associated with the tender) such that they and the Company would own 100 % of the issued common shares and warrants of CIOC.

The Open Offer

The full terms of the Open Offer, which will be for approximately £65 million, will be announced later today.  Qualifying Shareholders (defined below) will be offered the opportunity to subscribe for New Ordinary Shares on the basis of 1 New Ordinary Share ("Open Offer Entitlements") for every 9 Ordinary Shares held and registered in their name as at the close of business on the record date. An excess application facility will permit Qualifying Shareholders who have applied for their Open Offer Entitlements in full to apply for additional New Ordinary Shares (the "Excess Application Facility"). The Excess Application Facility will comprise New Ordinary Shares that are not taken up by Qualifying Shareholders under the Open Offer pursuant to their Open Offer Entitlements but excluding the Non-Claw Back Shares. The Company (in consultation with the Joint Sponsors and the Company's investment manager) will determine how the excess is allocated as between the Excess Application Facility and the Placing and how applications under the Excess Application Facility are scaled back, except that the Non-Claw Back Shares will not be subject to scaling back.

"Qualifying Shareholders" are shareholders included on the register of shareholders of the Company on the record date, other than those located or resident in, or who have a registered address in, any jurisdiction where the extension or availability of the Open Offer would breach applicable local laws.

Further details of the Placing and Open Offer will be included in the Prospectus.

ILX III

Since REL's Q3 2015 Interim Management Statement, the Company has made a commitment of up to $200 million to ILX Holdings III LLC ("ILX III"), a newly-formed, Houston-based joint-venture with Ridgewood Energy Corporation ("REC").

ILX III represents the third partnership between Riverstone and REC's operating team. Similar to Riverstone's prior successful partnerships with ILX III management in ILX Holdings LLC ("ILX I") and ILX Holdings II LLC ("ILX II"), ILX III is being established to pursue the strategy of developing oil and gas fields in deepwater Gulf of Mexico ("GOM") in areas where first production may be accelerated by accessing existing nearby infrastructure and where analogous discoveries are expected to increase the Company's chance of success. Riverstone has participated in the drilling of 15 deepwater exploration wells of which 13 have been deemed commercially successful discoveries (87% success rate) since the initial partnership with REC in 2010.

REC's operating team is led by Kenny Lang (President and COO, REC), a 33‐year veteran, who spent 24 years at BP, where he most recently served as SVP of the GOM business and managed over 2,000 employees while overseeing an annual budget of $2.5 billion and 400,000 barrels of daily production. In addition, the management team includes Pete Zwart, a 37‐year veteran, who spent 29 years at BP and most recently served as CFO of the GOM business and Joe Morris, a 35‐year veteran, who previously served as the Geoscience Authority for BP's GOM deepwater unit.

About REL

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.  To date, REL has made 16 investments spanning conventional and unconventional oil and gas activities in the Gulf of Mexico, Continental U.S., Western Canada, the U.K. North Sea, the Norwegian Sea, Mexico 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.

Important Notices

Neither this announcement nor any copy of it may be made or transmitted into the United States of America (including its territories or possessions, any state of the United States of America and the District of Columbia) (the "United States"), or distributed, directly or indirectly, in the United States. Neither this announcement nor any copy of it may be taken or transmitted directly or indirectly into Australia, Canada, Japan or South Africa or to any persons in any of those jurisdictions, except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese or South African securities laws. The distribution of this announcement in other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for securities in the United States, Australia, Canada, Japan or South Africa or in any jurisdiction to whom or in which such offer or solicitation is unlawful.

The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended. In addition, the New Ordinary Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and, subject to certain exceptions, may not be offered, sold, pledged, or otherwise transferred, directly or indirectly, in or into the United States or to or for the account or benefit of US persons (as such terms are defined in Regulation S under the Securities Act). There will be no public offer of the New Ordinary Shares in the United States.

The securities to which this announcement relates have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any United States regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the New Ordinary Shares or the accuracy of adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

The securities referred to herein have not been registered under the applicable securities laws of Australia, Canada, Japan or South Africa and, subject to certain exceptions, may not be offered or sold within Australia, Canada, Japan or South Africa or to any national, resident or citizen of Australia, Canada, Japan or South Africa.

Marketing for the purposes of the Directive 2011/61/EU (the "AIFMD") by the Company and/or a third party on its behalf of the New Ordinary Shares in relation to the Placing and Open Offer will only take place in an EEA Member State if the Company is appropriately registered or has otherwise complied with the requirements under AIFMD (as implemented in the relevant EEA Member State) necessary for such marketing to take place.

Any purchase of New Ordinary Shares in the Placing and Open Offer should be made solely on the basis of the information contained in the Prospectus, which contains detailed information about the Company and its management.

J.P. Morgan Securities plc and Goldman Sachs International are each authorised by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the FCA. Each of the Joint Sponsors is acting exclusively for the Company and no one else in connection with Admission. None of the Joint Sponsors will regard any other person (whether or not a recipient of this document) as a client in relation to the issue and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for the giving of advice in relation to Admission or any transaction, matter or arrangement referred to in this announcement. The Joint Sponsors are not advising the Company or any other person on the Tender Offer.