Press release

- THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION -

Riverstone Energy Limited Announces 2Q22 Quarterly Portfolio Valuations & NAV

London, UK (29 July 2022) - Riverstone Energy Limited ("REL" or the "Company") announces its quarterly portfolio summary as of 30 June 2022, inclusive of updated quarterly unaudited fair market valuations.

Current Portfolio - Conventional

Current Portfolio - Decarbonisation

Realisations

Geopolitical Dynamics and Commodity Market Volatility

Global commodity price volatility and pervasive tightness has created distinct winners and losers in the market. We would be remiss not to acknowledge that the benefit dispersed over the last six months arrives alongside incredible human toll, whether Ukrainian lives and socioeconomic progress lost to war and the effects thereof. One small, but not insignificant silver lining is an increase in momentum toward long-term decarbonisation. For example, the influx of capital available to the beneficiaries of market volatility-namely oil and gas producers-may for the first time facilitate major consolidation among traditional and renewable power producers. The major oil producers, including Shell, Equinor, and TotalEnergies have recently completed cost-benefit analyses of prospective renewable utility buy-out acquisitions to facilitate decarbonisation. This would be a divergence and acceleration from thus-far incremental build-out of renewable generation to satisfy net-zero pledges, and opportunistic capital expenditure for hydrocarbon E&P.

In the meantime, Europe will be reliant on legacy coal-fired generation to balance intermittency on the grid in the context of repudiation of Russian gas. We continue to feel the effects of the bullwhip, as energy commodity price volatility persists into the second half of the year. Whilst WTI and Brent prices are up 42 per cent. and 45 per cent. since the beginning of the year, they increased by only 7.2 per cent. and 6.4 per cent. over the quarter. While some deceleration in price increases in oil may signify an absorption of war-driven energy supply adjustments, oil prices have reached heights not seen since 2008. Gasoline prices have risen commensurately, but market conditions for natural gas are worse than when systematic market failure threw the globe into recession.

While current geopolitical tensions persist and the global economy continues to recover from pandemic conditions, we expect our energy trilemma: security, affordability, and the need to decarbonise to mitigate the worst effects of climate change and drive global market dynamics.

Quarterly Performance Commentary

REL's legacy portfolio investments have maintained their valuations quarter over quarter due to volatility in global energy prices. The market dynamics of particular benefit to the portfolio include the increase in liquefied natural gas exports powering the UK's net-exporter role in the European power landscape. They also include European mandates to maintain or increase generation from coal-fired assets in efforts to arrest runaway power prices on the continent. Macroeconomic tailwinds driving the constructive commodity environment have dovetailed with strong operational results from several of REL's legacy investments. Centennial Resource Development generated record free cash flows in the second quarter of the year and now represents half of the largest pure-play E&P company in the Delaware Basin post its business combination with Colgate. Legacy production and generation assets still predominate REL's gross unrealised investment value (62 per cent. at 30 June 2022). Continued debt paydown and prudent hedging programs by our upstream oil and gas companies have created a resilient and substantially de-risked portfolio of high-quality assets.

In the second quarter of the year, each of REL's privately held, conventional investments maintained or improved their marks. Investments with exposure to public markets were predominately marked down. This included REL's investments in Hyzon, Tritium, Enviva, and Solid Power, and is consistent with the market's overall performance-the S&P 500 is down 21 per cent. year-to-date, and 16 per cent. over the quarter. REL's investments in private decarbonisation companies largely maintained their value.

Over the quarter, REL invested $4 million in Group14, which is described below. Continued liquidity management at the legacy portfolio coupled with persistent, incremental efforts to decarbonise has continued to position REL's portfolio to benefit from the energy transition and decarbonisation movements.

Further information on REL's five largest positions, which account for 72 per cent. of the portfolio's gross unrealised value is set forth below:

Onyx

The Gross MOIC for Onyx remained flat from the first quarter at 2.50x. Power markets in Europe, while highly volatile, remain elevated due to the Russian invasion of Ukraine and associated concerns over gas supply. In addition to prioritising plant availability, the management team continues to work on several organic growth initiatives, including the implementation of operational performance improvements and the development of potential capital projects related to the energy transition.

Hammerhead

The Gross MOIC for Hammerhead increased from 0.50x to 0.53x during the second quarter. Given the strong macro environment, Hammerhead plans to continue ramping development in the second half of 2022. Hammerhead has hedged approximately 52 per cent. of forecasted 2022 crude oil production at a weighted average price of $76.55 per barrel, 12 per cent. of forecasted 2023 crude oil production at a weighted average price of $71.84 per barrel, 59 per cent. of forecasted 2022 natural gas production at a weighted average price of $3.41 per MMBtu, and 10 per cent. of forecasted 2023 natural gas production at a weighted average price of $3.04 per MMBtu. As of 2Q 2022, Hammerhead was producing approximately 34,400 Boepd.

Centennial Resource Development

The Gross MOIC for Centennial was 1.00x at the end of the second quarter. In Q2, Centennial announced that they had entered into an agreement to combine with Colgate Energy for a total consideration of 269.3 million shares of Centennial stock, $525 million of cash and the assumption of $1.4 billion of Colgate's outstanding net debt. The company expects leverage at closing to be 1.0x. The combined company will be the largest pure-play E&P company in the Delaware Basin with approximately 180,000 net leasehold acres, 40,000 net royalty acres and total current production of 135,000 Boe/d.

From an operational standpoint, Centennial continues to see strong results on the back of a highly constructive commodity environment and strong capital efficiency. In Q1 2022, Centennial generated record free cash flow of $89 million and reduced Net Debt/LTM EBITDAX to 1.1x compared to 1.4x at YE 2021. The Company expects leverage to fall to <1.0x by Q2 2022.

GoodLeap (formerly Loanpal)

The Gross MOIC for GoodLeap remained flat at 2.75x during the second quarter. During the quarter, the company closed on its 13th securitisation which was oversubscribed despite volatile markets. Management continues to execute on its growth plans.

On 13 October 2021, GoodLeap announced a new investment round of over $800 million, which will support the company's operational improvements, technology innovation efforts, and expansion. This funding round gives the company an implied post-money valuation of $12 billion and informs our implied 2.75x valuation.

Carrier II

The Gross MOIC for Carrier II remained flat at 0.70x during the second quarter. The company continues to operate prudently and remains focused on using free cash flow for high commodity prices to fund development and reduce outstanding indebtedness on the company's term loan. Carrier II has hedged approximately 50 per cent. of forecasted oil production during the remainder of 2022 at a weighted average price of $57.40 per barrel WTI. As of 30 June 2022, the company was producing approximately 2,713 Boepd.

Other Investments

Anuvia

On 8 March 2022, REL invested $20 million into Anuvia Plant Nutrients' $65.5 million Series D funding round. Anuvia, a bio-based crop nutrition technology company, produces a sustainable, organic fertiliser product that provides delayed-release nutrient delivery better aligned with crop needs, allowing for more efficient nutrient absorption in agriculture. Anuvia's products improve soil health, reduce nutrient runoff, and reduce reliance on carbon-intensive synthetic fertilisers. During Q2 2022, the Company engaged McKinsey plant operations specialists for on-site consulting to help the Company establish best practices and identify root causes of production bottlenecks and potential solutions to further enhance Anuvia's ability to ramp production volumes.

Group14

In April 2022, REL invested $4 million into Group14 Technologies, Inc.'s $400 million Series C funding round. The Series C round was led by Porsche AG, with participation from OMERS Capital Markets, Decarbonization Partners, Vsquared Ventures, and others. Group14 is a battery materials technology company founded in 2015.  The Company has developed a proprietary silicon-based anode battery material to replace graphite in conventional lithium-ion batteries.

LEI: 213800HAZOW1AWRSZR47

About Riverstone Energy Limited:

REL is a closed-ended investment company that has since 2020 been exclusively focussed on pursuing and has committed $171 million to a global strategy across decarbonisation sectors presented by Riverstone's investment platform.  REL's ordinary shares are listed on the London Stock Exchange, trading under the symbol RSE.  REL has 19 active investments spanning decarbonisation, oil and gas, renewable energy and power in the Continental U.S., Western Canada, Gulf of Mexico and Europe.

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

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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 2022 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 Board reviews and considers the valuations of the Company's investments held through the Partnership.