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Final results for the half year ended 30 June 2017

RNS Announcement

RNS Number : 4570N

Riverstone Energy Limited

09 August 2017

Riverstone Energy Limited

Final results for the half year ended 30 June 2017

London, 9 August 2017: Riverstone Energy Limited ("REL" or the "Company") announces its Half Year Results for the 6-month period from 1 January 2017 to 30 June 2017.

Summary performance

30 June 2017
NAV	$1,668 million
NAV per share	$19.74 / £15.16¹
Profit/(loss) during period	$(30.6) million
Basic profit/(loss) per share during period	(36.17) cents
Market Capitalisation	£1,060 million / $1,381 million¹
Share price	£12.55 / $16.35¹

Highlights

§ As of 30 June 2017, REL had a NAV per share of $19.74, representing a decrease of 36 cents or 1.8 per cent. versus NAV per share at 31 December 2016. On a Sterling basis, the NAV per share decreased by £1.13 or 6.9 per cent. compared with the end of 2016.

§ The decline in NAV was primarily driven by REL's second largest investment, Centennial, which is publicly traded and saw its shares share price decline from $19.72 at the end of December to $15.82 at 30 June 2017 as market sentiment for oil producers weakened. Strong performance at Three Rivers III, Meritage III and Liberty II helped offset this decline.

§ The Company invested a total of $142 million during the period, bringing net capital invested as of 30 June 2017 to $1,314 million, or 91 per cent of net capital available².

§ During the first half of 2017, REL reduced commitments to two companies, totaling $116 million, bringing net committed capital as of 30 June 2017 to $1,718 million, or 119 per cent of net capital available².

Commitments and Investments

During the year, the company made the following investments:

§ Invested $64 million in Canadian International Oil Corp.

§ Invested $26 million in ILX Holdings III LLC

§ Invested $16 million in Liberty Resources II LLC

§ Invested $10 million in Three Rivers Natural Resources Holdings III LLC

§ Invested $7 million in Canadian Non-Operated Resources LP

§ Invested $19 million to other investments including Eagle Energy Exploration, LLC, Carrier Energy Partners II LLC, Castex Energy 2014 LLC, Meritage Midstream Services III, L.P. and Origo Exploration AS

During the year, the Company reduced the following commitments:

§ Commitment reduction of $59 million to CanEra Resources III

§ Commitment reduction of $57 million to Origo Exploration AS

Manager Outlook

§ Global oil market volatility is likely to remain elevated as the market seeks equilibrium.

§ The Investment Manager believes that energy producers in low-cost basins with an oil-weighting will continue to outperform.

§ North American energy investments retain an advantage in a global marketplace due to low breakeven costs, short cycle times and high asset liquidity.

§ The portfolio's 14 active investments as a whole are well placed to offer investors resilience and growth in a variety of commodity price environments.

Richard Hayden, Chairman of Riverstone Energy Limited, commented:

"Today's results demonstrate REL's resilience as oil price volatility resumed in the first half of 2017. Despite a 14 per cent decline in the price of West Texas Intermediate, the net asset value declined by 1.8 per cent, reflecting continued operational successes and the portfolio's emphasis on low-cost basins."

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

"Riverstone continues to leverage its expertise across the energy value chain and capital structure to identify profitable opportunities for REL and its investors. The successes highlighted in today's results, such as Meritage III's confirmed expansion in Western Canadian midstream infrastructure and Sierra's recent historic oil discovery offshore Mexico, illustrate the strength of Riverstone's investment strategy despite the increase in oil price volatility."

- Ends -

Riverstone Energy Limited's 2017 Interim Report is available to view at: www.RiverstoneREL.com.

The Investment Manager will host a conference call with investors at 09:00am BST today. Dial-in details are as follows:

Dial-in (UK): 0800 028 8438

Dial-in (Intl.): +44 (0) 203 107 0289

Conference ID: 59166774

2Q17 Quarterly Portfolio Valuation

Previously, on 26 July 2017, REL announced its quarterly portfolio summary as of 30 June 2017, inclusive of updated quarterly unaudited fair market valuations:

Current Portfolio

	Target Basin	Gross Committed Capital ($mm)	Invested Capital ($mm)	Realised Capital ($mm)³	Net Invested Capital ($mm)⁴	Gross Realised & Unrealised Value ($mm)⁵	Gross MOIC⁵
CIOC	Deep Basin (Canada)	$307	$295	$23	$275	$533	1.8x
Centennial	Permian (U.S.)	268	268	-	268	380	1.4x
Three Rivers III	Permian (U.S.)	167	86	-	86	259	3.0x
Liberty II	Bakken, PRB (U.S.)	142	137	-	137	171	1.3x
Carrier II	Permian (U.S.)	133	110	-	110	131	1.2x
ILX III	Deepwater GoM (U.S.)	200	94	-	94	122	1.3x
RCO⁶	North America	125	87	81	24	109	1.3x
CNOR	Western Canada	90	80	-	80	80	1.0x
Eagle II	Mid-Continent (U.S.)	67	62	-	62	68	1.1x
Meritage III⁷	Western Canada	67	32	-	32	45	1.4x
Castex 2014	Gulf Coast Region (U.S.)	67	40	-	40	40	1.0x
Fieldwood	GoM Shelf (U.S.)	82	58	3	58	35	0.6x
Castex 2005	Gulf Coast Region (U.S.)	50	48	-	48	5	0.1x
Sierra	Mexico	38	1	-	1	2	1.1x
Total Current Portfolio⁸		$1,802	$1,398	$107	$1,314	$1,979	1.4x
Percentage of REL net capital available⁹					91%

Realisations

	Target Basin	Gross Committed Capital ($mm)	Invested Capital ($mm)	Realised Capital ($mm)³	Unrealised Value ($mm)	Gross Realised & Unrealised Value ($mm)⁵	Gross MOIC⁵
Rock Oil¹⁰	Permian (U.S.)	-	114	216	24	240	2.1x
CanEra III	Western Canada	-	1	1	-	1	0.4x
Origo	North Sea (Norway, U.K.)	-	9	-	-	-	0.0x
Total Investments⁸			$1,523	$323		$2,220	1.5x

About Riverstone Energy Limited:

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 17 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 REL'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:

Brian Potskowski

Natasha Fowlie

+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 2017 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 valuation committee as part of the valuation process.

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.

¹ GBP:USD Fx rate of 1.303 as of 30 June 2017.

2 Based on total capital raised of $1,320 million, bank loan, realised profits and other income net of fees, expenses and performance allocation. The Board does
not expect to fully fund all commitments in the normal course of business.

³ Realised capital is total gross proceeds realised on invested capital. Of the $323 million of capital realised to date, $199 million is the return of the cost basis, and the remainder is profit.

⁴ Net invested capital is total invested capital less cost basis of the realised capital.

⁵ Gross MOIC is Multiple of Invested Capital. Gross Unrealised Value and Gross MOIC are before transaction costs, taxes (approximately 35 to 41.5 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 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 US 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.

⁶ Credit investment.

⁷ Midstream investment.

⁸ Amounts may vary due to rounding.

⁹ Based on total capital raised of $1,320 million, bank loan, realised profits and other income net of fees, expenses and performance allocation. The Board does not expect to fully fund all commitments in the normal course of business.

¹⁰ The unrealised value of the Rock Oil investment consists of sale proceeds in escrow of $13 million and rights to mineral acres of $11 million.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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RNS metadata

Title: Final results for the half year ended 30 June 2017
Time: 08:00:03
Date: 9 Aug 2017
Category: Results
ID: 4570N