REG - Riverstone Energy Ld - 4Q24 Quarterly Portfolio Valuations & NAV
07/02/2025 07:00
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RNS Number : 2590W Riverstone Energy Limited 07 February 2025
- THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION -
Riverstone Energy Limited Announces 4Q24 Quarterly Portfolio Valuations &
NAV
London, UK (7 February 2025) - Riverstone Energy Limited ("REL" or the
"Company") announces its quarterly portfolio summary as of 31 December 2024,
inclusive of updated quarterly unaudited fair market valuations.
Current Portfolio - Conventional
Investment (Public/Private) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 30 Sep 2024 31 Dec 2024
Capital ($mm) Capital ($mm) 1 ($mm) 2 Gross MOIC(2) Gross MOIC(2)
Permian Resources 3 (Public) 268 268 232 145 377 1.37x 1.41x
Onyx (Private) 66 60 121 46 167 3.10x 2.80x
Veren(3) (Public) 296 296 199 43 242 0.85x 0.82x
Total Current Portfolio - Conventional - Public 4 $564 $564 $431 $188 $619 1.10x 1.10x
Total Current Portfolio - Conventional - Private(4) $66 $60 $121 $46 $167 3.10x 2.80x
Total Current Portfolio - Conventional - Public & Private(4) $630 $624 $552 $234 $786 1.29x 1.26x
Current Portfolio - Decarbonisation
Investment (Public/Private) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 30 Sep 2024 31 Dec 2024
Capital ($mm) Capital ($mm)(1) ($mm)(2) Gross MOIC(2) Gross MOIC(2)
GoodLeap (formerly Loanpal) 25 25 2 23 25 1.00x 1.00x
(Private)
Infinitum (Private) 27 27 - 23 23 1.10x 0.85x
Solid Power(3) (Public) 48 48 - 14 14 0.21x 0.29x
Group14 (Private) 4 4 - 3 3 1.00x 0.75x
Hyzon Motors(3) (Public) 10 10 - 0 0 0.00x 0.00x
Total Current Portfolio - Decarbonisation - Public(4) $58 $58 $- $14 $14 0.17x 0.24x
Total Current Portfolio - Decarbonisation - Private(4) $56 $56 $2 $49 $51 1.05x 0.91x
Total Current Portfolio - Decarbonisation - Public & Private(4) $114 $114 $2 $63 $65 0.60x 0.57x
Total Current Portfolio - Conventional & Decarbonisation - Public & $744 $738 $554 $297 $851 1.18x 1.15x
Private(4)
Cash and Cash Equivalents $79
Total Liquidity (Cash and Cash Equivalents & Public Portfolio) $281
Total Market Capitalisation $250
Realisations
Investment (Initial Investment Date) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 30 Sep 2024 Gross MOIC(2) 31 Dec 2024
Capital ($mm) Capital ($mm)(1) ($mm)(2) Gross MOIC(2)
Rock Oil 5 (12 Mar 2014) 114 114 236 0 239 2.09x 2.09x
Three Rivers III (7 Apr 2015) 94 94 204 - 204 2.17x 2.17x
ILX III (8 Oct 2015) 179 179 172 - 172 0.96x 0.96x
Meritage III 6 (17 Apr 2015) 40 40 88 - 88 2.20x 2.20x
RCO 7 (2 Feb 2015) 80 80 80 - 80 0.99x 0.99x
Carrier II (22 May 2015) 110 110 67 - 67 0.61x 0.61x
Pipestone Energy (formerly CNOR) (29 Aug 2014) 90 90 58 - 58 0.64x 0.64x
Sierra (24 Sept 2014) 18 18 38 - 38 2.06x 2.06x
Aleph (9 Jul 2019) 23 23 23 - 23 1.00x 1.00x
Ridgebury 18 18 22 - 22 1.22x 1.22x
(19 Feb 2019)
Castex 2014 52 52 14 - 14 0.27x 0.27x
(3 Sep 2014)
Total Realisations(4) $819 $819 $1,006 $0 $1,006 1.23x 1.23x
Withdrawn Commitments and Investment Write-Offs 8 467 467 10 - 10 0.02x 0.02x
Total Investments(4) $2,030 $2,024 $1,570 $297 $1,867 0.93x 0.92x
Total Investments & Cash and Cash Equivalents $376
Draft Unaudited Net Asset Value 9 $376
Total Shares Repurchased to-date 36,324,225 at average price per share of £4.38 ($5.59)
Current Shares Outstanding 25,342,691
Technology stocks continue to drive equity market performance
Equity markets held onto gains made since the start of the year but were
largely unchanged in the final quarter of 2024. The FTSE 100 was up 5 per
cent. in GBP during the year, while the S&P 500 was up 25 per cent in USD.
In Q4, the FTSE 100 was down 1 per cent. in GBP while the S&P 500 was up 4
per cent. in USD. Stronger growth in the U.S. over the course of the year was
largely due to the exceptional performance of the "Magnificent 7" technology
stocks. Excluding these stocks, however, the S&P 500 has traded sideways
for much of the last two years. This highlights the degree to which the
S&P 500's performance has been driven by the technology sector.
Central banks started to bring down interest rates during 2024, in a potential
boost to the energy industry by increasing capital availability and reducing
funding costs. The U.S. Federal Reserve announced three rate cuts. At 4.5 per
cent., U.S. rates are now 100 basis points lower than what they were at the
start of the year. The Bank of England similarly announced two rate cuts this
year, cutting rates from 5.25 per cent. to 4.75 per cent. While expectations
for 2025 suggest the pace of cuts will slow, we expect these developments to
benefit the portfolio and to be particularly important for the growth of
companies in the energy transition space. In addition to rate cuts, the Trump
Administration's approach towards the energy transition will play a role in
the direction of energy economics in 2025. The Trump Administration's plans
include prioritizing expanded US drilling, renewed focus around natural gas
exports, and rolling back climate commitments and clean energy incentives, all
of which have positive and negative downstream effects on the portfolio.
There was some volatility in oil prices, but ultimately the 2024 average price
was only marginally higher than in 2023. In 2025, however, commentators expect
oil prices to be lower due to the Trump Administration's plans and advances in
fuel efficiency in combustion engines. Gas is a different story though - while
Henry Hub gas prices trended lower in 2024, averaging $2.21 per MMBtu compared
with $2.57 per MMBtu in 2023, in Europe the outlook is more uncertain. 2025
started with the cessation of gas flows through Ukraine, increasing the
continent's reliance on LNG imports, and has seen cold snaps in the US, UK and
elsewhere boosting gas demand and gas prices.
Quarterly Performance Commentary
Share prices in our conventional energy portfolio increased slightly in the
fourth quarter of 2024. Permian Resources and Veren, REL's publicly traded
upstream oil and gas businesses, saw share prices ending the quarter up 4.1
per cent. and 6.5 per cent. respectively. We see the increase as driven by
optimism about the prospects for conventional fuels playing a longer-term role
in meeting energy demand, as well the market recognising positive operational
and financial news during the period.
Following completion at the end of Q3, Permian Resources has been focused on
integrating the Barilla Draw bolt-on acquisition, adding significant acreage
and midstream infrastructure in the Delaware Basin. The company also increased
the base dividend by 150 per cent.
The macroeconomic backdrop is mixed, with conventional assets increasing in
value and partially offsetting declines in the decarbonisation portfolio.
Looking ahead, REL expects further gains and distributions in 2025, supported
by solid cash flow generation, low leverage, and favourable commodity prices.
The regulatory environment in the U.S. is also expected to be beneficial.
The energy transition will be a longer-term process, requiring a balanced
approach that leverages both conventional and clean energy sources to meet
growing global energy demand. There is an acceptance that conventional energy
will continue to play an important role in the global energy mix. The focus
remains on maintaining a diversified portfolio to ensure reliable and
affordable energy while advancing towards a decarbonised and cleaner energy
system.
Permian Resources
The valuation for Permian Resources (NYSE: PR) increased from 1.37x to 1.41x
Gross MOIC in the fourth quarter of 2024. During the quarter, Permian
Resources increased its quarterly base dividend from $0.06/share to
$0.15/share and announced the sale of its natural gas and oil gathering
systems primarily located in Reeves County, Texas to Kinetik Holdings Inc.
(NYSE: KNTK) for a total cash consideration of $180 million. The company also
increased mid-point of full year oil and total production guidance by over 4
per cent. to 158.5 MBbls/d and 341.0 MBoe/d. The pro-forma company has hedged
approximately 29 per cent. of forecasted 2024 crude oil production at a
weighted average price of $75.08 per barrel and 20 per cent. of forecasted
2024 natural gas production at a weighted average price of $3.86 per mcf.
Onyx
The valuation multiple for Onyx decreased to 2.8x Gross MOIC during the fourth
quarter. CDS margins have reduced materially since the highs of 2022 due to
high gas storage levels, warm winter weather, high wind generation and energy
conservation. The effect is partially offset by hedging activities at the
company. Onyx received a withholding tax exemption certificate for OSIM II
from BZSt (German federal tax office). Additionally, decommissioning at Farge
continues to advance smoothly. The management team is working on organic
growth initiatives, including the implementation of operational performance
improvements and the development of energy transition projects.
Veren
Veren's valuation decreased from 0.89x to 0.85x Gross MOIC during the fourth
quarter of 2024. Over 2024, Veren's shares have traded down 19.6 per cent.
compared to a 15.0 per cent. increase in its peer group, and a 0.8 per cent.
rally in WTI over the same period. In October 2024, Veren announced its Q3
2024 results, which were below expectations. Veren also announced its 2025
budget which expects C$775 million of excess cash flow at current commodity
prices. Excess cash will be spent on debt reduction and shareholder returns.
Veren's 2029 plan targets 7 per cent. production CAGR and corporate production
of 250 mboe/d. In Q4 2024, Veren delivered its quarterly dividend of
C$0.115/sh, implying an annualised dividend yield of 6.2 per cent.
Infinitum
The valuation multiple for Infinitum was lowered to 0.85x Gross MOIC during
the fourth quarter of 2024. Unfortunately, Infinitum is experiencing
longer-than-expected sales cycles with its customers; in response, the company
is taking steps to strengthen its margins and extend its cash runway after its
Series E extension closed in July.
In November, Infinitum announced it has been selected by the U.S. Department
of Energy to negotiate funding for a manufacturing facility to produce
high-powered printed circuit board (HP-PCB) stators, the key component of
Infinitum's high-efficiency, axial-flux motors. This facility is expected to
be located in Rockdale, Texas and could create up to 170 operating jobs and
125 construction jobs in the community. At the time of the announcement,
Infinitum's award from the DOE Office of Manufacturing and Energy Supply
Chains (MESC) was projected to be $34 million.
GoodLeap
The valuation multiple for GoodLeap was held at 1.00x Gross MOIC for the
fourth quarter of 2024. The company closed $1.5 billion financing for its
lease/PPA business with two strategic partners (TIP and ATLAS SP), extending
funding pipeline well into 2025. In H2 2024, the company also launched
GoodLeap Payments and a homeowner mobile app in a strong debut. That said,
political uncertainty is creating challenges at the business. The management
team is assessing potential changes to the Solar Investment Tax Credit, which
provides a 30 per cent. tax credit for qualifying solar installations,
tariffs, and interest rates. GoodLeap's rapid transition to home improvement
sales is expected to cushion these impacts.
Other Investments
Group14
The valuation multiple for Group14 was lowered from 1.00x to 0.75x Gross MOIC
for the fourth quarter of 2024, primarily due to delays in revenue
recognition. These delays stem from setbacks in the company's spending
schedule-mainly related to factory site issues-that have postponed the EV
related start of production at the Washington plant.
Enviva
On 4 October 2024, following the filing of Enviva's Form 8-K related to the
Amended Joint Chapter 11 Plan of Reorganization of Enviva Inc. ("Amended
Plan"), the New York Stock Exchange (NYSE) Regulation reached its decision
that Enviva is no longer suitable for listing pursuant to NYSE Listed Company
Manual and delisted the company. In reaching its delisting determination,
NYSE Regulation notes that pursuant to the Amended Plan, existing equity
interests of the company, including REL's equity interests, will be cancelled
and holders thereof will receive no recovery. In December of 2024, Enviva
emerged from Chapter 11 bankruptcy resulting in legacy equity holders
receiving no consideration.
Share Buyback Programme
In further support of the Board's capital management objectives, at the 2024
AGM, the shareholders renewed the authorisation for the Board to continue with
share buybacks. The Board duly commenced the current programme, allocating an
amount of £21.3 million ($27.1 million), of which £7.1 million was available
for repurchases as of 31 December 2024.
Furthermore, following the changes to the Investment Management Agreement
announced on 3 January 2020, the Investment Manager agreed that the Company
would repurchase shares or pay dividends equal to 20 per cent. of net gains on
disposals. No further carried interest will be payable until the $156.7
million of realised and unrealised losses to date as at 31 December 2024 are
made whole with future gains.
LEI: 213800HAZOW1AWRSZR47
About Riverstone Energy Limited:
REL is a closed-ended investment company which invests in the energy industry.
REL's ordinary shares are listed on the London Stock Exchange, trading under
the symbol RSE. REL has 8 active investments spanning decarbonisation, oil
and gas, renewable energy and power in the Continental U.S., Western Canada
and Europe.
For further details, see www.RiverstoneREL.com (http://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:
LPRelations@RiverstoneLLC.com
Deutsche Numis - Corporate Broker:
Hugh Jonathan
Matt Goss
+44 (0) 20 7260 1000
Ocorian Administration (Guernsey) Limited -
Company Secretary:
Birgitte Horn
OAGLCoSec@ocorian.com (mailto:OAGLCoSec@ocorian.com)
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 31 December 2024
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.
1 Gross realised capital is total gross proceeds realised on invested
capital. Of the $1,570 million of capital realised to date, $1,201 million is
the return of the cost basis, and the remainder is profit.
2 Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested Capital)
are before transaction costs, taxes (approximately 21 to 27.5 per cent. of
U.S. sourced taxable income) and 20 per cent. carried interest on applicable
gross profits in accordance with the revised terms announced on 3 January
2020, but effective 30 June 2019. Since there was no netting of losses against
gains before the aforementioned revised terms, the effective carried interest
rate on the portfolio as a whole will be greater than 20 per cent. No further
carried interest will be payable until the $156.7 million of realised and
unrealised losses to date at 31 December 2024 are made whole with future
gains. Since REL has not yet met the appropriate Cost Benchmark at 31 December
2024, $29.0 million in Performance Allocation fees that would have been due
under the prior agreement were not accrued. In addition, there is a management
fee of 1.5 per cent. of net assets (including cash) 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 U.S. 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. In the normal course of business, REL may form
wholly-owned subsidiaries, to be treated as C Corporations for US tax
purposes. The C Corporations serve to protect REL's public investors from
incurring U.S. effectively connected income. The C Corporations file U.S.
corporate tax returns with the U.S. Internal Revenue Service and pay U.S.
corporate taxes on its taxable income.
3 Represents closing price per share in USD for publicly traded shares
Permian Resources Corporation (formerly Centennial Resource Development, Inc.)
(NASDAQ:PR - 31-12-2024: $14.38 per share / 30-09-2024: $13.61 price per share
Solid Power, Inc. (NASDAQ:SLDP - 31-12-2024: $1.89 per share / 30-09-2024:
$1.35 price per share); Hyzon Motors, Inc. (NASDAQ:HYZN - 31-12-2024: $1.06
per share / 30-09-2024: $2.43 price per share); and Veren (NASDAQ: VRN -
31-12-2024: CAD 7.39 per share / 30-09-2024: CAD 8.33 per share).
4 Amounts vary due to rounding
5 The unrealised value of Rock Oil investment is made up of funds held in
escrow from the sale of rights to mineral acres
6 Midstream investment
7 Credit investment
8 Withdrawn commitments and investment write-offs consist of Origo ($9
million) and CanEra III ($1 million), and impairments consist of Liberty II
($142 million), Fieldwood ($80 million), Eagle II ($62 million), Castex 2005
($48 million), Tritium ($25 million), T-Rex ($21 million), Enviva ($21
million) Anuvia Plant Nutrients ($20 million), (FreeWire ($14 million), Our
Next Energy ($12 million) and Ionic I & II ($3 million)
9 Since REL has not yet met the appropriate Cost Benchmark at 31 December
2024, $29.0 million in Performance Allocation fees that would have been due
under the prior agreement were not accrued and thereby would have reduced the
NAV on a pro forma basis to $347 million or $13.69 per share
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