REG - Riverstone Energy Ld - Annual Report and Financial Statements <Origin Href="QuoteRef">RSER.L</Origin> - Part 2

Riverstone EnergyAnnouncement

28/02/2018 07:05

- Part 2: For the preceding part double click  ID:nRSb1636Ga 

Agreement, to
manage the conflict (and upon taking such actions the Investment Manager will
be considered to have discharged responsibility for managing such conflict).
The Directors are required by the Registered Collective Investment Schemes
Rules 2015 issued by the GFSC to take all reasonable steps to ensure that
there is no breach of the conflicts of interest requirements of those rules. 
 
Asset Allocation 
 
The Company acquires its interests in each Qualifying Investment at the same
time (or as near as practicable thereto) as, and on substantially the same
economic and financial terms as, the relevant Private Riverstone Funds. 
 
The Company and the current Private Riverstone Funds, (Fund V and Fund VI)
invest in each Qualifying Investment in which the Private Riverstone Funds
participate in a ratio of one-third to REL to two-thirds to the Private
Riverstone Funds. This investment ratio is subject to adjustment on a
case-by-case basis (a) to take account of the liquid assets available to each
of the Company and the Private Riverstone Funds for investment at the relevant
time and any other investment limitations applicable to either of them or
otherwise and (b) if both (i) a majority of the Company's independent
Directors and (ii) the Investment Manager agree that the investment ratio
should be adjusted for specific Qualifying Investments. 
 
For each Private Riverstone Fund subsequent to Fund V and Fund VI which is of
a similar size and has a similar investment policy to the Company, Riverstone
will seek to ensure that, subject to the investment capacity of the Company at
the time, the Company and the Private Riverstone Fund invest in Qualifying
Investments in an investment ratio of one-third to REL to two-thirds to the
Private Riverstone Fund or in such other ratio as the Company's independent
Directors and the Investment Manager agree at or prior to the first closing of
such Private Riverstone Fund. 
 
Such investment ratio may be adjusted by agreement between the Company's
independent Directors and the Investment Manager on subsequent closings of a
Private Riverstone Fund having regard to the total capital commitments raised
by that Private Riverstone Fund during its commitment period, the liquid
assets available to the Company at that time and any other investment
limitations applicable to either of them. 
 
The Investment Manager typically seeks to ensure that the Company and the
Private Riverstone Funds dispose of their interests in Qualifying Investments
at the same time, on substantially the same terms, and in the case of partial
disposals, in the same ratio as the relevant Qualifying Investment was
acquired, but this may not always be the case. 
 
In addition, the Company may at any time make investments consistent with its
investment policy independent from Private Riverstone Funds, which may include
investments alongside Riverstone employee co-investment vehicles or other
Riverstone managed or advised co-investment vehicles. In such cases, approval
by the Board is required. 
 
The Company invests in public or private securities, may hold controlling or
non-controlling positions in its investments and may make investments in the
form of equity, equity-related instruments, indebtedness or derivatives (or a
combination of any of them). The Company does not permit any investments to be
the subject of stock lending or sale and repurchase of shares. 
 
Diversification 
 
Save for the Company's investment in Hammerhead, which may represent up to 35
per cent. of the Company's gross assets, including cash holdings, measured at
the time the investment is made, no one investment made by the Company,
through the Partnership, may (at the time of the relevant investment)
represent more than 25 per cent. of the Company's gross assets, including cash
holdings, measured at the time the investment is made. The Company utilises
the Partnership and its subsidiary undertakings or other similar investment
holding structures to make investments and this limitation does not apply to
its ownership interest in any such subsidiary undertaking (nor, for the
avoidance of doubt, to the Company's interest in the Partnership). 
 
Gearing 
 
The Company can, but is not required to, incur indebtedness for investment
purposes, to the extent that such indebtedness is a precursor to an ultimate
equity investment, working capital requirements and to fund own-share
purchases or retentions up to a maximum of 30 per cent. of the last published
NAV as at the time of the borrowing unless approved by the Company by an
ordinary resolution. This limitation does not apply to portfolio level
entities in respect of which the Company is invested but it does apply to all
subsidiary undertakings utilised by the Company or the Partnership for the
purposes of making investments. The consent of a majority of the Company's
Directors shall be required for the Company or the Partnership to enter into
any credit or other borrowing facility. 
 
The Company must at all times comply with its published investment policy. For
so long as the Ordinary Shares are listed on the Official List, no material
change may be made to the Company's investment policy other than with the
prior approval of both the Company's Shareholders and a majority of the
independent Directors of the Company, and otherwise in accordance with the
Listing Rules. 
 
Investment Restrictions 
 
The Company is subject to the following investment restrictions: 
 
·      for so long as required by the Listing Rules, it will at all times seek
to ensure that the Investment Manager invests and manages the Company's and
the Partnership's assets in a way which is consistent with the Company's
objective of spreading risk and in accordance with the Company's investment
policy; 
 
·      for so long as required by the Listing Rules, it must not conduct a
trading activity which is significant in the context of the Company and its
Investment Undertakings; 
 
·      for so long as required by the Listing Rules, not more than 10 per
cent. of the value of its total assets will be invested in other UK-listed
closed-ended investment funds, except for those which themselves have
published investment policies to invest not more than 15 per cent. of their
total assets in other UK-listed closed-ended investment funds; and 
 
·      any investment restrictions that may be imposed by Guernsey law
(although no such restrictions currently exist). 
 
Currency and interest rate hedging transactions will only be undertaken for
the purpose of efficient portfolio management and these transactions will not
be undertaken for speculative purposes. 
 
"The Company invests in the global energy sector, which is undergoing
significant transformation driven in large part by a revolution in horizontal
drilling and completion technology." 
 
Board of Directors 
 
Richard Hayden (72), Chairman and Non-executive Independent Director 
 
Appointment: Appointed to the Board in May 2013 and appointed as Chairman in
May 2016 
 
Experience: Mr Hayden serves as non-executive Chairman of TowerBrook Capital
Partners Advisory Board and member of the Investment Committee. Prior to
joining TowerBrook in 2009, Mr Hayden was Vice Chairman of GSC Group Inc and
Global Head of the CLO and Mezzanine Debt business. Previously, Mr Hayden was
with Goldman Sachs from 1969 to 1999. Mr Hayden held a variety of senior
positions during his time at Goldman Sachs, including Deputy Chairman of
Goldman Sachs International Ltd and Chairman of the Global Credit Committee.
Mr Hayden has served on a number of corporate and advisory boards and is
currently a non-executive Director of CQS. Mr Hayden is also on the Finance
and Investment Committee of the Children's Investment Fund Foundation. Mr
Hayden is a UK resident. 
 
Committee Membership: Audit Committee Member; Nomination Committee Chairman;
Management Engagement Committee Member 
 
Peter Barker (69), Non-executive Independent Director 
 
Appointment: Appointed to the Board in September 2013 
 
Experience: Mr Barker was California Chairman of JPMorgan Chase & Co., a
global financial services firm, from September 2009 until his retirement on 31
January 2013, and a member of its Executive Committee in New York. Mr Barker
was also an Advisory Director of Goldman, Sachs & Co. from December 1998 until
his retirement in May 2002, and a Partner of Goldman, Sachs & Co. from 1982 to
1998, heading up Investment Banking on the West Coast, having joined Goldman,
Sachs & Co. in 1971. Mr Barker is President of the Fletcher Jones Foundation
and has held numerous directorships. He is currently on the board of Fluor
Corporation, Avery Dennison Corporation, the W. M. Keck Foundation, the Irvine
Company, Franklin Resources, Inc., and the Automobile Club of Southern
California. Mr Barker is also a Trustee of Claremont McKenna College, having
formerly been its Chairman, and was previously Chair of the Los Angeles Area
Council of the Boy Scouts of America. Mr Barker is a U.S. resident. 
 
Committee Membership: Audit Committee Member; Nomination Committee Member;
Management Engagement Committee Member 
 
Patrick Firth (56), Non-executive Senior Independent Director 
 
Appointment: Appointed to the Board in May 2013 and appointed as Senior
Independent Director in May 2016 
 
Experience: Mr Firth qualified as a Chartered Accountant with KPMG Guernsey in
1991 and is also a member of the Chartered Institute for Securities and
Investment. He has worked in the fund industry in Guernsey since joining
Rothschild Asset Management (CI) Limited in 1992 before moving to become
Managing Director at Butterfield Fund Services (Guernsey) Limited
(subsequently Butterfield Fulcrum Group (Guernsey) Limited), a company
providing third party fund administration services, where he worked from April
2002 until June 2009. He is a non-executive Director of a number of investment
funds and management companies, including GLI Finance Limited, ICG Longbow
Senior Secured UK Property Debt Investments Limited, JZ Capital Partners
Limited and NextEnergy Solar Fund Limited. Mr Firth is a resident of
Guernsey. 
 
Committee Membership: Audit Committee Chairman; Nomination Committee Member;
Management Engagement Committee Member 
 
Pierre F. Lapeyre (55), Non-executive Director 
 
Appointment: Appointed to the Board in May 2013 
 
Experience: Mr Lapeyre is a Founder and Senior Managing Director of
Riverstone. He is based in New York. Prior to founding Riverstone, Mr Lapeyre
was a Managing Director of Goldman Sachs in its Global Energy and Power Group.
Mr Lapeyre joined Goldman Sachs in 1986 and spent his 14-year investment
banking career focussed on energy and power, particularly the midstream,
upstream and energy service sectors. Mr Lapeyre's responsibilities at Goldman
Sachs included client coverage and leading the execution of a wide variety of
mergers and acquisitions, IPO, strategic advisory and capital markets
financings for clients across all sectors of the industry. 
 
While at Goldman Sachs, Mr Lapeyre served as sector captain for the midstream
and energy services segments, led the group's coverage of Asian energy
companies and was extensively involved in the origination and execution of
energy private equity investments on behalf of the firm. Mr Lapeyre was
responsible for managing Goldman Sachs' leading franchise in master limited
partnerships. He was also asked to lead the group's agency and principal
investment effort in energy/power technology. At Goldman Sachs Mr Lapeyre had
relationship and deal execution responsibilities for a broad range of energy
clients. 
 
Mr Lapeyre serves on the boards of directors or equivalent bodies of a number
of portfolio companies in which Other Riverstone Funds have investment
interests. Mr Lapeyre is a U.S. resident. 
 
Committee Membership: None 
 
David M. Leuschen (66), Non-executive Director 
 
Appointment: Appointed to the Board in May 2013 
 
Experience: Mr Leuschen is a Founder and Senior Managing Director of
Riverstone. He is based in New York. Prior to founding Riverstone, Mr Leuschen
was a Partner and Managing Director at Goldman Sachs and founder and head of
the Goldman Sachs Global Energy and Power Group. Mr Leuschen joined Goldman
Sachs in 1977, became head of the Global Energy and Power Group in 1985,
became a Partner of that firm in 1986 and remained with Goldman Sachs until
leaving to found Riverstone. Mr Leuschen has extensive mergers and
acquisitions, financing and investing experience in the energy and power
industry. 
 
Mr Leuschen was responsible for building the Goldman Sachs energy and power
investment banking practice into one of the leading franchises in the global
energy and power industry. During this period, Mr Leuschen and his team
participated in a large number of the major energy and power mergers and
acquisitions transactions worldwide. Mr Leuschen also was a founder of Goldman
Sachs' leading master limited partnership franchise. Mr Leuschen also served
as Chairman of the Goldman Sachs Energy Investment Committee, where he was
responsible for screening potential capital commitments by Goldman Sachs in
the energy and power industry and was responsible for establishing and
managing the firm's relationships with senior executives from leading
companies in all segments of the energy and power industry. 
 
Mr Leuschen also serves on the boards of directors or equivalent bodies of a
number of portfolio companies in which Other Riverstone Funds have investment
interests. Mr Leuschen is a U.S. resident. 
 
Committee Membership: None 
 
Ken Ryan (45), Non-executive Director 
 
Appointment: Appointed to the Board in May 2016 
 
Experience: Mr Ryan is a Partner of Riverstone and is responsible for
corporate development. He is based in New York. Prior to joining Riverstone in
2011, he worked for Gleacher & Company / Gleacher Partners in both London and
New York, most recently as Managing Director and Co-head of Investment
Banking. Prior to Gleacher, he worked for Goldman Sachs in the European
Financial Institutions Group in London, the U.S. Financial Institutions Group
in New York, and the European Advisory Group. He received a law degree from
University of Dublin, Trinity College. 
 
Mr Ryan also serves on the boards of directors or equivalent bodies of a
number of portfolio companies in which Other Riverstone Funds have investment
interests. Mr Ryan is a U.S. resident. 
 
Committee Membership: None 
 
Jeremy Thompson (62), Non-executive Independent Director 
 
Appointment: Appointed to the Board in May 2016 
 
Experience: Mr Thompson has sector experience in Finance, Telecoms,
Engineering and Oil & Gas. He acts as an independent non-executive
directorship for both listed, including DP Aircraft 1 Limited, and PE funds.
Prior to that, he has worked in private equity and was CEO of four autonomous
global businesses within Cable & Wireless Plc (operating in both regulated and
unregulated markets), and earlier held CEO roles within the Dowty Group. He
currently serves as chairman of the States of Guernsey Renewable Energy Team
and is a commissioner of the Alderney Gambling Control Commission. He is also
an independent member of the Guernsey Tax Tribunal panel. He is a graduate of
Brunel (B.Sc), Cranfield (MBA)  and Bournemouth (M.Sc) Universities and was an
invited member to the UK's senior defence course (Royal College of Defence
Studies). He is a member of the IoD and holds the IoD's Certificate and
Diploma in Company Direction, is an associate of the Chartered Institute of
Arbitration and a chartered Company Secretary. Mr Thompson is a resident of
Guernsey and has previously lived and worked in the UK, USA and Germany. 
 
Committee Membership: Audit Committee Member; Nomination Committee Member;
Management Engagement Committee Member 
 
Claire Whittet (62), Non-executive Independent Director 
 
Appointment: Appointed to the Board in May 2015 
 
Experience: 
 
Mrs Whittet has 40 years of experience in the financial services industry.
After obtaining a MA (Hons) in Geography from the University of Edinburgh, she
joined the Bank of Scotland for 19 years and undertook a wide variety of roles
including running two city centre offices. She moved to Guernsey in 1996 and
was Global Head of Private Client Credit for Bank of Bermuda before joining
the Board of Rothschild Bank International Limited in 2003, initially as
Director of Lending and latterly as Managing Director and Co-Head until May
2016 when she became a non-executive Director. Mrs Whittet is an ACIB member
of the Chartered Institute of Bankers in Scotland, a Chartered Banker, a
member of the Chartered Insurance Institute and holds an IoD Diploma in
Company Direction. She is a non-executive Director of five other listed funds,
being BH Macro Limited, Eurocastle Investment Limited, International Public
Partnerships Limited, Third Point Offshore Investors Limited and TwentyFour
Select Monthly Income Fund Limited. Mrs Whittet is a Guernsey resident. 
 
Committee Membership: Audit Committee Member; Nomination Committee Member;
Management Engagement Committee Chairman 
 
Report of the Directors 
 
The Directors hereby submit the Annual Report and Audited Financial Statements
for the Company for the year ended 31 December 2017. This Report of the
Directors should be read together with the Corporate Governance Report. 
 
General Information 
 
Riverstone Energy Limited is a company limited by shares, which was
incorporated on 23 May 2013 in Guernsey with an unlimited life and registered
with the Commission as a Registered Closed-ended Collective Investment Scheme
pursuant to the POI Law. It has been listed on the London Stock Exchange since
29 October 2013. The registered office of the Company is Heritage Hall, PO Box
225, Le Marchant Street, St Peter Port, Guernsey, GY1 4HY, Channel Islands. 
 
Principal Activities 
 
The principal activity of the Company is to act as an investment entity
through the Partnership and make privately negotiated equity investments in
the energy sector. 
 
The Company's investment objective is to generate long-term capital growth by
investing in the global energy sector, with a particular focus on
opportunities in the global exploration and production and midstream energy
sub-sectors. 
 
Business Review 
 
A review of the Company's business and its likely future development is
provided in the Chairman's Statement and in the Investment Manager's Report. 
 
Listing Requirements 
 
Since being admitted on 29 October 2013 to the Official List of the UK Listing
Authority, maintained by the FCA, the Company has complied with the applicable
Listing Rules. 
 
Results and Dividend 
 
The results of the Company for the year are shown in the audited Statement of
Comprehensive Income. 
 
The Net Asset Value of the Company as at 31 December 2017 was $1,743 million
(31 December 2016: $1,699 million). 
 
The Directors do not recommend the payment of a dividend in respect of the
year ended 31 December 2017 (31 December 2016: $Nil). 
 
Share Capital 
 
At incorporation on 23 May 2013, the Company issued one founder Ordinary Share
of no par value. On 29 October 2013, the Company issued 71,032,057 Ordinary
Shares of no par value at £10 per Ordinary Share in an initial public offering
raising a total of $1,138 million. 
 
KFI, one of the Cornerstone Investors in the Company, paid for and acquired 10
million Ordinary Shares in two equal tranches of £50 million. The first
tranche was paid on Admission and the second tranche of 5 million Ordinary
Shares was paid on 26 September 2014. 
 
On 11 December 2015, the Company raised £67.6 million ($102.3 million)(1)
through the issuance of 8,448,006 new Ordinary Shares at £8.00 per Ordinary
Share. 
 
Following admission of the new Ordinary Shares, the share capital of the
Company is 84,480,064 Ordinary Shares in aggregate. 
 
The Company has one class of Ordinary Shares. The issued nominal value of the
Ordinary Shares represents 100 per cent. of the total issued nominal value of
all share capital. Under the Company's Articles of Incorporation, on a show of
hands, each Shareholder present in person or by proxy has the right to one
vote at general meetings. On a poll, each Shareholder is entitled to one vote
for every share held. 
 
Shareholders are entitled to all dividends paid by the Company and, on a
winding up, provided the Company has satisfied all of its liabilities, the
Shareholders are entitled to all of the surplus assets of the Company. The
Company has not declared or paid dividends from inception to 31 December 2017,
and has no intention to do so. 
 
The Ordinary Shares have no right to fixed income. 
 
(1) Gross of share issuance costs of $3.6 million 
 
Shareholdings of the Directors 
 
The Directors with beneficial interests in the shares of the Company as at 31
December 2017 and 2016 are detailed below: 
 
 Director              OrdinaryShares held31 December2017  Per cent.Holding at31 December2017  OrdinaryShares held31 December2016  Per cent.Holding at31 December2016  
 Richard Hayden(1)     10,000                              0.012                               10,000                              0.012                               
 Peter Barker(1)(2)    5,000                               0.006                               5,000                               0.006                               
 Patrick Firth(2)(3)   8,000                               0.009                               4,000                               0.005                               
 Pierre Lapeyre(4)     50,000                              0.059                               50,000                              0.059                               
 David Leuschen(4)     -                                   -                                   -                                   -                                   
 Ken Ryan(4)           -                                   -                                   -                                   -                                   
 Jeremy Thompson(1)    3,751                               0.004                               -                                   -                                   
 Claire Whittet(1)(5)  2,250                               0.003                               -                                   -                                   
 
 
(1)        Non-executive Independent Director 
 
(2)     Ordinary Shares held jointly with spouse 
 
(3)        Senior Independent Director 
 
(4)     Mr Lapeyre, Mr Leuschen and Mr Ryan, as well as other Riverstone
senior management, have a beneficial interest in REL Coinvestment, LP, which
as at the year end held 5,000,000 Ordinary Shares, and Riverstone Energy
Limited Capital Partners LP, which as at the year end held 675,814 Ordinary
Shares 
 
(5)     Ordinary Shares held indirectly with spouse 
 
  
 
In addition, the Company also provides the same information as at 16 February
2018, being the most current information available. 
 
 Director              OrdinaryShares held16 February2018  Per cent.Holding at16 February2018  
 Richard Hayden(1)     10,000                              0.012                               
 Peter Barker(1)(2)    5,000                               0.006                               
 Patrick Firth(2)(3)   8,000                               0.009                               
 Pierre Lapeyre(4)     50,000                              0.059                               
 David Leuschen(4)     -                                   -                                   
 Ken Ryan(4)           -                                   -                                   
 Jeremy Thompson(1)    3,751                               0.004                               
 Claire Whittet(1)(5)  2,250                               0.003                               
 
 
(1)     Non-executive Independent Director 
 
(2)     Ordinary Shares held jointly with spouse 
 
(3)     Senior Independent Director 
 
(4)     Mr Lapeyre, Mr Leuschen and Mr Ryan, as well as other Riverstone
senior management, have a beneficial interest in REL Coinvestment, LP, which
as 16 February 2018 held 5,000,000 Ordinary Shares and Riverstone Energy
Limited Capital Partners LP, which as at 16 February 2018 held 675,814
Ordinary Shares 
 
(5)     Ordinary Shares held indirectly with spouse 
 
Directors' Authority to Buy Back Shares 
 
At the AGM on 23 May 2017 in St Peter Port, Guernsey, the Company renewed the
authority to make market purchases of up to a maximum of 14.99 per cent. of
the issued share capital of the Company. Any buy back of the Company's
Ordinary Shares will be made subject to Companies Law and within any
guidelines established from time to time by the Board. The making and timing
of any buy backs will be at the absolute discretion of the Board and not at
the option of the Shareholders. Purchases of the Company's Ordinary Shares
will only be made through the market for cash at prices below the prevailing
Net Asset Value of the Company's Ordinary Shares (as last calculated) where
the Directors believe such purchases will enhance Shareholder value. Such
purchases will also only be made in accordance with the Listing Rules which
provide that the price to be paid must not be more than 5 per cent. above the
average of the middle market quotations for the Company's Ordinary Shares for
the five business days before the shares are purchased unless previously
advised to Shareholders. 
 
In accordance with the Company's Articles of Incorporation and Companies Law,
up to 10 per cent. of the Company's Ordinary Shares may be held as treasury
shares. The Company did not purchase any shares for treasury or cancellation
up to the date of this report. 
 
Directors' and Officers' Liability Insurance 
 
The Company maintains insurance in respect of directors' and officers'
liability in relation to their acts on behalf of the Company. 
 
Substantial Shareholdings 
 
As at 31 December 2017, the Company had been notified, in accordance with
Chapter 5 of the Disclosure Guidance and Transparency Rules, of the following
substantial voting rights as Shareholders of the Company. 
 
 Shareholder                        Shareholding  Per cent.Holding  Nature ofHolding  
 AKRC Investments LLC(1)            23,264,259    27.54             Indirect          
 Kendall Family Investments LLC(1)  10,000,000    11.84             Direct            
 Old Mutual Global Investors        6,139,239     7.27              Indirect          
 REL Coinvestment, LP               5,000,000     5.92              Direct            
 
 
(1)        Held by a Cornerstone Investor 
 
In addition, the Company also provides the same information as at 16 February
2018, being the most current information available. 
 
 Shareholder                        Shareholding  Per cent.Holding  Nature ofHolding  
 AKRC Investments LLC(1)            23,264,259    27.54             Indirect          
 Kendall Family Investments LLC(1)  10,000,000    11.84             Direct            
 Old Mutual Global Investors        6,168,531     7.30              Indirect          
 REL Coinvestment, LP               5,000,000     5.92              Direct            
 
 
(1)     Held by a Cornerstone Investor 
 
The Directors confirm that there are no securities in issue that carry special
rights with regards to the control of the Company. 
 
The Company's issued share capital consists of 84,480,064 Ordinary Shares.
Under the Company's Articles of Incorporation, on a show of hands, each
Shareholder present in person or by proxy has the right to one vote at general
meetings. On a poll, each Shareholder is entitled to one vote for every share
held. 
 
Independent External Auditor 
 
Ernst & Young LLP has been the Company's external auditor since incorporation.
The Audit Committee reviews the appointment of the external auditor, its
effectiveness and its relationship with the Company, which includes monitoring
the use of the external auditor for non-audit services and the balance of
audit and non-audit fees paid. Following a review of the independence and
effectiveness of the external auditor, a resolution will be proposed at the
2018 Annual General Meeting to reappoint Ernst & Young LLP. Each Director
believes that there is no relevant information of which the external auditor
is unaware. Each has taken all steps necessary, as a Director, to be aware of
any relevant audit information and to establish that Ernst & Young LLP is made
aware of any pertinent information. This confirmation is given and should be
interpreted in accordance with the provisions of Section 249 of the Companies
Law. Further information on the work of the external auditor is set out in the
Report of the Audit Committee. 
 
Articles of Incorporation 
 
The Company's Articles of Incorporation may only be amended by special
resolution of the Shareholders. 
 
Non-mainstream Pooled Investments 
 
The Board has concluded that the Company's Ordinary Shares are not
non-mainstream pooled investments for the purposes of the FCA rules regarding
the restrictions on the promotion to retail investors of unregulated
collective investment schemes and close substitutes, meaning that the
restrictions on promotion imposed by the FCA rules do not apply. It is the
Board's intention that the Company conducts its affairs so that these
restrictions will continue to remain inapplicable. 
 
AIFMD 
 
REL is regarded as an externally managed non-EEA AIF under the AIFM Directive.
RIL is the Investment Manager of the Company as its non-EEA AIFM. The AIFMD
outlines the required information which has to be made available to investors
in an AIF and directs that material changes to this information be disclosed
in the Annual Report of the AIF. All information required to be disclosed
under the AIFMD is either disclosed in this Annual Report or is detailed in
the Appendix entitled AIFMD Disclosures on page 178 in REL's latest Prospectus
which can be obtained through the Company's website www.RiverstoneREL.com. The
AIFM has no remuneration within the current or prior year that falls within
the scope of Article 22 of the Directive. 
 
RIL provides AIFMD compliant management services to REL. The AIFM acting on
behalf of the AIF, has appointed Estera Depositary Company (UK) Limited to
provide depositary services to the AIF. The appointment of the Depositary is
intended to adhere to, and meet the conditions placed on the Depositary and
the AIFM under Article 21 and other related articles of the AIFMD. The
Depositary shall only provide depositary services to the AIF should it admit
one or more German and/or Danish investors following marketing activity
towards them. At that time, the Depositary shall observe and comply with the
Danish and German regulations applying to the provision of depositary services
to a non-EEA AIF marketed in Denmark or Germany, as the case may be, by a
non-EEA AIFM. 
 
UCITS Eligibility 
 
The Investment Manager is a relying adviser of Riverstone Investment Group
LLC. Riverstone Investment Group LLC is registered as an investment adviser
with the SEC under the U.S. Investment Advisers Act. As such, the Investment
Manager is subject to Riverstone Investment Group LLC's supervision and
control, the advisory activities of the Investment Manager are subject to the
U.S. Investment Advisers Act and the rules thereunder and the Investment
Manager is subject to examination by the SEC. Accordingly the Company has been
advised that its Ordinary Shares should be "transferable securities" and,
therefore, should be eligible for investment by authorised funds in accordance
with the UCITS Directive or NURS on the basis that: 
 
·      the Company is a closed end investment company; 
 
·      the Ordinary Shares are admitted to trading on the Main Market of the
London Stock Exchange; and 
 
·      the Ordinary Shares have equal voting rights. 
 
However, the manager of the relevant UCITS or NURS should satisfy itself that
the Ordinary Shares are eligible for investment by the relevant UCITS or
NURS. 
 
AEOI Rules 
 
Under AEOI Rules the Company continues to comply with both FATCA and CRS
requirements to the extent relevant to the Company. 
 
General Partner's Performance Allocation and Management Fees 
 
The General Partner's Performance Allocation is equal to 20 per cent. of all
realised pre-tax profits without regard to realised losses as disclosed in the
Company's Prospectuses. In particular, taxes on realised gains from ECI
investments, as shown in the Investment Manager's Report, can be substantial
at rates up to 27.5 per cent. The Company is not an umbrella collective
investment undertaking and therefore has no gross liability. In the normal
course of business, REL may form wholly-owned subsidiaries, to be treated as C
Corporations for U.S. tax purposes. The C Corporations serve to protect REL's
public investors from incurring U.S. ECI. The C Corporations file U.S.
corporate tax returns with the U.S. IRS and pay U.S. corporate taxes on its
taxable income. 
 
The General Partner's Performance Allocation is calculated under the terms of
the Partnership Agreement and as described in the Prospectuses. 
 
The Performance Allocation is calculated on a quarterly basis, which is taken
into account when calculating the fair value of the Company's investment in
the Partnership, as described in Note 10. The fair value of the Company's
investment in the Partnership is after the calculation of Management Fees, as
described in Note 10. 
 
The financial effect of the General Partner's Performance Allocation,
Management Fees and any taxes on ECI investments is shown in Note 6. The
Investment Management Agreement continues into perpetuity post the seventh
year anniversary. 
 
Change of Control 
 
There are no agreements that the Company considers significant and to which
the Company is party that would take effect, alter or terminate upon change of
control of the Company following a takeover bid. 
 
Going Concern 
 
The Company's Financial Statements are prepared in accordance with the AIC
Code and presented on a going concern basis. As further disclosed in the
Corporate Governance Report, the Company is a member of the AIC and complies
with the AIC Code. The Directors have assessed the financial prospects of the
Company for the next twelve months from the date of approval of the Financial
Statements and made an assessment of the Company's ability to continue as a
going concern. The Directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence for the next
twelve months, as explained below. 
 
The Company retained $11.5 million of cash in the IPO and Placing and Open
Offer, and received distributions of $5.5 million and $1.1 million from the
Partnership in Q1 2016 and Q1 2017, respectively, of which $0.8 million
remains at 31 December 2017 (31 December 2016: $3.2 million). This cash
balance is sufficient to cover the Company's existing liabilities at 31
December 2017 of $0.6 million, but the Company will require a distribution of
$3.3 million to cover its forecasted annual expenses for 2018 of approximately
$3.5 million. In accordance with section 4.1(a) of the Partnership Agreement,
in the event of the Company requiring additional funds for working capital, it
is entitled to receive another distribution from the Partnership. 
 
As at 31 December 2017, the Partnership, including its wholly-owned
subsidiaries, REL US Corp and REL US Centennial Holdings, LLC,  had $147
million of uninvested funds held as cash and money market fixed deposits (31
December 2016: $268 million), and has no material going concern risk. Although
the Company's commitments, through the Partnership, exceed its available
liquid resources, it is not expected that all commitments will be drawn due to
a variety of factors, such as a portfolio company being sold earlier than
anticipated or a targeted investment opportunity changing or disappearing. In
addition, the board of each underlying portfolio company, more often than not
controlled by Riverstone, has discretion over whether or not that capital is
ultimately invested. Moreover, REL's arrangements with Riverstone allow excess
commitments to be amended by the Investment Manager with consideration from
the Board. 
 
In light of the above facts, the Directors are satisfied that it is
appropriate to apply the going concern basis in preparing the Financial
Statements. In reaching this conclusion, the Board has considered budgeted and
projected results of the business, projected cash flow and risks that could
impact the Company's liquidity over the next twelve months. 
 
Viability Statement 
 
As required by the AIC Code, the Directors have assessed the prospects of the
Company over a longer period than required by the going concern provision. The
Board chose to conduct a review for a period of three years to 31 December
2020 as it was determined to be an appropriate timeframe based on the
historical investment cycle of the Company's investments through the
Partnership and its financial planning processes. On a rolling basis, the
Directors evaluate the outcome of the investments and the Company's financial
position as a whole. While an unprecedented and long-term decline in global
oil and gas consumption would threaten the Company's performance, it would not
necessarily threaten its viability. 
 
In support of this statement, the Directors have taken into account all of the
principal risks and their mitigation as identified in the Principal Risk and
Uncertainties section of the Corporate Governance Report, the nature of the
Company's business; including the cash reserves and money market deposits at
the Partnership, the potential of its portfolio of investments to generate
future income and capital proceeds, and the ability of the Directors to
minimise the level of cash outflows, if necessary. The most relevant potential
impacts of the identified Principal Risks and Uncertainties on viability were
determined to be: 
 
·      An investment's capital requirements may exceed the Company's ability
to provide capital; and 
 
·      The Company may not have sufficient capital available to participate in
all investment opportunities presented. 
 
Each quarter, Directors review threats to the Company's viability utilisingthe
risk matrix and update as required due to recent developments and/or changes
in the global market. The Board relies on periodic reports provided by the
Investment Manager and Administrator regarding risks faced by the Company.
When required, experts are utilised to gather relevant and necessary
information, regarding tax, legal, and other factors. 
 
The Investment Manager made financial commitments to each portfolio company.
However, the Company evaluates the ongoing suitability of each investment
prior to funding and may or may not agree to fund an investment. In the event
the Company is unable, or elects, not to fund an existing investment,
Riverstone may seek other funding alternatives. 
 
The Investment Manager considers the future cash requirements of the Company
before funding portfolio companies. Furthermore, the Board receives regular
updates from the Investment Manager on the Company's cash position, which
allows the Board to maintain their fiduciary responsibility to the
Shareholders and, if required, limit funding for existing commitments.
However, Management fees may not be deferred per the terms of the Investment
Management Agreement. 
 
The Board considered the Company's viability over the three year period, based
on a working capital model prepared by the Investment Manager. The working
capital model forecasts key cash flow drivers such as capital deployment rate,
investment returns, Management Fees and operating expenses. In connection with
the preparation of the working capital model, dividend payments and/or share
repurchases were assumed to not occur during the three year period, unless
already predetermined. In addition, the Board reviews credit market
availability, but no such financing has been assumed. 
 
If factors apart from capital deployment rate remain constant, accelerating
the capital deployment rate by 20 per cent., from 36 months to 30 months,
would result in the Company being directed by the Board, and the Investment
Manager recommending, to preserve working capital and postpone future
investments after 24 months, rather than 27 months; unless a financing or
capital raise was completed. In both scenarios, the Company is forecasted to
maintain sufficient working capital for the three year period. 
 
Based on the aforementioned procedures and the existing internal controls of
the Company and Investment Manager, the Board has concluded there is a
reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year period of the
assessment. 
 
Financial Risk Management Policies and Objectives 
 
Financial Risk Management Policies and Objectives are disclosed in Note 11. 
 
Principal Risk and Uncertainties 
 
Principal Risk and Uncertainties are discussed in the Corporate Governance
Report. 
 
Subsequent Events 
 
Subsequent Events are disclosed in Note 15. 
 
Annual General Meetings 
 
The AGM of the Company will be held at 10.30 am BST on 22 May 2018 at The Old
Government House Hotel, St Ann's Place, St Peter Port, Guernsey, Channel
Islands. Details of the resolutions to be proposed at the AGM, together with
explanations, will appear in the notices of meetings to be distributed to
Shareholders listed on the register as at 31 December 2017 together with this
Annual Report. As a matter of good practice, all resolutions will be conducted
on a poll and the results will be announced to the market as soon as possible
after the meeting. 
 
Members of the Board, including the Chairman and the Chairperson of each
Committee, will be in attendance at the AGM and will be available to answer
Shareholder questions. 
 
By order of the Board 
 
Richard Hayden 
 
Chairman 
 
27 February 2018 
 
Directors' Responsibilities Statement 
 
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations. 
 
The Companies Law requires the Directors to prepare Financial Statements for
each financial year. Under the Companies Law, the Directors must not approve
the Financial Statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Company and of the profit or loss of
the Company for that period. In preparing these Financial Statements, the
Directors are required to: 
 
·      select suitable accounting policies in accordance with IAS 8:
Accounting Policies, Changes in Accounting Estimates and Errors and then apply
them consistently; 
 
·      make judgements and estimates that are reasonable and prudent; 
 
·      present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information; 
 
·      provide additional disclosures when compliance with the specific
requirements in IFRS are insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the Company's
financial position and financial performance; 
 
·      state that the Company has complied with IFRS, subject to any material
departures disclosed and explained in the Financial Statements; and 
 
·      prepare the Financial Statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business. 
 
The Directors confirm that they have complied with the above requirements in
preparing the Financial Statements. 
 
The Directors are responsible for keeping proper accounting records, which
disclose with reasonable accuracy at any time, the financial position of the
Company and to enable them to ensure that the Financial Statements comply with
Companies Law. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud, error and non-compliance with law and regulations. 
 
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website
(www.RiverstoneREL.com). The work carried out by the external auditor does not
involve considerations of these matters and, accordingly, the external auditor
accepts no responsibility for any changes that may have occurred to the
Financial Statements since they were initially presented on the website. 
 
Legislation in Guernsey governing the preparation and dissemination of the
Financial Statements may differ from legislation in other jurisdictions. 
 
Responsibility Statement of the Directors in Respect of the Annual Report
under the Disclosure GUIDANCE and Transparency Rules 
 
Each of the Directors confirms to the best of their knowledge and belief
that: 
 
·      the Financial Statements, prepared in accordance with IFRS, give a true
and fair view of the assets, liabilities, financial position and profit or
loss of the Company; 
 
·      the Annual Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties faced; and 
 
·      the Annual Report and Financial Statements include information required
by the UK Listing Authority so that the Company complies with the provisions
of the Listing Rules, Disclosure Guidance and Transparency Rules of the UK
Listing Authority. With regard to corporate governance, the Company is
required to disclose how it has applied the principles, and complied with the
provisions of the corporate governance code applicable to the Company. 
 
Directors' statement under the Corporate Governance Code 
 
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations. Having taken
advice from the Investment Manager, the Directors consider the Annual Report
and Financial Statements, taken as a whole, as fair, balanced and
understandable and that it provides the information necessary for Shareholders
to assess the Company's performance, business model and strategy. 
 
By order of the Board 
 
 Richard Hayden    Patrick Firth     
 Chairman          Director          
 27 February 2018  27 February 2018  
 
 
Corporate Governance Report 
 
As a UK premium listed Company, Riverstone Energy Limited's governance
policies and procedures are based on the principles of the Corporate
Governance Code as required under the Listing Rules. The Corporate Governance
Code is available on the Financial Reporting Council's website,
www.frc.org.uk. 
 
The Company became a member of the AIC effective 15 January 2014 and has
therefore put in place arrangements to comply with the AIC Code and, in
accordance with the AIC Code, complies with the Corporate Governance Code. The
Directors recognise the importance of sound corporate governance, particularly
the requirements of the AIC Code. The AIC Code and the AIC Guide are available
on the AIC's website, www.theaic.co.uk. 
 
The Company is subject to the GFSC Code, which applies to all companies
registered as collective investment schemes in Guernsey. The GFSC has also
confirmed that companies that report against the Corporate Governance Code or
AIC Code are deemed to meet the GFSC Code. 
 
The Board monitors developments in corporate governance to ensure the Board
remains aligned with best practice especially with respect to the increased
focus on diversity. The Board acknowledges the importance of diversity,
including gender, for the effective functioning of the Board and commits to
supporting diversity in the boardroom. It is the Board's ongoing aspiration to
have a well diversified representation. The Board also values diversity of
business skills and experience because Directors with diverse skills sets,
capabilities and experience gained from different geographical backgrounds
enhance the Board by bringing a wide range of perspectives to the Company. 
 
The AIC Code, as explained by the AIC Guide, addresses all the principles set
out in the Corporate Governance Code, as well as setting out additional
principles and recommendations on issues that are of specific relevance to
investment companies such as the Company. The Board considers that reporting
against the principles and recommendations of the AIC Code, by reference to
the AIC Guide, provides better information to Shareholders. 
 
The Company has complied with the recommendations of the AIC Code and the
relevant provisions of the Corporate Governance Code, except as set out
below. 
 
The Corporate Governance Code includes provisions relating to: 
 
·      the role of the chief executive; 
 
·      executive directors' remuneration; and 
 
·      the need for an internal audit function. 
 
For the reasons set out in the AIC Guide, and as explained in the Corporate
Governance Code, the Board considers that the above provisions are not
currently relevant to the position of the Company, being an externally managed
investment company, which delegates most day-to-day functions to third
parties. 
 
The Company does not have a chief executive or any executive directors. The
Company has not established a separate remuneration committee as the Company
has no executive officers and the Board is satisfied that any relevant issues
that arise can be properly considered by the Board. 
 
The Company has no employees or internal operations and has therefore not
reported further in respect of these provisions. The need for an internal
audit function is discussed in the Audit Committee report. 
 
The Board 
 
The Company is led and controlled by a Board of Directors, which is
collectively responsible for the long-term success of the Company. It does so
by creating and preserving value, and has as its foremost principle acting in
the interests of Shareholders. 
 
The Company believes that the composition of the Board is a fundamental driver
of its success as the Board must provide strong and effective leadership of
the Company. The current Board was selected, as their biographies illustrate,
to bring a breadth of knowledge, skills and business experience to the
Company. The non-executive Directors provide independent challenge and review,
bringing wide experience, specific expertise and a fresh objective
perspective. 
 
The Board consists of eight Non-executive Directors (31 December 2016: eight),
five of whom, including the Chairman, are independent of the Company's
Investment Manager; Mr Hayden, Mr Firth, Mr Barker, Mrs Whittet and Mr
Thompson (31 December 2016: five). Mr Lapeyre, Mr Leuschen, and Mr Ryan are
not considered independent because of their nomination for appointment to the
Board by the Investment Manager, pursuant to a right set out in the Investment
Management Agreement. All Directors served throughout the year. 
 
The Chairman of the Board is independent and is appointed in accordance with
the Company's Articles of Incorporation. Mr Hayden is considered to be
independent because he: 
 
·      has no current or historical employment with the Investment Manager; 
 
·      has no current directorships or partnerships in any other investment
funds managed by the Investment Manager; and 
 
·      is not an executive of a self-managed company or an ex-employee who has
left the executive team of a self-managed company within the last five years. 
 
New Directors receive an induction from the Investment Manager and all
Directors receive other relevant training as necessary. 
 
At each subsequent Annual General Meeting of the Company, each of the
Directors at the date of the notice convening the Annual General Meeting shall
retire from office and may offer themselves for election or re-election by the
Shareholders. 
 
The Board meets at least four times a year for regular, scheduled meetings and
should the nature of the activity of the Company require it, additional
meetings may be held, some at short notice. At each meeting the Board follows
a formal agenda that covers the business to be discussed. The primary focus at
Board meetings is a review of investment performance and associated matters
such as asset allocation, share price discount/premium management, investor
relations, peer group information, gearing, industry issues and principal
risks and uncertainties in particular those identified at the end of this
report. 
 
Between meetings the Board visits, at least annually, the Investment Manager,
and there is regular contact with the Administrator, and the Board requires to
be supplied in a timely manner with information by the Investment Manager, the
Company Secretary and other advisers in a form and of a quality to enable it
to discharge its duties. 
 
The Company has adopted a share dealing code for the Board and will seek to
ensure compliance by the Board and relevant personnel of the Investment
Manager and other third party service providers with the terms of the share
dealing code. 
 
Board Tenure and Re-election 
 
No member of the Board has served for longer than eight years to date. As such
no issue has arisen to be considered by the Board with respect to long tenure.
In accordance with the AIC Code, when and if any director shall have been in
office (or on re-election would at the end of that term of office) for more
than nine years the Company will consider further whether there is a risk that
such a director might reasonably be deemed to have lost independence through
such long service. 
 
A Director who retires at an Annual General Meeting may, if willing to
continue to act, be elected or re-elected at that meeting. If, at a general
meeting at which a Director retires, the Company neither re-elects that
Director nor appoints another person to the Board in the place of that
Director, the retiring Director shall, if willing to act, be deemed to have
been re-elected unless at the general meeting it is resolved not to fill the
vacancy or unless a resolution for the re-election of the Director is put to
the meeting and not passed. 
 
Directors are appointed under letters of appointment, copies of which are
available at the registered office of the Company. The Board considers its
composition and succession planning on an ongoing basis. 
 
Following discussion, it is the opinion of the Management Engagement Committee
that the Investment Manager for the year ended 31 December 2017 continues to
demonstrate strong performance and as such for the Investment Manager to
continue in their appointment on the terms agreed, which would be in the
interests of the Shareholders as a whole. The Board is pleased with the
performance of the Investment Manager, based on selection of high quality E&P
and midstream investments and comparative resilience in weak markets. 
 
Directors' Remuneration 
 
The level of remuneration of the Non-executive Directors reflects the time
commitment and responsibilities of their roles. The remuneration of the
Non-executive Directors does not include any share options or other
performance related elements and there are no plans to seek any Shareholder
waivers to deviate from this. 
 
In 2017, an externally-facilitated review of the remuneration of the Board was
undertaken. The Board remuneration evaluation was externally facilitated by
Optimus Group Limited, the only piece of work undertaken by Optimus Group
Limited from the Company.  This evaluation and review considered Riverstone
Energy Limited peers, account domicile, asset class and size, board structure
and activity, and the resultant fees are further outlined below. 
 
The Chairman is entitled to annual remuneration of £132,000 (31 December 2016:
£120,000). The Chairman of the Audit Committee is entitled to annual
remuneration of £82,500 (31 December 2016: £75,000) and the Chairman of the
Management Engagement Committee is entitled to annual remuneration of £71,500
(31 December 2016: £65,000). The other independent Directors are entitled to
annual remuneration of £66,000 (31 December 2016: £60,000). This is the first
time the Company has increased Board remuneration since the inception of the
Company in 2013. The three non-independent Directors have chosen not to be
remunerated by the Company for their services. 
 
During the year ended 31 December 2017 and 31 December 2016, the Directors'
remuneration was as follows: 
 
 Director              2017($'000)  2016($'000)  
 Peter Barker (1)      79           79           
 Patrick Firth(1)(2)   99           91           
 Richard Hayden(1)(3)  158          126          
 Pierre Lapeyre        -            -            
 David Leuschen        -            -            
 Ken Ryan              -            -            
 Jeremy Thompson(1)    79           47           
 Claire Whittet(1)(4)  86           83           
 
 
(1)     Non-executive Independent Director 
 
(2)     Senior Independent Director and Chairman of the Audit Committee 
 
(3)     Chairman of the Company 
 
(4)     Chairman of the Management Engagement Committee 
 
The above fees due to the Directors are for the year ended 31 December 2017
and 31 December 2016, and none were outstanding at 31 December 2017 (31
December 2016: $Nil). 
 
Duties and Responsibilities 
 
The Board is responsible to Shareholders for the overall management of the
Company. The duties and powers reserved for the Board include decisions
relating to the determination of investment policy and approval of investments
in certain instances, strategy, capital raising, statutory obligations and
public disclosure, financial reporting and entering into any material
contracts by the Company. 
 
The Board has overall responsibility for maximising the Company's success by
directing and supervising the affairs of the business and meeting the
appropriate interests of Shareholders and relevant stakeholders, while
enhancing the value of the Company and also ensuring the protection of
investors. A summary of the Board's responsibilities is as follows: 
 
·      statutory obligations and public disclosure; 
 
·      strategic matters and financial reporting; 
 
·      risk assessment and management including reporting, compliance,
governance, monitoring and control; and 
 
·      other matters having a material effect on the Company. 
 
The Directors have access to the advice and services of the Administrator, who
is responsible to the Board for ensuring that Board procedures are followed
and that it complies with Companies Law and applicable rules and regulations
of the GFSC and the LSE. Where necessary, in carrying out their duties, the
Directors may seek independent professional advice and services at the expense
of the Company. The Company maintains directors' and officers' liability
insurance in respect of legal action against its Directors on an ongoing
basis. 
 
The Board's responsibilities for the Annual Report are set out in the
Directors' Responsibility Statement. The Board is also responsible for issuing
appropriate half-yearly financial reports, quarterly portfolio valuations and
other price-sensitive public reports. 
 
Directors' attendance at Board and Committee Meetings: 
 
One of the key criteria the Company uses when selecting Non-executive
Directors is their confirmation prior to their appointment that they will be
able to allocate sufficient time to the Company to discharge their
responsibilities in a timely and effective manner. 
 
The 

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the very attractive global energy sector.
 
The Investment Manager intends to manage investments for the benefit of all of
its investors. If any matter arises that the Investment Manager determines in
its good faith judgment constitutes an actual conflict of interest, the
Investment Manager may take such actions as may be necessary or appropriate,
having regard to all relevant terms of the Investment Management Agreement, to
manage the conflict (and upon taking such actions the Investment Manager will
be considered to have discharged responsibility for managing such conflict).
The Directors are required by the Registered Collective Investment Schemes
Rules 2015 issued by the GFSC to take all reasonable steps to ensure that
there is no breach of the conflicts of interest requirements of those rules.
 
Asset Allocation
The Company acquires its interests in each Qualifying Investment at the same
time (or as near as practicable thereto) as, and on substantially the same
economic and financial terms as, the relevant Private Riverstone Funds.
 
The Company and the current Private Riverstone Funds, (Fund V and Fund VI)
invest in each Qualifying Investment in which the Private Riverstone Funds
participate in a ratio of one-third to REL to two-thirds to the Private
Riverstone Funds. This investment ratio is subject to adjustment on a
case-by-case basis (a) to take account of the liquid assets available to each
of the Company and the Private Riverstone Funds for investment at the relevant
time and any other investment limitations applicable to either of them or
otherwise and (b) if both (i) a majority of the Company's independent
Directors and (ii) the Investment Manager agree that the investment ratio
should be adjusted for specific Qualifying Investments.
 
For each Private Riverstone Fund subsequent to Fund V and Fund VI which is of
a similar size and has a similar investment policy to the Company, Riverstone
will seek to ensure that, subject to the investment capacity of the Company at
the time, the Company and the Private Riverstone Fund invest in Qualifying
Investments in an investment ratio of one-third to REL to two-thirds to the
Private Riverstone Fund or in such other ratio as the Company's independent
Directors and the Investment Manager agree at or prior to the first closing of
such Private Riverstone Fund.
 
Such investment ratio may be adjusted by agreement between the Company's
independent Directors and the Investment Manager on subsequent closings of a
Private Riverstone Fund having regard to the total capital commitments raised
by that Private Riverstone Fund during its commitment period, the liquid
assets available to the Company at that time and any other investment
limitations applicable to either of them.
 
The Investment Manager typically seeks to ensure that the Company and the
Private Riverstone Funds dispose of their interests in Qualifying Investments
at the same time, on substantially the same terms, and in the case of partial
disposals, in the same ratio as the relevant Qualifying Investment was
acquired, but this may not always be the case.
 
In addition, the Company may at any time make investments consistent with its
investment policy independent from Private Riverstone Funds, which may include
investments alongside Riverstone employee co-investment vehicles or other
Riverstone managed or advised co-investment vehicles. In such cases, approval
by the Board is required.
 
The Company invests in public or private securities, may hold controlling or
non-controlling positions in its investments and may make investments in the
form of equity, equity-related instruments, indebtedness or derivatives (or a
combination of any of them). The Company does not permit any investments to be
the subject of stock lending or sale and repurchase of shares.
 
Diversification
Save for the Company's investment in Hammerhead, which may represent up to 35
per cent. of the Company's gross assets, including cash holdings, measured at
the time the investment is made, no one investment made by the Company,
through the Partnership, may (at the time of the relevant investment)
represent more than 25 per cent. of the Company's gross assets, including cash
holdings, measured at the time the investment is made. The Company utilises
the Partnership and its subsidiary undertakings or other similar investment
holding structures to make investments and this limitation does not apply to
its ownership interest in any such subsidiary undertaking (nor, for the
avoidance of doubt, to the Company's interest in the Partnership).
 
Gearing
The Company can, but is not required to, incur indebtedness for investment
purposes, to the extent that such indebtedness is a precursor to an ultimate
equity investment, working capital requirements and to fund own-share
purchases or retentions up to a maximum of 30 per cent. of the last published
NAV as at the time of the borrowing unless approved by the Company by an
ordinary resolution. This limitation does not apply to portfolio level
entities in respect of which the Company is invested but it does apply to all
subsidiary undertakings utilised by the Company or the Partnership for the
purposes of making investments. The consent of a majority of the Company's
Directors shall be required for the Company or the Partnership to enter into
any credit or other borrowing facility.
 
The Company must at all times comply with its published investment policy. For
so long as the Ordinary Shares are listed on the Official List, no material
change may be made to the Company's investment policy other than with the
prior approval of both the Company's Shareholders and a majority of the
independent Directors of the Company, and otherwise in accordance with the
Listing Rules.
 
 
 
Investment Restrictions
 
The Company is subject to the following investment restrictions:
·      for so long as required by the Listing Rules, it will at all
times seek to ensure that the Investment Manager invests and manages the
Company's and the Partnership's assets in a way which is consistent with the
Company's objective of spreading risk and in accordance with the Company's
investment policy;
·      for so long as required by the Listing Rules, it must not conduct
a trading activity which is significant in the context of the Company and its
Investment Undertakings;
·      for so long as required by the Listing Rules, not more than 10
per cent. of the value of its total assets will be invested in other UK-listed
closed-ended investment funds, except for those which themselves have
published investment policies to invest not more than 15 per cent. of their
total assets in other UK-listed closed-ended investment funds; and
·      any investment restrictions that may be imposed by Guernsey law
(although no such restrictions currently exist).
 
Currency and interest rate hedging transactions will only be undertaken for
the purpose of efficient portfolio management and these transactions will not
be undertaken for speculative purposes.
 
"The Company invests in the global energy sector, which is undergoing
significant transformation driven in large part by a revolution in horizontal
drilling and completion technology."
 
 
 
Board of Directors
 
Richard Hayden (72), Chairman and Non-executive Independent Director
 
Appointment: Appointed to the Board in May 2013 and appointed as Chairman in
May 2016
 
Experience: Mr Hayden serves as non-executive Chairman of TowerBrook Capital
Partners Advisory Board and member of the Investment Committee. Prior to
joining TowerBrook in 2009, Mr Hayden was Vice Chairman of GSC Group Inc and
Global Head of the CLO and Mezzanine Debt business. Previously, Mr Hayden was
with Goldman Sachs from 1969 to 1999. Mr Hayden held a variety of senior
positions during his time at Goldman Sachs, including Deputy Chairman of
Goldman Sachs International Ltd and Chairman of the Global Credit Committee.
Mr Hayden has served on a number of corporate and advisory boards and is
currently a non-executive Director of CQS. Mr Hayden is also on the Finance
and Investment Committee of the Children's Investment Fund Foundation. Mr
Hayden is a UK resident.
 
Committee Membership: Audit Committee Member; Nomination Committee Chairman;
Management Engagement Committee Member
 
Peter Barker (69), Non-executive Independent Director
 
Appointment: Appointed to the Board in September 2013
 
Experience: Mr Barker was California Chairman of JPMorgan Chase & Co., a
global financial services firm, from September 2009 until his retirement on 31
January 2013, and a member of its Executive Committee in New York. Mr Barker
was also an Advisory Director of Goldman, Sachs & Co. from December 1998
until his retirement in May 2002, and a Partner of Goldman, Sachs & Co.
from 1982 to 1998, heading up Investment Banking on the West Coast, having
joined Goldman, Sachs & Co. in 1971. Mr Barker is President of the
Fletcher Jones Foundation and has held numerous directorships. He is currently
on the board of Fluor Corporation, Avery Dennison Corporation, the W. M. Keck
Foundation, the Irvine Company, Franklin Resources, Inc., and the Automobile
Club of Southern California. Mr Barker is also a Trustee of Claremont McKenna
College, having formerly been its Chairman, and was previously Chair of the
Los Angeles Area Council of the Boy Scouts of America. Mr Barker is a U.S.
resident.
 
Committee Membership: Audit Committee Member; Nomination Committee Member;
Management Engagement Committee Member
 
Patrick Firth (56), Non-executive Senior Independent Director
 
Appointment: Appointed to the Board in May 2013 and appointed as Senior
Independent Director in May 2016
 
Experience: Mr Firth qualified as a Chartered Accountant with KPMG Guernsey in
1991 and is also a member of the Chartered Institute for Securities and
Investment. He has worked in the fund industry in Guernsey since joining
Rothschild Asset Management (CI) Limited in 1992 before moving to become
Managing Director at Butterfield Fund Services (Guernsey) Limited
(subsequently Butterfield Fulcrum Group (Guernsey) Limited), a company
providing third party fund administration services, where he worked from April
2002 until June 2009. He is a non-executive Director of a number of investment
funds and management companies, including GLI Finance Limited, ICG Longbow
Senior Secured UK Property Debt Investments Limited, JZ Capital Partners
Limited and NextEnergy Solar Fund Limited. Mr Firth is a resident of Guernsey.
 
Committee Membership: Audit Committee Chairman; Nomination Committee Member;
Management Engagement Committee Member
 
Pierre F. Lapeyre (55), Non-executive Director
 
Appointment: Appointed to the Board in May 2013
 
Experience: Mr Lapeyre is a Founder and Senior Managing Director of
Riverstone. He is based in New York. Prior to founding Riverstone, Mr Lapeyre
was a Managing Director of Goldman Sachs in its Global Energy and Power Group.
Mr Lapeyre joined Goldman Sachs in 1986 and spent his 14-year investment
banking career focussed on energy and power, particularly the midstream,
upstream and energy service sectors. Mr Lapeyre's responsibilities at Goldman
Sachs included client coverage and leading the execution of a wide variety of
mergers and acquisitions, IPO, strategic advisory and capital markets
financings for clients across all sectors of the industry.
 
While at Goldman Sachs, Mr Lapeyre served as sector captain for the midstream
and energy services segments, led the group's coverage of Asian energy
companies and was extensively involved in the origination and execution of
energy private equity investments on behalf of the firm. Mr Lapeyre was
responsible for managing Goldman Sachs' leading franchise in master limited
partnerships. He was also asked to lead the group's agency and principal
investment effort in energy/power technology. At Goldman Sachs Mr Lapeyre had
relationship and deal execution responsibilities for a broad range of energy
clients.
 
Mr Lapeyre serves on the boards of directors or equivalent bodies of a number
of portfolio companies in which Other Riverstone Funds have investment
interests. Mr Lapeyre is a U.S. resident.
 
Committee Membership: None
 
David M. Leuschen (66), Non-executive Director
 
Appointment: Appointed to the Board in May 2013
 
Experience: Mr Leuschen is a Founder and Senior Managing Director of
Riverstone. He is based in New York. Prior to founding Riverstone, Mr Leuschen
was a Partner and Managing Director at Goldman Sachs and founder and head of
the Goldman Sachs Global Energy and Power Group. Mr Leuschen joined Goldman
Sachs in 1977, became head of the Global Energy and Power Group in 1985,
became a Partner of that firm in 1986 and remained with Goldman Sachs until
leaving to found Riverstone. Mr Leuschen has extensive mergers and
acquisitions, financing and investing experience in the energy and power
industry.
 
Mr Leuschen was responsible for building the Goldman Sachs energy and power
investment banking practice into one of the leading franchises in the global
energy and power industry. During this period, Mr Leuschen and his team
participated in a large number of the major energy and power mergers and
acquisitions transactions worldwide. Mr Leuschen also was a founder of Goldman
Sachs' leading master limited partnership franchise. Mr Leuschen also served
as Chairman of the Goldman Sachs Energy Investment Committee, where he was
responsible for screening potential capital commitments by Goldman Sachs in
the energy and power industry and was responsible for establishing and
managing the firm's relationships with senior executives from leading
companies in all segments of the energy and power industry.
 
Mr Leuschen also serves on the boards of directors or equivalent bodies of a
number of portfolio companies in which Other Riverstone Funds have investment
interests. Mr Leuschen is a U.S. resident.
 
Committee Membership: None
 
Ken Ryan (45), Non-executive Director
 
Appointment: Appointed to the Board in May 2016
 
Experience: Mr Ryan is a Partner of Riverstone and is responsible for
corporate development. He is based in New York. Prior to joining Riverstone in
2011, he worked for Gleacher & Company / Gleacher Partners in both London
and New York, most recently as Managing Director and Co-head of Investment
Banking. Prior to Gleacher, he worked for Goldman Sachs in the European
Financial Institutions Group in London, the U.S. Financial Institutions Group
in New York, and the European Advisory Group. He received a law degree from
University of Dublin, Trinity College.
 
Mr Ryan also serves on the boards of directors or equivalent bodies of a
number of portfolio companies in which Other Riverstone Funds have investment
interests. Mr Ryan is a U.S. resident.
 
Committee Membership: None
 
Jeremy Thompson (62), Non-executive Independent Director
 
Appointment: Appointed to the Board in May 2016
 
Experience: Mr Thompson has sector experience in Finance, Telecoms,
Engineering and Oil & Gas. He acts as an independent non-executive
directorship for both listed, including DP Aircraft 1 Limited, and PE funds.
Prior to that, he has worked in private equity and was CEO of four autonomous
global businesses within Cable & Wireless Plc (operating in both regulated
and unregulated markets), and earlier held CEO roles within the Dowty Group.
He currently serves as chairman of the States of Guernsey Renewable Energy
Team and is a commissioner of the Alderney Gambling Control Commission. He is
also an independent member of the Guernsey Tax Tribunal panel. He is a
graduate of Brunel (B.Sc), Cranfield (MBA)  and Bournemouth (M.Sc)
Universities and was an invited member to the UK's senior defence course
(Royal College of Defence Studies). He is a member of the IoD and holds the
IoD's Certificate and Diploma in Company Direction, is an associate of the
Chartered Institute of Arbitration and a chartered Company Secretary. Mr
Thompson is a resident of Guernsey and has previously lived and worked in the
UK, USA and Germany.
 
Committee Membership: Audit Committee Member; Nomination Committee Member;
Management Engagement Committee Member
 
Claire Whittet (62), Non-executive Independent Director
 
Appointment: Appointed to the Board in May 2015
 
Experience:
Mrs Whittet has 40 years of experience in the financial services industry.
After obtaining a MA (Hons) in Geography from the University of Edinburgh, she
joined the Bank of Scotland for 19 years and undertook a wide variety of roles
including running two city centre offices. She moved to Guernsey in 1996 and
was Global Head of Private Client Credit for Bank of Bermuda before joining
the Board of Rothschild Bank International Limited in 2003, initially as
Director of Lending and latterly as Managing Director and Co-Head until May
2016 when she became a non-executive Director. Mrs Whittet is an ACIB member
of the Chartered Institute of Bankers in Scotland, a Chartered Banker, a
member of the Chartered Insurance Institute and holds an IoD Diploma in
Company Direction. She is a non-executive Director of five other listed funds,
being BH Macro Limited, Eurocastle Investment Limited, International Public
Partnerships Limited, Third Point Offshore Investors Limited and TwentyFour
Select Monthly Income Fund Limited. Mrs Whittet is a Guernsey resident.
 
Committee Membership: Audit Committee Member; Nomination Committee Member;
Management Engagement Committee Chairman
 
 
 
Report of the Directors
 
The Directors hereby submit the Annual Report and Audited Financial Statements
for the Company for the year ended 31 December 2017. This Report of the
Directors should be read together with the Corporate Governance Report.
 
General Information
Riverstone Energy Limited is a company limited by shares, which was
incorporated on 23 May 2013 in Guernsey with an unlimited life and registered
with the Commission as a Registered Closed-ended Collective Investment Scheme
pursuant to the POI Law. It has been listed on the London Stock Exchange since
29 October 2013. The registered office of the Company is Heritage Hall, PO Box
225, Le Marchant Street, St Peter Port, Guernsey, GY1 4HY, Channel Islands.
 
Principal Activities
The principal activity of the Company is to act as an investment entity
through the Partnership and make privately negotiated equity investments in
the energy sector.
 
The Company's investment objective is to generate long-term capital growth by
investing in the global energy sector, with a particular focus on
opportunities in the global exploration and production and midstream energy
sub-sectors.
 
Business Review
A review of the Company's business and its likely future development is
provided in the Chairman's Statement and in the Investment Manager's Report.
 
Listing Requirements
Since being admitted on 29 October 2013 to the Official List of the UK Listing
Authority, maintained by the FCA, the Company has complied with the applicable
Listing Rules.
 
Results and Dividend
The results of the Company for the year are shown in the audited Statement of
Comprehensive Income.
 
The Net Asset Value of the Company as at 31 December 2017 was $1,743 million
(31 December 2016: $1,699 million).
 
The Directors do not recommend the payment of a dividend in respect of the
year ended 31 December 2017 (31 December 2016: $Nil).
 
Share Capital
At incorporation on 23 May 2013, the Company issued one founder Ordinary Share
of no par value. On 29 October 2013, the Company issued 71,032,057 Ordinary
Shares of no par value at £10 per Ordinary Share in an initial public
offering raising a total of $1,138 million.
 
KFI, one of the Cornerstone Investors in the Company, paid for and acquired 10
million Ordinary Shares in two equal tranches of £50 million. The first
tranche was paid on Admission and the second tranche of 5 million Ordinary
Shares was paid on 26 September 2014.
 
On 11 December 2015, the Company raised £67.6 million ($102.3 million)((1))
through the issuance of 8,448,006 new Ordinary Shares at £8.00 per Ordinary
Share.
 
Following admission of the new Ordinary Shares, the share capital of the
Company is 84,480,064 Ordinary Shares in aggregate.
 
The Company has one class of Ordinary Shares. The issued nominal value of the
Ordinary Shares represents 100 per cent. of the total issued nominal value of
all share capital. Under the Company's Articles of Incorporation, on a show of
hands, each Shareholder present in person or by proxy has the right to one
vote at general meetings. On a poll, each Shareholder is entitled to one vote
for every share held.
 
Shareholders are entitled to all dividends paid by the Company and, on a
winding up, provided the Company has satisfied all of its liabilities, the
Shareholders are entitled to all of the surplus assets of the Company. The
Company has not declared or paid dividends from inception to 31 December 2017,
and has no intention to do so.
 
The Ordinary Shares have no right to fixed income.
 
((1)) Gross of share issuance costs of $3.6 million
 
 
 
Shareholdings of the Directors
 
The Directors with beneficial interests in the shares of the Company as at 31
December 2017 and 2016 are detailed below:
 
 Director                Ordinary      Per cent.     Ordinary      Per cent.
                         Shares held   Holding at    Shares held   Holding at
                         31 December   31 December   31 December   31 December
                         2017          2017          2016          2016
 Richard Hayden((1))     10,000        0.012         10,000        0.012
 Peter Barker((1)(2))    5,000         0.006         5,000         0.006
 Patrick Firth((2)(3))   8,000         0.009         4,000         0.005
 Pierre Lapeyre((4))     50,000        0.059         50,000        0.059
 David Leuschen((4))     -             -             -             -
 Ken Ryan((4))           -             -             -             -
 Jeremy Thompson((1))    3,751         0.004         -             -
 Claire Whittet((1)(5))  2,250         0.003         -             -
 
((1)       ) Non-executive Independent Director
((2))     Ordinary Shares held jointly with spouse
((3)       ) Senior Independent Director
((4))     Mr Lapeyre, Mr Leuschen and Mr Ryan, as well as other Riverstone
senior management, have a beneficial interest in REL Coinvestment, LP, which
as at the year end held 5,000,000 Ordinary Shares, and Riverstone Energy
Limited Capital Partners LP, which as at the year end held 675,814 Ordinary
Shares
((5))     Ordinary Shares held indirectly with spouse
( )
In addition, the Company also provides the same information as at 16 February
2018, being the most current information available.
 
 Director                Ordinary      Per cent.
                         Shares held   Holding at
                         16 February   16 February
                         2018          2018
 Richard Hayden((1))     10,000        0.012
 Peter Barker((1)(2))    5,000         0.006
 Patrick Firth((2)(3))   8,000         0.009
 Pierre Lapeyre((4))     50,000        0.059
 David Leuschen((4))     -             -
 Ken Ryan((4))           -             -
 Jeremy Thompson((1))    3,751         0.004
 Claire Whittet((1)(5))  2,250         0.003
 
((1))     Non-executive Independent Director
((2))     Ordinary Shares held jointly with spouse
((3))     Senior Independent Director
((4))     Mr Lapeyre, Mr Leuschen and Mr Ryan, as well as other Riverstone
senior management, have a beneficial interest in REL Coinvestment, LP, which
as 16 February 2018 held 5,000,000 Ordinary Shares and Riverstone Energy
Limited Capital Partners LP, which as at 16 February 2018 held 675,814
Ordinary Shares
((5))     Ordinary Shares held indirectly with spouse
 
Directors' Authority to Buy Back Shares
At the AGM on 23 May 2017 in St Peter Port, Guernsey, the Company renewed the
authority to make market purchases of up to a maximum of 14.99 per cent. of
the issued share capital of the Company. Any buy back of the Company's
Ordinary Shares will be made subject to Companies Law and within any
guidelines established from time to time by the Board. The making and timing
of any buy backs will be at the absolute discretion of the Board and not at
the option of the Shareholders. Purchases of the Company's Ordinary Shares
will only be made through the market for cash at prices below the prevailing
Net Asset Value of the Company's Ordinary Shares (as last calculated) where
the Directors believe such purchases will enhance Shareholder value. Such
purchases will also only be made in accordance with the Listing Rules which
provide that the price to be paid must not be more than 5 per cent. above the
average of the middle market quotations for the Company's Ordinary Shares for
the five business days before the shares are purchased unless previously
advised to Shareholders.
 
In accordance with the Company's Articles of Incorporation and Companies Law,
up to 10 per cent. of the Company's Ordinary Shares may be held as treasury
shares. The Company did not purchase any shares for treasury or cancellation
up to the date of this report.
 
Directors' and Officers' Liability Insurance
The Company maintains insurance in respect of directors' and officers'
liability in relation to their acts on behalf of the Company.
 
Substantial Shareholdings
As at 31 December 2017, the Company had been notified, in accordance with
Chapter 5 of the Disclosure Guidance and Transparency Rules, of the following
substantial voting rights as Shareholders of the Company.
 
 Shareholder                          Shareholding  Per cent.  Nature of
                                                    Holding    Holding
 AKRC Investments LLC((1))            23,264,259    27.54      Indirect
 Kendall Family Investments LLC((1))  10,000,000    11.84      Direct
 Old Mutual Global Investors          6,139,239     7.27       Indirect
 REL Coinvestment, LP                 5,000,000     5.92       Direct
 
((1)       ) Held by a Cornerstone Investor
 
In addition, the Company also provides the same information as at 16 February
2018, being the most current information available.
 
 Shareholder                          Shareholding  Per cent.  Nature of
                                                    Holding    Holding
 AKRC Investments LLC((1))            23,264,259    27.54      Indirect
 Kendall Family Investments LLC((1))  10,000,000    11.84      Direct
 Old Mutual Global Investors          6,168,531     7.30       Indirect
 REL Coinvestment, LP                 5,000,000     5.92       Direct
 
((1))     Held by a Cornerstone Investor
 
The Directors confirm that there are no securities in issue that carry special
rights with regards to the control of the Company.
 
The Company's issued share capital consists of 84,480,064 Ordinary Shares.
Under the Company's Articles of Incorporation, on a show of hands, each
Shareholder present in person or by proxy has the right to one vote at general
meetings. On a poll, each Shareholder is entitled to one vote for every share
held.
 
Independent External Auditor
Ernst & Young LLP has been the Company's external auditor since
incorporation. The Audit Committee reviews the appointment of the external
auditor, its effectiveness and its relationship with the Company, which
includes monitoring the use of the external auditor for non-audit services and
the balance of audit and non-audit fees paid. Following a review of the
independence and effectiveness of the external auditor, a resolution will be
proposed at the 2018 Annual General Meeting to reappoint Ernst & Young
LLP. Each Director believes that there is no relevant information of which the
external auditor is unaware. Each has taken all steps necessary, as a
Director, to be aware of any relevant audit information and to establish that
Ernst & Young LLP is made aware of any pertinent information. This
confirmation is given and should be interpreted in accordance with the
provisions of Section 249 of the Companies Law. Further information on the
work of the external auditor is set out in the Report of the Audit Committee.
 
Articles of Incorporation
The Company's Articles of Incorporation may only be amended by special
resolution of the Shareholders.
 
Non-mainstream Pooled Investments
The Board has concluded that the Company's Ordinary Shares are not
non-mainstream pooled investments for the purposes of the FCA rules regarding
the restrictions on the promotion to retail investors of unregulated
collective investment schemes and close substitutes, meaning that the
restrictions on promotion imposed by the FCA rules do not apply. It is the
Board's intention that the Company conducts its affairs so that these
restrictions will continue to remain inapplicable.
 
AIFMD
REL is regarded as an externally managed non-EEA AIF under the AIFM Directive.
RIL is the Investment Manager of the Company as its non-EEA AIFM. The AIFMD
outlines the required information which has to be made available to investors
in an AIF and directs that material changes to this information be disclosed
in the Annual Report of the AIF. All information required to be disclosed
under the AIFMD is either disclosed in this Annual Report or is detailed in
the Appendix entitled AIFMD Disclosures on page 178 in REL's latest Prospectus
which can be obtained through the Company's website www.RiverstoneREL.com. The
AIFM has no remuneration within the current or prior year that falls within
the scope of Article 22 of the Directive.
 
RIL provides AIFMD compliant management services to REL. The AIFM acting on
behalf of the AIF, has appointed Estera Depositary Company (UK) Limited to
provide depositary services to the AIF. The appointment of the Depositary is
intended to adhere to, and meet the conditions placed on the Depositary and
the AIFM under Article 21 and other related articles of the AIFMD. The
Depositary shall only provide depositary services to the AIF should it admit
one or more German and/or Danish investors following marketing activity
towards them. At that time, the Depositary shall observe and comply with the
Danish and German regulations applying to the provision of depositary services
to a non-EEA AIF marketed in Denmark or Germany, as the case may be, by a
non-EEA AIFM.
 
UCITS Eligibility
The Investment Manager is a relying adviser of Riverstone Investment Group
LLC. Riverstone Investment Group LLC is registered as an investment adviser
with the SEC under the U.S. Investment Advisers Act. As such, the Investment
Manager is subject to Riverstone Investment Group LLC's supervision and
control, the advisory activities of the Investment Manager are subject to the
U.S. Investment Advisers Act and the rules thereunder and the Investment
Manager is subject to examination by the SEC. Accordingly the Company has been
advised that its Ordinary Shares should be "transferable securities" and,
therefore, should be eligible for investment by authorised funds in accordance
with the UCITS Directive or NURS on the basis that:
 
·      the Company is a closed end investment company;
·      the Ordinary Shares are admitted to trading on the Main Market of
the London Stock Exchange; and
·      the Ordinary Shares have equal voting rights.
 
However, the manager of the relevant UCITS or NURS should satisfy itself that
the Ordinary Shares are eligible for investment by the relevant UCITS or NURS.
 
AEOI Rules
Under AEOI Rules the Company continues to comply with both FATCA and CRS
requirements to the extent relevant to the Company.
 
General Partner's Performance Allocation and Management Fees
The General Partner's Performance Allocation is equal to 20 per cent. of all
realised pre-tax profits without regard to realised losses as disclosed in the
Company's Prospectuses. In particular, taxes on realised gains from ECI
investments, as shown in the Investment Manager's Report, can be substantial
at rates up to 27.5 per cent. The Company is not an umbrella collective
investment undertaking and therefore has no gross liability. In the normal
course of business, REL may form wholly-owned subsidiaries, to be treated as C
Corporations for U.S. tax purposes. The C Corporations serve to protect REL's
public investors from incurring U.S. ECI. The C Corporations file U.S.
corporate tax returns with the U.S. IRS and pay U.S. corporate taxes on its
taxable income.
 
The General Partner's Performance Allocation is calculated under the terms of
the Partnership Agreement and as described in the Prospectuses.
 
The Performance Allocation is calculated on a quarterly basis, which is taken
into account when calculating the fair value of the Company's investment in
the Partnership, as described in Note 10. The fair value of the Company's
investment in the Partnership is after the calculation of Management Fees, as
described in Note 10.
 
The financial effect of the General Partner's Performance Allocation,
Management Fees and any taxes on ECI investments is shown in Note 6. The
Investment Management Agreement continues into perpetuity post the seventh
year anniversary.
 
Change of Control
There are no agreements that the Company considers significant and to which
the Company is party that would take effect, alter or terminate upon change of
control of the Company following a takeover bid.
 
Going Concern
The Company's Financial Statements are prepared in accordance with the AIC
Code and presented on a going concern basis. As further disclosed in the
Corporate Governance Report, the Company is a member of the AIC and complies
with the AIC Code. The Directors have assessed the financial prospects of the
Company for the next twelve months from the date of approval of the Financial
Statements and made an assessment of the Company's ability to continue as a
going concern. The Directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence for the next
twelve months, as explained below.
 
The Company retained $11.5 million of cash in the IPO and Placing and Open
Offer, and received distributions of $5.5 million and $1.1 million from the
Partnership in Q1 2016 and Q1 2017, respectively, of which $0.8 million
remains at 31 December 2017 (31 December 2016: $3.2 million). This cash
balance is sufficient to cover the Company's existing liabilities at 31
December 2017 of $0.6 million, but the Company will require a distribution of
$3.3 million to cover its forecasted annual expenses for 2018 of approximately
$3.5 million. In accordance with section 4.1(a) of the Partnership Agreement,
in the event of the Company requiring additional funds for working capital, it
is entitled to receive another distribution from the Partnership.
 
As at 31 December 2017, the Partnership, including its wholly-owned
subsidiaries, REL US Corp and REL US Centennial Holdings, LLC,  had $147
million of uninvested funds held as cash and money market fixed deposits (31
December 2016: $268 million), and has no material going concern
risk. Although the Company's commitments, through the Partnership, exceed its
available liquid resources, it is not expected that all commitments will be
drawn due to a variety of factors, such as a portfolio company being sold
earlier than anticipated or a targeted investment opportunity changing or
disappearing. In addition, the board of each underlying portfolio company,
more often than not controlled by Riverstone, has discretion over whether or
not that capital is ultimately invested. Moreover, REL's arrangements with
Riverstone allow excess commitments to be amended by the Investment Manager
with consideration from the Board.
 
In light of the above facts, the Directors are satisfied that it is
appropriate to apply the going concern basis in preparing the Financial
Statements. In reaching this conclusion, the Board has considered budgeted and
projected results of the business, projected cash flow and risks that could
impact the Company's liquidity over the next twelve months.
 
Viability Statement
As required by the AIC Code, the Directors have assessed the prospects of the
Company over a longer period than required by the going concern provision. The
Board chose to conduct a review for a period of three years to 31 December
2020 as it was determined to be an appropriate timeframe based on the
historical investment cycle of the Company's investments through the
Partnership and its financial planning processes. On a rolling basis, the
Directors evaluate the outcome of the investments and the Company's financial
position as a whole. While an unprecedented and long-term decline in global
oil and gas consumption would threaten the Company's performance, it would not
necessarily threaten its viability.
 
In support of this statement, the Directors have taken into account all of the
principal risks and their mitigation as identified in the Principal Risk and
Uncertainties section of the Corporate Governance Report, the nature of the
Company's business; including the cash reserves and money market deposits at
the Partnership, the potential of its portfolio of investments to generate
future income and capital proceeds, and the ability of the Directors to
minimise the level of cash outflows, if necessary. The most relevant potential
impacts of the identified Principal Risks and Uncertainties on viability were
determined to be:
 
·      An investment's capital requirements may exceed the Company's
ability to provide capital; and
·      The Company may not have sufficient capital available to
participate in all investment opportunities presented.
Each quarter, Directors review threats to the Company's viability utilising
the risk matrix and update as required due to recent developments and/or
changes in the global market. The Board relies on periodic reports provided by
the Investment Manager and Administrator regarding risks faced by the Company.
When required, experts are utilised to gather relevant and necessary
information, regarding tax, legal, and other factors.
 
The Investment Manager made financial commitments to each portfolio company.
However, the Company evaluates the ongoing suitability of each investment
prior to funding and may or may not agree to fund an investment. In the event
the Company is unable, or elects, not to fund an existing investment,
Riverstone may seek other funding alternatives.
 
The Investment Manager considers the future cash requirements of the Company
before funding portfolio companies. Furthermore, the Board receives regular
updates from the Investment Manager on the Company's cash position, which
allows the Board to maintain their fiduciary responsibility to the
Shareholders and, if required, limit funding for existing commitments.
However, Management fees may not be deferred per the terms of the Investment
Management Agreement.
 
The Board considered the Company's viability over the three year period, based
on a working capital model prepared by the Investment Manager. The working
capital model forecasts key cash flow drivers such as capital deployment rate,
investment returns, Management Fees and operating expenses. In connection with
the preparation of the working capital model, dividend payments and/or share
repurchases were assumed to not occur during the three year period, unless
already predetermined. In addition, the Board reviews credit market
availability, but no such financing has been assumed.
 
If factors apart from capital deployment rate remain constant, accelerating
the capital deployment rate by 20 per cent., from 36 months to 30 months,
would result in the Company being directed by the Board, and the Investment
Manager recommending, to preserve working capital and postpone future
investments after 24 months, rather than 27 months; unless a financing or
capital raise was completed. In both scenarios, the Company is forecasted to
maintain sufficient working capital for the three year period.
 
Based on the aforementioned procedures and the existing internal controls of
the Company and Investment Manager, the Board has concluded there is a
reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year period of the
assessment.
 
Financial Risk Management Policies and Objectives
Financial Risk Management Policies and Objectives are disclosed in Note 11.
 
Principal Risk and Uncertainties
Principal Risk and Uncertainties are discussed in the Corporate Governance
Report.
 
Subsequent Events
Subsequent Events are disclosed in Note 15.
 
Annual General Meetings
The AGM of the Company will be held at 10.30 am BST on 22 May 2018 at The Old
Government House Hotel, St Ann's Place, St Peter Port, Guernsey, Channel
Islands. Details of the resolutions to be proposed at the AGM, together with
explanations, will appear in the notices of meetings to be distributed to
Shareholders listed on the register as at 31 December 2017 together with this
Annual Report. As a matter of good practice, all resolutions will be conducted
on a poll and the results will be announced to the market as soon as possible
after the meeting.
 
Members of the Board, including the Chairman and the Chairperson of each
Committee, will be in attendance at the AGM and will be available to answer
Shareholder questions.
 
By order of the Board
 
 
Richard Hayden
Chairman
27 February 2018
 
 
 
Directors' Responsibilities Statement
 
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations.
 
The Companies Law requires the Directors to prepare Financial Statements for
each financial year. Under the Companies Law, the Directors must not approve
the Financial Statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Company and of the profit or loss of
the Company for that period. In preparing these Financial Statements, the
Directors are required to:
·      select suitable accounting policies in accordance with IAS 8:
Accounting Policies, Changes in Accounting Estimates and Errors and then apply
them consistently;
·      make judgements and estimates that are reasonable and prudent;
·      present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable information;
·      provide additional disclosures when compliance with the specific
requirements in IFRS are insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the Company's
financial position and financial performance;
·      state that the Company has complied with IFRS, subject to any
material departures disclosed and explained in the Financial Statements; and
·      prepare the Financial Statements on a going concern basis unless
it is inappropriate to presume that the Company will continue in business.
 
The Directors confirm that they have complied with the above requirements in
preparing the Financial Statements.
 
The Directors are responsible for keeping proper accounting records, which
disclose with reasonable accuracy at any time, the financial position of the
Company and to enable them to ensure that the Financial Statements comply with
Companies Law. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud, error and non-compliance with law and regulations.
 
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website
(www.RiverstoneREL.com). The work carried out by the external auditor does not
involve considerations of these matters and, accordingly, the external auditor
accepts no responsibility for any changes that may have occurred to the
Financial Statements since they were initially presented on the website.
 
Legislation in Guernsey governing the preparation and dissemination of the
Financial Statements may differ from legislation in other jurisdictions.
 
 
Responsibility Statement of the Directors in Respect of the Annual Report under the Disclosure GUIDANCE and Transparency Rules
 
Each of the Directors confirms to the best of their knowledge and belief that:
·      the Financial Statements, prepared in accordance with IFRS, give
a true and fair view of the assets, liabilities, financial position and profit
or loss of the Company;
·      the Annual Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties faced; and
·      the Annual Report and Financial Statements include information
required by the UK Listing Authority so that the Company complies with the
provisions of the Listing Rules, Disclosure Guidance and Transparency Rules of
the UK Listing Authority. With regard to corporate governance, the Company is
required to disclose how it has applied the principles, and complied with the
provisions of the corporate governance code applicable to the Company.
 
Directors' statement under the Corporate Governance Code
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations. Having taken
advice from the Investment Manager, the Directors consider the Annual Report
and Financial Statements, taken as a whole, as fair, balanced and
understandable and that it provides the information necessary for Shareholders
to assess the Company's performance, business model and strategy.
 
By order of the Board
 
 
 Richard Hayden    Patrick Firth
 Chairman          Director
 27 February 2018  27 February 2018
 
 
 
Corporate Governance Report
 
As a UK premium listed Company, Riverstone Energy Limited's governance
policies and procedures are based on the principles of the Corporate
Governance Code as required under the Listing Rules. The Corporate Governance
Code is available on the Financial Reporting Council's website,
www.frc.org.uk.
 
The Company became a member of the AIC effective 15 January 2014 and has
therefore put in place arrangements to comply with the AIC Code and, in
accordance with the AIC Code, complies with the Corporate Governance Code. The
Directors recognise the importance of sound corporate governance, particularly
the requirements of the AIC Code. The AIC Code and the AIC Guide are available
on the AIC's website, www.theaic.co.uk.
 
The Company is subject to the GFSC Code, which applies to all companies
registered as collective investment schemes in Guernsey. The GFSC has also
confirmed that companies that report against the Corporate Governance Code or
AIC Code are deemed to meet the GFSC Code.
 
The Board monitors developments in corporate governance to ensure the Board
remains aligned with best practice especially with respect to the increased
focus on diversity. The Board acknowledges the importance of diversity,
including gender, for the effective functioning of the Board and commits to
supporting diversity in the boardroom. It is the Board's ongoing aspiration to
have a well diversified representation. The Board also values diversity of
business skills and experience because Directors with diverse skills sets,
capabilities and experience gained from different geographical backgrounds
enhance the Board by bringing a wide range of perspectives to the Company.
 
The AIC Code, as explained by the AIC Guide, addresses all the principles set
out in the Corporate Governance Code, as well as setting out additional
principles and recommendations on issues that are of specific relevance to
investment companies such as the Company. The Board considers that reporting
against the principles and recommendations of the AIC Code, by reference to
the AIC Guide, provides better information to Shareholders.
 
 
The Company has complied with the recommendations of the AIC Code and the
relevant provisions of the Corporate Governance Code, except as set out below.
 
The Corporate Governance Code includes provisions relating to:
·      the role of the chief executive;
·      executive directors' remuneration; and
·      the need for an internal audit function.
 
For the reasons set out in the AIC Guide, and as explained in the Corporate
Governance Code, the Board considers that the above provisions are not
currently relevant to the position of the Company, being an externally managed
investment company, which delegates most day-to-day functions to third
parties.
 
The Company does not have a chief executive or any executive directors. The
Company has not established a separate remuneration committee as the Company
has no executive officers and the Board is satisfied that any relevant issues
that arise can be properly considered by the Board.
 
The Company has no employees or internal operations and has therefore not
reported further in respect of these provisions. The need for an internal
audit function is discussed in the Audit Committee report.
 
The Board
The Company is led and controlled by a Board of Directors, which is
collectively responsible for the long-term success of the Company. It does so
by creating and preserving value, and has as its foremost principle acting in
the interests of Shareholders.
 
The Company believes that the composition of the Board is a fundamental driver
of its success as the Board must provide strong and effective leadership of
the Company. The current Board was selected, as their biographies illustrate,
to bring a breadth of knowledge, skills and business experience to the
Company. The non-executive Directors provide independent challenge and review,
bringing wide experience, specific expertise and a fresh objective
perspective.
 
The Board consists of eight Non-executive Directors (31 December 2016: eight),
five of whom, including the Chairman, are independent of the Company's
Investment Manager; Mr Hayden, Mr Firth, Mr Barker, Mrs Whittet and Mr
Thompson (31 December 2016: five). Mr Lapeyre, Mr Leuschen, and Mr Ryan are
not considered independent because of their nomination for appointment to the
Board by the Investment Manager, pursuant to a right set out in the Investment
Management Agreement. All Directors served throughout the year.
 
The Chairman of the Board is independent and is appointed in accordance with
the Company's Articles of Incorporation. Mr Hayden is considered to be
independent because he:
·      has no current or historical employment with the Investment
Manager;
·      has no current directorships or partnerships in any other
investment funds managed by the Investment Manager; and
·      is not an executive of a self-managed company or an ex-employee
who has left the executive team of a self-managed company within the last five
years.
 
New Directors receive an induction from the Investment Manager and all
Directors receive other relevant training as necessary.
 
At each subsequent Annual General Meeting of the Company, each of the
Directors at the date of the notice convening the Annual General Meeting shall
retire from office and may offer themselves for election or re-election by the
Shareholders.
 
The Board meets at least four times a year for regular, scheduled meetings and
should the nature of the activity of the Company require it, additional
meetings may be held, some at short notice. At each meeting the Board follows
a formal agenda that covers the business to be discussed. The primary focus at
Board meetings is a review of investment performance and associated matters
such as asset allocation, share price discount/premium management, investor
relations, peer group information, gearing, industry issues and principal
risks and uncertainties in particular those identified at the end of this
report.
 
Between meetings the Board visits, at least annually, the Investment Manager,
and there is regular contact with the Administrator, and the Board requires to
be supplied in a timely manner with information by the Investment Manager, the
Company Secretary and other advisers in a form and of a quality to enable it
to discharge its duties.
 
The Company has adopted a share dealing code for the Board and will seek to
ensure compliance by the Board and relevant personnel of the Investment
Manager and other third party service providers with the terms of the share
dealing code.
 
Board Tenure and Re-election
No member of the Board has served for longer than eight years to date. As such
no issue has arisen to be considered by the Board with respect to long tenure.
In accordance with the AIC Code, when and if any director shall have been in
office (or on re-election would at the end of that term of office) for more
than nine years the Company will consider further whether there is a risk that
such a director might reasonably be deemed to have lost independence through
such long service.
 
A Director who retires at an Annual General Meeting may, if willing to
continue to act, be elected or re-elected at that meeting. If, at a general
meeting at which a Director retires, the Company neither re-elects that
Director nor appoints another person to the Board in the place of that
Director, the retiring Director shall, if willing to act, be deemed to have
been re-elected unless at the general meeting it is resolved not to fill the
vacancy or unless a resolution for the re-election of the Director is put to
the meeting and not passed.
 
Directors are appointed under letters of appointment, copies of which are
available at the registered office of the Company. The Board considers its
composition and succession planning on an ongoing basis.
 
Following discussion, it is the opinion of the Management Engagement Committee
that the Investment Manager for the year ended 31 December 2017 continues to
demonstrate strong performance and as such for the Investment Manager to
continue in their appointment on the terms agreed, which would be in the
interests of the Shareholders as a whole. The Board is pleased with the
performance of the Investment Manager, based on selection of high quality
E&P and midstream investments and comparative resilience in weak markets.
 
Directors' Remuneration
The level of remuneration of the Non-executive Directors reflects the time
commitment and responsibilities of their roles. The remuneration of the
Non-executive Directors does not include any share options or other
performance related elements and there are no plans to seek any Shareholder
waivers to deviate from this.
 
In 2017, an externally-facilitated review of the remuneration of the Board was
undertaken. The Board remuneration evaluation was externally facilitated by
Optimus Group Limited, the only piece of work undertaken by Optimus Group
Limited from the Company.  This evaluation and review considered Riverstone
Energy Limited peers, account domicile, asset class and size, board structure
and activity, and the resultant fees are further outlined below.
 
The Chairman is entitled to annual remuneration of £132,000 (31 December
2016: £120,000). The Chairman of the Audit Committee is entitled to annual
remuneration of £82,500 (31 December 2016: £75,000) and the Chairman of the
Management Engagement Committee is entitled to annual remuneration of £71,500
(31 December 2016: £65,000). The other independent Directors are entitled to
annual remuneration of £66,000 (31 December 2016: £60,000). This is the
first time the Company has increased Board remuneration since the inception of
the Company in 2013. The three non-independent Directors have chosen not to be
remunerated by the Company for their services.
 
During the year ended 31 December 2017 and 31 December 2016, the Directors'
remuneration was as follows:
 
 Director                2017      2016
                         ($'000)   ($'000)
 Peter Barker ((1))      79        79
 Patrick Firth((1)(2))   99        91
 Richard Hayden((1)(3))  158       126
 Pierre Lapeyre          -         -
 David Leuschen          -         -
 Ken Ryan                -         -
 Jeremy Thompson((1))    79        47
 Claire Whittet((1)(4))  86        83
((1))     Non-executive Independent Director
((2))     Senior Independent Director and Chairman of the Audit Committee
((3))     Chairman of the Company
((4))     Chairman of the Management Engagement Committee
 
The above fees due to the Directors are for the year ended 31 December 2017
and 31 December 2016, and none were outstanding at 31 December 2017 (31
December 2016: $Nil).
 
Duties and Responsibilities
The Board is responsible to Shareholders for the overall management of the
Company. The duties and powers reserved for the Board include decisions
relating to the determination of investment policy and approval of investments
in certain instances, strategy, capital raising, statutory obligations and
public disclosure, financial reporting and entering into any material
contracts by the Company.
 
The Board has overall responsibility for maximising the Company's success by
directing and supervising the affairs of the business and meeting the
appropriate interests of Shareholders and relevant stakeholders, while
enhancing the value of the Company and also ensuring the protection of
investors. A summary of the Board's responsibilities is as follows:
·      statutory obligations and public disclosure;
·      strategic matters and financial reporting;
·      risk assessment and management including reporting, compliance,
governance, monitoring and control; and
·      other matters having a material effect on the Company.
 
The Directors have access to the advice and services of the Administrator, who
is responsible to the Board for ensuring that Board procedures are followed
and that it complies with Companies Law and applicable rules and regulations
of the GFSC and the LSE. Where necessary, in carrying out their duties, the
Directors may seek independent professional advice and services at the expense
of the Company. The Company maintains directors' and officers' liability
insurance in respect of legal action against its Directors on an ongoing
basis.
 
The Board's responsibilities for the Annual Report are set out in the
Directors' Responsibility Statement. The Board is also responsible for issuing
appropriate half-yearly financial reports, quarterly portfolio valuations and
other price-sensitive public reports.
 
Directors' attendance at Board and Committee Meetings:
 
One of the key criteria the Company uses when selecting Non-executive
Directors is their confirmation prior to their appointment that they will be
able to allocate sufficient time to the Company to discharge their
responsibilities in a timely and effective manner.
 
The Board formally met four times during the year and the other Board
committee meetings were called in relation to specific events or to issue
approvals, often at short notice and did not necessarily require full
attendance. The Chairman meets privately with the independent Non-executive
Directors before each scheduled Board meeting. Directors are encouraged when
they are unable to attend a meeting to give the Chairman their views and
comments on matters to be discussed, in advance. In addition to their meeting
commitments, the Non-executive Directors also make themselves available to
management whenever required and there is regular contact outside the Board
meeting schedule.
 
Attendance is further set out below:
 
 Director                Scheduled  Audit       Nomination  Management   Board
  

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