REG - Riverstone Energy Ld - Interim Report for the six months to 30 June 2022
17/08/2022 07:16
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RNS Number : 2442W Riverstone Energy Limited 17 August 2022
Interim Report and Unaudited Interim Condensed Financial Statements Riverstone
for the six months ended 30 June 2022
Energy
Limited
(LSE: RSE)
Powering a shift toward energy transition
Financial and Operational Highlights((1))
Commitments during the period ended 30 June 2022 Commitments increased by a net total of $71 million ($71 million pursuant to
decarbonisation strategy):
(i) $20 million in Anuvia Plant Nutrients, Inc.
(ii) $17.5 million in T-Rex Group, Inc.
(iii) $17.5 million in Infinitum Electric Inc.
(iv) $15 million in Tritium DCFC Limited.
(v) $4 million in Group14 Technologies Inc.
(vi) ($3 million) in Enviva, Inc. (in connection with overall approved
commitment reduction)
Remaining potential unfunded commitments at 30 June 2022 $10 million((2)(3)) ($6 million pursuant to legacy conventional strategy and
$4 million pursuant to decarbonisation strategy):
(i) $6 million in Onyx Power
(ii) $4 million in Enviva Inc.
Investments during the period ended 30 June 2022 Invested a total of $74 million((4)) ($74 million pursuant to decarbonisation
strategy):
(i) $20 million in Anuvia Plant Nutrients Inc.
(ii) $17.5 million in T-Rex Group, Inc.
(iii) $17.5 million in Infinitum Electric Inc.
(iv) $15 million in Tritium DCFC Limited.
(v) $4 million in Group14 Technologies Inc.
Realisations during the period ended 30 June 2022 Realised a total of $68 million((4)):
(i) $42 million from Pipestone Energy Corp. (formerly Canadian
Non-Operated Resources LP)
(ii) $22 million from Centennial Resource Development, Inc.
(iii) $2 million from Meritage Midstream Services III, L.P.
(iv) $2 million in aggregate from ILX Holdings III, LLC, GoodLeap,
LLC and Rock Oil Holdings, LLC.
Key Financials
30 June 2022 31 December 2021 30 June 2021
NAV as at $719 million / $682 million / $582 million /
£593 million((4)) £506 million((4)) £420 million((4))
NAV per Share as at $13.64/ £11.25 ((4)) $12.41 / £9.19((4)) $9.46 / £6.83((4))
Market capitalisation at $425million / $345 million / $295 million /
£351 million((4)) £255 million((4)) £213 million((4))
Cash and cash equivalents at $72 million((5)) / $106 million((5)) / $53 million((5)) /
£60 million((4)) £78 million((4)) £38 million((4))
Marketable securities (unrestricted) at $90 million((6)) / $195 million((6)) / $125 million((6)) /
£74 million((4)) £144 million((4)) £90 million((4))
Marketable securities (restricted) at $81 million((7)) / $47 million((7))/ $8 million((7))/
£67 million((4)) £35 million((4)) £6 million((4))
Share price at $8.07/ £6.66((4)) $6.28 / £4.65((4)) $4.79 / £3.46((4))
30 June 2022 30 June 2021
Total comprehensive income/(loss) for the six months ended $55.3 million $198.13 million
Basic and diluted Earnings/(loss) per Share for the six months ended 103.19 cents 316.29 cents
Number of Shares repurchased/average price per Share for the period ended((8)) 2,223,312 1,441,740
$8.27 / £6.54 $4.62 / £3.30
Number of Shares outstanding at period ended 52,714,287 61,496,726
Per cent. change in Share price for the period ended 43.2 per cent. 16.5 per cent.
((1)) Amounts shown reflect investment-related activity at the Partnership,
not the Company.
((2)) Amounts may vary due to rounding.
((3)) Excludes the remaining unfunded commitments for Carrier II and
Hammerhead of $36 million, in aggregate, which are not expected to be funded.
The expected funding of the remaining unfunded commitments at 30 June 2022 are
nil for the remainder of 2022, nil in 2023, and the residual amounts to be
funded in 2024 and later years, if needed.
((4)) Based on exchange rate of 1.2119 $/£ at 30 June 2022 (1.3503 $/£ at 31
December 2021, 1.386 $/£ at 30 June 2021 and 1.606 $/£ at IPO on 29 October
2013).
((5)) At 30 June 2022, 31 December 2021 and 30 June 2021, respectively,
amounts are comprised of $6.4 million, $7.3 million and $5.7 million held at
the Company, $14.9 million, $4.1 million and $38.8 million held at the
Partnership and $51.0 million, $94.4 million and $8.2 million held at REL US
Corp.
((6)) At 30 June 2022, unrestricted marketable securities held by the
Partnership consist of publicly-traded shares of Enviva, Solid Power, Tritium
and Hyzon for which the aggregate fair value was $90 million (31 December
2021: Centennial, Pipestone, Enviva, Solid Power, Hyzon and Talos and 30 June
2021: Centennial, Pipestone and Talos).
((7)) At 30 June 2022, restricted marketable securities held by the
Partnership consist of publicly-traded shares of Centennial (lock-up
expiration in 3Q2022), Solid Power (lock-up expiration in 4Q2022), Tritium
(lock-up expiration in 1Q2023) and DCRD (lock-up expiration is one year post
future business combination) for which the aggregate fair value was $81
million (31 December 2021: Solid Power, Tritium and DCRD and 30 June 2021:
DCRN and DCRC).
((8)) Inception to date total number of shares repurchased were 27,182,444 at
an average price per share of £3.70 ($4.82).
Chairman's Statement
Geopolitical factors drive energy prices higher
The start of 2022 saw global economies continue their recovery from the
COVID-19 pandemic. The gradual re-opening of borders around the world and a
slow return towards travel and higher levels of consumption meant that oil
demand for 2022 was expected to recover towards pre-pandemic levels of 100
million barrels per day. This was despite ongoing lockdowns in China and
global supply chain disruptions which threatened global growth.
However, alongside this recovery in demand we have seen a new geo-political
crisis which has had significant impacts on energy markets and the world
economy. The war in Ukraine has brought not only suffering and tragedy for the
people of that country but also a new supply-side constraint. The ongoing
conflict has affected European and US relations with Russia and profoundly
changed the world's energy supply and demand dynamics.
The world, and Europe in particular, has almost overnight been forced to try
to reverse years of policy development to re-balance energy supply chains,
with countries scrambling for new sources of energy away from Russia. Almost
overnight we have seen a change in priorities and policies that had previously
received long-term support and investment. Most notably in evidence has been
the exit of western companies from Russia across multiple sectors including
energy and the banning of non-pipeline oil imports to the EU from Russia. This
has exacerbated what were already higher levels of price volatility and has
resulted in price increases in all areas of the energy market, which in turn
has contributed to the return of inflation in the world's major economies.
This has happened at a time when the supply of oil and gas is already tight
following years of underinvestment by the industry. Organization of Economic
Cooperation and Development (OECD) and US crude inventories were low going
into the year and as we come to the mid-point of 2022 are looking tighter
still. Spare OPEC capacity is reportedly limited and the ability to increase
and transport production from other sources and countries remains marginal in
the near-term.
So how has this impacted commodity prices year to date? For the year so far,
we have seen oil spot prices at eight-year highs and wholesale gas prices
approximately doubling. Despite this dramatic increase, we expect continued
price volatility as we see a steady increase in demand and global markets are
likely to remain under-supplied in both oil and gas. While oil and gas are at
multi-months lows due to recession fears and economic slowdown in China,
overall prices are still materially up from last year. Higher energy prices
are partly fuelling rapid inflation and a cost-of-living crisis which is
particularly pronounced in Europe. Recent forecasts from the OECD estimated
that average inflation in its 38 member countries rose to 10.3% in June of
this year - more than double its previous forecast. Rising interest rates by
central banks to rein in inflation may only exacerbate market volatility. Due
to recession fears, natural gas and oil prices are all up materially over the
last 12 months.
Energy security reinforces the case for decarbonisation
The current high commodity prices will continue to benefit our legacy
conventional energy investments. But these higher prices driven by scarcity
concerns have also underscored the importance of energy security in today's
world. Moreover, President Biden's green energy campaign reinforces clean
energy and aims towards net zero emissions by 2050. The recent passing of the
Inflation Reduction Act of 2022 which proposes to raise $725 billion, has
earmarked $369 billion toward energy security and climate change investment.
Against this dynamic and challenging backdrop, our ongoing work to reorient
our investment portfolio towards renewable energy sources and the technologies
that make them more efficient, has become more vital than ever.
The climate imperative on emissions and the global goal of reaching net zero
remains a strong tailwind for REL's investment strategy and we continue to
make good progress against the five critical areas of decarbonisation we
identified as the focus of our future investment plans. These are grid
flexibility and resilience; the electrification of transport; agriculture;
next generation liquid fuels and next horizon resource use plays. There
remains huge opportunity in these areas and we are confident they will not
only deliver value to shareholders but also help the world towards its
decarbonisation aims while improving the security of the energy markets that
we operate in.
Investments and performance
In the first half of 2022, we continued to strengthen our pipeline of
investments that support an equitable and just transition to a low-carbon
economy. During this period, the Investment Manager reviewed over 125
decarbonisation opportunities and REL committed to four exciting new
investments. This takes our total active investments in decarbonisation to
fifteen, strengthening the reorientation of our portfolio.
In January, REL invested $17.5 million in T-REX Group, a SaaS provider
supporting the asset-backed financing industry by giving institutions the
modernised tools and validation they require to deploy capital. T-REX Group
facilitates increased investment allocations into sustainable,
decarbonisation-related assets.
In February, REL announced it was making a lead investment in Infinitum
Electric's $80 million in the Series D round. Founded in 2018, Infinitum
Electric created the breakthrough air-core motor, which offers superior
performance at half the weight and size of conventional motors, and with just
a fraction of the carbon footprint of more traditional models. This technology
makes them pound for pound the most efficient in the world. Infinitum Electric
motors open up sustainable design possibilities for the machines we rely on to
be smaller, lighter and quieter, improving our quality of life while also
saving energy. Based in Austin, Texas, Infinitum Electric is led by a team of
industry experts and pioneers.
In March, REL invested $20 million in Anuvia Plant Nutrients' $65.5 million in
Series D funding. Anuvia Plant Nutrients manufactures high-efficiency,
sustainable field-ready fertilisers for the agriculture, turf, and lawncare
industries. Located in Winter Garden, Florida, the company has developed and
now uses a unique technology that not only optimises nutrient availability and
efficiency for plants, but also improves soil health, preserves natural
resources, and reduces greenhouse gas emissions. It is a really exciting
example of our investment into the decarbonisation of agriculture.
Finally, in April 2022, REL invested $4 million into Group14 Technologies,
Inc.'s $400 million Series C funding round. The Series C round was led by
Porsche AG, with participation from OMERS Capital Markets, Decarbonization
Partners, Vsquared Ventures, and others. Group14 is a battery materials
technology company that has developed a proprietary silicon-based anode
battery material to replace graphite in conventional lithium-ion batteries.
REL also realised some value in a number of its investments in legacy energy
assets. In February, we announced REL was exiting from Pipestone Energy Corp,
a Calgary-based oil and gas exploration company listed on the Toronto Stock
Exchange. Net proceeds from the sale are $53 million CAD, representing
approximately a 0.64x Gross MOIC. The sale further shifts our portfolio away
from oil and gas, and provides additional funds to accelerate our investments
in the energy transition.
Finally, subsequent to half year end, we were pleased to see the merger of
Centennial and Colgate, which will create a $7 billion Permian basin
pure-play. REL has invested $268 million into Centennial since 2016, and has
so far realised $194 million, or 72 per cent. of its cost basis, through
proceeds from share sales. This transformational transaction will help to
expand the combined businesses' shareholder base as well as reduce its GHG
emissions. Moving forward, the Company will continue looking to maximise
shareholder value on its conventional investments.
Buyback programme increased by an additional £46 million
Delivering shareholder value through strong investment performance and
effective capital management remains a core priority. As such, in March, the
Board sought and received shareholder permission to extend the share buyback
programme. This had already increased to £90 million in 2021 and the new
extension saw it further increase by an additional £46 million.
As at 30 June 2022, a total of 27,182,444 ordinary shares have been bought
back at an approximate cost of £101 million ($131 million) at an average
price of £3.70 ($4.82) per ordinary share, leaving £35 million ($43 million)
of buyback capacity outstanding. The Board has since taken a decision to limit
the share buyback amount to £17 million ($21 million) of the available £35
million ($43 million) for the period to 31 December 2022.
Portfolio valuation
REL ended the period to 30 June 2022 with a NAV per share of $13.64 (£11.25),
a 44 per cent and 65 per cent increase in USD and GBP, respectively, compared
to the 30 June 2021 NAV per share of $9.46 (£6.83). This partly reflects the
strengthening of the USD vs GBP in the first half of 2022 which has provided
an additional uplift to performance during the period. REL ended the first
half with an aggregate gross cash balance of $72 million (£60 million) across
the Company, Partnership and REL US Corp. Reflecting the improved commodity
price environment, the favourable outlook for decarbonisation investments and
the extension of the share buyback programme, shares traded up 43 per cent
during the first half of 2022.
REL's largest investments by gross unrealised value either maintained or
improved their marks quarter on quarter. Onyx continued to improve
substantially, moving from a 1.70x to 2.50x Gross MOIC valuation over the six
month period due, in part, to the company's strong H1 2022 financial
performance driven by favourable conditions in European energy markets.
GoodLeap, one of REL's decarbonisation investments, remained marked at 2.75x
Gross MOIC. Although flat, quarter on quarter, REL's legacy oil and gas
investments continued to benefit from supportive energy prices, robust demand,
and improved operations.
The valuation of REL's investments is conducted quarterly by the Investment
Manager and is subject to approval by the independent Directors. In addition,
the valuations of REL's investments are audited by Ernst & Young LLP in
connection with the annual audit of the Company's Financial Statements. The
Company's valuation policy is compliant with both IFRS and IPEV Valuation
Guidelines and has been applied consistently from period to period since
inception. Those of the Company's investments which are not publicly quoted
require meaningful judgement to establish a range of values, and the ultimate
value at which an investment is realised may differ from its most recent
valuation and the difference may be significant. Further information on the
Company's valuation policy can be found in the Investment Manager's Report.
Despite the broad equity market turbulence and decline, with significant
sell-offs in technology and growth sectors, energy proved to be the best
performing sector in the first half of the year. REL has come through this
period well, with legacy investments increasing in value and key investments
continuing our diversification into decarbonisation, renewables and low carbon
energy.
While the economic outlook for the rest of the year is difficult to predict
with any certainty, the energy price environment looks supportive. Energy
security is moving up the list of priorities facing the world's major advanced
economies, while the need to continue the process of decarbonising our
economies has not disappeared. Consequently, I remain convinced that our
decision to shift our business towards meeting the challenges and
opportunities of the energy transition is the right one. I am confident that
we are well positioned to continue to deliver value for shareholders through
the execution of this strategy over the coming years.
Recent NAV & Share Price Performance of the Company
As announced on 30 October 2020, the Company's independent directors agreed to
closely monitor the Investment Manager's success in repositioning the
Company's existing investment policy through the modified investment strategy
over the next twenty-four months following the previous quarter ended 30
September 2020. In the absence of a significant improvement in the
performance of the Company, taking into account the trading price of the
Ordinary Shares and portfolio performance over that period through 30
September 2022, the independent directors would release an announcement by
November 2022 regarding an EGM to seek Shareholder approval before 31
December 2022 to amend the Company's investment policy to provide for the
managed wind-down of the Company. At year end, the directors stated in the
2021 Annual Report that it was extremely unlikely that they would seek such
approval.
As at 30 June 2022, REL had a NAV per Share of $13.64 (£11.25), an increase
in USD and GBP of 138 & 152 per cent., respectively, compared to $5.74
(£4.46) as at 30 September 2020, which is the most recent quarter end prior
to the aforementioned announcement and being used as a proxy for comparative
purposes. The period end closing trading price of the Ordinary Shares was
$8.07 (£6.66), an increase of 107 & 120 per cent., respectively, compared
to $3.90 (£3.03) as at 30 September 2020. Subsequently, from period-end
through 15 August 2022, the Company's NAV per Share and closing trading price
of the Ordinary Shares have remained relatively unchanged at $14.51 (£12.04)
and $8.03 (£6.66), respectively.
Based on this significant improvement in the performance of REL, and the
outlook for further energy transition investment opportunities from the
Investment Manager, as of the date of this report, the Company's independent
Directors have decided that they will not seek Shareholder approval before 31
December 2022 to amend the Company's investment policy to provide for the
managed wind-down of the Company. The Board is fully supportive of the
Company's modified investment programme to continue shifting the portfolio
from conventional energy to decarbonisation assets and expects that the
Company will seek shareholder approval to amend its investment policy to
facilitate this transition further in the coming months.
Board succession
Lastly, as highlighted in the 2021 Annual Report, Peter Barker, Patrick Firth
and I will be reaching our ninth year as Non-Executive Directors and intend to
retire from the Board either in advance of or at the Company's Annual General
Meeting in 2023. We have retained major search consultants and will be taking
into account current guidelines when making the appointments. We are
planning for a period of overlap for the new and retiring Directors which will
allow for an orderly transition in due course.
Richard Hayden
Chairman
16 August 2022
Investment Manager's Report
The end of the second quarter marked 126 days of war in Ukraine. Russia's
invasion exacerbated post-pandemic economic conditions defined by a ferocious
rebound in travel and strong pent-up consumer spending. These two trends met
head on with the combination of tight energy supply and creaky supply chains.
We continue to feel the effects of the bullwhip as energy commodity price
volatility persists into the second half of the year. Whilst WTI and Brent
prices are up 42 per cent. and 45 per cent., since the beginning of the year,
they have increased by only 7 per cent. and 6 per cent. over the last quarter,
and declined during July 2022. Due to underinvestment in oil and natural gas
production over the past few years and strong consumer demand, petrol prices
had set new records globally before showing signs of stabilisation in July
2022, while power costs (especially in Europe), are crippling both businesses
and individuals. We find ourselves entering the second half of the year on
the brink of a global recession, the depths of which remain unknown, and an
economic slowdown in China.
Europe's reliance on Russian natural gas and a dearth of renewable energy has
pushed global gas and power prices up without reprieve. The geopolitical
aftershocks of war coupled with soaring summer temperatures and droughts have
increased UK power daily average prices by 258 per cent. year-over-year.
Despite record power prices, Britain has become a net exporter of power to
France which has seen half of its nuclear facilities undergoing routine
maintenance and periodic refueling and higher than normal river temperatures
which reduce the cooling capabilities of the nuclear reactors. Germany is
breaking solar power generation records amid a heat wave in Western Europe but
faces shortfalls from wind production. Germany is also considering extensions
for oil fuel and nuclear power stations. Compensating for this intermittency
will likely exacerbate the continent's reliance on legacy coal-fired
generation in the near-term as it seeks to offset reduced flows of Russian
natural gas.
Global commodity price volatility and tightness in supply has created distinct
winners and losers in the market. We would be remiss not to acknowledge that
the gains since the beginning of the year of conventional energy investments
have come at the cost of tragic losses, of both human lives and economic
devastation. The geopolitical turmoil impacting Europe and its allies has
added urgency to the long-term trend toward decarbonisation and energy
security.
REL's portfolio will continue to benefit from previous cost-reduction and
liquidity preservation efforts in the legacy commodity-linked portfolio. REL
continues to work with its portfolio companies to navigate and improve their
positioning against the valuation and perception headwinds associated with
hydrocarbon production in an ESG-focused regulatory and consumer environment.
This focus on ESG excellence helped facilitate a merger between REL portfolio
company, Centennial Development Resources, and Colgate Energy to create the
largest pure-play company in the Delaware Basin. Both companies have already,
and intend to extend further, their track record in emissions footprint
reduction following a combined ~43 per cent. reduction in greenhouse gas
emissions for the combined company during the 2020-2021 period.
While current geopolitical tensions persist and the global economy continues
to recover from pandemic conditions, we expect that our energy trilemma,
namely: security, affordability, and the need to decarbonise our economies,
will provide continued tailwinds to the portfolio's strategy.
Investment Strategy
Historically, the Investment Manager's objective was to achieve superior risk
adjusted after tax returns by making privately negotiated investments in the
E&P, midstream, services and power (including renewable energy) sectors,
which are a significant component of virtually all major economies. Long-term
market drivers of economic expansion, population growth, development of
markets, deregulation, and privatisation allied to near-term commodity price
volatility are expected to continue to create opportunities globally for
Riverstone.
In the first half of 2022, the Investment Manager made further progress
against the goals of its modified investment programme, which includes
shifting the portfolio toward decarbonisation assets as the energy transition
progresses. Early in the year, REL fully exited its position in Pipestone
Energy, and partially exited from Centennial Development, both legacy
commodity-linked investments, for net proceeds of CAD$53 million and $22
million, respectively. Liquidity from the sales facilitated a follow-on
investment in Tritium, and four new decarbonisation investments including lead
investments in funding rounds for T-REX Group, Anuvia Plant Nutrients, and
Infinitum, and a minority round investment in Group14. Each fall into one of
five identified proven and investable decarbonisation families, including:
grid flexibility and resilience, electrification of transport, next generation
liquid fuels, next horizon resource use, and agriculture and natural resource
plays. We expect these will constitute a $3tn opportunity by 2030, up
from $1.2tn in 2020, a circa two-and-a-half-fold increase over that
timeframe. REL invested approximately $75 million in the first halves of 2021
and 2022, representing consistent progress toward supporting these
decarbonisation themes.
The Company's fully independent Board is supportive of the continuation of the
Investment Manager's modified investment strategy for the immediate future and
will continue to monitor the Investment Manager's success in repositioning the
Company's existing investment policy through the modified investment strategy.
At the EGMin 2020, the Board committed to review the Investment Manager's
performance and, before 31 December 2022, decide whether or not it would be
in the best interests of all shareholders to request an EGM to vote on a
run-off of its portfolio. As noted in the Chairman's Statement, the Company's
Independent Directors have decided that they will not seek Shareholder
approval before 31 December 2022 to amend the Company's investment policy to
provide for the managed wind-down of the Company. This is explained further in
Note 3.3 of the unaudited interim condensed financial statements.
Key Drivers of Investment Strategy:
• Capital constraints among companies with high levels of leverage
and/or limited access to public markets;
• Industry distress and pressures to rationalise assets;
• Increases in ability to extract hydrocarbons from oil and gas-rich
shale formations;
• Historical under-investment in energy infrastructure; and
• Rapid growth in electricity consumption and energy transition.
The Investment Manager, through its affiliates, has a strong track record of
building businesses with management teams. The Company aims to capitalise on
the opportunities presented by Riverstone's pipeline of investments, as well
as through its modified investment strategy implemented in 2019. This can be
seen through the Company's investments, through the Partnership, in Ridgebury
H3 in 2019, Enviva in 2020, DCRB, DCRN, DCRC & DCRD SPAC investments in
2021 and four new decarbonisation investments in 2022.
The Investment Manager, having made over 200 investments globally in the
energy sector since being founded in 2000, utilises its extensive industry
expertise and relationships to thoroughly evaluate investment opportunities
and uses its significant experience in conducting due diligence, valuing
assets and all other aspects of deal execution, including financial and legal
structuring, accounting, and compensation design. The Investment Manager also
draws upon its extensive network of relationships with industry-focused
professional advisory firms to assist with due diligence in other areas such
as accounting, tax, legal, employee benefits, environmental, engineering and
insurance.
Current Portfolio - Conventional
Investment (Public/Private) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 30 Jun 2022 Gross MOIC((2)) 31 Dec 2021 Gross MOIC((2))
Capital ($mm) Capital ($mm)((1)) ($mm)((2))
Centennial((4)) (Public) 268 268 194 75 269 1.00x 0.98x
Hammerhead Resources (Private) 307 295 23 133 156 0.53x 0.39x
Onyx (Private) 66 60 - 149 149 2.50x 1.70x
Carrier II (Private) 133 110 29 48 77 0.70x 0.70x
Total Current Portfolio - Conventional - Public((3)) $268 $268 $194 $75 $269 1.00x 0.98x
Total Current Portfolio - Conventional - Private((3)) $507 $465 $52 $330 $382 0.82x 0.63x
Current Portfolio - Decarbonisation
Investment (Public/Private) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 30 Jun 2022 31 Dec 2021
Capital ($mm) Capital ($mm)((1)) ($mm)((2)) Gross MOIC((2)) Gross MOIC((2))
GoodLeap (formerly Loanpal) (Private) 25 25 2 67 69 2.75x 2.75x
Solid Power((4)) (Public) 48 48 - 39 39 0.82x 1.24x
Enviva((4)) (Public) 22 18 - 37 37 2.03x 2.45x
FreeWire (Private) 10 10 - 20 20 2.00x 2.00x
Anuvia Plant Nutrients (Private) 20 20 - 20 20 1.00x n/a
T-REX Group (Private) 18 18 - 18 18 1.00x n/a
Infinitum (Private) 18 18 - 18 18 1.00x n/a
Tritium DCFC((4)) (Public) 16 16 - 17 17 1.07x n/a
Group14 (Private) 4 4 - 4 4 1.00x n/a
Hyzon Motors((4)) (Public) 10 10 - 3 3 0.29x 0.65x
Ionic I & II (Samsung Ventures) (Private) 3 3 - 3 3 1.00x 1.00x
DCRD((5) ) (Public) 1 1 - 1 1 1.00x 1.00x
Total Current Portfolio - Decarbonisation - Public((3),(5)) $96 $92 $- $96 $96 1.04x 1.49x
Total Current Portfolio - Decarbonisation - Private((3)) $97 $97 $2 $149 $151 1.56x 2.42x
Cash and Cash Equivalents((10)) $72
Total Liquidity $243
Total Market Capitalisation $425
Realisations
Investment Gross Committed Capital Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 30 Jun 2022 31 Dec 2021
(Initial Investment Date) ($mm) Capital ($mm) Capital ($mm)((1)) ($mm)((2)) Gross Gross
MOIC((2)) MOIC((2))
Rock Oil((6)) 114 114 233 4 237 2.07x 2.06x
(12 Mar 2014)
Three Rivers III 94 94 204 - 204 2.17x 2.17x
(7 Apr 2015)
ILX III 179 179 172 - 172 0.96x 0.96x
(8 Oct 2015)
Meritage III((7)) 40 40 87 - 87 2.20x 2.16x
(17 Apr 2015)
RCO((8)) 80 80 80 - 80 0.99x 0.99x
(2 Feb 2015)
Pipestone Energy (formerly CNOR) (29 Aug 2014) 90 90 58 - 58 0.64x 0.58x
Sierra 18 18 38 - 38 2.06x 2.06x
(24 Sept 2014)
Aleph Midstream 23 23 23 - 23 1.00x 1.00x
(9 Jul 2019)
Ridgebury H3 18 18 22 - 22 1.22x 1.22x
(19 Feb 2019)
Castex 2014 52 52 14 - 14 0.27x 0.27x
(3 Sep 2014)
Total Realisations((3)) $709 $709 $932 $4 $936 1.32x 1.31x
Withdrawn Commitments and Impairments((9)) 350 350 9 - 9 0.02x 0.02x
Total Investments((3)) $2,026 $1,980 $1,188 $654 $1,842 0.93x 0.89x
Total Investments & Cash and Cash Equivalents((3),(10)) $726
( )
((1)) Gross realised capital is total gross proceeds realised on invested
capital. Of the $1,188 million of capital realised to date, $888 million is
the return of the cost basis, and the remainder is profit.
((2)) Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested
Capital) are before transaction costs, taxes (approximately 21 to 27.5 per
cent. of U.S. sourced taxable income) and 20 per cent. carried interest on
applicable gross profits in accordance with the revised terms announced on 3
January 2020, but effective 30 June 2019. Since there was no netting of losses
against gains before the aforementioned revised terms, the effective carried
interest rate on the portfolio as a whole will be greater than 20 per cent. No
further carried interest will be payable until the $138.4 million of realised
and unrealised losses to date at 30 June 2022 (largest deficit of $605.5
million at 30 June 2020) are made whole with future gains, so the earned
carried interest of $0.8 million at 30 June 2022 has been deferred and will
expire in October 2023 if the aforementioned losses are not made whole. Since
REL has not yet met the appropriate Cost Benchmark at 30 June 2022, $34.1
million in Performance Allocation was not accrued in accordance with the terms
of the current agreement, which would have been accrued under the prior
agreement. In addition, there is a management fee of 1.5 per cent. of net
assets (including cash) per annum and other expenses. Given these costs, fees
and expenses are in aggregate expected to be considerable, Total Net Value and
Net MOIC will be materially less than Gross Unrealised Value and Gross MOIC.
Local taxes, primarily on U.S. assets, may apply at the jurisdictional level
on profits arising in operating entity investments. Further withholding taxes
may apply on distributions from such operating entity investments. In the
normal course of business, REL may form wholly-owned subsidiaries, to be
treated as C Corporations for US tax purposes. The C Corporations serve to
protect REL's public investors from incurring U.S. effectively connected
income. The C Corporations file U.S. corporate tax returns with the U.S.
Internal Revenue Service and pay U.S. corporate taxes on its taxable income.
((3)) Amounts may vary due to rounding.
((4)) Represents closing price per share in USD for publicly traded shares of
Centennial Resource Development, Inc. (NASDAQ:CDEV - 30-06-2022: $5.98 per
share / 31-03-2022: $8.07 price per share); Enviva, Inc. (NYSE:EVA -
30-06-2022: $57.22 per share / 31-03-2022: $79.15 price per share); Solid
Power, Inc. (NASDAQ:SLDP - 30-06-2022: $5.38 per share / 31-03-2022: $8.67
price per share; Hyzon Motors, Inc. (NASDAQ:HYZN - 30-06-2022: $2.94 per share
/ 31-03-2022: $6.39 price per share); and Tritium DCFC Limited (NASDAQ:DCFC -
30-06-2022: $6.09 price per share / 31-03-2022 $10.04 price per share.)
(( 1 )) Amounts vary due to rounding
((5)) SPAC Sponsor investment for Decarbonization Plus Acquisition Corporation
IV (NASDAQ:DCRD).
((6)) The unrealised value of the Rock Oil investment consists of rights to
mineral acres.
((7)) Midstream investment.
((8)) Credit investment.
((9)) Withdrawn commitments consist of Origo ($9 million) and CanEra III ($1
million), and impairments consist of Liberty II ($142 million), Fieldwood ($80
million), Eagle II ($62 million) and Castex 2005 ($48 million).
((10)) This figure is comprised of $6.4 million held at the Company, $14.9
million held at the Partnership and $51.0 million held at REL US Corp.
Investment Portfolio Summary
As of 30 June 2022, REL's portfolio comprised nineteen active investments
including three E&P investments, fifteen decarbonisation investments and
one power investment.
Onyx
As of 30 June 2022, REL, through the Partnership, has invested $60 million of
its $66 million commitment to Onyx. Onyx is a European-based independent power
producer that was created through the successful acquisition of 2,350MW of
gross installed capacity (1,941MW of net installed capacity) of five coal- and
biomass-fired power plants in Germany and the Netherlands from Engie SA. Two
of the facilities in the current portfolio are among Europe's most recently
constructed thermal plants, which benefit from high efficiencies, substantial
environmental controls, low emissions profiles and the potential use of
sustainable biomass.
As of 30 June 2022, REL's interest in Onyx, through the Partnership, was
valued at 2.50x Gross MOIC((1)) or $149 million (Realised: nil, Unrealised:
$149 million). The Gross MOIC((1)) increased over the prior period.
Hammerhead
As of 30 June 2022, REL, through the Partnership, has invested $295 million of
its $307 million commitment to Hammerhead. Hammerhead is a private E&P
company focused on liquids-rich unconventional resources in the Montney and
Duvernay resource play in Western Canada. Since its establishment in 2010,
Hammerhead has aggregated one of the largest and most advantaged land
positions in the emerging Montney and Duvernay formations of Western Canada's
Deep Basin. The company controls and operates 100 per cent. of this asset
base, which comprises over 1,800 net drilling locations across approximately
~112,000 Montney net acres. Since Riverstone's initial investment, Hammerhead
has increased production almost ten-fold and has significantly grown reserves
to 309 mmboe. As of 31 December 2021, the company was producing approximately
29,500 boepd.
The company continues to focus on ramping development within cash flow in the
near term and paying down debt. The company elected to increase the
development pace in 2H 2021 on the back of higher commodity prices, and the
company will continue to ramp development in 2022. As of 31 December 2021,
Hammerhead had hedged approximately 46 per cent. of forecasted 2022 oil
production at a weighted average price of CAD$87/bbl.
As of 30 June 2022, REL's interest in Hammerhead, through the Partnership, was
valued at 0.53x Gross MOIC((1)) or $156 million (Realised: $23 million,
Unrealised: $133 million). The Gross MOIC((1)) increased over the prior
period.
Centennial (CDEV)
As of 30 June 2022, REL, through the Partnership, has invested in full its
$268 million commitment to Centennial. Centennial, based in Denver, Colorado,
is an E&P company focused on the acquisition and development of oil and
liquids-rich natural gas resources in the Permian Delaware Basin, West Texas.
The company has rapidly aggregated an 75,500 net acre position in its targeted
basin.
In Q2 2022, Centennial announced that they had entered into an agreement to
combine with Colgate Energy for a total consideration of 269.3 million shares
of Centennial stock, $525 million of cash and the assumption of $1.4 billion
of Colgate's outstanding net debt. The company expects leverage at closing to
be 1.0x. The combined company will be the largest pure-play E&P company in
the Delaware Basin with approximately 180,000 net leasehold acres, 40,000 net
royalty acres and total current production of 135,000 Boe/d.
From an operational standpoint, Centennial continues to see strong results on
the back of a highly constructive commodity environment and strong capital
efficiency. In Q1 2022, Centennial generated record free cash flow of $89
million and reduced Net Debt/LTM EBITDAX to 1.1x compared to 1.4x at YE 2021.
The Company expects leverage to fall to <1.0x by Q2 2022.
REL, through the Partnership, owns approximately 12.5 million shares which are
publicly traded (NASDAQ:CDEV) at a 60-day volume weighted average price of
$7.87.
As of 30 June 2022, REL's interest in Centennial, through the Partnership, was
valued at 1.0x Gross MOIC((1)) or $269 million (Realised: $194 million,
Unrealised: $75 million). The Gross MOIC((1)), which reflects the
mark-to-market value of REL's shareholding, increased over the period.
GoodLeap (formerly Loanpal)
As of 30 June 2022, REL, through the Partnership, has invested in full its $25
million commitment to GoodLeap. The company is a technology-enabled
sustainable home improvement loan originator, providing a point-of-sale
lending platform used by key residential contractors. GoodLeap does not take
funding risk. The company presells its originated loans via forward purchase
agreements to large asset managers. The company's attractive unit economics
and asset-light business model allow for rapid growth and the ability to scale
faster than its competitors, while generating free cash flow by capitalising
on upfront net cash payments on the flow of loan originations and avoiding
costly SG&A and capital expenditures incurred by other portions of the
value chain.
During the second quarter of 2022, the company closed on its 13th
securitisation which was oversubscribed despite volatile markets. Management
continues to execute on its growth plans. On 13 October 2021, GoodLeap
announced a new investment round of over $800 million, which will support the
company's operational improvements, technology innovation efforts, and
expansion.
As of 30 June 2022, REL's interest in GoodLeap, through the Partnership, was
valued at 2.75x Gross MOIC((1)) or $69 million (Realised: $2 million,
Unrealised: $67 million). The Gross MOIC((1)) held flat during the period.
Carrier II
As of 30 June 2022, REL, through the Partnership, has invested $110 million of
its $133 million commitment to Carrier II. Carrier II is focus
ed on the acquisition and exploitation of upstream oil and gas assets by
partnering with select operators that are developing both unconventional and
conventional reservoirs in North America. Shortly after its establishment in
May 2015, Carrier II entered into a joint venture agreement with a highly
experienced operator group made up of Henry Resources, LLC and PT Petroleum,
LLC, targeting 19,131 net acres for development in the southern Midland Basin
(subsequently increased to 20,260 net acres). In addition, through three
separate acquisitions, the company has acquired 3,892 net acres in Karnes
County in the Eagle Ford basin, targeting the Sugarloaf Project and the
Chisholm Project, both operated by Marathon Oil Corp.
The company continues to operate prudently and remains focused on using free
cash flow for high commodity prices to fund development and reduce outstanding
indebtedness on the company's term loan. Carrier II has hedged approximately
50 per cent. of forecasted oil production during the remainder of 2022 at a
weighted average price of $57.40 per barrel WTI. As of 30 June 2022, the
company was producing approximately 2,713 boepd.
Since inception, Carrier II has distributed $29 million through dividends to
REL, through the Partnership, representing approximately 26 per cent. of REL's
invested capital. As of 30 June 2022, REL's interest in Carrier II, through
the Partnership, was valued at 0.70x Gross MOIC((1)) or $77 million (Realised:
$29 million, Unrealised: $48 million). The Gross MOIC((1)) held flat over the
period.
Enviva
As of 30 June 2022, REL, through the Partnership, has invested $18 million of
its $22 million commitment to Enviva, which was reduced by $3.0 million this
period in conjunction with an overall commitment reduction to the company by
the Investment Manager. Enviva, based in Bethesda, Maryland, is the world's
largest supplier of wood pellets to major utilities and heat and power
generators, principally in Europe and Japan. Through its subsidiaries, Enviva
owns and operates ten plants with a combined wood pellet production capacity
of approximately 6.2 million MTPY.
On 31 December 2021, Enviva completed its conversion from a master limited
partnership to a corporation following approval by Enviva unitholders on 17
December 2021. The company continues to capitalise on the industry's growth
opportunities, announcing its inaugural agreements with German customers in
May and continuing to expand into heat and other industrial applications.
Enviva commissioned its newly constructed Lucedale plant in March 2022 and
commemorated its first shipment of pellets from the Port of Pascagoula in June
2022.
As of 30 June 2022, REL's interest in Enviva, through the Partnership, was
valued at 2.03x Gross MOIC((1)) or $37 million (Realised: nil, Unrealised: $37
million). The Gross MOIC((1)) decreased over the period.
Samsung Ventures
On 17 August 2021, REL announced the purchase of an interest in one of Samsung
Ventures' battery technology focused venture capital portfolios (the "Samsung
Portfolio") for $30.0 million. The majority of the Samsung Portfolio consists
of 1.66 million shares of Solid Power, Inc., which successfully completed its
business combination with DCRC on 8 December 2021. Gross proceeds to Solid
Power from the transaction amounted to $542.9 million from a fully committed
$195 million PIPE and $347.9 million of cash held in trust net of redemptions;
only 0.6 per cent. of shares held by public stockholders of DCRC were
redeemed. Of the shares voted at the special meeting of DCRC's stockholders,
over 99.9 per cent. voted to approve the business combination.
The remainder of the portfolio is held in shares of Ionic Materials (Ionic I
& II), a material science company that manufactures transformative
polymers for use in solid-state batteries, healthcare and 5G applications.
Ionic Materials' solid polymer is believed to be the first of its kind to
conduct ions at room temperature, a critical enabler of solid-state batteries.
As of 30 June 2022, REL's aggregate investment in the Samsung Portfolio,
through the Partnership, was marked at 0.95x Gross MOIC((1)) or $29 million
(Realised: nil, Unrealised: $29 million). The Gross MOIC((1)) decreased over
the period.
DCRC/Solid Power
As of 30 June 2022, REL, through the Partnership, has fully invested its $20.6
million commitment to DCRC/Solid Power. Riverstone sponsored DCRC's $350
million IPO on 23 March 2021. REL made a $0.6 million investment in DCRC at
the time of the IPO, as the blank check company began to pursue merger
candidates. On 15 June 2021, DCRC announced its business combination agreement
with Solid Power, a Louisville, Colorado based producer of all solid-state
batteries for electric vehicles, to which REL committed an additional $20
million to the $165 million PIPE that was raised.
Between DCRC's IPO and announcing the business combination with Solid Power,
Solid Power closed on a $130 million Series B investment raise led by BMW
Group, Ford Motor Company, and Volta Energy Technologies. In conjunction with
the Series B raise, BMW and Ford expanded their existing joint development
agreements with the Company to secure all solid-state batteries for future
electric vehicles. Both Ford and BMW will receive full-scale 100 Ah cells for
automotive qualification testing and vehicle integration beginning in 2022.
Solid Power's all solid-state platform technology allows for the production of
unique cell designs expected to meet performance requirements for each
automotive partner.
The business combination between DCRC and Solid Power closed on 8 December
2021, with Solid Power beginning to trade on NASDAQ under the ticker "SLDP".
Gross proceeds to Solid Power from the transaction amounted to $542.9 million
from a fully committed $195 million PIPE and $347.9 million of cash held in
trust net of redemptions; only 0.6 per cent. of shares held by public
stockholders of DCRC were redeemed. Of the shares voted at the special meeting
of DCRC's stockholders, over 99.9 per cent. voted to approve the business
combination
As of 30 June 2022, REL's interest in Solid Power, through the Partnership,
consisted of the $0.6 million sponsor investment, which was valued at 4.23x
Gross MOIC((1)) or $2 million (Realised: $- million, Unrealised: $2 million),
and the $20 million PIPE investment, which was valued at 0.54x Gross MOIC((1))
or $11 million (Realised: nil, Unrealised: $11 million).
FreeWire
As of 30 June 2022, REL, through the Partnership, has fully invested its $10
million commitment to FreeWire. FreeWire is the leading provider of
battery-integrated DC fast chargers (DCFCs) and their associated software.
Riverstone led the company's $50 million Series C round in January 2021.
Their primary hardware product is the Boost Charger, a unitised, turnkey DCFC
that offers charging speeds of up to 120kW with only a 20kW grid connection by
using a 160kWh battery. These specifications support 15-24 fast charging
sessions per day. The current software platform, AMP Connect, allows for
charger management and integration with existing customer platforms with
broader services in development.
As of 30 June 2022, REL's interest in FreeWire, through the Partnership, was
valued at 2.00x Gross MOIC((1)) or $20 million (Realised: nil, Unrealised: $20
million).
Anuvia Plant Nutrients
As of 30 June 2022, REL, through the Partnership, has fully invested its $20
million commitment to Anuvia Plant Nutrients. Anuvia Plant Nutrients
manufactures high-efficiency, sustainable field-ready fertilisers for the
agriculture, turf, and lawncare industries.
Located in Winter Garden, Florida, the company developed and uses a unique
technology that not only optimises nutrient availability and efficiency for
plants, but also improves soil health, preserves natural resources, and
reduces greenhouse gas emissions.
As of 30 June 2022, REL's interest in Anuvia Plant Nutrients, through the
Partnership, was valued at 1.00x Gross MOIC((1)) or $20 million (Realised:
nil, Unrealised: $20 million).
T-REX Group
As of 30 June 2022, REL, through the Partnership, has fully invested its $17.5
million commitment to T-REX Group. T-REX Group, a SaaS provider supporting the
asset-backed financing industry, brings together asset class expertise,
critical data management capabilities, and a platform for deal structuring,
cash flow modeling, scenario analysis, real-time performance tracking, and
reporting.
T-REX Group combines sophisticated cloud-based SaaS technology with big data
and asset class expertise to drive down operating and capital expense, reduce
risk exposure, and enhance performance for complex investments.
As of 30 June 2022, REL's interest in T-REX Group, through the Partnership,
was valued at 1.00x Gross MOIC((1)) or $17.5 million (Realised: nil,
Unrealised: $17.5 million).
Infinitum Electric
As of 30 June 2022, REL, through the Partnership, has fully invested its $17.5
million commitment to Infinitum. Infinitum Electric's patented air-core motors
offer superior performance in half the weight and size, at a fraction of the
carbon footprint of traditional motors, making them pound for pound the most
efficient in the world. Infinitum Electric motors open up sustainable design
possibilities for the machines we rely on to be smaller, lighter and quieter,
improving our quality of life while also saving energy.
As of 30 June 2022, REL's interest in Infinitum Electric, through the
Partnership, was valued at 1.00x Gross MOIC((1)) or $17.5 million (Realised:
nil, Unrealised: $17.5 million).
DCRN/Tritium DCFC
In February 2021, REL invested $0.6 million in the Founder Shares and Warrants
of Decarbonization Plus Acquisition Corp. II (NASDAQ: DCRN) at the time of its
IPO. In May 2021, DCRN announced it would combine with Tritium, a Brisbane
based pioneer in e-mobility and EV charging infrastructure. On 4 January 2022,
Tritium announced record breaking Q4'21 and FY'21 financial performance
results. The merger vote to approve the combination of Tritium and DCRN
occurred and closed on 12 January 2022.
In February 2022, REL funded an additional $15 million commitment to Tritium.
The funding event occurred three days after the company met with President
Biden to announce the construction of the Company's Lebanon, Tennessee
manufacturing plant. The plant will employ 500 over the next five years,
produce over 10,000 DC fast chargers units annually, and will ultimately reach
peak production capacity of 30,000 units annually.
As of 30 June 2022, REL's interest in Tritium, through the Partnership,
consisted of the $0.6 million sponsor investment, which was valued at 5.4x
Gross MOIC((1)) or $3 million (Realised: nil, Unrealised: $3 million), and the
$15 million equity investment, which was valued at 0.88x Gross MOIC((1)) or
$13 million (Realised: nil, Unrealised: $13 million).
Group14
In April 2022, REL, through the Partnership, invested $4 million into Group14
Technologies, Inc.'s $400 million Series C funding round. The Series C round
was led by Porsche AG, with participation from OMERS Capital Markets,
Decarbonization Partners, Vsquared Ventures, and others. Group14 is a battery
materials technology company founded in 2015. The Company has developed a
proprietary silicon-based anode battery material to replace graphite in
conventional lithium-ion batteries.
As of 30 June 2022, REL's interest in Group14, through the Partnership, was
valued at 1.00x Gross MOIC((1)) or $4 million (Realised: nil, Unrealised: $4
million).
Hyzon
In connection with the closing of the previously announced merger between DCRB
and Hyzon Motors Inc. (NASDAQ: HYZN), REL purchased $10 million of DCRB common
stock in a private placement transaction at $10 per share in July 2021. Hyzon,
headquartered in Rochester, New York, is the industry-leading global supplier
of zero-emissions hydrogen fuel cell powered commercial vehicles.
As of 30 June 2022, REL's interest in Hyzon, through the Partnership, was
valued at 0.29x Gross MOIC((1)) or $3 million (Realised: nil, Unrealised: $3
million). The Gross MOIC((1)) decreased over the period.
DCRD
In August 2021, REL announced an investment of $0.6 million in DCRD, a special
purpose acquisition vehicle sponsored by an affiliate of REL's investment
manager which raised over $316 million in its IPO.
As of 30 June 2022, REL's interest in DCRD, through the Partnership, was
valued at 1.00x Gross MOIC((1)) or $0.6 million (Realised: nil, Unrealised:
$0.6 million).
Realised Investments
Pipestone
Pipestone is a Calgary-based oil and gas company focused on the Western
Canadian Sedimentary Basin. CNOR had invested in a joint venture with
Tourmaline Oil Corp. targeting the Peace River High area (126,000 net acres),
which it sold in 3Q19 for C$175 million. Earlier in 2019, CNOR closed on a
strategic combination with publicly-traded Blackbird Energy to consolidate its
~25,000 net acre Pipestone Montney position with that of Blackbird's
offsetting ~73,000 acres. The pro forma company is named Pipestone Energy
Corporation and trades under TSX: PIPE. During the third quarter of 2019,
Pipestone completed the build-out of required infrastructure needed to expand
its future operations and has since been working towards bringing incremental
production online.
In February 2022, REL sold its entire position in Pipestone for net proceeds
of 53 million CAD (USD 41.7 million). With this transaction, REL no longer
owns any interest in Pipestone.
As of 30 June 2022, REL's realised position in Pipestone, through the
Partnership, was valued at 0.64x Gross MOIC or $58 million (100 per cent.
realised).
Valuation
The Investment Manager is charged with proposing the valuation of the assets
held by REL through the Partnership. The Partnership has directed that
securities and instruments be valued at their fair value. REL's valuation
policy is compliant with IFRS and IPEV Valuation Guidelines and has been
applied consistently from period to period since inception. As the Company's
investments are generally not publicly quoted, valuations require meaningful
judgement to establish a range of values, and the ultimate value at which an
investment is realised may differ from its most recent valuation and the
difference may be significant.
The Investment Manager values each underlying investment in accordance with
the Riverstone valuation policy, the IFRS accounting standards and IPEV
Valuation Guidelines. The value of REL's portion of that investment is derived
by multiplying its ownership percentage by the value of the underlying
investment. If there is any divergence between the Riverstone valuation policy
and REL's valuation policy, the Partnership's proportion of the total holding
will follow REL's valuation policy. Valuations of REL's investments through
the Partnership are determined by the Investment Manager and disclosed
quarterly to investors, subject to Board approval.
Riverstone values its investments using common industry valuation techniques,
including comparable public market valuation, comparable merger and
acquisition transaction valuation, and discounted cash flow valuation.
For development-type investments, Riverstone also considers the recognition of
appreciation or depreciation of subsequent financing rounds, if any. For those
early stage privately held companies where there are other indicators of a
decline in the value of the investment, Riverstone will value the investment
accordingly even in the absence of a subsequent financing round.
Riverstone reviews the valuations on a quarterly basis with the assistance of
the Riverstone Performance Review Team ("PRT") as part of the valuation
process. The PRT was formed to serve as a single structure overseeing the
existing Riverstone portfolio with the goal of improving operational and
financial performance.
The Audit Committee reviews the valuations of the Company's investments held
through the Partnership and makes a recommendation to the Board for formal
consideration and acceptance.
Uninvested Cash
As of 30 June 2022, REL had a cash balance of $6.4 million and the
Partnership, including its wholly-owned subsidiaries, REL Cayman Holdings, LP,
REL US Corp and REL US Centennial Holdings, LLC, had uninvested funds of over
$65.9 million held as cash and money market fixed deposits, gross of the
accrued Management Fee of $2.7 million. After the outstanding share buybacks
at period end of $1.9 million and the accrued Management Fee, REL's aggregate
cash balance is $68 million. As in prior years, in accordance with the
Partnership Agreement, if the Company requires additional funds for working
capital, it is entitled to receive another distribution from the Partnership.
The Partnership maintains deposit accounts with several leading international
banks. In addition, the Partnership invests a portion of its cash deposits in
short-term money market fixed deposits. REL's treasury policy seeks to protect
the principal value of cash deposits utilising low risk investments with
top-tier counterparts. Uninvested cash earned approximately 5 basis points
during the period ended 30 June 2022. All cash deposits referred to in this
paragraph are denominated in U.S. dollars.
On 4 March 2022, the Board was pleased to allocate an additional £46.0
million to the Share Buyback Programme at which time the Company had the
authority to repurchase 8,062,463 shares pursuant to the authority granted at
its 2022 AGM. In 2022, the Company had repurchased 2,223,312 shares, in
aggregate, for £14.5 million ($18.4 million) at an average share price of
£6.54 ($8.27). Since the company started the buyback programme in May 2020,
the Company has purchased 27,182,444 shares, in aggregate, for £101 million
($131 million) at an average share price of £3.70 ($4.82). As of 30 June
2022, £35 million remains available for repurchasing; however, the Board has
since taken a decision to limit the share buyback amount to £17 million ($21
million) of the available £35 million ($43 million) for the period to 31
December 2022.
As of 30 June 2022, REL, through the Partnership, had potential unfunded
commitments of $45.6 million. Additionally, REL's functional currency and
Financial Statements are all presented in U.S. dollars. The Partnership's
commitments are denominated in U.S. dollars, except Hammerhead which is
denominated in Canadian dollars.
Going Concern
The Audit Committee has reviewed the appropriateness of the Company's
unaudited interim condensed financial statements being prepared in accordance
with "IAS 34 Interim Financial Reporting as adopted by the EU" and presented
on a going concern basis, which it has recommended to the Board. The unaudited
interim condensed financial statements have been prepared on a going concern
basis for the reasons set out below and as the Directors, with recommendation
from the Audit Committee, have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the foreseeable
future, which is defined as the period from the date of approval of the
unaudited interim condensed financial statements up until 30 September 2023.
In reaching this conclusion, the Directors, with recommendation from the Audit
Committee, have considered the risks that could impact the Company's liquidity
over the period from the date of approval of the unaudited interim condensed
financial statements up until 30 September 2023, and have taken into account
the following six key considerations, which are discussed further below.
1. Available liquid resources and potential proceeds from investment
realisations versus current and expected liabilities of the Company over the
period from the date of approval of the unaudited interim condensed financial
statements up until 30 September 2023;
2. Available liquid resources and potential proceeds from investment
realisations versus total potential unfunded commitments of the Partnership;
3. Recent NAV & Share Price Performance of the Company;
4. Discount to NAV of the Company;
5. Ongoing Impact of COVID-19; and
6. The Russian Invasion of Ukraine.
Please see Note 3 of the unaudited interim condensed financial statements for
further information.
Principal Risks and Uncertainties
Historically, the Company's assets have consisted of investments, through the
Partnership, within the global energy industry, with a particular focus on
opportunities in the global exploration and production, midstream energy and
renewable energy sub-sectors. Its principal risks are therefore related to
market conditions in the energy sector in general, but also the particular
circumstances of the businesses in which it is invested through the
Partnership. The Investment Manager to the Partnership seeks to mitigate these
risks through active asset management initiatives and by carrying out due
diligence work on potential targets before entering into any investments.
The key areas of risk faced by the Company are the following: 1) concentration
risk from historically investing only in the global energy sector, 2) Ordinary
Shares trading at a Discount to NAV per Share, 3) inherent risks associated
with the exploration and production and midstream energy subsectors, including
the ongoing impact of the coronavirus pandemic, 4) difficulty for the Company
to terminate its Investment Management Agreement, 5) vote on any
discontinuation resolution that may be proposed, 6) differences in the
investment time horizons and fee provisions between the Company and the
private funds managed by Riverstone and 7) climate change and the transition
to a lower carbon economy.
The principal risks and uncertainties of REL were identified in further detail
in the 2021 Annual Report and Financial Statements.
The principal risks outlined above remain the most likely to affect the
Company and its investments in the second half of the year.
Post-Period End Updates
Subsequent to period-end, there have been no material updates for the Company.
Outlook
The Investment Manager continues to work with its portfolio companies and
management teams to navigate dynamic market conditions driven by geopolitical
strife, the ongoing pandemic, volatility in commodity markets, and the energy
transition. We believe past work with the legacy commodity linked portfolio
and work to identify strong growth equity opportunities in the ever-evolving
decarbonisation space, has positioned the portfolio well to capitalise on the
upside of energy market volatility and the steady march toward a decarbonised
economy. We expect portfolio companies to manage liquidity with discipline,
and to increase strategic capital expenditure where appropriate. The
Investment Manager will continue to execute on the modified investment
programme, identifying new decarbonisation investments that present attractive
risk-reward profiles supporting value creation for shareholders.
RIGL Holdings, LP
16 August 2022
((1)) Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested
Capital) are before transaction costs, taxes (approximately 21 to 27.5 per
cent. of U.S. sourced taxable income) and 20 per cent. carried interest on
applicable gross profits in accordance with the revised terms announced on 3
January 2020, but effective 30 June 2019. Since there was no netting of losses
against gains before the aforementioned revised terms, the effective carried
interest rate on the portfolio as a whole will be greater than 20 per cent. No
further carried interest will be payable until the $138.4 million of realised
and unrealised losses to date at 30 June 2022 (largest deficit of $605.5
million at 30 June 2020) are made whole with future gains, so the earned
carried interest of $0.8 million at 30 June 2022 has been deferred and will
expire in October 2023 if the aforementioned losses are not made whole. Since
REL has not yet met the appropriate Cost Benchmark at 30 June 2022, $34.1
million in Performance Allocation was not accrued in accordance with the terms
of the current agreement, which would have been accrued under the prior
agreement. In addition, there is a management fee of 1.5 per cent. of net
assets (including cash) per annum and other expenses. Given these costs, fees
and expenses are in aggregate expected to be considerable, Total Net Value and
Net MOIC will be materially less than Gross Unrealised Value and Gross MOIC.
Local taxes, primarily on U.S. assets, may apply at the jurisdictional level
on profits arising in operating entity investments. Further withholding taxes
may apply on distributions from such operating entity investments. In the
normal course of business, REL may form wholly-owned subsidiaries, to be
treated as C Corporations for US tax purposes. The C Corporations serve to
protect REL's public investors from incurring U.S. effectively connected
income. The C Corporations file U.S. corporate tax returns with the U.S.
Internal Revenue Service and pay U.S. corporate taxes on its taxable income
Directors' Responsibilities Statement
The Directors are responsible for preparing this Interim Report in accordance
with applicable law and regulations. The Directors confirm that to the best of
their knowledge:
• The unaudited interim condensed financial statements
have been prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU; and
• The Chairman's Statement and Investment Manager's
Report include a fair review of the information required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred during the
first six months of the financial year and their impact on the unaudited
interim condensed financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in the first six
months of the financial year and that have materially affected the financial
position and performance of the entity during that period; and any changes in
the related party transactions described in the last annual report that could
do so.
On behalf of the Board
Richard Hayden
Chairman
16 August 2022
Independent Review Report to Riverstone Energy Limited
Conclusion
We have been engaged by the Company to review the Unaudited Interim Condensed
Financial Statements for the six months ended 30 June 2022 which comprise the
Condensed Statement of Financial Position, the Condensed Statement of
Comprehensive Income, the Condensed Statement of Changes in Equity, the
Condensed Statement of Cash Flow and related Notes 1 to 10. We have read the
other information contained in the Interim Report and considered whether it
contains any apparent misstatements or material inconsistencies with the
information in the Unaudited Interim Condensed Financial Statements.
Based on our review, nothing has come to our attention that causes us to
believe that the Unaudited Interim Condensed Financial Statements for the six
months ended 30 June 2022 are not prepared, in all material respects, in
accordance with "International Accounting Standard 34, "Interim Financial
Reporting" as adopted by the European Union" and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with IFRS as adopted by the European Union. The
Unaudited Interim Condensed Financial Statements have been prepared in
accordance with "International Accounting Standard 34, "Interim Financial
Reporting" as adopted by the European Union".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
International Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity"
issued by the Financial Reporting Council, however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the Interim Report and Unaudited
Interim Condensed Financial Statements in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the Interim Report and Unaudited Interim Condensed Financial
Statements, the Directors are responsible for assessing the Company's ability
to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease operations, or
have no realistic alternative but to do so.
Auditor's Responsibilities for the Review of the Financial Information
In reviewing the Interim Report and Unaudited Interim Condensed Financial
Statements, we are responsible for expressing to the Company a conclusion on
the Unaudited Interim Condensed Financial Statements. Our conclusion,
including our Conclusions Relating to Going Concern, are based on procedures
that are less extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use of our Report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Guernsey, Channel Islands
16 August 2022
Condensed Statement of Financial Position
As at 30 June 2022
30 June 31 December
2022 2021
Notes $'000 $'000
(Unaudited)
(Audited)
Assets
Non-current assets
Investments at fair value through profit or loss 6 714,820 674,439
Total non-current assets 714,820 674,439
Current assets
Trade and other receivables 413 970
Cash and cash equivalents 6,365 7,296
Total current assets 6,778 8,266
Total assets 721,598 682,705
Current liabilities
Trade and other payables 2,613 664
Total current liabilities 2,613 664
Total liabilities 2,613 664
Net assets 718,985 682,041
Equity
Share capital 1,115,458 1,133,854
Retained deficit (396,473) (451,813)
Total equity 718,985 682,041
Number of Shares in issue at period/year end 9 52,714,287 54,937,599
Net Asset Value per Share ($) 9 13.64 12.41
The unaudited interim condensed financial statements on pages 21 to 39 were
approved and authorised for issue by the Board of Directors on 16 August 2022
and signed on their behalf by:
Richard Hayden Patrick Firth
Chairman Director
The accompanying notes form an integral part of these unaudited interim
condensed financial statements.
Condensed Statement of Comprehensive Income
For the six months ended 30 June 2022 (Unaudited)
1 January 2022 1 January 2021
to 30 June 2022 to 30 June 2021
Notes $'000 $'000
Investment gain
Change in fair value of investment at fair value through profit or loss 6 58,746 200,353
Expenses
Directors' fees and expenses 7 (342) (349)
Legal and professional fees (319) (250)
Other operating expenses (1,764) (1,597)
Total expenses (2,425) (2,196)
Operating profit for the period 56,321 198,157
Finance income and expenses
Foreign exchange loss (981) (30)
Total finance income and expenses (981) (30)
Profit for the period 55,340 198,127
Total comprehensive income for the period 55,340 198,127
Basic Earnings per Share 103.19 316.29
(cents)
9
Diluted Earnings per Share (cents) 9 103.19 316.29
All activities derive from continuing operations.
The accompanying notes form an integral part of these unaudited interim
condensed financial statements.
Condensed Statement of Changes in Equity
For the six months ended 30 June 2022
Share Retained Total
capital deficit Equity
$'000 $'000 $'000
As at 1 January 2022 1,133,854 (451,813) 682,041
Profit for the financial period - 55,340 55,340
Buyback and cancellation of shares (18,396) - (18,396)
As at 30 June 2022 1,115,458 (396,473) 718,985
For the six months ended 30 June 2021
Share Retained Total
capital deficit Equity
$'000 $'000 $'000
As at 1 January 2021 1,184,100 (793,757) 390,343
Profit for the financial period - 198,127 198,127
Buyback and cancellation of shares (6,682) - (6,682)
As at 30 June 2021 1,177,418 (595,630) 581,788
The accompanying notes form an integral part of these unaudited interim
condensed financial statements.
Condensed Statement of Cash Flows
For the six months ended 30 June 2022 (Unaudited)
1 January 2022 1 January 2021
to 30 June 2022 to 30 June 2021
$'000 $'000
Cash flows generated from operating activities
Operating profit for the financial period 56,321 198,157
Adjustments for:
Change in fair value of investment at fair value through profit or loss (58,746) (200,353)
Movement in trade receivables 557 649
Movement in trade payables 33 (80)
Net cash used in operating activities (1,835) (1,627)
Cash flows generated from investing activities
Distribution from the Partnership 18,365 7,036
Net cash generated from investing activities 18,365 7,036
Cash flow used in financing activities
Buyback of shares (16,480) (8,454)
Net cash used in financing activities (16,480) (8,454)
Net movement in cash and cash equivalents during the period 50 (3,045)
Cash and cash equivalents at the beginning of the period 7,296 8,807
Effect of foreign exchange rate changes (981) (30)
Cash and cash equivalents at the end of the period 6,365 5,732
The accompanying notes form an integral part of these unaudited interim
condensed financial statements.
Notes to the UNAUDITED Interim Condensed Financial Statements
For the six months ended 30 June 2022
1. 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 GFSC as a Registered Closed-ended Collective Investment Scheme
pursuant to the POI Law. The Company's Ordinary Shares were admitted to the UK
Listing Authority's Official List and to trading on the London Stock Exchange
as part of its IPO which completed on 29 October 2013. The registered office
of the Company is PO Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter
Port, Guernsey, GY1 4LY.
The Company makes its investments through the Partnership, a Cayman Islands
registered exempted limited partnership, in which the Company is the sole
limited partner. The principal place of business of the Partnership is the
Cayman Islands. Both the Company and the Partnership are subject to the
Investment Management Agreement with the Investment Manager, a partnership
registered in the Cayman Islands.
The Partnership has the right to invest alongside the Private Riverstone Funds
in all Qualifying Investments in which the Private Riverstone Funds
participate. These funds are managed and advised by affiliates of the
Investment Manager. Further detail of these investments is provided in the
Investment Manager's Report.
The unaudited interim condensed financial statements of the Company for the
six months ended 30 June 2022 have been prepared in accordance with
International Accounting Standard 34 ("IAS 34") Interim Financial Reporting as
adopted by the European Union.
The accounting policies adopted in the preparation of the unaudited interim
condensed financial statements are consistent with those followed in the
preparation of the Company's annual financial statements for the year ended 31
December 2021, which were prepared in accordance with IFRS as adopted by the
European Union.
These unaudited interim condensed financial statements are presented in U.S.
dollars, which is also the Company's functional currency. The amounts are
rounded to the nearest $'000, unless otherwise stated.
2. New standards, interpretations and amendments adopted by the Company
The Company has not early adopted any standard, interpretation or amendment
that has been issued but is not yet effective. It is not anticipated that any
standard which is not yet effective, will have a material impact on the
Company's financial position or on the presentation of the Company's
statements.
3. Significant accounting judgements, estimates and assumptions
The estimates and judgements made by the Investment Manager are consistent
with those made in the Financial Statements for the year ended 31 December
2021. The going concern assessment has been updated for the 6 months ended 30
June 2022, which is outlined below.
Going Concern
The Audit Committee has reviewed the appropriateness of the Company's
unaudited interim condensed financial statements being prepared in accordance
with "IAS 34 Interim Financial Reporting as adopted by the EU" and presented
on a going concern basis, which it has recommended to the Board. The unaudited
interim condensed financial statements have been prepared on a going concern
basis for the reasons set out below and as the Directors, with recommendation
from the Audit Committee, have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the foreseeable
future, which is defined as the period from the date of approval of the
unaudited interim condensed financial statements up until 30 September 2023.
In reaching this conclusion, the Directors, with recommendation from the Audit
Committee, have considered the risks that could impact the Company's liquidity
over the period from the date of approval of the unaudited interim condensed
financial statements up until 30 September 2023, and have taken into account
the following six key considerations, which are discussed further below.
1. Available liquid resources and potential proceeds from
investment realisations versus current and expected liabilities of the Company
over the period from the date of approval of the unaudited interim condensed
financial statements up until 30 September 2023;
2. Available liquid resources and potential proceeds from
investment realisations versus total potential unfunded commitments of the
Partnership;
3. Recent NAV & Share Price Performance of the Company;
4. Discount to NAV of the Company;
5. Ongoing Impact of COVID-19; and
6. The Russian Invasion of Ukraine.
1. Available liquid resources and potential proceeds from investment
realisations versus current and expected liabilities of the Company over the
period from the date of approval of the unaudited interim condensed financial
statements up until 30 September 2023
REL retained $11.5 million of cash in the Company's IPO and Placing and Open
Offer for the initial three years post-listing and has requested and received
eight distributions for working capital needs in aggregate of $29.3 million
from the Partnership cumulatively through 30 June 2022. During 2022, the
Company requested and received distribution requests in aggregate of £10.0
million ($13.4 million) for the share buyback programme, of which $6.4 million
remains at 30 June 2022 (31 December 2021: $7.3 million). This cash balance is
sufficient to cover the Company's existing liabilities at 30 June 2022 of $2.6
million, but will need an additional distribution of $0.5 million from the
Partnership for the Company's forecasted annual expenses of approximately $4.3
million. Additionally, REL will need additional distributions of approximately
$43.0 million from the Partnership to fulfill the incremental share buyback
programme amount of £35.4 million, which was announced by the Company on 8
February 2022 and for which the buyback authority was approved at the EGM on 4
March 2022. As in prior years, in accordance with the Partnership Agreement,
if the Company requires additional funds for working capital or the share
buyback programme, it is entitled to receive another distribution from the
Partnership. In order to do so, the Company would submit a distribution
request approved by the Board to the Partnership, which would then be required
to arrange for the payment of the requested amount. Since REL's inception, the
Company has requested and received eight distributions from the Partnership
for working capital needs. As detailed further in section 2 below, REL,
through the Partnership, had available liquid resources of $65.9 million in
excess of potential unfunded commitments of $45.6 million at 30 June 2022, but
currently, as of the date of this report, REL, through the Partnership, has
total potential unfunded investment commitments of up to $45.6 million, which
does not exceed its available liquid resources of $50.5 million. However,
based on the Investment Manager's cash flow forecast for the next three years
to 30 June 2025, the expectation is that, if needed, the Partnership will only
fund the remaining investment commitments to Enviva and Onyx which total $9.7
million as of the date of this report.
2. Available liquid resources and potential proceeds from investment
realisations versus total potential unfunded commitments of the Partnership
As at 30 June 2022, REL and the Partnership, including its wholly-owned
subsidiaries, REL Cayman Holdings, LP, REL US Corp and REL US Centennial
Holdings, LLC, had $72.2 million of uninvested funds held as cash (31 December
2021: $105.8 million). This amount is comprised of $65.9 million held at the
Partnership and $6.4 million held at REL. Subsequent to 30 June 2022 and up to
the date of this report, the Company, through the Partnership, made payments
of $2.7 million for the Q2 2022 Management Fee, $2.6 million for US tax
withholdings, and $0.1 million for Partnership expenses, as well as $10
million distribution from the Partnership to the Company, bringing the
uninvested funds at the Partnership level down to $50.5 million as at the date
of this report. In accordance with the revised terms for REL's GP Performance
Allocation announced in January 2020, REL did not meet the portfolio level
Cost Benchmark at 30 June 2022; therefore, any unrealised Performance
Allocation has been deferred. If these changes had not been accepted, then the
accrued GP Performance Allocation would have been $34.1 million as of 30 June
2022. No performance fees will be payable until the $138.4 million realised
and unrealised losses to date at 30 June 2022 are offset with future gains. If
these realised and unrealised losses have not been offset, any such accrued
fees will no longer be payable after three years from each respective accrual
date.
The Company's total potential unfunded investment commitments of $45.6 million
as at 30 June 2022 (31 December 2021: $49.1 million), through the Partnership,
did not exceed its available liquid resources as at 30 June 2022. This amount
does not exceed the Partnership's available liquid resources of $50.5 million
as of the date of this report. It is not expected that all potential unfunded
investment commitments will be drawn due to a variety of factors, such as the
ability for the commitment to be reduced and/or cancelled by the Investment
Manager with consideration from the Board, the present market conditions do
not warrant presently further capital expenditure as the returns would not be
incrementally positive, a portfolio company being sold earlier than
anticipated or a targeted investment opportunity changing or disappearing.
Based on the Investment Manager's cash flow forecast for the next three years
to 30 June 2025, the expectation is that, if needed, the Partnership will only
fund the remaining commitments to Enviva and Onyx, which aggregate up to $9.7
million as of the date of this report. However, if the Board decides to fund
any of the Partnership's unfunded commitments to the other active investments,
the Partnership can execute a reactionary measure to provide liquidity as
discussed further below.
At 30 June 2022, nine of the Company's realised investments, held through the
Partnership, resulted in $874 million of gross proceeds on invested capital of
$619 million, respectively in aggregate, resulting in an average Gross MOIC of
approximately 1.4x. The initial commitments to these nine investments were in
excess of $934 million, so approximately 66 per cent. had been funded before
realisation. In addition, the board of each underlying portfolio company, more
often than not are controlled by Riverstone, which has discretion over whether
or not that capital is ultimately invested. Moreover, REL's arrangements with
Riverstone allow the Company's potential unfunded commitments to be reduced
and/or cancelled by the Investment Manager with consideration from the Board,
although this has yet to happen. Moreover, any proposed investments outside of
those made with Fund V and VI can be unilaterally declined by the Board.
Finally, as a reactionary measure, the Partnership's investments in the
publicly-traded shares of the portfolio companies could always be sold, or
used as collateral to secure asset-backed financing, to fund the Partnership's
shortfall of liquid resources and potential proceeds from investment
realisations versus potential unfunded commitments. The Partnership holds
unrestricted marketable securities consisting of publicly-traded shares of
Enviva, Solid Power, Tritium and Hyzon, for which the aggregate fair value was
$90 million at 30 June 2022 and $116.7 million as of 15 August 2022.
Additionally, the Partnership holds restricted marketable securities
consisting of publicly-traded shares of Centennial (lock-up expiration in
3Q2022), Solid Power (lock-up expiration in 4Q2022), Tritium (lock-up
expiration in 1Q2023), and DCRD (lock-up expiration is one year post future
business combination), for which the aggregate fair value was $81 million at
30 June 2022 and $97.4 million as of 15 August 2022.
3. Recent NAV & Share Price Performance of the Company
As announced on 30 October 2020, the Company's independent directors agreed to
closely monitor the Investment Manager's success in repositioning the
Company's existing investment policy through the modified investment strategy
over the next twenty four months following the previous quarter ended 30
September 2020. In the absence of a significant improvement in the
performance of the Company, taking into account the trading price of the
Ordinary Shares and portfolio performance over that period through 30
September 2022, the independent directors would release an announcement in
November 2022 regarding an EGM to seek Shareholder approval before 31
December 2022 to amend the Company's investment policy to provide for the
managed wind-down of the Company.
As at 30 June 2022, REL had a NAV per Share of $13.64 (£11.25), an increase
in USD and GBP of 138 & 152 per cent., respectively, compared to $5.74
(£4.46) as at 30 September 2020, which is the most recent quarter end prior
to the aforementioned announcement and being used as a proxy for comparative
purposes. The period end closing trading price of the Ordinary Shares was
$8.07 (£6.66), an increase of 107 & 120 per cent., respectively, compared
to $3.90 (£3.03) as at 30 September 2020. Subsequently, from period-end
through 15 August 2022, the Company's NAV per Share and closing trading price
of the Ordinary Shares have remained relatively unchanged at $14.51 (£12.04)
and $8.03 (£6.66), respectively.
Based on this significant improvement in the performance of REL, and the
outlook for further energy transition investment opportunities from the
Investment Manager, as of the date of this report, the Company's independent
Directors have decided that they will not seek Shareholder approval before 31
December 2022 to amend the Company's investment policy to provide for the
managed wind-down of the Company. The Board is fully supportive of the
Company's modified investment programme to continue shifting the portfolio
from conventional energy to decarbonisation assets and expects that the
Company will seek shareholder approval to amend its investment policy to
facilitate this transition further in the coming months.
4. Discount to NAV of the Company
Since its inception, the Company's trading discount to NAV percentage has
remained consistent with a population of comparable publicly‐traded PE funds
as their life to date average trading discount percentages are 24.8 per cent.
and 21.9 per cent., respectively. However, from December 2015 to January 2016
and November 2018 to December 2018, as well as from December 2019 to November
2020, declines in the price of oil adversely impacted the market sentiment for
energy companies, which resulted in the Company's trading discount percentage
increasing at a faster rate than the population of comparable publicly-traded
PE funds, as it is solely invested in the global energy industry across all
sectors. In order to return uninvested capital to Shareholders and attempt to
reduce REL's trading discount percentage, on 11 May 2021, the Company
announced a buyback programme with the intention of returning £20 million to
shareholders via market buybacks, which was subsequently increased to £40
million. On 14 February 2022, the Company announced an additional increase of
£46 million, subject to approval by the Shareholders which was obtained at
the EGM on 4 March 2022. Since the announcement in May 2021, the Company has
purchased 27,182,444 shares, in aggregate, for £101 million ($131 million) at
an average share price of £3.70 ($4.82), which has attributed to the
narrowing of the Company's trading discount from 55.0 per cent. at 31 March
2021 to 40.8 per cent. at 30 June 2022 (or from 61.8 per cent. to 45.4 per
cent., respectively, on a cash-adjusted basis). From period-end through 15
August 2022, reflecting a $26.5 million increase in the fair value of the
Company's remaining unrestricted marketable securities, the Company's pro
forma trading discount has increased and was 44.7 per cent. as of 15 August
2022 (or 48.8 per cent. on a cash-adjusted basis).
The Board, with consultation of the Investment Manager, regularly monitors the
Company's trading discount percentage and, when possible, executes corporate
actions aimed at managing it, such as the aforementioned share buyback
programme and Tender Offer share repurchase in November 2018, which
contributed to a 1.5 per cent. increase in the Company's NAV, and partially
offset the increase of the trading discount percentage. Additionally, the
General Partner's Performance Fee, if and when earned according to the revised
terms, will be used for future share repurchases.
5. Ongoing Impact of COVID-19
The Board and Investment Manager have been in continuous dialogue regarding
the ongoing impact of COVID-19 and appropriate disclosures within the
Company's unaudited interim condensed financial statements, given that it's a
continuously evolving situation. In 2020, the Company's Management Engagement
Committee requested and received updates from REL's key service providers,
including the Investment Manager, regarding their initial response to
COVID-19, including an update on their respective business continuity plans.
At the outset of COVID-19, the Investment Manager activated its business
continuity plan and its regular working pattern changed to remote working.
Whilst staff had assumed their day-to-day responsibilities remotely, weekly
virtual calls across teams took place. In mid-2021, a significant proportion
of the staff began transitioning back to the in-person work environment, but
did revert back to remote working for periods of time due to spikes in cases
caused by the Delta and Omicron variants. The Investment Manager has
maintained dialogue with its portfolio companies to make sure that they have
the appropriate plans and resources in place to prioritise the health and
safety of their employees, as well as to assess supply chain disruptions and
ensure the normal operations of our businesses.
6. The Russian Invasion of Ukraine
Russian's invasion of Ukraine and the sanctions imposed against Russia and
Belarus pose significant challenges to business activities and introduce a
high degree of uncertainty on the expected development of those activities and
the associated knock on effects on the economic and financial system
internationally. While international efforts to find a peaceful solution
persist, any further escalations are likely to push energy prices higher.
However, if a peaceful resolution is achieved and Russian pipelines begin to
open, it's likely that energy prices will fall.
Directors' Assessment of Going Concern
Based on the reasons outlined above, on balance, the Directors are satisfied,
as of the date of this report, that it is appropriate to adopt the going
concern basis in preparing the unaudited interim condensed financial
statements.
Provisions & Contingent Liabilities
In line with IAS 37 Provisions, Contingent Liabilities and Contingent Assets,
we recognise provisions when the Company has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount can be
reliably estimated.
Where this criteria is not met we disclose a contingent liability if the
Company has a possible obligation, or has a present obligation with an outflow
that is not probable or which cannot be reliably estimated.
Provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability.
Critical & Key Accounting Estimates and Significant Judgements Made in
Accounting for Provisions & Contingent Liabilities
We exercise judgement in determining the quantum of all provisions to be
recognised. Our assessment includes consideration of whether we have a present
obligation, whether payment is probable and if so whether the amount can be
estimated reliably.
As part of this assessment, we also assess the likelihood of contingent
liabilities occurring in the future.
Contingent liabilities are not recognised as liabilities on our balance
sheet. By their nature, contingencies will be resolved only when one or more
uncertain future events occur or fail to occur. We assess the likelihood that
a potential claim or liability will arise and also quantify the possible range
of financial outcomes where this can be reasonably determined.
In estimating contingent liabilities we make key judgements in relation to
performance fee rules, and the likelihood, timing and cost.
Establishing contingent liabilities associated with the performance fee may
involve the use of critical estimates and assumptions, in particular around
the ability to form a reliable estimate of any probable outflow. We provide
further information in relation to specific matters in the 'contingent
liabilities' section below.
For all risks, the ultimate liability may vary materially from the amounts
provided and will be dependent upon the eventual
outcome of any performance fee allocation.
Contingent Liabilities - Performance Fee Allocation
In the ordinary course of business, we monitor the performance fee allocation
and provide for anticipated costs where an outflow of resources is considered
probable and a reasonable estimate can be made of the likely outcome.
Where an outflow is not probable but is possible a contingent liability may
still exist and its relevant details will be disclosed.
At the reporting date we are not aware of any evidence to indicate that a
present obligation exists, nor is it probable that an outflow of resources
will be required such that any amount should be provided for. As the
performance fee allocation would have to be met for 4 quarters and is
currently not met there is no probable obligation at this time, moving closer
to a possible obligation, albeit there is not one at this time.
In January 2020, the management engagement committee of REL, consisting of
REL's independent directors, has agreed with RIGL Holdings, LP (formerly
Riverstone International Limited), REL's investment manager (the "Investment
Manager"), to amend the terms on which REL is required to pay a performance
allocation (the "Performance Allocation") in respect of REL's investments, as
follows:
· Portfolio Level Cost Benchmark: A Performance Allocation will
only be distributed in respect of a realised investment if, at the time of the
realisation of the relevant investment, the aggregate of the fair market value
of all of the Company's then unrealised investments and the proceeds of all of
its realised investments since inception exceeds the aggregate acquisition
price of all of the Company's unrealised and realised investments. If this
portfolio level cost benchmark is not met at the time of realisation of the
relevant investment, distribution of the Performance Allocation is subject to
deferment as described further below.
· 8 per cent. Hurdle Rate: A Performance Allocation will only be
accrued for payment upon the realisation of an investment if the proceeds from
that investment exceed an amount equal to its acquisition cost plus an 8 per
cent. annual cumulative hurdle rate calculated from the date of investment to
the date of realisation. If the hurdle is met, the Performance Allocation
will be 20 per cent. of all Net Profits in respect of each such investment.
"Net Profits" means the proceeds received from each realised investment (after
the expenses related to its disposal) minus the acquisition price of that
realised investment.
· Full Realisation: A Performance Allocation will only be
calculated and accrued on the full realisation of the entire interest in an
investment, unless a partial realisation results in the full return of all
capital invested in such investment. Otherwise, no Performance Allocation
will be payable on partial disposals and the ability for the Investment
Manager to elect to receive a Performance Allocation on an investment that has
been held by the Company for at least seven years (but not sold) has been
removed.
· Deferral: If the portfolio level cost benchmark is not met at
the time of full realisation of the relevant investment, it will be retested
on a quarterly basis for the following three years. If, at any time during
those three years, the benchmark is satisfied for four continuous quarters,
the relevant Performance Allocation will then become distributable without
interest. Any accrued but undistributed Performance Allocation that has been
deferred due to the portfolio level cost benchmark test will expire after 36
months.
The Investment Manager will continue to be required to apply each Performance
Allocation (net of taxes) to acquire ordinary shares of the Company.
Distribution of Investment Proceeds
As explained in note 3.2 above, in addition, the Company and the Investment
Manager have agreed that, going forward, 20 per cent. of the Net Profits
attributable to each fully realised investment, net of taxes, withholdings or
reserves for taxes will, at the discretion of the Company, be available for
distribution to the Company's shareholders, whether by dividend or share
repurchases.
In accordance with the revised terms announced on 3 January 2020, but
effective 30 June 2019, no further carried interest will be payable until the
$138.4 million of realised and unrealised losses to date at 30 June 2022 are
made whole with future gains. The earned carried interest of $0.8 million at
30 June 2022 has been deferred and will expire in October 2023 if the
aforementioned losses are not made whole. Since REL has not yet met the
appropriate Cost Benchmark at 30 June 2022, $34.1 million in Performance
Allocation fees were not accrued in accordance with the terms of the current
agreement, which would have been accrued under the prior agreement.
4. Taxation
The taxation basis of the Company remains consistent with that disclosed in
the Financial Statements for the year ended 31 December 2021.
The Company has made an election to, and currently expects to conduct its
activities so as to be treated as a partnership for U.S. federal income tax
purposes. Therefore, the Company expects that it generally will not be liable
for U.S. federal income taxes. 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 income. Each of the Company's
Shareholders who are liable for U.S. taxes will take into account their
respective share of the Company's items of income, gain, loss and deduction in
computing its U.S. federal income tax liability as if such Shareholder had
earned such income directly, even if no cash distributions are made to the
Shareholder.
The Company is exempt from taxation in Guernsey under the provisions of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 2008 and is charged an annual
exemption fee of £1,200.
The Cayman Islands at present impose no taxes on profit, income, capital gains
or appreciations in value of the Partnership. There are also currently no
taxes imposed in the Cayman Islands by withholding or otherwise on the Company
as a limited partner of the Partnership on profit, income, capital gains or
appreciations in respect of its partnership interest nor any taxes on the
Company as a limited partner of the Partnership in the nature of estate duty,
inheritance or capital transfer tax.
Local taxes may apply at the jurisdictional level on profits arising in
operating entity investments. Further taxes may apply on distributions from
such operating entity investments. The company is structured, and has
structured its investments, to eliminate the incurrence of ECI by REL's
investors. Based upon the current commitments and investments held through REL
US Corp., the future U.S. tax liability on profits is expected to be in the
range of 21 to 27.5 per cent. (31 December 2021: 21 to 27.5 per cent.).
5. Fair value
IFRS 13 'Fair Value Measurement' requires disclosure of fair value measurement
by level. The level in the fair value hierarchy within which the financial
assets or financial liabilities are categorised is determined on the basis of
the lowest level input that is significant to the fair value measurement,
adjusted if necessary.
Financial assets and financial liabilities are classified in their entirety
into only one of the three levels:
• Level 1 - quoted prices (unadjusted) in active markets for identical
assets or liabilities;
• Level 2 - inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly (i.e. as
prices) or indirectly (i.e. derived from prices);
• Level 3 - inputs for the assets or liabilities that are not based on
observable market data (unobservable inputs).
The Company's only financial instrument carried at fair value is its
investment in the Partnership which has been classified within Level 3 as it
is derived using unobservable inputs. Amounts classified under Level 3 for the
period ended 30 June 2022, consisting of only the Company's investment in the
Partnership, were $715 million (31 December 2021: $674 million).
The fair value of all other financial instruments approximates to their
carrying value.
Transfers during the period
There have been no transfers between levels during the period ended 30 June
2022 and the year ended 31 December 2021. Any transfers between the levels
will be accounted for on the last day of each financial period. Due to the
nature of the investment in the Partnership, it is always expected to be
classified under Level 3.
Valuation methodology and process
The same valuation methodology and process was deployed at 30 June 2022 and 31
December 2021.
The Directors base the fair value of the investment in the Partnership on the
value of its limited partnership capital account received from the General
Partner, which is determined on the basis of the fair value of its assets and
liabilities, adjusted if necessary, to reflect liquidity, future commitments,
and other specific factors of the Partnership and Investment Manager. This is
based on the components within the Partnership, principally the value of the
Partnership's investments in addition to cash and short-term money market
fixed deposits. Any fluctuation in the value of the Partnership's investments
in addition to cash and short-term money market fixed deposits held will
directly impact on the value of the Company's investment in the Partnership.
The Partnership's investments are valued using the techniques described in the
Company's valuation policy. The Investment Manager's assessment of fair value
of investments held by the Partnership, through Investment Undertakings, is
determined in accordance with IPEV Valuation Guidelines. When valuing the
Partnership's investments, the Investment Manager reviews information provided
by the underlying investee companies and other business partners and applies
IPEV methodologies, to estimate a fair value as at the date of the Statement
of Financial Position, subject to Board approval. It is the opinion of the
Directors, that the IPEV valuation methodology used in deriving a fair value
is generally not different from the fair value requirements of IFRS 13. In the
event that there is a difference, the requirements of IFRS 13 override the
IPEV requirements.
The Investment Manager values the investments on a quarterly basis using
common industry valuation techniques, including comparable public market
valuation, comparable merger and acquisition transaction valuation and
discounted cash flow valuation. For early stage private investments,
Riverstone's investment due diligence process includes assumptions about
short-term financial results in determining the appropriate purchase price for
the investment. For the SPAC Sponsor investments, the Investment Manager
applies discounts to the closing price of the publicly traded shares for lack
of identified target, risk of unsuccessful closing of the business combination
and applicable lock-up periods post-closing. The techniques used in
determining the fair value of the Company's investments through the
Partnership are selected on an investment by investment basis so as to
maximise the use of market based observable inputs.
REL's valuation policy is compliant with both IFRS and IPEV Valuation
Guidelines and is applied consistently from period to period. As the Company's
investments are generally not publicly quoted, valuations require meaningful
judgement to establish a range of values and the ultimate value at which an
investment is realised may differ from its most recent valuation and the
difference may be significant.
For the period ended 30 June 2022, the valuations of the Company's
investments, through the Partnership, are detailed in the Investment Manager's
Report.
The Board reviews and considers the fair value of the Partnership's
investments arrived at by the Investment Manager before incorporating such
values into the fair value of the Partnership. The variety of valuation bases
adopted, quality of management information provided by the underlying investee
companies and the lack of liquid markets for the investments mean that there
are inherent difficulties in determining the fair value of these investments
and such difficulties cannot be eliminated. Therefore, the amounts realised on
the sale of investments may differ from the fair values reflected in these
unaudited interim condensed financial statements and the differences may be
significant.
Quantitative information about Level 3 fair value measurements as at 30 June
2022
Industry: Energy
Range
Fair value of Level 3 Investments (in thousands) Valuation technique(s) Unobservable input(s) Low ((1)) High((1)) Weighted Average ((1)) Sensitivity of the Fair value of Level 3
input to fair value of Investments affected by unobservable input ((3)) (in thousands)
Level 3 investments((2))
$417,621 Public comparables 2022E EV / EBITDA Multiple 2.0x 22.8x 7.8x 20 per cent. weighted average change in the input would result in 1 per cent. 248,088
change in the total fair value of Level 3 investments
2023E EV / EBITDA Multiple 1.3x 1.5x 1.4x 20 per cent. weighted average change in the input would result in 3 per cent. 282,501
change in the total fair value of Level 3 investments
2022E EV/Revenue Multiple((5)) 10.3x 15.6x 14.4x 20 per cent. weighted average change in the input would result in 1 per cent. 86,949
change in the total fair value of Level 3 investments
EV / 2022E Production Multiple ($/Boepd) ((5)) $25,500 $35,400 $28,100 10 per cent. weighted average change in the input would result in 1 per cent. 181,183
change in the total fair value of Level 3 investments
2P Reserve multiple ($/Boe) $3 $6 $3 10 per cent. weighted average change in the input would result in 1 per cent. 133,011
change in the total fair value of Level 3 investments
Transaction comparables Asset Value ($m/kW) $56 $182 $77 50 per cent. weighted average change in the input would result in 1 per cent. 149,490
change in the total fair value of Level 3 investments
2022 EV/EBITDA multiple 14.0x 28.0x 23.4x 30 per cent. weighted average change in the input would result in 1 per cent. 66,906
change in the total fair value of Level 3 investments
2023 EV/EBITDA multiple 8.5x 22.5x 17.9x 30 per cent. weighted average change in the input would result in 1 per cent. 66,906
change in the total fair value of Level 3 investments
Discounted cash flow Oil Price Curve ($/bbl)((4)) $75 $95 $76 30 per cent. weighted average change in the input would result in 7 per cent. 181,183
change in the total fair value of Level 3 investments
Gas Price Curve ($/mcfe)((4)) $4 $6 $4 50 per cent. weighted average change in the input would result in 6 per cent. 181,183
change in the total fair value of Level 3 investments
Discount Rate 30% 10% 27% +/-50 per cent. Weighted average change in the input would result in -/+1 per 149,490
cent. change in the total fair value of Level 3 investments
$72,035 Other((6))
$489,656 Total
((1)) Calculated based on fair values of the Partnership's Level 3
investments, which reflect oil and gas prices for the remainder of 2022 of
$100/bbl and $6/mcfe, respectively, and thereafter ranges of $75 - 95/bbl and
$4 - 6/mcfe, respectively.
((2)) Based on its professional experience and recent market conditions, the
Investment Manager has provided the Board with these weighted average change
in the inputs with a forecasted time period of 6 to 12 months.
((3)) The Partnership's Level 3 investments are valued using one or more of
the techniques which utilise one or more of the unobservable inputs, so the
amounts in the "Fair value of Level 3 investments" column will not aggregate
to the total fair value of the Partnership's Level 3 investments.
((4)) Discounted cash flow technique involves the use of a discount factor of
10 per cent.
((5)) As at 30 June 2022, the sensitivity of this unobservable input to the
total fair value of Level 3 investments was determined to be significant by
applying the same methodology that determined it to be significant as at 31
December 2021.
((6)) Includes $6.5 million of restricted marketable securities held by the
Partnership consisting of publicly-traded shares of Solid Power, Tritium and
DCRD, subject to discounts to the closing price of the publicly traded shares
during the period leading up to the announcement and closing of the business
combination, as well as applicable lock-up periods post-closing.
Quantitative information about Level 3 fair value measurements as at 31 December 2021
Industry: Energy
Fair value of Level 3
Range Investments
Fair value of Valuation technique(s) Unobservable input(s) Low ((1)) High ((1)) Sensitivity of the affected by unobservable input ((3)) (in thousands)
Level 3 Investments input to fair value of
(in thousands) Weighted Average ((1)) Level 3 investments((2))
$330,548 Public comparables 2022EV / EBITDA Multiple 1.0x 24.5x 7.5x 25 per cent. weighted average change in the input would result in 4 per cent. 310,548
change in the total fair value of Level 3 investments
2021 EV /Revenue Multiple((5)) 24.2x 27.9x 25.1x 87,402
10 per cent. weighted average change in the input would result in 1 per cent.
change in the total fair value of Level 3 investments
EV / 2021E Production Multiple ($/Boepd) $33,200 $41,100 $35,900 141,493
25 per cent. weighted average change in the input would result in 1 per cent.
change in the total fair value of Level 3 investments
EV / 2022E Production Multiple ($/Boepd)((5)) $28,200 $41,100 $32,600 141,493
10 per cent. weighted average change in the input would result in 1 per cent.
change in the total fair value of Level 3 investments
1P Reserve multiple ($/Boe) $6 $10 $8 25 per cent. weighted average change in the input would result in 1 per cent. 48,172
change in the total fair value of Level 3 investments
2P Reserve multiple ($/Boe) $4 $5 $4 25 per cent. weighted average change in the input would result in 3 per cent. 93,321
change in the total fair value of Level 3 investments
Transaction comparables Asset Value ($m/kW) $56 $182 $57 50 per cent. weighted average change in the input would result in 2 per cent. 101,653
change in the total fair value of Level 3 investments
Discounted cash flow Oil Price Curve ($/bbl)((4)) $61 $67 $63 35 per cent. weighted average change in the input would result in 10 per cent. 141,493
change in the total fair value of Level 3 investments
Gas Price Curve ($/mcfe)((4)) $3 $4 $3 35 per cent. weighted average change in the input would result in 11 per cent. 141,493
change in the total fair value of Level 3 investments
Discount Rate 30% 10% 30% +/-50 per cent. weighted average change in the input would result in -/+1 per 101,653
cent. change in the total fair value of Level 3 investments
$52,478 Other((6))
$383,026 Total
((1)) Calculated based on fair values of the Partnership's Level 3
investments.
((2)) Based on its professional experience and recent market conditions, the
Investment Manager has provided the Board with these weighted average change
in the inputs with a forecasted time period of 6 to 12 months.
((3)) The Partnership's Level 3 investments are valued using one or more of
the techniques which utilise one or more of the unobservable inputs, so the
amounts in the "Fair value of Level 3 investments" column will not aggregate
to the total fair value of the Partnership's Level 3 investments.
((4)) Discounted cash flow technique involves the use of a discount factor of
10 per cent.
((5)) As at 31 December 2021, the sensitivity of this unobservable input to
the total fair value of Level 3 investments was determined to be significant
by applying the same methodology that determined it to be significant as at 31
December 2020.
((6)) Includes $47 million of restricted marketable securities held by the
Partnership consisting of publicly-traded shares of Solid Power, DCRN/Tritium
and DCRD, subject to discounts to the closing price of the publicly traded
shares during the period leading up to the announcement and closing of the
business combination, as well as applicable lock-up periods post-closing.
The Board approves the valuations performed by the Investment Manager and
monitors the range of reasonably possible changes in significant unobservable
inputs on a regular basis with consultation from the Investment Manager. Using
its extensive industry experience, the Investment Manager provides the Board
with its determination of the reasonably possible changes in significant
unobservable inputs in the market conditions as of the period end.
The Directors have considered whether a discount or premium should be applied
to the net asset value of the Partnership. In view of the investment in the
Partnership and the nature of the Partnership's assets, no adjustment to the
net asset value of the Partnership has been deemed to be necessary.
6. Investment at fair value through profit or loss
The movement in fair value is derived from the fair value movements in the
underlying investments held by the Partnership, net of income and expenses of
the Partnership and its related Investment Undertakings, including any
Performance Allocation and applicable taxes.
30 June 31 December
2022
2021
$'000 $'000
Cost
Brought forward 1,094,090 1,149,917
Distribution from the Partnership (18,365) (55,827)
Carried forward 1,075,725 1,094,090
Fair value adjustment through profit or loss
Brought forward (419,651) (766,328)
Fair value movement during period/year - see Summary Income Statement below 58,746 346,677
Carried forward (360,905) (419,651)
Fair value at period/year end 714,820 674,439
Summary financial information for the Partnership's investments and its
related Investment Undertakings
30 June 31 December 2021
2022
Summary Balance Sheet $'000 $'000
Investments at fair value (net) 704,969 672,314
Cash and cash equivalents ((1)) 14,846 4,127
Management fee payable - see Note 7 (2,696) (2,463)
Other net (liabilities)/assets (2,299) 461
Fair value of REL's investment in the Partnership 714,820 674,439
((1)) These figures, together with the $51.0 million held at REL US Corp (31
December 2021: $94.4 million), comprise the $65.9 million cash held in the
Partnership (31 December 2021: $98.5 million).
30 June 31 December 2021
2022
Reconciliation of Partnership's investments at fair value $'000 $'000
Investments at fair value - Level 1 164,284 194,937
Investments at fair value - Level 3 - see Note 5 489,656 383,026
Investments at fair value 653,940 577,963
Cash and cash equivalents 51,029 94,351
Partnership's investments at fair value 704,969 672,314
1 January 2022 1 January 2021
to 30 June 2022 to 30 June 2021
Summary Income Statement $'000 $'000
Unrealised and realised gain on Partnership's investments (net) 66,702 204,906
Interest and other income 29 147
Management fee expense - see Note 7 (5,774) (3,941)
Other operating expenses (2,211) (759)
Portion of the operating profit for the period attributable to REL's 58,746 200,353
investment in the Partnership
1 January 2022 1 January 2021
to 30 June 2022 to 30 June 2021
Reconciliation of unrealised and realised gain/(loss) on Partnership's $'000 $'000
investments
Unrealised gain on investments (gross) 106,109 379,937
Realised loss on Partnership's investments (gross) (36,827) (174,996)
General Partner's Performance Allocation - see Note 7 - 50
Provision for taxation (2,580)
(85)
Unrealised and realised gain on Partnership's investments (net) 66,702 204,906
7. Related party transactions
Parties are considered to be related if one party has the ability to control
the other party or exercise significant influence over the party in making
financial or operational decisions.
Directors
The Company has five non-executive Directors (31 December 2021: five).
Directors' fees and expenses for the period ended 30 June 2022 amounted to
$341,749, (30 June 2021: $349,271), $none of which was outstanding at period
end (31 December 2021: Nil).
Partnership
In accordance with section 4.1(a) of the Partnership Agreement, the Company
received distributions in aggregate of $18 million (30 June 2021: $7.0
million) from the Partnership through the 6 month period to 30 June 2022. 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.
Investment Manager
For the provision of services under the Investment Management Agreement, the
Investment Manager is paid in cash out of the assets of the Partnership an
annual Management Fee equal to 1.5 per cent. per annum of the Company's Net
Asset Value (including cash). The fee is payable quarterly in arrears and each
payment is calculated using the quarterly Net Asset Value as at the relevant
half year end as further outlined on page 81 in the Financial Statements to 31
December 2021. During the period to 30 June 2022, the Partnership incurred
Management Fees of $5,773,552 (30 June 2021: $3,940,544) of which $2,696,192
remained outstanding as at the period end (31 December 2021: $2,463,262). In
addition, the Company and Partnership, in aggregate, reimbursed the Investment
Manager $1,024,264 in respect of amounts paid on their behalf for the period
(30 June 2021: $704,323), of which $460,361 related to legal and professional
fees of the Company and Partnership, $415,267 related to travel and other
operating expenses of the Investment Manager, and $148,636 related to
reimbursable expenses of the portfolio companies.
The circumstances in which the Company and the Investment Manager may
terminate the Investment Management Agreement are as follows:
Event Notice period Consequences of termination
By the Company if the Investment Manager is in material breach which has not 12 months The General Partner is entitled to receive a payment equal to four times the
been rectified quarterly Management Fee payable to the Investment Manager on the basis of the
Company's most recent Net Asset Value and an amount equal to the Performance
Allocation due on the Company's investments on the basis, at the Company's
option, of the latest quarterly valuation or the actual realisation value for
each investment.
By the Investment Manager if the Company is in material breach which has not 12 months The General Partner is entitled to receive a payment equal to twenty times the
been rectified quarterly Management Fee payable to the Investment Manager on the basis of the
Company's most recent Net Asset Value and an amount equal to the Performance
Allocation due on the Company's investments on the basis, at the General
Partner's option, of the latest quarterly valuation or the actual realisation
value for each investment.
By the Company if the Investment Manager becomes insolvent or resolves to wind Immediate No payment to be made to the Investment Manager or the General Partner.
up or if the Investment Manager commits an act of fraud or wilful default in
relation to the Company which results in material harm to the Company
The Investment Management Agreement cannot be terminated by either the Company
or the Investment Manager without cause.
Following the seventh anniversary of the Company's London listing on 29
October 2020, a discontinuation resolution was proposed and not passed,
therefore the Investment Management Agreement will continue in perpetuity
subject to the termination for cause provisions described above. However,
either the Board or Shareholders holding in aggregate at least 10 per cent. of
the Company's voting securities can call an EGM at any time to vote on the
liquidation of the Company (75 per cent. of the votes cast in favour required)
or run-off of its portfolio (50 per cent. of the votes cast in favour
required). Under both these scenarios, the Investment Manager would be
entitled to twenty times the most recent quarterly Management Fee.
General Partner
The General Partner makes all management decisions, other than investment
management decisions, in relation to the Partnership and controls all other
actions by the Partnership and is entitled to receive a Performance
Allocation, calculated and payable at the underlying investment holding
subsidiary level, equal to 20 per cent. of the gross realised profits (if any)
in respect of a disposal, in whole or in part, of any underlying asset of the
Company.
The General Partner is entitled to receive its Performance Allocation in cash,
all of which, after tax, Riverstone, through its affiliate RELCP, reinvests in
Ordinary Shares of the Company on the terms summarised in Part I and Part VIII
of the IPO Prospectus.
In accordance with the revised terms announced on 3 January 2020, but
effective 30 June 2019, no further carried interest will be payable until the
$138.4 million of realised and unrealised losses to date at 30 June 2022 are
made whole with future gains. The earned carried interest of $0.8 million at
30 June 2022 has been deferred and will expire in October 2023 if the
aforementioned losses are not made whole. Since REL has not yet met the
appropriate Cost Benchmark at 30 June 2022, $34.1 million in Performance
Allocation was not accrued in accordance with the terms of the current
agreement, which would have been accrued under the prior agreement.
Cornerstone Investors
Each of the Cornerstone Investors has acquired an indirect economic interest
in each of the General Partner and the Investment Manager depending on the
size of their commitment and the total issue size, up to an aggregate maximum
indirect economic interest of 20 per cent. in each, for nominal consideration.
These interests entitle the Cornerstone Investors to participate in the
economic returns generated by the General Partner, including from the
Performance Allocation, and the Investment Manager, which receives the
Management Fee.
8. Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of
Directors, as a whole. The key measure of performance used by the Board to
assess the Company's performance and to allocate resources is the Total Return
on the Company's Net Asset Value, as calculated under IFRS, and therefore no
reconciliation is required between the measure of profit or loss used by the
Board and that contained in the Financial Statements and Interim Report.
For management purposes, the Company is organised into one main operating
segment, which invests in one limited partnership.
All of the Company's income is derived from within Guernsey, United States and
the Cayman Islands.
All of the Company's non-current assets are located in the Cayman Islands.
Due to the Company's nature, it has no customers.
9. Earnings/Loss per Share and Net Asset Value per Share
Earnings/Loss per Share
1 January 2022 to 1 January 2021 to
30 June 2022
30 June 2021
Profit for the period ($'000) 55,340 198,127
Weighted average numbers of Shares in issue 53,629,141 62,641,626
EPS (cents) 103.19 316.29
The Earnings per Share is based on the profit or loss of the Company for the
period and on the weighted average number of Shares the Company had in issue
for the period.
There are no dilutive Shares in issue as at 30 June 2022 (30 June 2021: none).
Net Asset Value per Share
30 June 31 December 30 June
2022
2021
2021
NAV ($'000) 718,985 682,041 581,788
Number of Shares in issue 52,714,287 54,937,599 61,496,726
Net Asset Value per Share ($) 13.64 12.41 9.46
Net Asset Value per Share (£) 11.25 9.19 6.83
Discount to NAV (per cent.) 40.84 49.40 49.37
The Net Asset Value per Share is arrived at by dividing the net assets as at
the date of the Condensed Statement of Financial Position by the number of
Ordinary Shares in issue at that date. The Discount to NAV is arrived at by
calculating the percentage discount of the Company's Net Asset Value per Share
to the Company's closing Share price as at the date of the Condensed Statement
of Financial Position.
10. Post-Period End Updates
Subsequent to period end, there have been no material updates for the Company.
Glossary of Capitalised Defined Terms
"1P reserve" means proven reserves;
"2P reserve" means proven and probable reserves;
"Administrator" means Ocorian Administration (Guernsey) Limited;
"Admission" means admission, on 29 October 2013, to the Official List and/or
admission to trading on the London Stock Exchange, as the context may require,
of the Ordinary Shares becoming effective in accordance with the Listing Rules
and/or the LSE Admission Standards as the context may require;
"AEOI Rules" means Automatic Exchange of Information;
"AIC" means the Association of Investment Companies;
"AIC Code" means the AIC Code of Corporate Governance;
"AIF" means Alternative Investment Funds;
"AIFM" means AIF Manager;
"AIFMD" means EU Alternative Investment Fund Managers Directive (No.
2011/61EU);
"Aleph Midstream" means Aleph Midstream S.A;
"Annual General Meeting" or "AGM" means the general meeting of the Company;
"Annual Report and Financial Statements" means the annual publication of the
Company provided to the Shareholders to describe their operations and
financial conditions, together with their Financial Statements;
"Anuvia" means Anuvia Plant Nutrients Inc.;
"Articles of Incorporation" or "Articles" means the articles of incorporation
of the Company, as amended from time to time;
"Audit Committee" means a formal committee of the Board with defined terms of
reference;
"bbl" means barrel of crude oil;
"Board" or "Directors" means the directors of the Company;
"boepd" means barrels of equivalent oil per day;
"bopd" means barrels of oil per day;
"bw/d" means barrels of water per day;
"CAD" or "C$" means Canadian dollar;
"CanEra III" means CanEra Inc.;
"CAR" means Capital Adequacy Ratio;
"Carrier II" means Carrier Energy Partners II LLC;
"Castex 2005" means Castex Energy 2005 LLC;
"Castex 2014" means Castex Energy 2014 LLC;
"Centennial" means Centennial Resource Development, Inc.;
"CNOR" means the Canadian Non-Operated Resources LP;
"Companies Law" means the Companies (Guernsey) Law, 2008, (as amended);
"Company" or "REL" means Riverstone Energy Limited;
"Company Secretary" means Ocorian Administration (Guernsey) Limited;
"Cornerstone Investors" means those investors who have acquired Ordinary
Shares and acquired a minority economic interest in the General Partner and in
the Investment Manager, being AKRC Investments LLC, Casita, L.P., KFI and
McNair;
"Corporate Brokers" means JP Morgan Cazenove and Numis Securities Limited;
"C Corporations" means a C Corporation, under U.S. federal income tax law,
being a corporation that is taxed separately from its owners;
"CRAR" means Capital to Risk (Weighted) Assets Ratio;
"CRS" means Common Reporting Standard;
"DCRB" means Decarbonization Plus Acquisition Corporation;
"DCRC" means Decarbonization Plus Acquisition Corporation III;
"DCRN" means Decarbonization Plus Acquisition Corporation II;
"DCRD" means Decarbonization Plus Acquisition Corporation IV;
"DEA" means Deutsche Erdoel AG, an international independent exploration and
production company headquartered in Germany;
"Depositary" means Ocorian Depositary Company (UK) Limited;
"Disclosure Guidance and Transparency Rules" or "DTRs" mean the disclosure
guidance published by the FCA and the transparency rules made by the FCA under
section 73A of FSMA;
"Discontinuation Resolution" means a special resolution that was proposed and
not passed by the Company's Shareholders to discontinue the Company within six
weeks of the seventh anniversary of the Company's first Admission if the
trading price has not met the Target Price, and the Invested Capital Target
Return has not been met;
"Discount to NAV" means the situation where the Ordinary shares of the Company
are trading at a price lower than the Company's Net Asset Value;
"E&P" means exploration and production;
"Eagle II" means Eagle Energy Exploration, LLC;
"Earnings per Share" or "EPS" means the Earnings per Ordinary Share and is
expressed in U.S. dollars;
"EBITDA" means earnings before interest, taxes, depreciation and amortisation;
"ECI" means effectively connected income, which refers to all income from
sources within the United States connected with the conduct of a trade or
business;
"ECL" means expected credit loss;
"EEA" means European Economic Area;
"EGM" means an Extraordinary General Meeting of the Company;
"EIA" means the U.S. Energy Information Administration;
"Enviva" means Enviva Holdings, L.P.;
"EU" means the European Union;
"EV" means enterprise value;
"FATCA" means Foreign Account Tax Compliance Act;
"FCA" means the UK Financial Conduct Authority (or its successor bodies);
"Fieldwood" means Fieldwood Energy LLC;
"Financial Statements" means the audited financial statements of the Company,
including the Statement of Financial Position, the Statement of Comprehensive
Income, the Statement of Cash Flows, the Statement of Changes in Equity and
associated notes;
"FRC" means Financial Reporting Council;
"FreeWire" means FreeWire Technologies, Inc.;
"Fund V" means Riverstone Global Energy & Power Fund V, L.P.;
"Fund VI" means Riverstone Global Energy & Power Fund VI, L.P.;
"FVTPL" means Fair Value through the profit or loss;
"General Partner" means REL IP General Partner LP (acting through its general
partner, REL IP General Partner Limited), the general partner of the
Partnership and a member of the Riverstone group;
"GFSC" or "Commission" means the Guernsey Financial Services Commission;
"GFSC Code" means the GFSC Finance Sector Code of Corporate Governance;
"GHG" means greenhouse gases;
"GoodLeap" means GoodLeap, LLC;
"GoM" means the Gulf of Mexico;
"Gross IRR" means an aggregate, annual, compound, gross internal rate of
return on investments. Gross IRR does not reflect expenses to be borne by the
relevant investment vehicle or its investors including, without limitation,
carried interest, management fees, taxes and organisational, partnership or
transaction expenses;
"Gross MOIC" means gross multiple of invested capital;
"Group14" means Group14 Technologies Inc.;
"Hammerhead" means Hammerhead Resources Inc.;
"Hunt" means Hunt REL Holdings LLC together with various members of Ray L.
Hunt's family and their
related entities;
"Hyzon" means Hyzon Motors, Inc.;
"IAS" means international accounting standards as issued by the Board of the
International Accounting Standards Committee;
"IFRS" means the International Financial Reporting Standards, being the
principles-based accounting standards, interpretations and the framework by
that name issued by the International Accounting Standards Board, as adopted
by the EU;
"ILX III" means ILX Holdings III LLC;
"Infinitum Electric" means Infinitum Electric, Inc.;
"IMO" means the International Maritime Organization (IMO), an agency of the
United Nations which has been formed to promote maritime safety;
"Infinitum" means Infinitum Electric Inc.
"Interim Report" means the Company's half yearly report and unaudited interim
condensed financial statements for the period ended 30 June;
"Investment Manager" means RIL (effective through 17 August 2020) and RIGL
(effective after 17 August 2020) which are both majority-owned and controlled
by Riverstone;
"Investment Management Agreement" means the investment management agreement
dated 24 September 2013 between RIL, the Company and the Partnership (acting
through its General Partner) under which RIL is appointed as the Investment
Manager of both the Company and the Partnership (effective through 17 August
2020), the 2(nd) Amended & Restated investment management agreement
effective after 17 August 2020 between RIGL, the Company and the Partnership
(acting through its General Partner) under which RIGL is appointed as the
Investment Manager of both the Company and the Partnership and the 3(rd)
Amended & Restatement investment management agreement effective 9 December
2020 between RIGL, the Company and the Partnership (acting through its General
Partner);
"Invested Capital Target Return" means, as defined in the Articles, the Gross
IRR of 8 per cent. on the portion of the proceeds of the Issue (as such term
is defined in the Company's Prospectus) that have been invested or committed
to an investment ("Invested Capital") in respect of the period from the dates
of investment or commitment of that Invested Capital (being the dates from
which a Management Fee has been paid in respect of that Invested Capital) to
the seventh anniversary of the first Admission, calculated by reference to the
prevailing U.S. dollar valuations (as of the seventh anniversary of the first
Admission (or earlier disposal)) of the investment acquired with that Invested
Capital and sales proceeds of investments that have been disposed of prior to
such seventh anniversary and taking account of any distributions made on those
investments prior to the seventh anniversary of the first Admission;
"Investment Undertaking" means the Partnership, any intermediate holding or
investing entities that the Company or the Partnership may establish from time
to time for the purposes of efficient portfolio management and to assist with
tax planning generally and any subsidiary undertaking of the Company or the
Partnership from time to time;
"IPEV Valuation Guidelines" means the International Private Equity and Venture
Capital Valuation Guidelines;
"IPO" means the initial public offering of shares by a private company to the
public;
"IRS" means the Internal Revenue Service, the revenue service of the U.S.
federal government;
"ISA" means International Standards on Auditing (UK and Ireland);
"ISAE 3402" means International Standard on Assurance Engagements 3402,
"Assurance Reports on Controls at a Service Organisation";
"ISIN" means an International Securities Identification Number;
"KFI" means Moore Capital Management, formerly known as Kendall Family
Investments, LLC, a cornerstone investor in the Company;
"Liberty II" means Liberty Resources II LLC;
"Listing Rules" means the listing rules made by the UK Listing Authority under
section 73A Financial Services and Markets Act 2000;
"Loanpal" means Loanpal, LLC;
"London Stock Exchange" or "LSE" means London Stock Exchange Plc;
"LSE Admission Standards" means the rules issued by the London Stock Exchange
in relation to the admission to trading of, and continuing requirements for,
securities admitted to the Official List;
"M&A" means mergers and acquisitions;
"Management Engagement Committee" means a formal committee of the Board with
defined terms of reference;
"Management Fee" means the management fee to which RIL is entitled;
"mcfe" means thousand cubic feet equivalent (natural gas);
"McNair" means RCM Financial Services, L.P. for the purposes of acquiring
Ordinary Shares and Palmetto for the purposes of acquiring a minority economic
interest in the General Partner and the Investment Manager;
"Meritage III" means Meritage Midstream Services III, L.P.;
"mmboe" means million barrels of oil equivalent;
"mmcfepd" means million cubic feet equivalent (natural gas) per day;
"NASDAQ" means National Association of Securities Dealers Automated Quotations
Stock Market;
"NAV per Share" means the Net Asset Value per Ordinary Share;
"Net Asset Value" or "NAV" means the value of the assets of the Company less
its liabilities as calculated in accordance with the Company's valuation
policy and expressed in U.S. dollars;
"Net IRR" means an aggregate, annual, compound, gross internal rate of return
on investments, net of taxes and carried interest on gross profit;
"Net MOIC" means gross multiple of invested capital net of taxes and carried
interest on gross profit;
"Net Profits" means the proceeds received from each realised investment (after
the expenses related to its disposal) minus the acquisition price of that
realised investment;
"Nomination Committee" means a formal committee of the Board with defined
terms of reference;
"NURS" means non-UCITS retail schemes;
"NYSE" means The New York Stock Exchange;
"Official List" is the list maintained by the Financial Conduct Authority
(acting in its capacity as the UK Listing Authority) in accordance with
Section 74(1) of the Financial Services and Markets Act 2000;
"Onyx Power" means Onyx Strategic Investment Management I BV;
"OPEC" means Organisation of the Petroleum Exporting Countries;
"Ordinary Shares" means redeemable ordinary shares of no par value in the
capital of the Company issued and designated as "Ordinary Shares" and having
the rights, restrictions and entitlements set out in the Articles;
"Origo" means Origo Exploration Holding AS;
"Other Riverstone Funds" means other Riverstone-sponsored, controlled or
managed entities, including Fund V/VI, which are or may in the future be
managed or advised by the Investment Manager or one or more of its affiliates,
excluding the Partnership;
"Partnership" or "RELIP" means Riverstone Energy Investment Partnership, LP,
the Investment Undertaking in which the Company is the sole limited partner;
"Partnership Agreement" means the partnership agreement in respect of the
Partnership between inter alios the Company as the sole limited partner and
the General Partner as the sole general partner dated 23 September 2013;
"Performance Allocation" means the Performance Allocation to which the General
Partner is entitled;
"PIPE" means private investment in public entity;
"Placing and Open Offer" means the issuance of 8,448,006 new Ordinary Shares
at £8.00 per Ordinary Share on 11 December 2015;
"POI Law" means the Protection of Investors (Bailiwick of Guernsey) Law, 1987,
as amended;
"Private Riverstone Funds" means Fund V and all other private multi-investor,
multi-investment funds that are launched after Admission and are managed or
advised by the Investment Manager (or one or more of its affiliates) and
excludes Riverstone employee co-investment vehicles and any Riverstone managed
or advised private co-investment vehicles that invest alongside either Fund V
or any multi-investor multi-investment funds that the Investment Manager (or
one or more of its affiliates) launches after Admission;
"Prospectuses" means the prospectus published on 24 September 2013 by the
Company in connection with the IPO of Ordinary Shares and further prospectus
published on 23 November 2015;
"PRT" means Riverstone Performance Review Team;
"PSA" means a public service announcement;
"Qualifying Investments" means all investments in which Private Riverstone
Funds participate which are consistent with the Company's investment objective
where the aggregate equity investment in each such investment (including
equity committed for future investment) available to the relevant Private
Riverstone Fund and the Company (and other co-investees, if any, procured by
the Investment Manager or its affiliates) is $100 million or greater, but
excluding any investments made by Private Riverstone Funds where both (a) a
majority of the Company's independent directors and (b) the Investment Manager
have agreed that the Company should not participate;
"RCO" means Riverstone Credit Opportunities, L.P.;
"RELCP" means Riverstone Energy Limited Capital Partners, LP (acting by its
general partner Riverstone Holdings II (Cayman) Ltd.) a Cayman exempted
limited partnership controlled by affiliates of Riverstone;
"Ridgebury H3" means Ridgebury H3, LLC;
"RIGL" means RIGL Holdings, LP;
"RIL" means Riverstone International Limited;
"Riverstone" means Riverstone Holdings LLC and its affiliated entities (other
than the Investment Manager and the General Partner), as the context may
require;
"Rock Oil" means Rock Oil Holdings, LLC;
"SaaS" means Software as a Service;
"S&P Index" means the Standard & Poor's 500 Index;
"S&P Oil & Gas E&P Index" means the Standard & Poor's Oil
& Gas Exploration & Production Select Industry Index;
"SCOOP" means South Central Oklahoma Oil Province;
"SEC" means the U.S. Securities and Exchange Commission;
"Sierra" means Sierra Oil and Gas Holdings, L.P.;
"SIFI" means Systemically Important Financial Institutions;
"Shareholder" means the holder of one or more Ordinary Shares;
"Solid Power" means Solid Power, Inc.;
"SPAC" means special purpose acquisition company;
"SPPI" means solely payments of principal and interest;
"Standing Committee" means a formal committee of the Board with defined terms
of reference;
"Stewardship Code" means the UK Stewardship Code;
"Target Price" means, as defined in the Articles, £15.00, subject to (a)
downward adjustment in respect of the amount of all dividends and other
distributions, stock splits and equity issuances below the prevailing NAV per
Ordinary Share made following the first Admission and (b) upward adjustment to
take account of any share consolidations made following the first Admission;
"Tender Offer" means up to £55,000,000 in value of Ordinary Shares made by
the Company in 2018;
"Three Rivers III" means Three Rivers Natural Resources Holdings III LLC;
"Total Return on the Company's Net Asset Value" means the capital appreciation
of the Company's Net Asset Value plus the income received from the Company in
the form of dividends;
"T-REX Group" means T-REX Group, Inc.;
"TRIF" means Total Recordable Incident Frequency;
"Tritium" means Tritium DCFC Limited;
"TSX" means Toronto Stock Exchange;
"UCITS" means undertakings for collective investment in transferable
securities;
"United States Bankruptcy Code" means the source of bankruptcy law in the
United States Code;
"United States Code" means the consolidation and codification by subject
matter of the general and permanent laws of the United States;
"UK Code" means The UK Corporate Governance Code 2018, issued by the FRC;
"UNPRI" means UN-supported Principles of Responsible Investment;
"UK" or "United Kingdom" means the United Kingdom of Great Britain and
Northern Ireland;
"UK Listing Authority" or "UKLA" means the Financial Conduct Authority;
"U.S." or "United States" means the United States of America, its territories
and possessions, any state of the United States and the District of Columbia;
"US GAAP" means the accounting principles generally accepted in the United
States;
"WTI" means West Texas Intermediate which is a grade of crude oil used as a
benchmark in oil pricing;
"£" or "Pounds Sterling" or "Sterling" means British pound sterling and
"pence" means British pence; and
"$" means United States dollars and "cents" means United States cents.
DIRECTORS AND GENERAL INFORMATION
Directors Administrator and Company Secretary English solicitors to the Company
Richard Hayden (Chairman) Ocorian Administration (Guernsey) Limited Hogan Lovells International LLP
Atlantic House
Peter Barker PO Box 286
Holborn Viaduct
London
Patrick Firth Floor 2
EC1A 2FG
Jeremy Thompson Trafalgar Court
United Kingdom
Claire Whittet Les Banques
St Peter Port
Guernsey advocates to the Company
Audit Committee Guernsey
Carey Olsen (Guernsey) LLP
Patrick Firth (Chairman) GY1 4LY
Carey House
Peter Barker Channel Islands
PO Box 98
Richard Hayden
Les Banques
Jeremy Thompson Registered office
St Peter Port
Claire Whittet PO Box 286
Guernsey
Floor 2
GY1 4BZ
Management Engagement Committee Trafalgar Court
Channel Islands
Claire Whittet (Chair) Les Banques
Peter Barker St Peter Port
U.S. legal advisors to the Company
Patrick Firth Guernsey
Vinson & Elkins LLP
Richard Hayden GY1 4LY
1001 Fannin Street
Jeremy Thompson Channel Islands
Suite 2500
Houston, Texas
Nomination Committee Registrar
TX 77002
Richard Hayden (Chairman until 24 May 2022) Link Asset Services
United States of America
Jeremy Thompson (Chairman effective 24 May 2022) 65 Gresham Street
Peter Barker London
Independent auditor
Patrick Firth EC2V 7NQ
Ernst & Young LLP
United Kingdom
PO Box 9, Royal Chambers
Claire Whittet
St Julian's Avenue
Principal banker and custodian
St Peter Port
Investment Manager Barclays Bank PLC
Guernsey
RIGL Holdings, LP PO Box 41
Le Marchant House GY1 4AF
190 Elgin Avenue
Le Truchot Channel Islands
George Town
St Peter Port
Guernsey
Grand Cayman
GY1 3BE
Corporate Brokers
KY1-9005 Channel Islands
JP Morgan Cazenove
Cayman Islands
25 Bank Street
Canary Wharf
Investment Manager's Performance Review Team
London
Pierre Lapeyre
E15 5JP
David Leuschen
United Kingdom
Baran Tekkora
Robert Tichio
Numis Securities Limited
The London Stock Exchange Building
Website: www.RiverstoneREL.com
10 Paternoster Square
ISIN: GG00BBHXCL35
London
Ticker: RSE
EC4M 7LT
United Kingdom
SWISS SUPPLEMENT
ADDITIONAL INFORMATION FOR INVESTORS IN SWITZERLAND
This Swiss Supplement is supplemental to, forms part of and should be read in
conjunction with the Interim Report and Unaudited Interim Condensed Financial
Statements ended 30 June 2022 for RIVERSTONE ENERGY LIMITED (the "Fund").
Effective from 20th July 2015, the Fund had appointed Société Générale as
Swiss Representative and Paying Agent. The current Prospectus, the Memorandum
and Articles of Association and the annual report of the Fund can be obtained
free of charge from the representative in Switzerland, Société Générale,
Paris, Zurich Branch, Talacker 50, P.O. Box 5070, CH-8021 Zurich. The paying
agent of the Fund in Switzerland is Société Générale, Paris, Zurich
Branch, Talacker 50, P.O. Box 5070, CH-8021 Zurich. The Company may offer
Shares only to qualified investors in Switzerland. In respect of the Shares
distributed in and from Switzerland, the place of performance and jurisdiction
is the registered office of the Swiss Representative.
Cautionary Statement
The Chairman's Statement, the Investment Manager's Report and the Report of
the Directors have been prepared solely to provide additional information for
shareholders to assess the Company's strategies and the potential for those
strategies to succeed. These should not be relied on by any other party or for
any other purpose.
The Chairman's Statement, Investment Manager's Report and the Report of the
Directors may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or comparable
terminology.
These forward-looking statements include all matters that are not historical
facts. They appear in a number of places throughout this document and include
statements regarding the intentions, beliefs or current expectations of the
Directors and the Investment Adviser, concerning, amongst other things, the
investment objectives and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity, prospects,
and distribution policy of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future. Forward-looking statements are not guarantees of future
performance.
The Company's actual investment performance, results of operations, financial
condition, liquidity, distribution policy and the development of its financing
strategies may differ materially from the impression created by the
forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors and the
Investment Manager expressly disclaim any obligations to update or revise any
forward-looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based.
Riverstone Energy Limited
PO Box 286, Floor 2,
Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 4LY, Channel
Islands.
T 44 (0) 1481 742742
F 44 (0) 1481 742698
Further information available online:
www.RiverstoneREL.com (http://www.RiverstoneREL.com)
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