REG - Riverstone Energy Ld - Results for the half year ended 30 June 2022
17/08/2022 07:00
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RNS Number : 2437W Riverstone Energy Limited 17 August 2022
Riverstone Energy Limited
Results for the half year ended 30 June 2022
London, UK (17 August 2022) - Riverstone Energy Limited ("REL" or the
"Company") announces its Half Year Results for the 6-month period from 1
January 2022 to 30 June 2022 (the "Period").
Summary Performance
30 June 2022
NAV $719 million 1 (£593 million) 2
NAV per share $13.64 / £11.25(2)
Profit/(loss) for Period ended $55.34 million
Basic profit/(loss) per share for Period ended 103.19 cents
Total liquidity (cash and public portfolio) $243 million (£200 million)(2)
Market capitalisation $425 million (£351 million)(2)
Share price $8.07 / £6.66(2)
Highlights
§ As of 30 June 2022, REL had a NAV per share of $13.64 (£11.25),
representing an increase in USD and GBP of 10 and 22 per cent., respectively,
compared to the 31 December 2021 NAV.
§ Onyx, Hammerhead and Centennial were the largest drivers of REL's NAV
improvement over the Period.
§ During the half year ended 30 June 2022, the Company invested $74 million
in five new decarbonisation investments, bringing the total invested in this
area to $189 million, which, in aggregate, were valued at $246 million, or
1.3x Gross MOIC, at 30 June 2022.
§ Total invested capital during the Period of $74 million: Anuvia Plant
Nutrients ($20 million), T-REX Group ($17.5 million), Infinitum Electric
($17.5 million), Tritium DCFC ($15 million) and Group14 Technologies ($4.0
million).
§ Total net realisations and distributions during the Period of $67.3
million: Pipestone ($41.7 million), Centennial ($22.2 million), Meritage III
($1.7 million), and an aggregate of $1.7 million from ILX III, GoodLeap and
Rock Oil.
§ REL finished the Period with a cash balance of $72 million and remaining
potential unfunded commitments of $10 million 3 .
§Since the initial announcement of the Share Buyback Programme on 1 May 2020,
the Company has bought back a total of 27,182,444 ordinary shares at an
average price of approximately £3.70 per ordinary share, which has
contributed to the share price increase of ~203 per cent. from £2.20 to
£6.66 over the period to 30 June 2022.
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.
Based on the significant improvement in the performance of REL since the
aforementioned announcement, and the outlook for further energy transition
investment opportunities from the Investment Manager, the Company's
independent Directors 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
As highlighted in the 2021 Annual Report, Peter Barker, Patrick Firth and
Richard Hayden are each reaching their ninth year as Non-Executive Directors
and intend to retire from the Board in advance of the Company's Annual General
Meeting in 2023. The Board has retained major search consultants and will be
taking into account current guidelines when making the
appointments. Additionally, the Board is planning for a period of overlap for
the new and retiring Directors which will allow for an orderly transition in
due course.
Share Buyback Programme
Since the Company's announcement on 14 February 2022 of the authorised
increase of £46 million for the share buyback programme, 2,223,312 ordinary
shares have been bought back at a total cost of approximately £14.5 million
($18.4 million) at an average share price of approximately £6.54 ($8.27). 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.
Investment Manager Outlook
§ REL's $72 million aggregate cash balance at 30 June 2022 makes the Company
well positioned to both fund the capital needs of the portfolio and make new
investments.
§ Geopolitical tension and consequent fuel supply insecurity driving energy
commodity volatility has underscored our collective need to accelerate the
energy transition. REL's portfolio is well-positioned to capitalise on market
volatility in the legacy commodity-linked portfolio as well as on new
opportunities in the cleantech and decarbonisation space.
§ The Investment Manager believes that the current market environment is
generating attractive risk-reward investment opportunities in the energy
transition and decarbonisation space. While the Investment Manager continues
to pursue energy transition and decarbonisation assets, it also remains
focused on managing liquidity and operational efficiency at REL's existing
legacy portfolio companies.
Richard Hayden, Chairman of Riverstone Energy Limited, commented:
"Alongside a recovery in demand for oil and increased post-pandemic economic
activity, 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 exacerbating already tight supply conditions.
This has only enhanced the impetus for investment into the energy transition,
which the Investment Manager is well-positioned to achieved. In addition to
executing several decarbonisation transactions in the first half of 2022, REL
was able to allocate another £46.0 million to repurchase up to 14.99 per
cent. of shares outstanding. In the next half of the year, REL will continue
to work with the Investment Manager to further contribute to decarbonisation
efforts across the globe to create value for our Shareholders."
David M. Leuschen and Pierre F. Lapeyre Jr., Co-Founders of Riverstone, added:
"Riverstone's focus rests on facilitating both a fair and equitable global
energy transition and creating value for shareholders. We continue to work
closely with portfolio companies to navigate shifting market dynamics and
volatility with discipline. In addition to four decarbonisation investments in
the first half of the year, REL fully exited its position in Pipestone Energy
Corp., a Calgary-based oil and gas exploration company for CAD$53 million. We
were also pleased to assist Centennial Development in navigating its business
combination with Colgate Energy to create the largest pure-play E&P in the
Delaware Basin as part of our continued approach to maximise value of REL's
conventional investments to support future decarbonisation investment
opportunities."
- Ends -
Riverstone Energy Limited's 2022 Interim Report is available to view at:
www.RiverstoneREL.com (http://www.RiverstoneREL.com) .
2Q22 Quarterly Portfolio Valuation
Previously, on 29 July 2022, REL announced its quarterly portfolio summary as
of 30 June 2022, inclusive of updated quarterly unaudited fair market
valuations:
Current Portfolio - Conventional
Investment (Public/Private) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 31 Mar 2022 30 Jun 2022
Capital ($mm) Capital ($mm) 4 ($mm) 5 Gross MOIC(5) Gross MOIC(5)
Centennial 6 (Public) 268 268 194 75 269 1.10x 1.00x
Hammerhead Resources (Private) 307 295 23 133 156 0.50x 0.53x
Onyx (Private) 66 60 - 149 149 2.50x 2.50x
Carrier II (Private) 133 110 29 48 77 0.70x 0.70x
Total Current Portfolio - Conventional - Public8 $268 $268 $194 $75 $269 1.10x 1.00x
Total Current Portfolio - Conventional - Private8 $507 $465 $52 $330 $382 0.80x 0.82x
Current Portfolio - Decarbonisation
Investment (Public/Private) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 31 Mar 2022 Gross MOIC(5) 30 Jun 2022 Gross MOIC(5)
Capital ($mm) Capital ($mm)(4) ($mm)(5)
GoodLeap (formerly Loanpal) (Private) 25 25 2 67 69 2.75x 2.75x
Solid Power6 (Public) 48 48 - 39 39 1.29x 0.82x
Enviva6 (Public) 22 18 - 37 37 2.79x 2.03x
FreeWire (Private) 10 10 - 20 20 2.17x 2.00x
Anuvia Plant Nutrients 20 20 - 20 20 1.00x 1.00x
(Private)
T-REX Group (Private) 18 18 - 18 18 1.00x 1.00x
Infinitum 18 18 - 18 18 1.00x 1.00x
(Private)
Tritium DCFC6 16 16 - 17 17 1.78x 1.07x
(Public)
Group14 (Private) 4 4 - 4 4 n/a 1.00x
Hyzon Motors6 (Public) 10 10 - 3 3 0.64x 0.29x
Ionic I & II (Samsung Ventures) 3 3 - 3 3 1.00x 1.00x
(Private)
DCRD6(, 7 ) (Public) 1 1 - 1 1 1.00x 1.00x
Total Current Portfolio - Decarbonisation - Public 8 $96 $92 - $96 $96 1.59x 1.04x
Total Current Portfolio - Decarbonisation - Private8 $97 $97 $2 $149 $151 1.60x 1.56x
Cash and Cash Equivalents $72
Total Liquidity (Cash and Cash Equivalents & Public Portfolio) $243
Total Market Capitalisation $425
Realisations
Investment (Initial Investment Date) Gross Committed Capital ($mm) Invested Gross Realised Gross Unrealised Value Gross Realised Capital & Unrealised Value ($mm) 31 Mar 2022 Gross MOIC(5) 30 Jun 2022
Capital ($mm) Capital ($mm)(4) ($mm)(5) Gross MOIC(5)
Rock Oil 9 (12 Mar 2014) 114 114 233 4 237 2.06x 2.07x
Three Rivers III (7 Apr 2015) 94 94 204 - 204 2.17x 2.17x
ILX III (8 Oct 2015) 179 179 172 - 172 0.96x 0.96x
Meritage III 10 (17 Apr 2015) 40 40 87 - 87 2.20x 2.20x
RCO 11 (2 Feb 2015) 80 80 80 - 80 0.99x 0.99x
Pipestone Energy (formerly CNOR) (29 Aug 2014) 90 90 58 - 58 0.64x 0.64x
Sierra (24 Sept 2014) 18 18 38 - 38 2.06x 2.06x
Aleph (9 Jul 2019) 23 23 23 - 23 1.00x 1.00x
Ridgebury 18 18 22 - 22 1.22x 1.22x
(19 Feb 2019)
Castex 2014 52 52 14 - 14 0.27x 0.27x
(3 Sep 2014)
Total Realisations8 $709 $709 $932 $4 $936 1.32x 1.32x
Withdrawn Commitments and Impairment 12 350 350 9 - 9 0.02x 0.02x
Total Investments $2,026 $1,980 $1,188 $654 $1,842 0.97x 0.93x
Total Investments & Cash and Cash Equivalents $726
Draft Unaudited Net Asset Value $719
Total Shares Repurchased to-date 27,182,444 at average price per share of £3.70 ($4.86)
Current Shares Outstanding 52,714,287
About Riverstone Energy Limited:
REL is a closed-ended investment company which invests in the energy industry
that has since 2020 been exclusively focused on pursuing and has committed
$171 million to a global strategy across decarbonisation sectors presented by
Riverstone's investment platform. REL's ordinary shares are listed on the
London Stock Exchange, trading under the symbol RSE. REL has 19 active
investments spanning decarbonisation, oil and gas, renewable energy and power
in the Continental U.S., Western Canada, Gulf of Mexico and Europe.
For further details, see www.RiverstoneREL.com (http://www.RiverstoneREL.com)
Neither the contents of Riverstone Energy Limited's website nor the contents
of any website accessible from hyperlinks on the websites (or any other
website) is incorporated into, or forms part of, this announcement.
Media Contacts
For Riverstone Energy Limited:
Josh Prentice
+44 20 3206 6300
Note:
The Investment Manager is charged with proposing the valuation of the assets
held by REL through the Riverstone Energy Investment Partnership, LP
("Partnership"). The Partnership has directed that securities and instruments
be valued at their fair value. REL's valuation policy follows IFRS and IPEV
Valuation Guidelines. The Investment Manager values each underlying investment
in accordance with the Riverstone valuation policy, the IFRS accounting
standards and IPEV Valuation Guidelines. The Investment Manager has applied
Riverstone's valuation policy consistently quarter to quarter since inception.
The value of REL's portion of that investment is derived by multiplying its
ownership percentage by the value of the underlying investment. If there is
any divergence between the Riverstone valuation policy and REL's valuation
policy, the Partnership's proportion of the total holding will follow REL's
valuation policy. There were no valuation adjustments recorded by REL as a
result of differences in IFRS and U.S. Generally Accepted Accounting Policies
for the period ended 30 June 2022 or in any period to date. Valuations of
REL's investments through the Partnership are determined by the Investment
Manager and disclosed quarterly to investors, subject to Board approval.
Riverstone values its investments using common industry valuation techniques,
including comparable public market valuation, comparable merger and
acquisition transaction valuation, and discounted cash flow valuation.
For development-type investments, Riverstone also considers the recognition of
appreciation or depreciation of subsequent financing rounds, if any. For those
early stage privately held companies where there are other indicators of a
decline in the value of the investment, Riverstone will value the investment
accordingly even in the absence of a subsequent financing round.
Riverstone reviews the valuations on a quarterly basis with the assistance of
the Riverstone Performance Review Team ("PRT") as part of the valuation
process. The PRT was formed to serve as a single structure overseeing the
existing Riverstone portfolio with the goal of improving operational and
financial performance.
The Board reviews and considers the valuations of the Company's investments
held through the Partnership.
1 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
performance allocation terms announced on 3 January 2020, effective from 30
June 2019, which would have been accrued under the prior terms, and thereby
would have reduced the NAV on a pro forma basis to $685 million or $12.99 per
share
2 GBP:USD FX rate of 1.211 as of 30 June 2022
3 Excludes the remaining unfunded commitments for Carrier II and Hammerhead
$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 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.
5 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.
(( 6 )) 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.)
(( 7 )) SPAC Sponsor investment for Decarbonization Plus Acquisition
Corporation IV (NASDAQ:DCRD)
(( 8 )) Amounts vary due to rounding
(( 9 )) The unrealised value of Rock Oil investment consists of rights to
mineral acres.
(( 10 )) Midstream investment
(( 11 )) Credit investment
12 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)
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