- THIS
ANNOUNCEMENT INCLUDES INSIDE INFORMATION
Riverstone Energy Limited
Announces 1Q24 Quarterly Portfolio Valuations &
NAV
London, UK (8 May 2024) - Riverstone Energy Limited ("REL" or the "Company") is issuing
this Interim Management Statement ("IMS") for the period from 1
January 2024 to 31 March 2024 (the "Period").
Highlights
·
Key Financials
(unaudited)
o NAV as at
31 March 2024
|
$496 million (£393
million)[1]
|
o NAV per
share as at 31 March 2024
|
$18.26 /
£14.461
|
o Profit for
Period ended
|
$20.8 million
|
o Basic
profit per share for Period ended
|
49.85 cents
|
o Market
capitalisation as at 31 March 2024
|
$315 million (£250
million)1
|
o Share
price as at 31 March 2024
|
$11.62 /
£9.201
|
·
As of 31 March 2024, REL had a NAV per share of
$18.26 (£14.46), an increase in USD and GBP of 14 & 15 per
cent., respectively, compared to 31 December 2023. The
converted USD and listed GBP quarter end closing share price was
$11.62 (£9.20), an increase of 14 & 15 per cent., respectively,
compared to 31 December 2023.
·
The net increase of REL's NAV over the Period was
due to unrealised gains in the shares of Permian Resources ($40.8
million) and Crescent Point Energy ($10.3 million), which were
partially offset by the write-off of the FreeWire ($3.5 million)
investment, and full write-downs of the investments in T-REX ($17.4
million) and Our Next Energy ($3.1 million).
·
On 28 March 2024, Riverstone Energy
Limited acquired and cancelled 15,047,619 of the
Company's ordinary shares at the Tender Price
of £10.50 per Share, pursuant to the Tender Offer
announced on 23 February 2024 for a total price of
£158,000,000 ($198,556,380).
·
REL finished the Period with a cash balance of $93
million, net of Tender Offer, and remaining potential unfunded
commitment of $6 million[2].
Share Buyback Programme
Since the Company's announcement
on 23 May 2023 of the authorised
increase of £30 million for the share buyback programme through 31
March 2024, 3,126,023 ordinary shares have
been bought back at a total cost of approximately £18 million
($22 million) at an average share price of approximately £5.67
($7.13). As of 31 March 2024, £22 million
was available for repurchases.
In addition, pursuant to changes to
the Investment Management Agreement announced on 3 January 2020,
the Investment Manager agreed for the Company to be required to
repurchase shares or pay dividends equal to 20 per cent. of net
gains on dispositions. No further carried interest will be
payable until the $60.9 million of realised and unrealised losses
to date at 31 March 2024 are made whole
with future gains.
Richard Horlick, Chair of Riverstone
Energy Limited, commented:
"In late March, REL completed the previously announced
acquisition of 15,047,619 of the Company's ordinary shares, at a
price of £10.50 per share. The Tender Offer, in addition
to gains to Permian Resources and Crescent Point Energy (formerly
Hammerhead Energy), proved accretive to NAV per share which rose by
14 per cent. (in US Dollar terms). REL remains well positioned to
deliver value from our conventional energy investments and to
capture long-term growth in our decarbonisation
portfolio."
David M. Leuschen and Pierre F.
Lapeyre Jr., Co-Founders of Riverstone, added:
"Now that the Tender Offer is behind us, we are focussing our
efforts on remaining portfolio companies within our conventional
energy and decarbonisation strategies. While it's true that the
decarbonisation portfolio has suffered in the recent past, lower
returns are offset by our conventional energy investments, which
continue to perform well. We are pleased to see investor appetite
increase for traditional energy investments and welcome the
addition of long-only capital for these strategies. Global turmoil
reminds us that a strategic combination of energy independence and
exposure to traditional energy resources are key. There can't be an
energy transition without reliable energy."
Current Portfolio - Conventional
Investment (Public/Private)
|
Gross Committed Capital
($mm)
|
Invested
Capital
($mm)
|
Gross
Realised
Capital ($mm)[3]
|
Gross Unrealised
Value
($mm)[4]
|
Gross Realised Capital &
Unrealised Value ($mm)
|
31 Dec 2023
Gross
MOIC4
|
31 Mar 2024
Gross
MOIC4
|
Permian Resources[5]
(Public)
|
268
|
268
|
226
|
178
|
404
|
1.35x
|
1.51x
|
Onyx
(Private)
|
66
|
60
|
121
|
70
|
191
|
3.20x
|
3.20x
|
Crescent Point Energy (fka Hammerhead
Resources)5,[6] (Public)
|
296
|
296
|
199
|
68
|
267
|
0.87x
|
0.90x
|
Total Current Portfolio - Conventional - Public[7]
|
$564
|
$564
|
$425
|
$246
|
$671
|
1.10x
|
1.19x
|
Total Current Portfolio - Conventional -
Private7
|
$66
|
$60
|
$121
|
$70
|
$191
|
3.20x
|
3.20x
|
Total Current Portfolio - Conventional - Public &
Private7
|
$630
|
$624
|
$546
|
$316
|
$862
|
1.30x
|
1.38x
|
Current Portfolio - Decarbonisation
|
|
|
|
|
|
|
Investment (Public/Private)
|
Gross Committed Capital
($mm)
|
Invested
Capital
($mm)
|
Gross
Realised
Capital
($mm)3
|
Gross Unrealised
Value
($mm)4
|
Gross Realised Capital &
Unrealised Value ($mm)
|
31 Dec 2023
Gross
MOIC4
|
31 Mar 2024
Gross
MOIC4
|
Infinitum
(Private)
|
27
|
27
|
-
|
30
|
30
|
1.10x
|
1.10x
|
GoodLeap (formerly
Loanpal)
(Private)
|
25
|
25
|
2
|
29
|
31
|
1.25x
|
1.25x
|
Solid Power5
(Public)
|
48
|
48
|
-
|
15
|
15
|
0.22x
|
0.31x
|
Tritium DCFC5,[8] (Public)
|
25
|
25
|
1
|
5
|
6
|
0.46x
|
0.24x
|
Group
14
(Private)
|
4
|
4
|
-
|
4
|
4
|
1.00x
|
1.00x
|
Hyzon Motors5 (Public)
|
10
|
10
|
-
|
1
|
1
|
0.09x
|
0.07x
|
Enviva5
(Public)
|
22
|
22
|
0
|
0
|
1
|
0.05x
|
0.03x
|
Ionic I & II (Samsung
Ventures) (Private)
|
3
|
3
|
-
|
0
|
0
|
1.00x
|
0.02x
|
T-REX
(Private)
|
21
|
21
|
-
|
-
|
-
|
0.82x
|
0.00x
|
Our
Next Energy
(Private)
|
13
|
13
|
-
|
-
|
-
|
0.25x
|
0.00x
|
Total Current Portfolio - Decarbonisation -
Public7
|
$105
|
$105
|
$1
|
$21
|
$22
|
0.23x
|
0.21x
|
Total Current Portfolio - Decarbonisation -
Private7
|
$93
|
$93
|
$2
|
$64
|
$66
|
0.73x
|
0.71x
|
Total Current Portfolio - Decarbonisation - Public &
Private7
|
$198
|
$198
|
$3
|
$85
|
$88
|
0.73x
|
0.44x
|
Total Current Portfolio - Conventional &
Decarbonisation - Public & Private7
|
$827
|
$821
|
$549
|
$401
|
$950
|
1.06x
|
1.16x
|
Cash and Cash Equivalents (net of Tender
Offer)
|
|
|
|
$93
|
|
|
|
Total Liquidity (Cash and Cash Equivalents net of Tender Offer
& Public Portfolio)
|
$360
|
|
|
|
Total Market Capitalisation
|
|
|
|
$315
|
|
|
|
Realisations
Investment (Initial Investment
Date)
|
Gross Committed Capital
($mm)
|
Invested
Capital
($mm)
|
Gross
Realised
Capital
($mm)3
|
Gross Unrealised
Value
($mm)4
|
Gross Realised Capital &
Unrealised Value ($mm)
|
31 Dec 2023
Gross
MOIC4
|
31 Mar 2024
Gross
MOIC4
|
Rock Oil[9]
(12 Mar
2014)
|
114
|
114
|
234
|
4
|
238
|
2.08x
|
2.08x
|
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
|
88
|
-
|
88
|
2.20x
|
2.20x
|
RCO[11]
(2
Feb 2015)
|
80
|
80
|
80
|
-
|
80
|
0.99x
|
0.99x
|
Carrier II
(22 May
2015)
|
110
|
110
|
67
|
-
|
67
|
0.61x
|
0.61x
|
Pipestone Energy (formerly
CNOR)
(29 Aug
2014)
|
90
|
90
|
58
|
-
|
58
|
0.64x
|
0.64x
|
Sierra
(24 Sept
2014)
|
18
|
18
|
38
|
-
|
38
|
2.06x
|
2.06x
|
Aleph
(9 Jul
2019)
|
23
|
23
|
23
|
-
|
23
|
1.00x
|
1.00x
|
Ridgebury
(19 Feb 2019)
|
18
|
18
|
22
|
-
|
22
|
1.22x
|
1.22x
|
Castex 2014
(3
Sep 2014)
|
52
|
52
|
14
|
-
|
14
|
0.27x
|
0.27x
|
Total Realisations7
|
$819
|
$819
|
$1,000
|
$4
|
$1,004
|
1.23x
|
1.23x
|
Withdrawn Commitments and Impairment[12]
|
384
|
384
|
9
|
-
|
9
|
0.02x
|
0.02x
|
Total Investments7
|
$2,030
|
$2,024
|
$1,558
|
$405
|
$1,963
|
0.96x
|
0.97x
|
Total Investments & Cash and Cash Equivalents (net of
Tender Offer)
|
$498
|
|
|
|
Draft Unaudited Net Asset Value
|
$496
|
|
|
|
Total Shares Repurchased to-date
|
57,331,894
|
at average price per share of
£6.56 ($8.33)
|
Current Shares Outstanding
|
27,148,170
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Highlight on Conventional
The world continues its recovery
following the COVID-19 pandemic. US public equity markets performed
positively during Q1 2024; the Russell 1000 was up 260 points
during the quarter and the S&P increased 484 points in the same
time period, from 4,770 at close on 29 December 2023 to 5,254 at
close on 28 March 2024. US market sentiment remains relatively
positive, but now that the S&P has come down from record highs
in late March, some wonder if a market adjustment is right around
the corner. European markets have had smoother gains since
year-end; the FTSE 100 hit record highs of 8,191 on 30 April
2024.
Interest rates started the year by
defying aggressive market expectations of early rate cuts and
returned to higher levels as inflation proved stickier than
expected. The average U.S. 30-year fixed mortgage is now back above
7 per cent. Although rates are expected to trickle down throughout
the back half of the year, for now they are essentially back to
2023 levels with the possibility of additional increases. High
interest rates combined with uncertainty over the outlook for rates
continues to negatively impact the ability for growth stage energy
transition and decarbonisation investments to ramp up. As a result,
REL's decarbonisation portfolio has continued to suffer from
reduced investor risk appetite. This has meant fundraising, M&A
opportunities, and other potential monetisation events have been
deferred or delayed.
On the energy commodity front, West
Texas Intermediate (WTI) crude prices were up 16 per cent. during
Q1 2024. Brent Crude was up 15 per cent. and the Henry Hub is down
40 per cent. during the quarter. Consolidation in the US oil and
gas sector hasn't slowed, and, in contrast to the decarbonisation
portfolio, M&A and other monetisation opportunities have come
to fruition. If rates lower, energy IPO markets could even see a
comeback. Global tensions continued in 2024 as two separate wars
are fought, one along the Russia/Ukraine border and the other in
the Middle East. Both situations require consistent political
attention, and neither have a clear resolution in sight. If
conflicts continue to escalate in areas with significant impact on
the global oil trade and world supply chains become disrupted, oil
prices could increase significantly. Global turmoil reminds us that
a strategic combination of energy independence and exposure to
traditional energy resources are key. There can't be an energy
transition without reliable energy. Considering the bulk of REL's
remaining unrealised value is in conventional energy, we are well
primed if market sentiment continues in this direction and will
lean into more traditional themes where we can. Permian Resources
and Crescent Point Energy (formerly Hammerhead Energy) are great
examples that fall within Riverstone's flagship investing thesis
and showcase our ability to boost value creatively as financial
managers. Both investments have driven the recent success of REL's
portfolio.
Quarterly Performance Commentary
REL's conventional energy portfolio
has continued to perform well for the quarter, gaining 6.5 per
cent. in value. Both Permian Resources and Crescent Point Energy
(formerly Hammerhead Energy), REL's publicly traded upstream oil
and gas businesses, have maintained organic share price growth and
positive marks for the portfolio. They are the main needle movers
for REL. Permian Resources share price increased 30 per cent.
during the quarter and Crescent Point Energy's share price trended
up 21 per cent. It's clear that even though these oil producers
operate in vastly different basins with their own unique and
complex characteristics (Permian Resources in the Delaware Basin
and Crescent Point in Montney and Duvernay), investors' appetite
for public E&P exposure to best in-class producers remains
strong and free cash flow generation along with returning cash to
shareholders is the focus. Meanwhile, Onyx continues to improve
operational efficiencies as it gears up for its next chapter after
a warm European winter.
The decarbonisation portfolio
dropped 22.9 per cent. in value during the quarter. While this is a
large negative percentage move, it represents a $28 million
drawdown against the Company NAV of $496 million. FreeWire, T-REX,
and Our Next Energy were all marked to 0.0x as of Q1 2024 due to
company-specific events, including missed sales process targets and
falling short of fundraising goals. With the exception of
Infinitum, Solid Power and GoodLeap (formerly Loanpal), the
remainder of the decarbonisation portfolio continues to suffer from
fundraising headwinds caused by the impact of rates and a lower
risk appetite from investors. On 27 February 2024, Solid Power
announced positive FY 2023 results of $17.4 million in revenue, up
$5.6 million compared to FY 2022. The company attributes this
success to the continued execution of Solid Power's joint
development agreement with SK On.
Further information on REL's five
largest positions, which account for ~93 per cent. of the
portfolio's gross unrealised value is set forth below:
Permian Resources
The valuation for Permian Resources
(NYSE: PR) increased from 1.35x to 1.51x Gross MOIC in the first
quarter of 2024. In Q1 2024, Permian Resources announced a series
of portfolio optimisation transactions consisting of two bolt-on
acquisitions, a sizeable acreage swap, a divestiture of non-core
assets and additional grassroots acquisitions. In Q4 2023, Permian
Resources completed the ~$4.5 billion acquisition of Earthstone
Energy, Inc. which has bolstered PR's leading position in the
Delaware Basin and increases operating size and scale. The
pro-forma company remains committed to achieving an investment
grade rating. The pro-forma company has hedged approximately 25 per
cent. of forecasted 2024 crude oil production at a weighted average
price of $74.51 per barrel and 22 per cent. of forecasted 2024
natural gas production at a weighted average price of $3.89 per
mcf.
Onyx
The valuation multiple for Onyx was
unchanged during the first quarter, holding at 3.20x Gross
MOIC. CDS margins have reduced materially
since the fourth quarter due to high gas storage levels, warm
winter weather and high wind generation. The effect is partially
offset by hedging activities at Onyx. During Q1 2024, Onyx successfully extended the Engie credit
agreement to include $100 million of fixed collateral until YE
2024. The management team continues to work on organic growth
initiatives, including the implementation of operational
performance improvements and the development of projects related to
the energy transition.
Crescent Point Energy (formerly Hammerhead
Energy)
Crescent Point Energy's valuation
increased from 0.87x to 0.90x Gross MOIC during the first quarter
of 2024 reflecting solid share price performance. Since closing the
acquisition, Crescent Point's shares have traded up 17.1 per cent.
compared to a 9.3 per cent. increase in its peer group, and an 11.4
per cent. rally in WTI over the same period. In February 2024,
Crescent Point announced its FY 2023 results, which were above
expectations. Crescent Point's unchanged five-year plan is
targeting 6 per cent. production CAGR through 2028, driven by the
Montney (8 per cent. CAGR) and Duvernay (11 per cent. CAGR), and
targeting corporate production of 260 mboe/d. In Q1, 2024, Crescent
Point increased its quarterly dividend by 15 per cent. to
C$0.115/sh, implying an annualized dividend yield of 4.2 per
cent.
Infinitum
The valuation multiple for Infinitum
held at 1.10x Gross MOIC during the first quarter of 2024. The
company maintains a robust balance sheet as a result of their
$185mm Series E round from the second half of 2023. The company
aims to continue the strong momentum from Q4 into FY24, with a
focus on ramping production and revenue. Additionally, in January,
Infinitum announced an agreement with Matrix, a wholly owned
subsidiary of Alliance Resource Partners, L.P., to jointly develop
and distribute high-efficiency, reliable motors and advanced motor
controllers designed specifically for the mining industry. In Q1,
the company was recognised with a prestigious 2024 Silver Edison
Award and named as on the 2024 Global Cleantech 100 list by
Cleantech Group.
GoodLeap (formerly Loanpal)
The valuation multiple for GoodLeap
remained at 1.25x Gross MOIC for the first quarter of 2024. The
macroeconomic environment headwinds are beginning to stabilise, and
the industry outlook is improving. The company continues to enforce
strategic changes to better navigate market dynamics such as
expanding product partnerships and tightening contractor payment
guidelines.
Other Investments
FreeWire
On 3 February 2024, a potential
acquiror of FreeWire, who had been under exclusivity, withdrew
itself from the sale process. Given the accelerating cash
constraints and limited runway in combination with the sale process
withdrawal, FreeWire evaluated all alternatives which culminated in
a sale on 20 February 2024 to a private investor. The consideration
with respect to the sale was 100% assumption of all company
liabilities. As of 31 March 2024, FreeWire has a realised mark of
0.0x and is no longer an investment in the portfolio.
Our
Next Energy ("ONE")
The valuation multiple for ONE was
written down from 0.25x Gross MOIC to 0.00x Gross MOIC during the
first quarter of 2024. In Q1 2024, the company raised capital by
way of its insider led convertible note, a financing in which
Riverstone elected not to participate. As a result of not
participating, REL's ownership stake was significantly diluted and
subordinated.
T-REX
The valuation multiple for T-REX was
written down to 0.00x Gross MOIC during the first quarter of 2024.
In September 2023, an investment bank was hired to run a sales
process for the company. After over 6-months no LOIs were
submitted. In April 2024, the company initiated an orderly
wind-down due to limited cash runway (Mid-May 2024). The company
currently has an asset sale pending completion that would monetise
substantially all of T-REX's assets that would result in a ~60%
recovery for Silicon Valley Bank (T-REX's Creditor).
Simultaneously, the Board is evaluating several ABC providers to
manage the liquidation.
Tritium DCFC
In March 2024, Tritium executed a
reverse stock split to avoid de-listing by converting every
existing common stock share into the right to receive 0.005 new
common stock shares (200 to 1 split). In April 2024, Tritium
notified regulators that its businesses were insolvent or likely to
become insolvent and proposed placing control of the company under
administrators working for KPMG in compliance with Australian law.
At 31 March 2024, REL's debt investment was written down from 1.12x
Gross MOIC to 0.62x Gross MOIC because the outcome of the sale
process remains unknown at this time.
LEI: 213800HAZOW1AWRSZR47
About Riverstone Energy Limited:
REL is a closed-ended investment
company which invests in the energy industry. REL's ordinary shares
are listed on the London Stock Exchange, trading under the symbol
RSE. REL has 11 active investments spanning decarbonisation,
oil and gas, renewable energy and power in the Continental U.S.,
Western Canada, Europe and Australia.
For further details, see
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:
Riverstone Investor
Relations
+44 20 3206 6300
|
Note:
The Investment Manager is charged
with proposing the valuation of the assets held by REL through the
Partnership. The Partnership has directed that securities and
instruments be valued at their fair value. REL's valuation policy
follows IFRS and IPEV Valuation Guidelines. The Investment Manager
values each underlying investment in accordance with the Riverstone
valuation policy, the IFRS accounting standards and IPEV Valuation
Guidelines. The Investment Manager has applied Riverstone's
valuation policy consistently quarter to quarter since inception.
The value of REL's portion of that investment is derived by
multiplying its ownership percentage by the value of the underlying
investment. If there is any divergence between the Riverstone
valuation policy and REL's valuation policy, the Partnership's
proportion of the total holding will follow REL's valuation policy.
There were no valuation adjustments recorded by REL as a result of
differences in IFRS and U.S. Generally Accepted Accounting Policies
for the period ended 31 March 2024 or in any period to date.
Valuations of REL's investments through the Partnership are
determined by the Investment Manager and disclosed quarterly to
investors, subject to Board approval.
Riverstone values its investments
using common industry valuation techniques, including comparable
public market valuation, comparable merger and acquisition
transaction valuation, and discounted cash flow
valuation.
For development-type investments,
Riverstone also considers the recognition of appreciation or
depreciation of subsequent financing rounds, if any. For those
early stage privately held companies where there are other
indicators of a decline in the value of the investment, Riverstone
will value the investment accordingly even in the absence of a
subsequent financing round.
Riverstone reviews the valuations on
a quarterly basis with the assistance of the Riverstone Performance
Review Team ("PRT") as part of the valuation process. The PRT was
formed to serve as a single structure overseeing the existing
Riverstone portfolio with the goal of improving operational and
financial performance.
The Board reviews and considers the
valuations of the Company's investments held through the
Partnership.