Riverstone Energy NAV goes up in smoke – As of 31 December 2019, Riverstone Energy had a NAV per share of $9.66 (GBP7.36), representing a decrease in USD and GBP of over 46 and 48 per cent., respectively, compared to the 31 December 2018 NAV.
The statement says that Hammerhead, Centennial and Liberty II were the largest drivers of Riverstone Energy’s NAV decline over the year.
Hammerhead, which was the largest investment, saw the greatest decline in unrealised value during the period as its Gross MOIC decreased from 1.5x to 0.4x. They say that this valuation change reflects a more conservative development outlook due to limited liquidity and capital markets availability, trading performance of Canadian E&P peers, and regulatory uncertainty.
Riverstone Energy’s other E&P investments also experienced decreases during the period as a result of market headwinds. Centennial’s Gross MOIC declined from 1.3x to 0.9x due to its share price, which was impacted by underperformance in the broader public equity markets within E&P. The Gross MOIC for Liberty II decreased from 1.1x to 0.4x due to weak capital markets conditions and constrained access to financing. Meanwhile, Ridgebury H3 (Handy Tankers) increased its Gross MOIC from 1.0x to 1.2x during the period to reflect investment proceeds received to date and an improving market for Handy vessels.
During 2019, Riverstone Energy, through the Partnership, received $162 million in gross proceeds from the realisation of its investments in Meritage III ($83 million), Sierra ($39 million), CNOR ($16 million) and Three Rivers III ($4 million), as well as distributions from Carrier II ($13 million), ILX III ($5 million), Ridgebury ($2 million) and Rock Oil ($1 million).
$81 million was invested during the year, bringing net capital invested as of 31 December 2019 to $1,007 million, or 85 per cent. of net capital available.
Riverstone Energy committed up to $188 million to Aleph Midstream ($100 million), Onyx ($66 million) and Ridgebury ($22 million) and withdrew commitments totalling $51 million to Sierra, Meritage III, and Eagle II, bringing net committed capital as of 31 December 2019 to $1,219 million, or 103 per cent. of net capital available.
At the end of the year, the cash balance was $183 million and remaining potential unfunded commitments were $212 million.
Over the year, Riverstone Energy:
- received sale proceeds of $83 million from Meritage III.
- received sale proceeds of $39 million from Sierra.
- invested $31 million in Onyx Power.
- invested $23 million in Aleph Midstream. Subsequently, the investment was unwound and Riverstone Energy was reimbursed for the full
- invested amount of $23 million in March 2020.
- invested $18 million and received income distributions of $2 million from Ridgebury.
- received proceeds of $16 million from partial realisation of CNOR.
- received income distributions of $13 million from Carrier II.
- invested $8 million in ILX III and Castex 2014, and received proceeds of $10 million from ILX III, Three Rivers III and Rock Oil.
- In January 2020, Ridgebury H3 decided to sell the Nalini D, one of the three Handy vessels purchased in April 2019, to Tufton Oceanic, at a premium to its original purchase price. Ridgebury H3 decided to take advantage of a recent market spike to reduce risk and lock in returns. Riverstone Energy’s realised Gross MOIC in this investment is 0.5x (total Gross MOIC of 1.2x), including prior distributions.
- In February 2020, Riverstone Energy decided to unwind its commitment to Aleph Midstream due to the macroeconomic conditions in Argentina as well as certain condition precedents that have not been met with its anchor customer. In March 2020, Riverstone Energy was reimbursed for its fund invested capital in Aleph Midstream.
- At 31 March 2020, Riverstone Energy’s uninvested cash balance had increased to $211 million and potential unfunded commitments had decreased to $135 million. The board and the investment manager do not expect to fully fund all commitments in the normal course of business.
The chairman says: “The company’s focus has now shifted to defensive measures as we enter a new period of considerable uncertainty this year. Looking forward, Riverstone Energy’s top priority is working with its operating teams to navigate choppy waters and protecting the Company’s investment principal. What is to come remains uncertain as the world continues to fight coronavirus”.
RSE : Riverstone Energy NAV goes up in smoke