Riverstone Energy makes further NAV gains in first half

Riverstone Energy issued its half-year results for the six month period ended 30 June on Wednesday, reporting a closing net asset value of $1.75bn, and a net asset value per share of $20.76 or £15.72.

That net asset value per share was up 0.6% on the start of the period on a dollar basis, and 2.9% on a sterling basis.

The FTSE 250 company said its profit for the period was $10.7m, with its basic profit per share sitting at 12.72 cents.

Its market capitalisation at period end stood at £1.08bn or $1.42bn, while its share price was $16.85 or £12.76.

On the operational front, Riverstone said it “took advantage” of favourable market conditions to exit Three Rivers Natural Resources Holdings III and sell 4.4 million shares in Centennial Resource Development, of which $280m of gross proceeds were received during the period, resulting in a gross internal rate of return of 47% for shareholders.

The company said it invested a total of $50m during the period, bringing net capital invested as at 30 June to $1.16bn, or 83% of net capital available.

During the first half of 2018, Riverstone Energy reduced commitments to two companies, totaling $74m, bringing net committed capital as at 30 June to $1.39bn, or 99% of net capital available.

Riverstone Energy said it finished the period with a cash balance of $236m and no debt, following the repayment of its loan secured against shares in Centennial Resource Development in April.

During the period, the company made an investment of $22m in Fieldwood Energy, $15m in ILX Holdings III, $6m in Sierra Oil and Gas Holdings, $5m in Meritage Midstream Services III, and $2m in Canadian Non-Operated Resources.

Realisations during the period included $196m of gross proceeds for Three Rivers Natural Resources Holdings III, and $85m of gross proceeds for Centennial Resource Development.

During the half, Riverstone said it made a commitment reduction of $72m to Three Rivers Natural Resources Holdings III, and of $2m to Castex Energy 2005.

Looking ahead, the Riverstone board said the company’s $236m cash balance made it “well placed” to make new investments and grow its existing portfolio.

The investment manager said it believed the current cycle was generating “attractive opportunities” in midstream, oilfield services and power, while energy producers in low-cost basins, with strong operational capabilities and an oil-weighting, would continue to outperform.

It said its North American energy investments retained an advantage in a global marketplace due to low breakeven costs, short cycle times and high asset liquidity.

The portfolio's 12 active investments as a whole were described as “well-placed” to offer investors resilience and growth in a variety of commodity price environments.

“The $280 million of realisations during the period have strengthened Riverstone Energy’s ability to take advantage of new opportunities,” said chairman Richard Hayden.

“The board continues to evaluate various options to deploy this capital which would be most beneficial for shareholders, including new investments as well as a return of capital.”

David M Leuschen and Pierre F Lapeyre Jr, co-founders of Riverstone, added that oil prices experienced their first sustained period above $60 per barrel since the market downturn in 2014.

“The improvement in market fundamentals is supportive for REL realising value from its mature investments, while capitalising upon a broader universe of opportunities across the energy value chain,” Leuschen and Lapeyre said in their joint statement.