Riverstone Energy’s discount widens in tough period for the sector

Riverstone Energy RSE

Riverstone Energy’s discount widens in tough period for the sector – The commodities and natural resources company, Riverstone Energy (RSE), has reported half-year results to 30 June 2019. It has been a difficult year for the sector; we note that the company’s discount widened from around 20% this time last year to 35% over the past week or so. The shares are down by nearly 40% over the past year.

David M. Leuschen and Pierre F. Lapeyre Jr., co-founders of Riverstone, had this to say: “While spot prices for oil have improved modestly, the volatile nature of the geopolitical landscape has continued to negatively impact energy equities and valuations as investor sentiment remains weak. Despite the macro environment, we remain focused on driving operational performance in order to maximise returns over the long-term as market conditions stabilise.”

Over $1bn in net committed capital

Some of the portfolio highlights from the year include:

  • As of 30 June 2019, RSE had a NAV per share of $13.24 (£10.43), representing a decrease in USD and GBP of 26 per cent. compared to the 31 December 2018 NAV;
  • The company invested a total of $24m during the period, bringing net capital invested as of 30 June 2019 to $991m, or 82 per cent of net capital available;
  • During the first half of 2019, RSE committed up to $22m to Ridgebury and withdrew commitments totalling $28m to Sierra, Meritage III, and Eagle II, bringing net committed capital as of 30 June 2019 to $1,116m, or 92 per cent of net capital available;
  • RSE finished the Period with a cash balance of $219m and remaining unfunded commitments of $125m;
  • On 26 April 2019, Riverstone Holdings LLC announced the formation of Onyx Strategic Investment Management I BV, a European independent power producer. The investment in Onyx will be funded with an initial equity commitment from RSE, Riverstone Global Energy and Power Fund VI, L.P., and other Riverstone managed vehicles. Further details on RSE’s commitment of up to $66m will be provided upon close of the transaction, which is expected to occur later this year following the receipt of regulatory and other approvals;
  • On 28 June 2019, Riverstone announced the signing of an agreement for RSE to invest in Aleph Midstream S.A., an independent Argentine oil and gas gathering and processing-focused midstream company, in line with RSE’s previously-stated modified investment approach.

Changes to management agreement?

From the chairman: “As we move into the second half of the year, REL remains focussed on its objective of delivering an advantageous return to shareholders. As part of meeting this objective, the company’s Management Engagement Committee has been holding discussions with the investment manager regarding potential changes to the terms of the investment management agreement. REL has a contractual agreement with the investment manager and any change to the investment management agreement requires the consent of the manager.”

RSE: Riverstone Energy’s discount widens in tough period for the sector


Click here to subscribe for free equity research on investment trusts, funds and listed companies.

Leave a Reply

Your email address will not be published. Required fields are marked *