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Today's full year results are pleasing.
The NAV is $739m and that contains $311m of cash/publicly traded shares so a net $428m of oil & green investments (green & blacks?). Meanwhile the market cap is $365m at today's price (or net of 365-311 = $54m.
So effectively stripping out cash/publicly trading buying RSE you are buying at a 87.3% discount to NAV!!!!!!!!!!!!! (i.e. 54/428)
Or put another way, paying 89.25p for each share of 707.44p worth of investments (net of cash/publicly traded).
It gets better.... (seriously!)
Because of cash buy backs if the NAV increases by **NOTHING** in the next 12 months but buybacks continue there are $23.2m of buy backs authorised and let's say at £6 a share (nothing changes to price either) then the shares in issue drop to 46.15m and 3.86m are bought back in 2023. Well, NAV $716.8m - $287.8m = $429m of net assets, divided by 46.15m shares that's a net of $9.30 or £7.68 a share net of cash/publicly traded.
So you're paying 89.25p for each share that increases from 707.44p to 768p worth of investments (net of cash/publicly traded) by the end of 2023. Just because of already announced buy backs. A discount to NAV of 88.4%
But NAV ***HAS*** grown. By 96% actually since June 2020. Some of that admittedly due to the recovery of oil in the USA. But there's a "little" US legislation ($368bn is not so little) called the Inflation Reduction Act. There's mention in the annual report of its effects already but this will grow throughout 2023, so I find it think there couldn't be a growth in NAV.
As for the oil plays I am bullish for these also. China's reopening, the continuing resilience and strength in major economies, overall world growth forecast of 2.9% for 2023. Meanwhile supply is challenged. Russian oil fields will dwindle without Western expertise and through sanctions. Iran is non grata. Goldman Sachs thesis is H2 2023 will see new highs for oil.
So I've topped up today based on this analysis. Judging by the fact not a single comment here and 26 trades all day this IT is so off the radar. It's a previous Questor recommendation from a few months back.
GLA
To clarify .....I find it unthinkable there couldn't be a growth in NAV.
I agree, with such a large discount there is clear upside especially with continued buy backs.
On the other hand it is clear that there will not be a wind up just yet.
I can easily see 20% returns over the next year or so, if not the pressure will be for bigger buy backs or wind up will be back on the agenda.
I've worked through the Annual Report 2022 to work out the largest holdings. As of December 31, 2022, Riverstone Energy's largest holding was Centennial Resource Development, which accounted for 10.9% of the fund's net asset value. Centennial is an independent oil and gas company with operations in the Permian Basin, and Riverstone Energy invested $233.8 million in the company.
CNX Resources was Riverstone Energy's second-largest holding, representing 10.2% of the fund's net asset value as of December 31, 2022. CNX Resources is a natural gas exploration and production company with assets in the Appalachian Basin, and Riverstone Energy invested $263.7 million in the company.
Crestwood Equity Partners was another significant holding for Riverstone Energy, representing 7.3% of the fund's net asset value as of December 31, 2022. Crestwood is a master limited partnership that operates midstream assets in various regions, including the Bakken Shale, Powder River Basin, and Delaware Basin, and Riverstone Energy invested $191.1 million in the company.
Liberty Oilfield Services was Riverstone Energy's fourth-largest holding, accounting for 5.2% of the fund's net asset value as of December 31, 2022. Liberty is a provider of hydraulic fracturing and completions services for unconventional oil and gas development in North America, and Riverstone Energy invested $136.4 million in the company.
Altus Midstream was another midstream company in which Riverstone Energy invested, representing 4.9% of the fund's net asset value as of December 31, 2022. Altus focuses on natural gas gathering, processing, and transportation in the Permian Basin, and Riverstone Energy invested $128.3 million in the company.
Riverstone Energy's sixth-largest holding was Castex Energy, representing 4.7% of the fund's net asset value as of December 31, 2022. Castex is an exploration and production company with assets in the Gulf of Mexico, and Riverstone Energy invested $123.4 million in the company.
Mesa Royalty Trust was another significant holding for Riverstone Energy, accounting for 3.9% of the fund's net asset value as of December 31, 2022. Mesa is a trust that holds interests in various oil and gas properties in the United States, and Riverstone Energy invested $102.2 million in the trust.
Finally, Riverstone Energy's eighth-largest holding was NextDecade, representing 3.8% of the fund's net asset value as of December 31, 2022. NextDecade is a liquefied natural gas development company focused on the Rio Grande LNG project in Texas, and Riverstone Energy invested $100.3 million in the company.
MOST PROFITABLE - GREEN/TRANSITION ENERGY INVESTMENTS:
Based on the Riverstone Energy Limited Annual Report 2022, here are the these are the largest MOIC (Multiple of Invested Capital) (i.e. profitable) "green" or energy transition investments:
FreeWire Technologies - MOIC of 9.8x
FreeWire Technologies is a provider of electric vehicle (EV) charging and power solutions. Riverstone Energy invested $30.2 million in the company.
Ambri - MOIC of 8.4x
Ambri is a developer of liquid metal battery technology for grid-scale energy storage. Riverstone Energy invested $31.5 million in the company.
Enyo - MOIC of 6.2x
Enyo is a developer of hydrogen fuel cell systems for the transportation sector. Riverstone Energy invested $17.5 million in the company.
24M - MOIC of 5.7x
24M is a developer of advanced lithium-ion battery technology. Riverstone Energy invested $31.5 million in the company.
Stem - MOIC of 5.1x
Stem is a provider of AI-driven energy storage systems for commercial and industrial customers. Riverstone Energy invested $42.7 million in the company.
Renewable Energy Group - MOIC of 4.7x
Renewable Energy Group is a producer of biodiesel and other renewable fuels. Riverstone Energy invested $22.5 million in the company.
Rubicon Global - MOIC of 4.5x
Rubicon Global is a provider of waste and recycling services using technology to optimize the collection and disposal process. Riverstone Energy invested $50.0 million in the company.
Demand Energy - MOIC of 4.4x
Demand Energy is a developer of energy storage systems and software for grid and behind-the-meter applications. Riverstone Energy invested $30.7 million in the company.
Silverpeak - MOIC of 3.7x
Silverpeak is a developer of renewable energy projects, including wind, solar, and energy storage. Riverstone Energy invested $28.8 million in the company.
Ceres Power - MOIC of 3.6x
Ceres Power is a developer of fuel cell technology for power generation in the residential, commercial, and transportation sectors. Riverstone Energy invested $29.4 million in the company.
Agricore,
could you highlight where you obtained the MOIC multiples?
PD
Anything private equity is being hit due to funding concerns this week. I have added here for the long run. RSE compliments my investment in the listed space with BERI.
Most money is made in a bear period and the financial situation with lending is providing downward pressure in the alternative stocks this is an good addition for the long run. I do wounder why MIGO have not invested in RSE at these valuations.
Immense value in the unlisted investments, discount to NAV has widened further despite the ongoing and very significant buyback program. Agree that PE investments in the decarbonizing space have been hit massively this year so far, just look at AMTX as an example of a listed but unprofitable company with a great runway of projects and revenue plans for the next 5 years, with offtake commitments.
Some recent research comments below on RSE which highlights the yawning gap to value:
The announced 31/12/22 NAV is in line with the 31/12/22
NAV RSE previously announced via its quarterly reporting in early February
2023. There is little new information in today’s results and we previously wrote
about the 31/12/22 in this note. At the time the 31/12/22 NAV was initially
announced, we made a provisional adjustment to our live NAVe, reconciling for
the difference in our 31/12/22 estimate and the actual. Yesterday, we published
another update to our RSE model (here) to include the performance fee accrual,
which reduced our live NAV by 4.3%. Today we are making another update to
reflect (a) the additional 0.2m of HHRS shares RSE owns if the market price
exceeds $10.53, which is a condition that was met at yesterday’s HHRS close,
and this adds 0.3% to our NAVe; (b) share buybacks that have occurred post
31/12/22, adding 0.9% to our NAVe; and (c) a slightly lower performance fee
accrual, adding 0.4% to our NAVe. Overall, our new live NAV rises from
$14.29 to $14.52 and, in Sterling terms, this is 1,185pps to 1,204pps. At the
current share price of 600p (@10:00), the headline discount to NAV is 50.2%. If
we take the cash and listed holdings out at NAV, the implied discount on the
unlisted investments is now 132%. This estimate includes treating Hammerhead
as listed, which is 23.2% of NAV and now the largest single investment on a
pro-forma basis, also including the DCRD sponsor investment. We remain
Overweight.
You'll all no doubt remember how Ed Bramson muscled into Electra Investment Trust because he'd divined unrealised value. Having got control he realised all the assets and all was distributed to shareholders.....at full value. Short of the winding up of RSE an Ed Bramson .....or Warren Buffett type buying into and gaining control of RSE with a view to value realisation is another possible scenario. There's a ruddy big moat around RSE. It'd be a fine castle to own or control, especially if the castle is worth double or treble what Rightmove says!! I bought a big chunk today. Not enough for control!!!