Riverstone Energy (RSE) 2017年年度報告「LSE」.pdf

《Riverstone Energy (RSE) 2017年年度報告「LSE」.pdf》由會員分享，可在線閱讀，更多相關《Riverstone Energy (RSE) 2017年年度報告「LSE」.pdf（80頁珍藏版）》請在三個皮匠報告上搜索。

1、2017ANNUAL REPORT ANDFINANCIAL STATEMENTSfor the year ended 31 December 2017A FOCUS ON LONG-TERMCAPITAL GROWTHRiverstoneEnergyLimited(LSE:RSE)Riverstone Energy Limited seeks to achieve superior riskadjusted returns through investing in the energy sector.The energy sector is global and a significant

2、component ofvirtually all major economies.Long-term market driversof economic expansion,population growth,developmentof markets,deregulation and privatisation will continueto create opportunities globally for investors in energy.Riverstone Energy Limited Annual Report and Financial Statements 2017Wh

3、o We AreRIVERSTONEENERGYLIMITEDThe Companys investment manager is Riverstone International Limited,which is majority-owned and controlled by affiliates of Riverstone.Riverstone is an energy and power-focussed private investment firm foundedin 2000 by David M.Leuschen and Pierre F.Lapeyre with over$3

4、8 billionof capital raised.Riverstone conducts buyout and growth capital investmentsin the E&P,midstream,credit,oilfield services,power and renewable sectorsof the global energy industry.With offices in New York,London,Houston,Mexico City and Amsterdam,the firm has committed over$37 billion tomore t

5、han 150 investments in North America,Latin America,Europe,Africa,Asia and Australia.The registered office of the Company is Heritage Hall,PO Box 225,Le Marchant Street,St Peter Port,Guernsey,GY1 4HY,Channel Islands.Contents 1 Who We Are 2 Financial and Operational Highlights 2 Key Financials 6 Chair

6、mans Statement 10 Investment Managers Report 22 Investment Policy 23 Investment Restrictions 24 Board of Directors 26 Report of the Directors 31 Directors Responsibilities Statement 32 Responsibility Statement of the Directors in Respectof the Annual Report under the Disclosure Guidance andTranspare

7、ncy Rules 33 Corporate Governance Report 40 Report of the Audit Committee 43 Independent Auditors Report to the Membersof Riverstone Energy Limited 47 Statement of Financial Position 48 Statement of Comprehensive Income 49 Statement of Changes in Equity 50 Statement of Cash Flows 51 Notes to the Fin

8、ancial Statements 70 Glossary of Capitalised Defined Terms 74 Directors and General InformationRiverstone Energy Limited Annual Report and Financial Statements 2017Financial and Operational HighlightsNet Committed Capital to Date$1,669 million/114 per cent.of net capital available(1)Commitments redu

9、ced during theCommitments reduced by a total of$116 million:year ended 31 December 2017(i)$59 million in CanEra Inc.(ii)$57 million in Origo Exploration Holding ASNet Capital Invested to Date$1,316 million/90 per cent.of net capital available(1)Investments during the year endedInvested a total of$19

10、4 million(3):31 December 2017(2)(i)$64 million in Hammerhead Resources Inc.(formerly CanadianInternational Oil Corp.)(ii)$49 million in ILX Holdings III LLC(iii)$21 million in Liberty Resources II LLC(iv)$18 million in Three Rivers Natural Resources Holdings III LLC(v)$10 million in Canadian Non-Ope

11、rated Resources LP(vi)$8 million in Castex Energy 2014 LLC(vii)$7 million in Sierra Oil and Gas Holdings,L.P.(viii)$6 million in Eagle Energy Exploration,LLC(ix)$5 million in Carrier Energy Partners II LLC(x)$4 million in Meritage Midstream Services III,L.P.(xi)$2 million in aggregate in Origo Explo

12、ration Holding ASand Fieldwood Energy LLCRealised Capital to Date$425 million/27 per cent.of total capital investedRealisations during the year endedRealised a total of$114 million(3):31 December 2017(i)$87 million in Centennial Resource Development,Inc.(ii)$14 million in Rock Oil Holdings,LLC(iii)$

13、12 million in Riverstone Credit Opportunities,L.P.(iv)$2 million in aggregate in CanEra Inc.,Fieldwood Energy LLCand Hammerhead Resources Inc.Key Financials20172016 NAV as at 31 December$1,743 million/$1,699 million/1,290 million(4)1,376 million(4)NAV per Share as at 31 December$20.63/15.27(4)$20.11

14、/16.29(4)Market capitalisation at 31 December$1,409 million/$1,402 million/1,043 million(4)1,135 million(4)Share price at 31 December$16.68/12.35(4)$16.59/13.44(4)Total comprehensive profit for the year ended 31 December$44.6 million$351.4 millionBasic Earnings per Share for the year ended 31 Decemb

15、er52.82 cents 415.97 cents(1)Net capital available of$1,464 million is based on total capital raised of$1,320 million,bank loan of$100 million(maturing 27 June 2018),realised profits and other income net of fees,expenses and performance allocation.The Board does not expect to fully fund all commitme

16、ntsin the normal course of business(2)Art.105 of the Delegated Regulation 213/2013(3)Amounts may vary due to rounding(4)Based on exchange rate of 1.351$/at 31 December 2017(1.234$/at 31 December 2016)A Resilient PortfolioRELs investments remain centred in some of the mostattractive basins in North A

17、merica,with investmentsin the Permian,Eagle Ford and Western Canadaaccounting for 88 per cent.of the Companys grossunrealised value.Riverstone Energy Limited Annual Report and Financial Statements 2017A Resilient PortfolioThree Rivers IIIILX IIIRiverstone Energy Limited Annual Report and Financial S

18、tatements 2017Hammerhead/CIOCRock OilRiverstone Energy Limited Annual Report and Financial Statements 2017Chairmans StatementWhile it is too early to tell how the industry will respond,we expect companies which are differentiated whetherthrough outstanding operational capabilities,attractiveacreage

19、positions or balance sheet strength will bebest positioned to grow value as the sector recovers.Our investment in Centennial is an excellent exampleof RELs differentiated approach in practice.In the spanof less than two years,the company has completed threesizeable acquisitions to establish an 88,00

20、0 net acre positionin the highly attractive Delaware Basin of the Permian.Under the leadership of CEO Mark Papa and his highlyexperienced technical team,Centennial has used leadingedge completion technology to deliver outstanding wellresults and grow production,while avoiding the excessiveuse of lev

21、erage.Recently,the company began testing anadditional zone(3rd Bone Spring)and has utilised itsrelationships to enter into a long-term proppant supplyagreement with a local sand provider,which will helpmitigate the impact of cost inflation from a tighteningservices market.In the fourth quarter,REL t

22、ook advantage of strength inthe Centennial share price to de-risk its position throughthe sale of 18 per cent.of its shareholding for$87 million,which resulted in strong returns to Shareholders with aGross MOIC(1)of 1.8x and a Gross IRR(1)of 74 per cent.The increased share price through the fourth q

23、uarterhowever meant that the unrealised value of RELs holdingin Centennial remained at approximately the same levelas in the third quarter.Overall,the portfolio is now largely invested,havingdeployed 90 per cent.of net capital available.RELs“build-up”strategy has meant that the Company hasgradually

24、deployed its capital throughout the cycle,with an increased focus on oil-weighted,highly productivebasins with low costs of production.As a result,RELsinvestments remain centred in some of the most attractivebasins in North America,with investments in the Permian,Eagle Ford and Western Canada accoun

25、ting for 88 percent.of the Companys gross unrealised value.Investmentplatforms with strategies better suited to higher oil priceshave either been discounted,or seen their commitmentswithdrawn with minimal capital exposure to investors.At the end of 2017,the United States Governmentpassed and signed

26、the Tax Cuts and Jobs Act,which willhave a positive impact for investors in REL.The mainimpact of the Tax Cuts and Jobs Act for REL is a reductionin the federal corporate tax rate from 35 per cent.to21 per cent.,effective 1 January 2018 which resulted in aFinancial Statement benefit of approximately

27、$48 million(57 cents per share).Going forward,the lower federalcorporate tax rate will improve net returns for RELsfuture realisations in the United States.The oil market finally showed signs of asustained recovery in the second half oflast year,with WTI exiting 2017 at itshighest levels in over two

28、 and a half years.However,prices were turbulent for much of the year,with WTI dropping below$43 per barrel over the summeras North American oil production remained resilientdespite weakening prices.Today,the macro backdrop hasimproved considerably,supported by robust global oildemand and OPECs produ

29、ction cuts,which are helpingto alleviate oversupply and reduce excess stockpiles.Unfortunately,the improvement in the underlyingcommodity price did not translate into strong returnsfor energy equities overall.The total shareholder returnfor the S&P Oil&Gas E&P Index was negative nineper cent.over th

30、e course of the year,resulting in yetanother year of underperformance relative to the S&PIndex.This was a result of several themes that weighedon the minds of investors in 2017.In particular,therewas a renewed focus on the ability for energy producersto show financial discipline by prioritising retu

31、rns andfree cash flow generation over production growth.Stabilisation in oil marketprovides attractive backdropfor crystallising valuePerformanceREL ended 31 December 2017 with an NAV of$20.63 pershare.This equates to an increase of 52 cents(2.6 per cent.),when compared to NAV per share at 31 Decemb

32、er 2016.The growth since RELs half year results at 30 June 2017was even greater,with an uplift of 89 cents(4.5 per cent.),as the oil market rebounded from its lows.The increase in NAV over the period was primarilydriven by U.S.tax reform and a recovery at RELs thirdlargest investment,Liberty II,whic

33、h grew from Gross MOICof 1.0 x to 1.3x,on the success of its drilling programmein the Powder River Basin and opportunistic acquisitionsin the Bakken.Another key contributor was Meritage III,which completed its second gas processing facility,andis now marked at 1.8x Gross MOIC.Sierra experienced the

34、largest multiple uplift in theportfolio following the historic discovery at its“Zama 1”well,though the impact on NAV is relatively small giventhe amount of capital invested to date.Fieldwood was the largest detractor to performanceover the period.REL made its$59 million investmentin early 2014,when

35、the price of oil hovered around$100 per barrel.Although the terms of its investmentwere attractive at the time,substantial borrowings andthe sharp slide in commodity prices since then haveproved challenging for the company.This has beenexacerbated by recent production issues stemming fromthird-party

36、 infrastructure downtime and tropical stormactivity in the second half of the year.As a result,RELhas written down its investment to 20 per cent.of cost.The company now accounts for less than one per cent.of RELs gross unrealised value.Subsequent to year end,Fieldwood announced a comprehensive restr

37、ucturingtransaction,which is designed to reduce leverage,improveliquidity for the development and growth of its asset base,and to pursue a significant strategic acquisition.The valuation of RELs investments is conductedquarterly by the Investment Manager and subject toapproval by the independent Dir

38、ectors.In addition,thevaluations of RELs investments are audited by Ernst&Young LLP in connection with the annual audit of theCompanys Financial Statements.The Companys valuationpolicy is compliant with both IFRS and IPEV ValuationGuidelines and has been applied consistently from periodto period sin

39、ce inception.As the Companys investmentsare generally not publicly quoted,valuations requiremeaningful judgment to establish a range of values,andthe ultimate value at which an investment is realised maydiffer from its most recent valuation and the differencemay be significant.Further information on

40、 the Companysvaluation policy can be found in the Investment ManagersReport on page 21.Following a 70 per cent.increase in 2016,shares inREL declined by 8 per cent.over the calendar year 2017.This coincides with weakness of the U.S.Dollar,whichfell by 9 per cent.relative to Pounds Sterling.Despite a

41、volatile commodity backdrop since IPO,shares haveperformed relatively well,with an increase of 24 per cent.through the end of 2017 compared with the total returnfor the S&P Oil&Gas E&P Index of negative 46 per cent.Shares closed 2017 at a 19 per cent.Discount to NAV.The Board and Investment Manager

42、carefully monitorthe capital requirements of the portfolio,anticipatedrealisations and liquidity levels.REL finished the yearwith$1,316 million net invested,equating to 90 per cent.of net capital available.Over the past year,REL hasfocussed on maintaining capital flexibility for its existinginvestme

43、nts and as a result has not participated in newinvestments by Riverstones Global Energy&PowerFund VI.Should REL experience a significant changein capital availability due to one or more realisations,theBoard will evaluate the conditions for new investment aswell as the option of returning capital to

44、 its Shareholders.The Board also continues to monitor where its sharestrade relative to NAV and to evaluate all options availableto close any discount that would be in the best interestsof its Shareholders.While the improvement in oil price was beneficial toRELs underlying portfolio companies,the va

45、luation ofits investments did not move up in line with the oil price.Over the past year,the underperformance of energyequities meant that comparable valuation multiplesgenerally did not experience the same level of improvementas the commodity.In addition,net asset value analysistakes into account th

46、e forward curve for the underlyingcommodity,which did not experience the same degreeof recovery as spot prices.As ever,Riverstone reliesupon its disciplined investment strategy to grow valuethrough the“drill-bit”rather than rely on commodityprice movements.I am pleased to report that there were seve

47、ralexamples of this operational focus in 2017.Sierra,whichwas established as the first private Mexican E&P companyfollowing the countrys energy market reform,made ahistoric oil discovery in the shallow waters of the Gulf ofMexico.With estimates between 1.4 billion and 2.0 billionbarrels of oil in pl

48、ace,the discovery ranks as one of thelargest shallow water discoveries anywhere in the worldover the last twenty years.Although significant work willbe required to bring the well to production,the resultvalidates Riverstones strategy of being an early mover asthe Mexican energy market opened to fore

49、ign investors.Riverstone Energy Limited Annual Report and Financial Statements 2017Chairmans Statement(continued)(1)Gross MOIC is Gross Multiple of Invested Capital before transaction costs,taxes(approximately 21 to 27.5 per cent.of U.S.sourced taxable income)and20 per cent.carried interest on gross

50、 profits(without a hurdle rate).Since there is no netting of losses against gains,the effective carried interest rateon the portfolio as a whole will be greater than 20 per cent.In addition,there is a management fee of 1.5 per cent.of net assets per annum and otherexpenses.Given these costs,fees and

51、 expenses are in aggregate expected to be considerable,Net MOIC and Net IRR will be materially less than the GrossMOIC and Gross IRR.Local taxes,primarily on U.S.assets,may apply at the jurisdictional level on profits arising in operating entity investments.Furtherwithholding taxes may apply on dist

52、ributions from such operating entity investments.In the normal course of business,REL may form wholly-ownedsubsidiaries,to be treated as C Corporations for U.S.tax purposes.The C Corporations serve to protect RELs public investors from incurring U.S.ECI.The C Corporations file U.S.corporate tax retu

53、rns with the U.S.IRS and pay U.S.corporate taxes on its taxable income2017 was another good year for REL as its investmentscontinued to execute upon their strategies and themarket environment improved.While there are a numberof factors which could disrupt the recovery,industry hasemerged from the do

54、wn-cycle with improved health afterslashing costs and repairing balance sheets.This,alongwith constructive fundamentals for crude oil,shouldprovide a fertile environment for REL to grow value,capitalise upon improved market sentiment and makeattractive realisations for investors.Richard HaydenChairm

55、an27 February 2018Our largest investment,Hammerhead,has grownproduction to just under 30,000 boepd,up from 4,000 boepdat the time of Riverstones initial investment.Also inWestern Canada,Meritage III signed several third partyagreements for its midstream services,which havesupported the construction

56、of a second gas gatheringand processing facility,which came online in November.In the Permian,Centennial doubled oil production overthe course of 2017,to over 20,000 bopd.Liberty II hadanother active year,adding 40,000 net acres in theEast Nesson area of the Bakken on attractive terms,where it has a

57、lso begun drilling.On the U.S.side ofthe Gulf of Mexico,ILX III continued to achieve drillingsuccess with three discoveries over the course of 2017,resulting in a success rate of 75 per cent.on the 12 wellsdrilled to date.Subsequent to year end,REL took advantage of theimproved market environment to

58、 agree the sale of itsinvestment in Three Rivers III.This investment wasformed by Riverstone in April 2015 to pursue acquisition,exploitation and development opportunities in thePermian Basin of West Texas and Southeast New Mexico,following successful partnerships with the same team.Shortly after fo

59、rmation,Three Rivers III made severalacquisitions to establish a contiguous acreage positionin the core of the Delaware Basin,which it subsequentlygrew to approximately 57,000 net acres through leasingoffset acreage.As a result of Three Rivers IIIs early entryinto the basin,REL was able to achieve a

60、 strong returnon its$94 million investment,with the sale resultingin gross cash proceeds of approximately$205 million,representing a Gross MOIC(1)of 2.2x and a Gross IRR(1)of 49 per cent.for Shareholders.RELs portfolio of fourteen activeinvestments with a strong emphasis onNorth Americas low-cost ba

61、sins makesit well placed to take advantage of theimproving market environment.Riverstone Energy Limited Annual Report and Financial Statements 2017Riverstone Energy Limited Annual Report and Financial Statements 2017Investment Managers ReportIn addition,there have been no new substantial resourcepla

62、ys to augment the loss of core drilling locations andthe inherent declines from existing wells.As a result,thetrajectory for North American oil production may dependon whether improvements in drilling and completiontechnology can offset geological constraints.While Riverstone believes this dynamic i

63、s constructivefor oil prices over the medium-term,we are not in thebusiness of forecasting commodity prices.Riverstonesinvestment strategy is focussed on generating attractiveabsolute and relative returns throughout the commoditycycle.We seek to accomplish this in a number of ways.First,we leverage

64、our extensive expertise across theenergy ecosystem and capital structure to identifyopportunities as they shift over time.For example,wequickly established platforms in emerging,low-costbasins such as the Permian and Western Canada as oilprices declined.In addition,we utilised our basin expertiseto

65、spot new opportunities,such as Meritage III,whichprovides a solution to infrastructure constraints asHammerhead and other producers grow production.Throughout all of our investments,we have sought topartner with the best management teams in the energyindustry.Their operational excellence,deep localr

66、elationships and focus on safety generates an“alpha”beyond simply investing in the underlying commodity.Another key component of Riverstones investmentstrategy remains the“build-up”approach.Riverstoneand its investment professionals have many years ofexperience successfully investing in,and operatin

67、g,energy businesses through multiple commodity pricecycles.The firm applies a disciplined approach tomaintain maximum operational and financial flexibilitythrough any commodity price environment.While energyprices have been particularly volatile since RELs IPOin October 2013,when prices hovered arou

68、nd$100 perbarrel,Riverstones investment strategy has helpedmitigate the impact of commodity price volatility onthe portfolio.As a result,REL has deployed capitalat a weighted average oil price of approximately$51 per barrel.Over the same time period,NAV per sharehas increased by 29 per cent.on a US

69、Dollar basis andthe share price by 24 per cent.on a Pounds Sterlingbasis,compared with a negative 46 per cent.totalshareholder return for the S&P Oil&Gas E&P Index.Because of the build-up approach,the weightedaverage life of RELs investments is only 1.9 years.However,several of the companies are now

70、 reachinga stage whereby they have successfully executed upontheir strategies and achieved a level of scale whichmakes them candidates for sale or an IPO.While we willcontinue to focus on growing Shareholder value withinthe portfolio,we will seek to take advantage of favourablemarket conditions to m

71、ake realisations on attractiveterms.With fourteen active investments across E&P andmidstream in North America,REL offers investors aunique opportunity to invest in the most dynamic area ofthe energy market,and we believe those with a long-termoutlook will be handsomely rewarded.Oil prices have spent

72、 most of the pasttwo years oscillating in a range of$40 to$55 per barrel.However,prices finally brokeabove$60 per barrel in the second half of2017 as the market rebalanced.This is dueto five consecutive years of strong globaloil demand growth,high OPEC compliancelevels and various supply disruptions

73、.RELs portfolio of fourteen activeinvestments with a strong emphasison North Americas low-cost basinsmakes it well placed to take advantageof the improving market environment.The oil market spent much of early 2017 seekingequilibrium.However,steadily improving fundamentalsbecame clearer through the

74、second half as oversuppliedinventories began to decline and revert towards their fiveyear average.Drilling activity in U.S.basins,as measuredby oil rigs,slightly declined over the same period.Meanwhile,geopolitical risk remains ever-present,withpotential disruptions to supply from Venezuela and Iran

75、,as well as ongoing tensions in Saudi Arabia,NorthernIraq and elsewhere in the Middle East.Prices haveshifted to reflect these bullish developments,withprompt prices rallying and pushing the forward curveinto backwardation.While this has helped improvemarket sentiment,energy equities have not experi

76、encedthe same level of uplift as many fund managers haveremained underweight on the sector.While there is little doubt that higher prices willincentivise additional drilling and producer hedging,oneof the key questions hanging over the market in 2018 iswhether E&P companies will prove disciplined by

77、 focusingon returns,or ramp-up production.This ability for NorthAmerican producers to“turn on the shale tap”hascontinually weighed on the market as prices haveincreased.However,there are some signs that U.S.oilproduction may be more restrained than the marketexpects.One potential obstacle is the exh

78、austion of“core”drilling locations in North Americas more matureshale plays,such as the Eagle Ford and Bakken.This isa result of both the extensive drilling that has occurred inthese basins and the“high-grading”of prospects towardsthe most economic acreage as oil prices collapsed.Poised to Take Adva

79、ntageof the North AmericanShale Recovery Committed:$208m(12%)Invested:$203m(14%)OtherOnshore U.S.Committed:$568m(31%)Invested:$472m(33%)Permian&Eagle FordCommitted:$464m(26%)Invested:$412m(28%)WesternCanadaCommitted:$399m(22%)Invested:$267m(18%)Gulf ofMexicoCommitted:$163m(9%)Invested:$95m(7%)Intern

80、ational&CreditCNOR L.P.CANADIAN NON-OPERATEDRESOURCES I LTD.Riverstone Energy Limited Annual Report and Financial Statements 2017Investment StrategyThe Investment Managers objective is to achievesuperior risk adjusted after tax returns by makingprivately negotiated control investments primarily inth

81、e E&P and midstream energy sectors,which is asignificant component of virtually all major economies.Long-term market drivers of economic expansion,population growth,development of markets,deregulation,and privatisation allied to near-term commodity pricevolatility are expected to continue to create

82、opportunitiesglobally for Riverstone.Key Drivers:Capital constraints among companies with high levelsof leverage;Industry distress and pressures to rationalise assets;Increases in ability to extract hydrocarbons from oiland gas-rich shale formations;andHistorical under-investment in energy infrastru

83、cture.The Investment Manager,through its affiliates,has a strong track record of building businesses withmanagement teams and of delivering consistentlyattractive returns and significant outperformanceagainst both crude oil and natural gas benchmarks.The Company aims to capitalise on the opportuniti

84、espresented by Riverstones pipeline of investments.The Investment Manager,having made over 150investments globally in the energy sector since beingfounded in 2000,utilises its extensive industry expertiseand relationships to thoroughly evaluate investmentopportunities and uses its significant experi

85、ence inconducting due diligence,valuing assets and all otheraspects of deal execution,including financial and legalstructuring,accounting and compensation design.The Investment Manager also draws upon its extensivenetwork of relationships with industry-focussedprofessional advisory firms to assist w

86、ith due diligencein other areas such as accounting,tax,legal,employeebenefits,environmental,engineering and insurance.Riverstone Energy Limited Annual Report and Financial Statements 2017Investment Managers Report(continued)Current Portfolio Gross Realised Gross Gross Gross Capital&Committed Investe

87、d Realised Unrealised Unrealised Capital Capital Capital Value Value Gross Target Basin ($mm)($mm)($mm)(1)($mm)(2)($mm)(3)MOIC(3)Hammerhead Resources(formerly CIOC)Deep Basin(Canada)307 295 23 538 561 1.9xCentennial Permian(U.S.)268 268 87 392 479 1.8xThree Rivers III Permian(U.S.)167 94 206 206 2.2

88、xLiberty II Bakken,PRB(U.S.)142 142 177 177 1.3xILX III Deepwater GoM(U.S.)200 116 139 139 1.2xCarrier II Permian(U.S.)133 110 131 131 1.2xRCO(4)North America 125 87 82 17 99 1.1xCNOR Western Canada 90 83 83 83 1.0 xMeritage III(5)Western Canada 67 34 59 59 1.8xEagle II Mid-Continent(U.S.)67 62 56 5

89、6 0.9xCastex 2014 Gulf Coast Region(U.S.)67 44 44 44 1.0 xSierra Mexico 38 8 20 20 2.4xFieldwood GoM Shelf(U.S.)82 59 3 9 12 0.2xCastex 2005 Gulf Coast Region(U.S.)50 48 5 5 0.1x Total Current Portfolio(6)$1,803$1,450$195$1,876$2,071 1.4x Realisations Gross Realised Gross Gross Gross Capital&Committ

90、ed Invested Realised Unrealised Unrealised Capital Capital Capital Value Value Gross Target Basin ($mm)($mm)($mm)(1)($mm)($mm)(3)MOIC(3)Rock Oil(8)Permian(U.S.)114 229 11 240 2.1xCanEra III Western Canada 1 1 1 0.4xOrigo North Sea(Norway,U.K.)9 0.0 x Total Investments(6)$1,574$425$1,887$2,312 1.5x N

91、ote:Please refer to the Investment Portfolio Summary on pages 13 to 20 for additional details on the valuation of the Companys portfolio as of 31 December 2017.(1)Gross realised capital is total gross proceeds realised on invested capital.Of the$425 million of capital realised to date,$248 million i

92、s the return of the costbasis,and the remainder is profit(2)Net invested capital is total invested capital less cost basis of the realised capital(3)Gross MOIC is Multiple of Invested Capital.Gross Unrealised Value and Gross MOIC are before transaction costs,taxes(approximately 21 to 27.5 per cent.o

93、fU.S.sourced taxable income)and 20 per cent.carried interest on gross profits(without a hurdle rate).Since there is no netting of losses against gains,theeffective carried interest rate on the portfolio as a whole will be greater than 20 per cent.In addition,there is a management fee of 1.5 per cent

94、.of net assetsper annum and other expenses.Given these costs,fees and expenses are in aggregate expected to be considerable,Total Net Value and Net MOIC will bematerially less than Gross Unrealised Value and Gross MOIC.Local taxes,primarily on U.S.assets,may apply at the jurisdictional level on prof

95、its arising inoperating entity investments.Further withholding taxes may apply on distributions from such operating entity investments.In the normal course of business,REL may form wholly-owned subsidiaries,to be treated as C Corporations for U.S.tax purposes.The C Corporations serve to protect RELs

96、 public investorsfrom incurring U.S.ECI.The C Corporations file U.S.corporate tax returns with the U.S.IRS and pay U.S.corporate taxes on its taxable income(4)Credit investment(5)Midstream investment(6)Amounts may vary due to rounding(7)Net capital available of$1,464 million is based on total capita

97、l raised of$1,320 million,bank loan of$100 million(maturing 27 June 2018),realised profits andother income net of fees,expenses and performance allocation.The Board does not expect to fully fund all commitments in the normal course of business(8)The unrealised value of the Rock Oil investment consis

98、ts of rights to mineral acresRiverstone Energy Limited Annual Report and Financial Statements 2017Investment Portfolio SummaryAs of 31 December 2017,RELs portfolio comprised fourteen active investments including twelve E&P investments,onemidstream investment and one credit investment.HAMMERHEADAs of

99、 31 December 2017,REL,through thePartnership,has invested$295.3 million of its$307.3 million commitment to Hammerhead.Hammerhead is a private E&P company focussedon liquids-rich unconventional resources inWestern Canada.Since its establishment in 2010,Hammerhead has aggregated one of the largestand

100、most advantaged land positions in theemerging Montney and Duvernay formationsof Western Canadas Deep Basin.The companycontrols and operates 100 per cent.of this assetbase,which comprises over 2,000 net drillinglocations across 400,000 net acres in theMontney and Duvernay.Since Riverstonesinitial inv

101、estment,Hammerhead has increasedproduction almost ten-fold to 28,000 boepd sincetime of entry and significantly grown reserves to260 mmboe(as of December 2016,pro forma foracquisitions in Q1 2017).In the second half of 2017,Hammerheadchanged its name from Canadian International OilCorp.(CIOC)to Hamm

102、erhead Resources Inc.InQ3 2017,Hammerhead issued$160 million seniornotes,the proceeds of which were used to redeemsecond lien notes and fund drilling for continueddevelopment and delineation of its asset base.As of 31 December 2017,RELs interest inHammerhead,through the Partnership,wasvalued at 1.9x

103、 Gross MOIC(1)or$561.2 million(Realised:$23.1 million,Unrealised:$538.1 million).The headline multiple on RELs investment inHammerhead decreased over the period,reflectingthe$64 million warrant exercise in Q1 2017 beingvalued at cost.CENTENNIALAs of 31 December 2017,REL,through the Partnership,has i

104、nvested in full its$267.9 million commitment toCentennial.Centennial is an E&P company focussed onthe acquisition and development of oil and liquids-richnatural gas resources in the Permian Delaware Basin,West Texas.The company,led by former EOGResources,Inc.chief executive Mark Papa,has rapidlyaggr

105、egated an 88,000 net acre position in the DelawareBasin of the Permian.The companys development planenvisages growing oil production from approximately21,000 bopd as of Q3 2017 to 60,000 bopd in 2020.REL,through the Partnership,owns approximately19.5 million shares which are publicly traded(NASDAQ:C

106、DEV),at a weighted average purchaseprice of$11.21.REL has borrowed$100 millionthrough a margin loan secured by RELs investmentin Centennial.In addition,REL has interests inapproximately$6 million of sponsor warrants.In Q4 2017,Centennial completed an underwrittensecondary public offering of 25.0 mil

107、lion shares.RELparticipated by selling 4.3 million shares(equal to itsproportional share)at a price of$19.95.The transactionresulted in gross proceeds to REL of$86.7 million andimplied a Gross MOIC(1)of 1.8x(Net MOIC of 1.6x)andGross IRR(1)of 74 per cent.(Net IRR of 59 per cent.).Also in the quarter

108、,Centennial completed a$400 millionprivate offering for senior unsecured notes due 2026yielding 5.375 per cent.,which it intends to use to repayits credit facility and for general corporate purposes.As of 31 December 2017,RELs interest inCentennial,through the Partnership,was valued at 1.8xGross MOI

109、C(1)or$479.2 million(Realised:$86.7 million,Unrealised:$392.5 million).The Gross MOIC(1),which reflects the mark-to-market value of RELsshareholding,remained unchanged over the year.(1)Gross MOIC is Gross Multiple of Invested Capital before transaction costs,taxes(approximately 21 to 27.5 per cent.o

110、f U.S.sourced taxable income)and 20 per cent.carried interest on gross profits(without a hurdle rate).Since there is no netting of losses against gains,the effective carried interestrate on the portfolio as a whole will be greater than 20 per cent.In addition,there is a management fee of 1.5 per cen

111、t.of net assets per annum andother expenses.Given these costs,fees and expenses are in aggregate expected to be considerable,Net MOIC and Net IRR will be materially lessthan the Gross MOIC and Gross IRR.Local taxes,primarily on U.S.assets,may apply at the jurisdictional level on profits arising in o

112、perating entityinvestments.Further withholding taxes may apply on distributions from such operating entity investments.In the normal course of business,REL mayform wholly-owned subsidiaries,to be treated as C Corporations for U.S.tax purposes.The C Corporations serve to protect RELs public investors

113、from incurring U.S.ECI.The C Corporations file U.S.corporate tax returns with the U.S.IRS and pay U.S.corporate taxes on its taxable incomeRiverstone Energy Limited Annual Report and Financial Statements 2017Investment Managers Report(continued)THREERIVERSIIIAs of 31 December 2017,REL,through the Pa

114、rtnership,has invested$94.3 million of its$166.7 millioncommitment to Three Rivers III.Similar to Riverstonestwo prior successful partnerships with this managementteam,Three Rivers III focuses on oil and gas acquisitionand development opportunities in the Permian Basin.Through a series of acquisitio

115、ns,Three Rivers III hasbuilt a position of approximately 60,000 net acres in thePermian Delaware basin,primarily in Culberson&Reeves counties.The company drilled five wells in thesecond half of 2017 as the team continues to delineateits position and was producing approximately10,000 boepd at the end

116、 of January 2018.As of 31 December 2017,RELs interest inThree Rivers III,through the Partnership,was valuedat 2.2x Gross MOIC(1)or$205.6 million.The valuationfor Three Rivers III decreased over the year,reflectingreduced M&A activity and acreage multiples inthe Permian.Subsequent to year end,REL ann

117、ounced the saleof Three Rivers III.Under the terms of the transaction,the Companys investment,through the Partnership,will realise gross cash proceeds of approximately$205 million,representing a Gross MOIC(1)of 2.2x(Net MOIC of 1.9x)on the$94 million investment anda Gross IRR(1)of 49 per cent.(Net I

118、RR of 41 per cent.).This represents a gross profit of$111 million,whichwill be subject to a performance fee upon closing ofthe sale,which is expected to occur in April 2018and is subject to customary closing conditions.Therealised gain from this transaction was fully offsetby net operating losses fr

119、om prior years,with thetax effect of the transaction fully reflected in thetax component of the valuation of the Companysinvestment in the Partnership,resulting in no tax due.CARRIERIIAs of 31 December 2017,REL,through thePartnership,has invested$109.6 million of its$133.3 million commitment to Carr

120、ier II.Carrier IIis focussed on the acquisition and exploitation ofupstream oil and gas assets by partnering withselect operators that are developing bothunconventional and conventional reservoirs inNorth America.Shortly after its establishmentin May 2015,Carrier II entered into a jointventure agree

121、ment with a highly experiencedoperator group made up of Henry Resourcesand PT Petroleum targeting 19,131 net acres fordevelopment in the southern Midland Basin.Subsequently through three separate acquisitionsthe company has acquired 3,489 net acres inKarnes County in the Eagle Ford basin,targetingth

122、e Sugarloaf Project and the Chisholm Project,both operated by Marathon Oil Corp.As of endof the period,Carrier II was producing over8,000 boepd net.As of 31 December 2017,RELs interest inCarrier II,through the Partnership,was valuedat 1.2x Gross MOIC(1)or$131.5 million.TheGross MOIC(1)decreased slig

123、htly over the year,reflecting weaker performance of publiclytraded comparables.Investment Portfolio Summary(continued)Riverstone Energy Limited Annual Report and Financial Statements 2017(1)Gross MOIC is Gross Multiple of Invested Capital before transaction costs,taxes(approximately 21 to 27.5 per c

124、ent.of U.S.sourced taxable income)and 20 per cent.carried interest on gross profits(without a hurdle rate).Since there is no netting of losses against gains,the effective carried interestrate on the portfolio as a whole will be greater than 20 per cent.In addition,there is a management fee of 1.5 pe

125、r cent.of net assets per annum andother expenses.Given these costs,fees and expenses are in aggregate expected to be considerable,Net MOIC and Net IRR will be materially lessthan the Gross MOIC and Gross IRR.Local taxes,primarily on U.S.assets,may apply at the jurisdictional level on profits arising

126、 in operating entityinvestments.Further withholding taxes may apply on distributions from such operating entity investments.In the normal course of business,REL mayform wholly-owned subsidiaries,to be treated as C Corporations for U.S.tax purposes.The C Corporations serve to protect RELs public inve

127、storsfrom incurring U.S.ECI.The C Corporations file U.S.corporate tax returns with the U.S.IRS and pay U.S.corporate taxes on its taxable incomeLIBERTYIIAs of 31 December 2017,REL,through thePartnership,has invested$141.7 million of its$141.7 million commitment to Liberty II.As ofDecember 2017,Liber

128、ty II had established anapproximately 97,000 net acre position in theWilliston(Bakken)and Powder River Basinsthrough a series of acquisitions,which benefitfrom Liberty IIs sophisticated and proprietary wellcompletion technology.Liberty II has an inventoryof over 1,000 gross drilling locations,and is

129、currently producing approximately 7,700 boepd.In 2017,Liberty II was successful in leasing40,000 net acres in the East Nesson area of theBakken,at an average cost of approximately$600 per acre.The company initiated a drillingcampaign on this acreage in late 2017.As of 31 December 2017,RELs interest

130、inLiberty II,through the Partnership,was valuedat 1.3x Gross MOIC(1)or$177.1 million.Thevaluation multiple increased over the year,reflecting improved performance at the companyand a recovery in M&A activity in the basins inwhich it operates.RCOAs of 31 December 2017,REL,through thePartnership,has i

131、nvested$87.0 million of its$125.0 million commitment to RCO,of which$82.0 million has been realised.RCO was formedin January 2015 to take advantage of thedislocation in the leveraged capital markets forenergy companies.Since its inception,RCO hasmade a total of 32 investments,27 of which havealready

132、 been fully exited.As of 31 December 2017,RELs interest inRCO,through the Partnership,was valued at1.1x Gross MOIC(1)or$99.0 million(Realised:$82.0 million,Unrealised:$17.0 million).Thevaluation decreased over the year,reflectingthe mark-to-market value of RCOs remainingunderlying securities.Riverst

133、one Energy Limited Annual Report and Financial Statements 2017Investment Managers Report(continued)ILX IIIAs of 31 December 2017,REL,through thePartnership,has invested$116.1 million of its$200.0 million commitment to ILX III.ILX III,based in Houston,Texas,is a repeat joint-venturewith Ridgewood Ene

134、rgy Corporation.The newentity maintains the same strategy of acquiringnon-operated working interests in oil-focussedexploration projects in the shallow Gulf of Mexico.ILX III acquired offshore leases with 15 defineddeepwater prospects at inception,but hassince opportunistically farmed into twoadditi

135、onal prospects and added 12 additionalprospects through the 2016 central Gulf ofMexico Lease Sale.In 2017,ILX III drilled four wells,of which threewere discoveries.The company has a 75 per cent.success rate on its 12 wells drilled to date andis currently progressing plans to develop itsnine discover

136、ies.As of 31 December 2017,RELs interest inILX III,through the Partnership,was valued at1.2x Gross MOIC(1)or$139.3 million.The GrossMOIC(1)for ILX III decreased over the year,reflecting recent discoveries being valued at cost.CNORAs of 31 December 2017,REL,through thePartnership,has invested$83.3 mi

137、llion of its$90.0 million commitment to CNOR.CNOR is aCalgary-based oil and gas company focussed onthe Western Canadian Sedimentary Basin.CNORhas invested in a joint venture with Tourmaline Oiltargeting the Peace River High area(111,700 netacres)and is currently also pursuing a delineationprogramme

138、in the Pipestone Montney,where ithas a position of approximately 25,000 net acres.As of 31 December 2017,RELs interest inCNOR,through the Partnership,was valued at1.0 x Gross MOIC(1)or$83.3 million.The GrossMOIC(1)remained unchanged over the year.Investment Portfolio Summary(continued)Riverstone Ene

139、rgy Limited Annual Report and Financial Statements 2017(1)Gross MOIC is Gross Multiple of Invested Capital before transaction costs,taxes(approximately 21 to 27.5 per cent.of U.S.sourced taxable income)and 20 per cent.carried interest on gross profits(without a hurdle rate).Since there is no netting

140、 of losses against gains,the effective carried interestrate on the portfolio as a whole will be greater than 20 per cent.In addition,there is a management fee of 1.5 per cent.of net assets per annum andother expenses.Given these costs,fees and expenses are in aggregate expected to be considerable,Ne

141、t MOIC and Net IRR will be materially lessthan the Gross MOIC and Gross IRR.Local taxes,primarily on U.S.assets,may apply at the jurisdictional level on profits arising in operating entityinvestments.Further withholding taxes may apply on distributions from such operating entity investments.In the n

142、ormal course of business,REL mayform wholly-owned subsidiaries,to be treated as C Corporations for U.S.tax purposes.The C Corporations serve to protect RELs public investorsfrom incurring U.S.ECI.The C Corporations file U.S.corporate tax returns with the U.S.IRS and pay U.S.corporate taxes on its ta

143、xable incomeFIELDWOODAs of 31 December 2017,REL,through thePartnership,has invested$58.7 million of its$82.4 million commitment to Fieldwood.Riverstoneformed Fieldwood in partnership with CEO MattMcCarroll and his team in December 2012.RELmade its investment in Fieldwood in 2014,as thecompany acquir

144、ed the GoM interests from Apacheand SandRidge.The company has subsequentlymade three bolt-on acquisitions,and now has aninterest in 400 GoM leases and 1,000 GoM wells,making it one of the largest oil and gas producersin the shallow Gulf of Mexico.As of 31 December 2017,RELs interest inFieldwood,thro

145、ugh the Partnership,was valuedat 0.2x Gross MOIC(1)or$11.6 million(Realised:$2.8 million,Unrealised:$8.8 million).The valuationfor Fieldwood decreased over the year,reflectinga combination of lower production,liquiditypressures,and ongoing balance sheet initiatives.Some portion of decreased valuatio

146、n representsa permanent impairment of value.Subsequent to year end,Fieldwood filed avoluntary petition for relief under Chapter 11 of theUnited States Bankruptcy Code.The Chapter 11 planof reorganisation encompasses a comprehensiverestructuring of the companys balance sheetthrough reducing current d

147、ebt by approximately$1.6 billion and raising capital of approximately$525 million through an equity rights offering.In addition,Fieldwood is expected to acquire thedeepwater Gulf of Mexico oil and gas assets ofNoble Energy,Inc.,which complement and enhancethe companys existing asset base and operati

148、ons.The transaction is expected to close in the secondquarter of 2018,subject to court approval.EAGLEIIAs of 31 December 2017,REL,through thePartnership,has invested$61.7 million of its$66.7 million commitment to Eagle II.Thecompany owns approximately 11,300 net acresin the SCOOP and approximately 1

149、3,800 net acresin the Mississippi Lime.At the end of 2017,thecompany sold a circa.5,000 acre portion of itsSCOOP assets,the proceeds of which were usedto pay down debt.Eagle II is currently producingapproximately 2,100 boepd.As of 31 December 2017,RELs interest inEagle II,through the Partnership,was

150、 valuedat 0.9x Gross MOIC(1)or$55.5 million.The GrossMOIC(1)for Eagle II decreased over the year,reflecting less active M&A markets for MississippiLime assets.Riverstone Energy Limited Annual Report and Financial Statements 2017Investment Managers Report(continued)Investment Portfolio Summary(contin

151、ued)CASTEX2014As of 31 December 2017,REL,through thePartnership,has invested$43.7 million of its$66.7 million commitment to Castex 2014.Castex2014 is a Houston-based oil and gas companyfocussed on gas exploration opportunities in theU.S.Gulf Coast Region,in partnership with Castex2005.Castex 2014 ha

152、s achieved a 100 per cent.success rate on the seven exploration prospectsdrilled since inception.In the second half of 2017,Castex 2014 andCastex 2005 drilled the second well within theCoastal Terrebone Seismic area.The companiesencountered commercial amounts consistentwith pre-drill estimates.As of

153、 31 December 2017,RELs interest inCastex 2014,through the Partnership,was valuedat 1.0 x Gross MOIC(1)or$43.7 million.The GrossMOIC(1)remained unchanged over the year.MERITAGEIIIAs of 31 December 2017,REL,through thePartnership,has invested$33.7 million of its$66.7 million commitment to Meritage III

154、.RELsinvestment to date is related to construction ofgas gathering,gas processing,and oil gatheringinfrastructure in Western Canada.Since completing its initial midstreaminfrastructure,the company has successfullyentered into additional gas gathering andprocessing agreements with Hammerhead andthird

155、 parties.In the second half of 2017,thecompany completed and commissioned its secondgas processing facility and related infrastructureat Patterson Creek.As of 31 December 2017,RELs interest inMeritage III,through the Partnership,was valuedat 1.8x Gross MOIC(1)or$59.0 million.Thevaluation for Meritag

156、e III increased over the year,reflecting the company securing contracts foradditional volumes.Riverstone Energy Limited Annual Report and Financial Statements 2017(1)Gross MOIC is Gross Multiple of Invested Capital before transaction costs,taxes(approximately 21 to 27.5 per cent.of U.S.sourced taxab

157、le income)and 20 per cent.carried interest on gross profits(without a hurdle rate).Since there is no netting of losses against gains,the effective carried interestrate on the portfolio as a whole will be greater than 20 per cent.In addition,there is a management fee of 1.5 per cent.of net assets per

158、 annum andother expenses.Given these costs,fees and expenses are in aggregate expected to be considerable,Net MOIC and Net IRR will be materially lessthan the Gross MOIC and Gross IRR.Local taxes,primarily on U.S.assets,may apply at the jurisdictional level on profits arising in operating entityinve

159、stments.Further withholding taxes may apply on distributions from such operating entity investments.In the normal course of business,REL mayform wholly-owned subsidiaries,to be treated as C Corporations for U.S.tax purposes.The C Corporations serve to protect RELs public investorsfrom incurring U.S.

160、ECI.The C Corporations file U.S.corporate tax returns with the U.S.IRS and pay U.S.corporate taxes on its taxable incomeSIERRAAs of 31 December 2017,REL,through thePartnership,has invested$8.2 million of its$37.5 million commitment to Sierra.Sierra is anindependent Mexican energy company established

161、to pursue select upstream and midstreamopportunities in Mexico.Sierras consortiumshave won five offshore blocks to date,which makeSierra the third-largest non-state owned E&Pcompany in Mexico by net acreage,withapproximately 560,000 net acres.In Q3 2017,a consortium consisting of Sierra,Talos(a Rive

162、rstone portfolio company)andPremier Oil PLC announced a historic oildiscovery in the shallow waters of the Gulf ofMexico.The Zama 1 well,located in MexicosBlock 7,confirmed the presence of a light oilresource estimated to be in the range 1.4 billionand 2 billion barrels of oil in place.As of 31 Dece

163、mber 2017,RELs interest inSierra,through the Partnership,was valued at2.4x Gross MOIC(1)or$19.7 million.The valuationfor Sierra increased over the year,reflectingadjustments to the valuation of the Zama 1discovery and spending on undrilled prospects.CASTEX2005As of 31 December 2017,REL,through thePa

164、rtnership,has invested$48.0 million of its$50.0 million commitment to Castex 2005.Castex 2005 is a partnership focussed on aportfolio of properties in Southern Louisianaand the Gulf of Mexico Shelf that produceapproximately 62 mmcfepd,as well as aseismic-driven exploration program.Castexis managed b

165、y Castex Energy Inc.,which hasa 27 year operating history in exploration anddevelopment in the region.As of 31 December 2017,RELs interest inCastex 2005,through the Partnership,was valuedat 0.1x Gross MOIC(1)or$4.8 million,reflecting itsbalance sheet and the challenging environmentfor gas-focussed p

166、roducers in the Gulf Coast andGulf of Mexico shelf.The valuation remainedunchanged over the year.Riverstone Energy Limited Annual Report and Financial Statements 2017Investment Managers Report(continued)Realised InvestmentsROCKOILRock Oil was formed in March 2014 with the strategyof applying Rock Oi

167、ls land and technical expertiseto the acquisition and development of assets intop-tier North American plays.Since formation,Rock Oil has entered into a series of acquisitionsto establish a position of approximately 24,783 netacres in the Midland Basin of the Permian,producingapproximately 4,900 boep

168、d.In Q3 2016,Rock Oil agreed to the sale of100 per cent.of its membership interests toSM Energy Company(NYSE:SM),a U.S.basedE&P company.The transaction subsequentlyclosed on 4 October 2016,resulting in gross proceedsto REL of approximately$230 million.This impliesa Gross MOIC(1)of 2.0 x,a Gross IRR(

169、1)of 78 per cent.and a gain of$116 million on the Companysinvestment,through the Partnership,of$114 million.The MOIC and IRR,net of performance allocationand taxes,are approximately 1.9x and 60 per cent.,respectively.The Company received$216 millionof the gross proceeds at the close of the transacti

170、on.The Investment Manager,through RELCP,subsequently invested the net proceeds of itsperformance allocation,resulting in the purchaseof approximately 590,000 shares.In Q3 2017,the Company received theremaining$14 million proceeds from the salefollowing completion of the nine month escrowperiod.Appro

171、ximately$11 million of value remainsunrealised consisting of balance of cash andmineral acre reserves not included in the sale.As of 31 December 2017,RELs total interestin Rock Oil,through the Partnership,wasvalued at 2.1x Gross MOIC(1)or$240.2 million(Realised$229.5 million,Unrealised$10.7 million)

172、.CANERAIIIDuring Q1 2017,REL,through the Partnership,terminated its commitment to CanEra III andrealised$0.6 million of its$1.4 millioninvestment,or 0.4x Gross MOIC(1).ORIGOIn June 2017,REL,through the Partnership,transferred its interest in Origo to Norwegianoil and gas operator DNO ASA(OSE:DNO)for

173、no proceeds.(1)Gross MOIC is Gross Multiple of Invested Capital before transaction costs,taxes(approximately 21 to 27.5 per cent.of U.S.sourced taxable income)and 20 per cent.carried interest on gross profits(without a hurdle rate).Since there is no netting of losses against gains,the effective carr

174、ied interestrate on the portfolio as a whole will be greater than 20 per cent.In addition,there is a management fee of 1.5 per cent.of net assets per annum andother expenses.Given these costs,fees and expenses are in aggregate expected to be considerable,Net MOIC and Net IRR will be materially lesst

175、han the Gross MOIC and Gross IRR.Local taxes,primarily on U.S.assets,may apply at the jurisdictional level on profits arising in operating entityinvestments.Further withholding taxes may apply on distributions from such operating entity investments.In the normal course of business,REL mayform wholly

176、-owned subsidiaries,to be treated as C Corporations for U.S.tax purposes.The C Corporations serve to protect RELs public investorsfrom incurring U.S.ECI.The C Corporations file U.S.corporate tax returns with the U.S.IRS and pay U.S.corporate taxes on its taxable incomeRiverstone Energy Limited Annua

177、l Report and Financial Statements 2017ValuationThe Investment Manager is charged with proposingthe valuation of the assets held by REL through thePartnership.The Partnership has directed that securitiesand instruments be valued at their fair value.RELsvaluation policy is compliant with IFRS and IPEV

178、Valuation Guidelines and has been applied consistentlyfrom period to period since inception.As the Companysinvestments are generally not publicly quoted,valuationsrequire meaningful judgment to establish a range ofvalues,and the ultimate value at which an investmentis realised may differ from its mo

179、st recent valuation andthe difference may be significant.The Investment Manager values each underlyinginvestment in accordance with the Riverstone valuationpolicy,the IFRS accounting standards and IPEV ValuationGuidelines.The value of RELs portion of that investmentis derived by multiplying its owne

180、rship percentage by thevalue of the underlying investment.If there is anydivergence between the Riverstone valuation policy andRELs valuation policy,the Partnerships proportion of thetotal holding will follow RELs valuation policy.There wereno valuation adjustments recorded by REL as a result ofdiff

181、erences between IFRS and U.S.Generally AcceptedAccounting Policies for the year ended 31 December 2017or in any period to date.Valuations of RELs investmentsthrough the Partnership are determined by the InvestmentManager and disclosed quarterly to investors,subject toBoard approval.Riverstone values

182、 its investments using commonindustry valuation techniques,including comparable publicmarket valuation,comparable merger and acquisitiontransaction valuation,and discounted cash flow valuation.For development-type investments,Riverstone alsoconsiders the recognition of appreciation or depreciationof

183、 subsequent financing rounds,if any.For those earlystage privately held companies where there are otherindicators of a decline in the value of the investment,Riverstone will value the investment accordingly evenin the absence of a subsequent financing round.Riverstone reviews the valuations on a qua

184、rterly basiswith the assistance of the Investment Managers valuationcommittee as part of the valuation process.The Audit Committee reviews the valuations of theCompanys investments held through the Partnership,and makes a recommendation to the Board for formalconsideration and acceptance.Uninvested

185、CashAs of 31 December 2017,REL,including the Partnership,had uninvested funds of over$147 million held as cash andmoney market fixed deposits.The Partnership maintainsdeposit accounts with several leading international banks.In addition,the Partnership invests a portion of its cashdeposits in short-

186、term money market fixed deposits.RELs treasury policy seeks to protect the principal valueof cash deposits utilising low risk investments with top-tiercounterparts.Uninvested cash earned approximately128 basis points during the year ended 31 December 2017.In connection with the listing of REL on the

187、 LondonStock Exchange,all proceeds of the offering wereconverted to U.S.dollars at an average rate of 1.606at inception.All cash deposits referred to above aredenominated in U.S.dollars.Additionally,RELs functionalcurrency and Financial Statements are all presentedin U.S.dollars.The Partnerships com

188、mitments aredenominated in U.S.dollars,except Hammerhead andCNOR which are denominated in Canadian dollars.Subsequent EventsIn February 2018,REL announced the sale of ThreeRivers III.Under the terms of the transaction,theCompanys investment,through the Partnership,willrealise gross cash proceeds of

189、approximately$205 million,representing a Gross MOIC(1)of 2.2x(Net MOIC of 1.9x)on the$94 million investment and a Gross IRR(1)of49 per cent.(Net IRR of 41 per cent.).This representsa gross profit of$111 million,which will be subject toa performance fee upon closing of the sale,which isexpected to oc

190、cur in April 2018 and is subject to customaryclosing conditions.The realised gain from this transactionwas fully offset by net operating losses from prior years,with the tax effect of the transaction fully reflected inthe tax component of the valuation of the Companysinvestment in the Partnership,re

191、sulting in no tax due.In February 2018,Fieldwood filed a voluntarypetition for relief under Chapter 11 of the United StatesBankruptcy Code.The Chapter 11 plan of reorganisationencompasses a comprehensive restructuring of thecompanys balance sheet through reducing currentdebt by approximately$1.6 bil

192、lion and raising capitalof approximately$525 million through an equity rightsoffering.In addition,Fieldwood is expected to acquirethe deepwater Gulf of Mexico oil and gas assets ofNoble Energy,Inc.,which complement and enhancethe companys existing asset base and operations.The transaction is expecte

193、d to close in the second quarterof 2018,subject to court approval.The effects of bothtransactions are fully reflected in the valuation of theCompanys investment in the Partnership at the year end.Riverstone International Limited27 February 2018Riverstone Energy Limited Annual Report and Financial St

194、atements 2017Investment PolicyAsset AllocationThe Company acquires its interests in each QualifyingInvestment at the same time(or as near as practicablethereto)as,and on substantially the same economic andfinancial terms as,the relevant Private Riverstone Funds.The Company and the current Private Ri

195、verstoneFunds,(Fund V and Fund VI)invest in each QualifyingInvestment in which the Private Riverstone Fundsparticipate in a ratio of one-third to REL to two-thirds tothe Private Riverstone Funds.This investment ratio issubject to adjustment on a case-by-case basis(a)totake account of the liquid asse

196、ts available to each of theCompany and the Private Riverstone Funds for investmentat the relevant time and any other investment limitationsapplicable to either of them or otherwise and(b)if both(i)a majority of the Companys independent Directorsand(ii)the Investment Manager agree that theinvestment

197、ratio should be adjusted for specificQualifying Investments.For each Private Riverstone Fund subsequent toFund V and Fund VI which is of a similar size and has asimilar investment policy to the Company,Riverstonewill seek to ensure that,subject to the investmentcapacity of the Company at the time,th

198、e Company andthe Private Riverstone Fund invest in QualifyingInvestments in an investment ratio of one-third to RELto two-thirds to the Private Riverstone Fund or in suchother ratio as the Companys independent Directors andthe Investment Manager agree at or prior to the firstclosing of such Private

199、Riverstone Fund.Such investment ratio may be adjusted by agreementbetween the Companys independent Directors and theInvestment Manager on subsequent closings of a PrivateRiverstone Fund having regard to the total capitalcommitments raised by that Private Riverstone Fundduring its commitment period,t

200、he liquid assets availableto the Company at that time and any other investmentlimitations applicable to either of them.The Investment Manager typically seeks to ensurethat the Company and the Private Riverstone Fundsdispose of their interests in Qualifying Investments atthe same time,on substantiall

201、y the same terms,and inthe case of partial disposals,in the same ratio as therelevant Qualifying Investment was acquired,but thismay not always be the case.In addition,the Company may at any time makeinvestments consistent with its investment policyindependent from Private Riverstone Funds,which may

202、include investments alongside Riverstone employeeco-investment vehicles or other Riverstone managed oradvised co-investment vehicles.In such cases,approvalby the Board is required.REL invests exclusively in the global energyindustry,with a particular focus on theexploration and production,and midstr

203、eamsectors.The Company may also makeinvestments in other energy sub-sectors(including energy services and powerand coal).REL is well positioned to takeadvantage of,and benefit from,the largenumber of investment opportunities beingdriven by the current commodity priceenvironment,as well as continued

204、growth inglobal energy demand,the North Americanenergy revolution,asset rationalisation bylarger companies,and growing deepwaterexploration success rates.Since REL,through the Partnership,invests alongsidethe Private Riverstone Funds in all Qualifying Investmentsin which the Private Riverstone Funds

205、 participate,RELpresents a unique opportunity for public market investorsto gain exposure to Riverstones investments in the veryattractive global energy sector.The Investment Manager intends to manageinvestments for the benefit of all of its investors.If anymatter arises that the Investment Manager

206、determinesin its good faith judgment constitutes an actual conflict ofinterest,the Investment Manager may take such actionsas may be necessary or appropriate,having regard to allrelevant terms of the Investment Management Agreement,to manage the conflict(and upon taking such actions theInvestment Ma

207、nager will be considered to have dischargedresponsibility for managing such conflict).The Directorsare required by the Registered Collective InvestmentSchemes Rules 2015 issued by the GFSC to take allreasonable steps to ensure that there is no breach of theconflicts of interest requirements of those

208、 rules.Riverstone Energy Limited Annual Report and Financial Statements 2017The Company invests in public or private securities,may hold controlling or non-controlling positions in itsinvestments and may make investments in the form ofequity,equity-related instruments,indebtedness orderivatives(or a

209、 combination of any of them).The Companydoes not permit any investments to be the subject ofstock lending or sale and repurchase of shares.DiversificationSave for the Companys investment in Hammerhead,which may represent up to 35 per cent.of the Companysgross assets,including cash holdings,measured

210、at thetime the investment is made,no one investment made bythe Company,through the Partnership,may(at the timeof the relevant investment)represent more than 25 percent.of the Companys gross assets,including cashholdings,measured at the time the investment is made.The Company utilises the Partnership

211、 and its subsidiaryundertakings or other similar investment holdingstructures to make investments and this limitation doesnot apply to its ownership interest in any such subsidiaryundertaking(nor,for the avoidance of doubt,to theCompanys interest in the Partnership).GearingThe Company can,but is not

212、 required to,incurindebtedness for investment purposes,to the extent thatsuch indebtedness is a precursor to an ultimate equityinvestment,working capital requirements and to fundown-share purchases or retentions up to a maximumof 30 per cent.of the last published NAV as at the timeof the borrowing u

213、nless approved by the Company byan ordinary resolution.This limitation does not apply toportfolio level entities in respect of which the Company isinvested but it does apply to all subsidiary undertakingsutilised by the Company or the Partnership for thepurposes of making investments.The consent of

214、amajority of the Companys Directors shall be requiredfor the Company or the Partnership to enter into anycredit or other borrowing facility.The Company must at all times comply with itspublished investment policy.For so long as the OrdinaryShares are listed on the Official List,no material changemay

215、 be made to the Companys investment policy otherthan with the prior approval of both the CompanysShareholders and a majority of the independent Directorsof the Company,and otherwise in accordance with theListing Rules.Investment RestrictionsThe Company is subject to the following investmentrestricti

216、ons:for so long as required by the Listing Rules,it will atall times seek to ensure that the Investment Managerinvests and manages the Companys and thePartnerships assets in a way which is consistent withthe Companys objective of spreading risk and inaccordance with the Companys investment policy;fo

217、r so long as required by the Listing Rules,it mustnot conduct a trading activity which is significant inthe context of the Company and its InvestmentUndertakings;for so long as required by the Listing Rules,not morethan 10 per cent.of the value of its total assets will beinvested in other UK-listed

218、closed-ended investmentfunds,except for those which themselves havepublished investment policies to invest not more than15 per cent.of their total assets in other UK-listedclosed-ended investment funds;andany investment restrictions that may be imposedby Guernsey law(although no such restrictionscur

219、rently exist).Currency and interest rate hedging transactions willonly be undertaken for the purpose of efficient portfoliomanagement and these transactions will not beundertaken for speculative purposes.“The Company invests in theglobal energy sector,whichis undergoing significanttransformation dri

220、ven inlarge part by a revolutionin horizontal drilling andcompletion technology.”Riverstone Energy Limited Annual Report and Financial Statements 2017Board of DirectorsRichard Hayden(72),Chairman and Non-executive Independent DirectorAppointment:Appointed to the Boardin May 2013 and appointed as Cha

221、irmanin May 2016Experience:Mr Hayden serves as non-executive Chairman of TowerBrook CapitalPartners Advisory Board and memberof the Investment Committee.Prior tojoining TowerBrook in 2009,Mr Haydenwas Vice Chairman of GSC Group Inc andGlobal Head of the CLO and Mezzanine Debtbusiness.Previously,Mr H

222、ayden was with Goldman Sachs from 1969to 1999.Mr Hayden held a variety of senior positions during his timeat Goldman Sachs,including Deputy Chairman of Goldman SachsInternational Ltd and Chairman of the Global Credit Committee.Mr Hayden has served on a number of corporate and advisory boardsand is c

223、urrently a non-executive Director of CQS.Mr Hayden is also onthe Finance and Investment Committee of the Childrens InvestmentFund Foundation.Mr Hayden is a UK resident.Committee Membership:Audit Committee Member;NominationCommittee Chairman;Management Engagement Committee MemberPeter Barker(69),Non-

224、executive Independent DirectorAppointment:Appointed to the Boardin September 2013Experience:Mr Barker was CaliforniaChairman of JPMorgan Chase&Co.,a global financial services firm,fromSeptember 2009 until his retirementon 31 January 2013,and a member ofits Executive Committee in New York.Mr Barker w

225、as also an Advisory Director ofGoldman,Sachs&Co.from December 1998until his retirement in May 2002,and a Partner of Goldman,Sachs&Co.from 1982 to 1998,heading up Investment Banking on the West Coast,having joined Goldman,Sachs&Co.in 1971.Mr Barker is President ofthe Fletcher Jones Foundation and has

226、 held numerous directorships.He is currently on the board of Fluor Corporation,Avery DennisonCorporation,the W.M.Keck Foundation,the Irvine Company,FranklinResources,Inc.,and the Automobile Club of Southern California.Mr Barker is also a Trustee of Claremont McKenna College,havingformerly been its C

227、hairman,and was previously Chair of the LosAngeles Area Council of the Boy Scouts of America.Mr Barker is aU.S.resident.Committee Membership:Audit Committee Member;NominationCommittee Member;Management Engagement Committee MemberPatrick Firth(56),Non-executive Senior Independent DirectorAppointment:

228、Appointed to the Boardin May 2013 and appointed as SeniorIndependent Director in May 2016Experience:Mr Firth qualified as a CharteredAccountant with KPMG Guernsey in 1991 andis also a member of the Chartered Institutefor Securities and Investment.He has workedin the fund industry in Guernsey since j

229、oiningRothschild Asset Management(CI)Limitedin 1992 before moving to become ManagingDirector at Butterfield Fund Services(Guernsey)Limited(subsequentlyButterfield Fulcrum Group(Guernsey)Limited),a company providingthird party fund administration services,where he worked from April 2002until June 200

230、9.He is a non-executive Director of a number of investmentfunds and management companies,including GLI Finance Limited,ICG Longbow Senior Secured UK Property Debt Investments Limited,JZ Capital Partners Limited and NextEnergy Solar Fund Limited.Mr Firth is a resident of Guernsey.Committee Membership

231、:Audit Committee Chairman;NominationCommittee Member;Management Engagement Committee MemberPierre F.Lapeyre(55),Non-executive DirectorAppointment:Appointed to the Board inMay 2013Experience:Mr Lapeyre is a Founder andSenior Managing Director of Riverstone.He is based in New York.Prior to foundingRiv

232、erstone,Mr Lapeyre was a ManagingDirector of Goldman Sachs in its GlobalEnergy and Power Group.Mr Lapeyre joinedGoldman Sachs in 1986 and spent his14-year investment banking career focussedon energy and power,particularly the midstream,upstream and energyservice sectors.Mr Lapeyres responsibilities

233、at Goldman Sachsincluded client coverage and leading the execution of a wide variety ofmergers and acquisitions,IPO,strategic advisory and capital marketsfinancings for clients across all sectors of the industry.While at Goldman Sachs,Mr Lapeyre served as sector captain for themidstream and energy s

234、ervices segments,led the groups coverage ofAsian energy companies and was extensively involved in the originationand execution of energy private equity investments on behalf of the firm.Mr Lapeyre was responsible for managing Goldman Sachs leadingfranchise in master limited partnerships.He was also

235、asked to leadthe groups agency and principal investment effort in energy/powertechnology.At Goldman Sachs Mr Lapeyre had relationship and dealexecution responsibilities for a broad range of energy clients.Mr Lapeyre serves on the boards of directors or equivalent bodies of anumber of portfolio compa

236、nies in which Other Riverstone Funds haveinvestment interests.Mr Lapeyre is a U.S.resident.Committee Membership:NoneRiverstone Energy Limited Annual Report and Financial Statements 2017David M.Leuschen(66),Non-executive DirectorAppointment:Appointed to the Board inMay 2013Experience:Mr Leuschen is a

237、 Founder andSenior Managing Director of Riverstone.He is based in New York.Prior to foundingRiverstone,Mr Leuschen was a Partner andManaging Director at Goldman Sachs andfounder and head of the Goldman SachsGlobal Energy and Power Group.Mr Leuschenjoined Goldman Sachs in 1977,becamehead of the Globa

238、l Energy and Power Group in 1985,became a Partnerof that firm in 1986 and remained with Goldman Sachs until leaving tofound Riverstone.Mr Leuschen has extensive mergers and acquisitions,financing and investing experience in the energy and power industry.Mr Leuschen was responsible for building the G

239、oldman Sachs energyand power investment banking practice into one of the leading franchisesin the global energy and power industry.During this period,Mr Leuschenand his team participated in a large number of the major energy andpower mergers and acquisitions transactions worldwide.Mr Leuschenalso wa

240、s a founder of Goldman Sachs leading master limited partnershipfranchise.Mr Leuschen also served as Chairman of the GoldmanSachs Energy Investment Committee,where he was responsible forscreening potential capital commitments by Goldman Sachs in theenergy and power industry and was responsible for es

241、tablishing andmanaging the firms relationships with senior executives from leadingcompanies in all segments of the energy and power industry.Mr Leuschen also serves on the boards of directors or equivalentbodies of a number of portfolio companies in which Other RiverstoneFunds have investment intere

242、sts.Mr Leuschen is a U.S.resident.Committee Membership:NoneKen Ryan(45),Non-executive DirectorAppointment:Appointed to the Board inMay 2016Experience:Mr Ryan is a Partner ofRiverstone and is responsible for corporatedevelopment.He is based in New York.Priorto joining Riverstone in 2011,he worked for

243、Gleacher&Company/Gleacher Partners inboth London and New York,most recentlyas Managing Director and Co-head ofInvestment Banking.Prior to Gleacher,he worked for Goldman Sachs in the European Financial InstitutionsGroup in London,the U.S.Financial Institutions Group in New York,and the European Advis

244、ory Group.He received a law degree fromUniversity of Dublin,Trinity College.Mr Ryan also serves on the boards of directors or equivalent bodies ofa number of portfolio companies in which Other Riverstone Funds haveinvestment interests.Mr Ryan is a U.S.resident.Committee Membership:NoneJeremy Thompso

245、n(62),Non-executive Independent DirectorAppointment:Appointed to the Boardin May 2016Experience:Mr Thompson has sectorexperience in Finance,Telecoms,Engineering and Oil&Gas.He acts as anindependent non-executive directorship forboth listed,including DP Aircraft 1 Limited,and PE funds.Prior to that,h

246、e has workedin private equity and was CEO of fourautonomous global businesses within Cable&Wireless Plc(operating in both regulated and unregulated markets),and earlier held CEO roles within the Dowty Group.He currently servesas chairman of the States of Guernsey Renewable Energy Team andis a commis

247、sioner of the Alderney Gambling Control Commission.He is also an independent member of the Guernsey Tax Tribunal panel.He is a graduate of Brunel(B.Sc),Cranfield(MBA)and Bournemouth(M.Sc)Universities and was an invited member to the UKs seniordefence course(Royal College of Defence Studies).He is a

248、member ofthe IoD and holds the IoDs Certificate and Diploma in Company Direction,is an associate of the Chartered Institute of Arbitration and a charteredCompany Secretary.Mr Thompson is a resident of Guernsey and haspreviously lived and worked in the UK,USA and Germany.Committee Membership:Audit Co

249、mmittee Member;NominationCommittee Member;Management Engagement Committee MemberClaire Whittet(62),Non-executive Independent DirectorAppointment:Appointed to the Board inMay 2015Experience:Mrs Whittet has 40 years ofexperience in the financial services industry.After obtaining a MA(Hons)in Geography

250、from the University of Edinburgh,she joinedthe Bank of Scotland for 19 years andundertook a wide variety of roles includingrunning two city centre offices.She movedto Guernsey in 1996 and was Global Headof Private Client Credit for Bank of Bermuda before joining the Boardof Rothschild Bank Internati

251、onal Limited in 2003,initially as Director ofLending and latterly as Managing Director and Co-Head until May 2016when she became a non-executive Director.Mrs Whittet is an ACIBmember of the Chartered Institute of Bankers in Scotland,a CharteredBanker,a member of the Chartered Insurance Institute and

252、 holds anIoD Diploma in Company Direction.She is a non-executive Director offive other listed funds,being BH Macro Limited,Eurocastle InvestmentLimited,International Public Partnerships Limited,Third Point OffshoreInvestors Limited and TwentyFour Select Monthly Income Fund Limited.Mrs Whittet is a G

253、uernsey resident.Committee Membership:Audit Committee Member;NominationCommittee Member;Management Engagement Committee ChairmanReport of the DirectorsRiverstone Energy Limited Annual Report and Financial Statements 2017The Directors hereby submit the Annual Report and AuditedFinancial Statements fo

254、r the Company for the year ended31 December 2017.This Report of the Directors should beread together with the Corporate Governance Report onpages 33 to 39.General InformationRiverstone Energy Limited is a company limited by shares,which was incorporated on 23 May 2013 in Guernsey withan unlimited li

255、fe and registered with the Commission as aRegistered Closed-ended Collective Investment Schemepursuant to the POI Law.It has been listed on the LondonStock Exchange since 29 October 2013.The registered officeof the Company is Heritage Hall,PO Box 225,Le MarchantStreet,St Peter Port,Guernsey,GY1 4HY,

256、Channel Islands.Principal ActivitiesThe principal activity of the Company is to act as aninvestment entity through the Partnership and makeprivately negotiated equity investments in the energy sector.The Companys investment objective is to generatelong-term capital growth by investing in the global

257、energysector,with a particular focus on opportunities in theglobal exploration and production and midstream energysub-sectors.Business ReviewA review of the Companys business and its likely futuredevelopment is provided in the Chairmans Statement andin the Investment Managers Report on pages 10 to 2

258、1.Listing RequirementsSince being admitted on 29 October 2013 to the Official Listof the UK Listing Authority,maintained by the FCA,theCompany has complied with the applicable Listing Rules.Results and DividendThe results of the Company for the year are shown in theaudited Statement of Comprehensive

259、 Income on page 48.The Net Asset Value of the Company as at 31 December2017 was$1,743 million(31 December 2016:$1,699 million).The Directors do not recommend the payment of adividend in respect of the year ended 31 December 2017(31 December 2016:$Nil).Share CapitalAt incorporation on 23 May 2013,the

260、 Company issued onefounder Ordinary Share of no par value.On 29 October 2013,the Company issued 71,032,057 Ordinary Shares of no parvalue at 10 per Ordinary Share in an initial public offeringraising a total of$1,138 million.KFI,one of the Cornerstone Investors in the Company,paid for and acquired 1

261、0 million Ordinary Shares in twoequal tranches of 50 million.The first tranche was paid onAdmission and the second tranche of 5 million OrdinaryShares was paid on 26 September 2014.On 11 December 2015,the Company raised 67.6 million($102.3 million)(1)through the issuance of 8,448,006 newOrdinary Sha

262、res at 8.00 per Ordinary Share.Following admission of the new Ordinary Shares,theshare capital of the Company is 84,480,064 Ordinary Sharesin aggregate.The Company has one class of Ordinary Shares.Theissued nominal value of the Ordinary Shares represents100 per cent.of the total issued nominal value

263、 of all sharecapital.Under the Companys Articles of Incorporation,on a show of hands,each Shareholder present in personor by proxy has the right to one vote at general meetings.On a poll,each Shareholder is entitled to one vote for everyshare held.Shareholders are entitled to all dividends paid by t

264、heCompany and,on a winding up,provided the Company hassatisfied all of its liabilities,the Shareholders are entitledto all of the surplus assets of the Company.The Companyhas not declared or paid dividends from inception to31 December 2017,and has no intention to do so.The Ordinary Shares have no ri

265、ght to fixed income.(1)Gross of share issuance costs of$3.6 millionShareholdings of the DirectorsThe Directors with beneficial interests in the shares ofthe Company as at 31 December 2017 and 2016 aredetailed below:OrdinaryPer cent.OrdinaryPer cent.Shares heldHolding at Shares heldHolding at31313131

266、DecemberDecemberDecemberDecemberDirector2017201720162016Richard Hayden(1)10,0000.01210,0000.012Peter Barker(1)(2)5,0000.0065,0000.006Patrick Firth(2)(3)8,0000.0094,0000.005Pierre Lapeyre(4)50,0000.05950,0000.059David Leuschen(4)Ken Ryan(4)Jeremy Thompson(1)3,7510.004Claire Whittet(1)(5)2,2500.003(1)

267、Non-executive Independent Director(2)Ordinary Shares held jointly with spouse(3)Senior Independent Director(4)Mr Lapeyre,Mr Leuschen and Mr Ryan,as well as other Riverstonesenior management,have a beneficial interest in REL Coinvestment,LP,which as at the year end held 5,000,000 Ordinary Shares,andR

268、iverstone Energy Limited Capital Partners LP,which as at the yearend held 675,814 Ordinary Shares(5)Ordinary Shares held indirectly with spouseIn addition,the Company also provides the same informationas at 16 February 2018,being the most current informationavailable.OrdinaryPer cent.Shares heldHold

269、ing at16 February16 FebruaryDirector20182018Richard Hayden(1)10,0000.012Peter Barker(1)(2)5,0000.006Patrick Firth(2)(3)8,0000.009Pierre Lapeyre(4)50,0000.059David Leuschen(4)Ken Ryan(4)Jeremy Thompson(1)3,7510.004Claire Whittet(1)(5)2,2500.003(1)Non-executive Independent Director(2)Ordinary Shares h

270、eld jointly with spouse(3)Senior Independent Director(4)Mr Lapeyre,Mr Leuschen and Mr Ryan,as well as other Riverstonesenior management,have a beneficial interest in REL Coinvestment,LP,which as 16 February 2018 held 5,000,000 Ordinary Shares andRiverstone Energy Limited Capital Partners LP,which as

271、 at16 February 2018 held 675,814 Ordinary Shares(5)Ordinary Shares held indirectly with spouseDirectors Authority to Buy Back SharesAt the AGM on 23 May 2017 in St Peter Port,Guernsey,theCompany renewed the authority to make market purchasesof up to a maximum of 14.99 per cent.of the issued sharecap

272、ital of the Company.Any buy back of the CompanysOrdinary Shares will be made subject to Companies Law andwithin any guidelines established from time to time by theBoard.The making and timing of any buy backs will be at theabsolute discretion of the Board and not at the option of theShareholders.Purc

273、hases of the Companys Ordinary Shareswill only be made through the market for cash at pricesbelow the prevailing Net Asset Value of the CompanysOrdinary Shares(as last calculated)where the Directorsbelieve such purchases will enhance Shareholder value.Such purchases will also only be made in accorda

274、nce withthe Listing Rules which provide that the price to be paidmust not be more than 5 per cent.above the average of themiddle market quotations for the Companys OrdinaryShares for the five business days before the shares arepurchased unless previously advised to Shareholders.In accordance with th

275、e Companys Articles ofIncorporation and Companies Law,up to 10 per cent.of theCompanys Ordinary Shares may be held as treasury shares.The Company did not purchase any shares for treasury orcancellation up to the date of this report.Directors and Officers Liability InsuranceThe Company maintains insu

276、rance in respect of directorsand officers liability in relation to their acts on behalf ofthe Company.Substantial ShareholdingsAs at 31 December 2017,the Company had been notified,in accordance with Chapter 5 of the Disclosure Guidanceand Transparency Rules,of the following substantial votingrights

277、as Shareholders of the Company.Per cent.Nature ofShareholder Shareholding Holding Holding AKRC Investments LLC(1)23,264,259 27.54 IndirectKendall FamilyInvestments LLC(1)10,000,000 11.84 DirectOld Mutual GlobalInvestors 6,139,239 7.27 IndirectREL Coinvestment,LP 5,000,000 5.92 Direct (1)Held by a Co

278、rnerstone InvestorRiverstone Energy Limited Annual Report and Financial Statements 2017In addition,the Company also provides the same informationas at 16 February 2018,being the most current informationavailable.Per cent.Nature ofShareholder Shareholding Holding Holding AKRC Investments LLC(1)23,264

279、,259 27.54 IndirectKendall FamilyInvestments LLC(1)10,000,000 11.84 DirectOld Mutual GlobalInvestors 6,168,531 7.30 IndirectREL Coinvestment,LP 5,000,000 5.92 Direct (1)Held by a Cornerstone InvestorThe Directors confirm that there are no securities inissue that carry special rights with regards to

280、the controlof the Company.The Companys issued share capital consists of84,480,064 Ordinary Shares.Under the Companys Articlesof Incorporation,on a show of hands,each Shareholderpresent in person or by proxy has the right to one vote atgeneral meetings.On a poll,each Shareholder is entitledto one vot

281、e for every share held.Independent External AuditorErnst&Young LLP has been the Companys external auditorsince incorporation.The Audit Committee reviews theappointment of the external auditor,its effectiveness and itsrelationship with the Company,which includes monitoringthe use of the external audi

282、tor for non-audit services and thebalance of audit and non-audit fees paid.Following a reviewof the independence and effectiveness of the external auditor,a resolution will be proposed at the 2018 Annual GeneralMeeting to reappoint Ernst&Young LLP.Each Directorbelieves that there is no relevant info

283、rmation of which theexternal auditor is unaware.Each has taken all stepsnecessary,as a Director,to be aware of any relevant auditinformation and to establish that Ernst&Young LLP is madeaware of any pertinent information.This confirmation is givenand should be interpreted in accordance with the prov

284、isionsof Section 249 of the Companies Law.Further information onthe work of the external auditor is set out in the Report of theAudit Committee on pages 40 to 42.Articles of IncorporationThe Companys Articles of Incorporation may only beamended by special resolution of the Shareholders.Non-mainstrea

285、m Pooled InvestmentsThe Board has concluded that the Companys OrdinaryShares are not non-mainstream pooled investments forthe purposes of the FCA rules regarding the restrictions onthe promotion to retail investors of unregulated collectiveinvestment schemes and close substitutes,meaning thatthe res

286、trictions on promotion imposed by the FCA rulesdo not apply.It is the Boards intention that the Companyconducts its affairs so that these restrictions will continueto remain inapplicable.AIFMDREL is regarded as an externally managed non-EEA AIFunder the AIFM Directive.RIL is the Investment Managerof

287、 the Company as its non-EEA AIFM.The AIFMD outlinesthe required information which has to be made available toinvestors in an AIF and directs that material changes to thisinformation be disclosed in the Annual Report of the AIF.All information required to be disclosed under the AIFMDis either disclos

288、ed in this Annual Report or is detailed inthe Appendix entitled AIFMD Disclosures on page 178 inRELs latest Prospectus which can be obtained through theCompanys website www.RiverstoneREL.com.The AIFM hasno remuneration within the current or prior year that fallswithin the scope of Article 22 of the

289、Directive.RIL provides AIFMD compliant management servicesto REL.The AIFM acting on behalf of the AIF,has appointedEstera Depositary Company(UK)Limited to providedepositary services to the AIF.The appointment of theDepositary is intended to adhere to,and meet the conditionsplaced on the Depositary a

290、nd the AIFM under Article 21 andother related articles of the AIFMD.The Depositary shallonly provide depositary services to the AIF should it admitone or more German and/or Danish investors followingmarketing activity towards them.At that time,the Depositaryshall observe and comply with the Danish a

291、nd Germanregulations applying to the provision of depositary servicesto a non-EEA AIF marketed in Denmark or Germany,as thecase may be,by a non-EEA AIFM.UCITS EligibilityThe Investment Manager is a relying adviser of RiverstoneInvestment Group LLC.Riverstone Investment Group LLCis registered as an i

292、nvestment adviser with the SEC underthe U.S.Investment Advisers Act.As such,the InvestmentManager is subject to Riverstone Investment Group LLCssupervision and control,the advisory activities of theInvestment Manager are subject to the U.S.InvestmentAdvisers Act and the rules thereunder and the Inve

293、stmentManager is subject to examination by the SEC.Report of the Directors(continued)Riverstone Energy Limited Annual Report and Financial Statements 2017Accordingly the Company has been advised that its OrdinaryShares should be“transferable securities”and,therefore,should be eligible for investment

294、 by authorised funds inaccordance with the UCITS Directive or NURS on thebasis that:the Company is a closed end investment company;the Ordinary Shares are admitted to trading on theMain Market of the London Stock Exchange;andthe Ordinary Shares have equal voting rights.However,the manager of the rel

295、evant UCITS or NURSshould satisfy itself that the Ordinary Shares are eligiblefor investment by the relevant UCITS or NURS.AEOI RulesUnder AEOI Rules the Company continues to comply withboth FATCA and CRS requirements to the extent relevant tothe Company.General Partners Performance Allocationand Ma

296、nagement FeesThe General Partners Performance Allocation is equal to20 per cent.of all realised pre-tax profits without regard torealised losses as disclosed in the Companys Prospectuses.In particular,taxes on realised gains from ECI investments,as shown in the Investment Managers Report,can besubst

297、antial at rates up to 27.5 per cent.The Company is notan umbrella collective investment undertaking and thereforehas no gross liability.In the normal course of business,REL may form wholly-owned subsidiaries,to be treated asC Corporations for U.S.tax purposes.The C Corporationsserve to protect RELs

298、public investors from incurring U.S.ECI.The C Corporations file U.S.corporate tax returns with theU.S.IRS and pay U.S.corporate taxes on its taxable income.The General Partners Performance Allocation iscalculated under the terms of the Partnership Agreementand as described in the Prospectuses.The Pe

299、rformance Allocation is calculated on a quarterlybasis,which is taken into account when calculating the fairvalue of the Companys investment in the Partnership,asdescribed in Note 10.The fair value of the Companysinvestment in the Partnership is after the calculation ofManagement Fees,as described i

300、n Note 10.The financial effect of the General Partners PerformanceAllocation,Management Fees and any taxes on ECI investmentsis shown in Note 6.The Investment Management Agreementcontinues into perpetuity post the seventh year anniversary.Change of ControlThere are no agreements that the Company con

301、siderssignificant and to which the Company is party that wouldtake effect,alter or terminate upon change of control of theCompany following a takeover bid.Going ConcernThe Companys Financial Statements are prepared inaccordance with the AIC Code and presented on a goingconcern basis.As further discl

302、osed in the CorporateGovernance Report on pages 33 to 39,the Company is amember of the AIC and complies with the AIC Code.TheDirectors have assessed the financial prospects of theCompany for the next twelve months from the date of approvalof the Financial Statements and made an assessment ofthe Comp

303、anys ability to continue as a going concern.TheDirectors have a reasonable expectation that the Companyhas adequate resources to continue in operational existencefor the next twelve months,as explained below.The Company retained$11.5 million of cash in theIPO and Placing and Open Offer,and received

304、distributionsof$5.5 million and$1.1 million from the Partnership inQ1 2016 and Q1 2017,respectively,of which$0.8 millionremains at 31 December 2017(31 December 2016:$3.2 million).This cash balance is sufficient to cover theCompanys existing liabilities at 31 December 2017 of$0.6 million,but the Comp

305、any will require a distribution of$3.3 million to cover its forecasted annual expenses for 2018of approximately$3.5 million.In accordance with section4.1(a)of the Partnership Agreement,in the event of theCompany requiring additional funds for working capital,it isentitled to receive another distribu

306、tion from the Partnership.As at 31 December 2017,the Partnership,includingits wholly-owned subsidiaries,REL US Corp and REL USCentennial Holdings,LLC,had$147 million of uninvestedfunds held as cash and money market fixed deposits(31 December 2016:$268 million),and has no material goingconcern risk.A

307、lthough the Companys commitments,throughthe Partnership,exceed its available liquid resources,it is notexpected that all commitments will be drawn due to a varietyof factors,such as a portfolio company being sold earlier thananticipated or a targeted investment opportunity changingor disappearing.In

308、 addition,the board of each underlyingportfolio company,more often than not controlled byRiverstone,has discretion over whether or not that capitalis ultimately invested.Moreover,RELs arrangements withRiverstone allow excess commitments to be amended by theInvestment Manager with consideration from

309、the Board.In light of the above facts,the Directors are satisfied thatit is appropriate to apply the going concern basis in preparingthe Financial Statements.In reaching this conclusion,theBoard has considered budgeted and projected results of thebusiness,projected cash flow and risks that could imp

310、actthe Companys liquidity over the next twelve months.Viability StatementAs required by the AIC Code,the Directors have assessed theprospects of the Company over a longer period than requiredby the going concern provision.The Board chose to conducta review for a period of three years to 31 December

311、2020 asit was determined to be an appropriate timeframe based onthe historical investment cycle of the Companys investmentsthrough the Partnership and its financial planning processes.Riverstone Energy Limited Annual Report and Financial Statements 2017Riverstone Energy Limited Annual Report and Fin

312、ancial Statements 2017On a rolling basis,the Directors evaluate the outcome of theinvestments and the Companys financial position as a whole.While an unprecedented and long-term decline in globaloil and gas consumption would threaten the Companysperformance,it would not necessarily threaten its viab

313、ility.In support of this statement,the Directors have takeninto account all of the principal risks and their mitigationas identified in the Principal Risk and Uncertainties sectionof the Corporate Governance Report,the nature of theCompanys business;including the cash reserves and moneymarket deposi

314、ts at the Partnership,the potential of itsportfolio of investments to generate future income andcapital proceeds,and the ability of the Directors to minimisethe level of cash outflows,if necessary.The most relevantpotential impacts of the identified Principal Risks andUncertainties on viability were

315、 determined to be:An investments capital requirements may exceed theCompanys ability to provide capital;andThe Company may not have sufficient capital available toparticipate in all investment opportunities presented.Each quarter,Directors review threats to the Companysviability utilising the risk m

316、atrix and update as requireddue to recent developments and/or changes in the globalmarket.The Board relies on periodic reports provided bythe Investment Manager and Administrator regarding risksfaced by the Company.When required,experts are utilisedto gather relevant and necessary information,regard

317、ing tax,legal,and other factors.The Investment Manager made financial commitmentsto each portfolio company.However,the Company evaluatesthe ongoing suitability of each investment prior to fundingand may or may not agree to fund an investment.In the eventthe Company is unable,or elects,not to fund an

318、 existinginvestment,Riverstone may seek other funding alternatives.The Investment Manager considers the future cashrequirements of the Company before funding portfoliocompanies.Furthermore,the Board receives regular updatesfrom the Investment Manager on the Companys cashposition,which allows the Boa

319、rd to maintain their fiduciaryresponsibility to the Shareholders and,if required,limitfunding for existing commitments.However,Managementfees may not be deferred per the terms of the InvestmentManagement Agreement.The Board considered the Companys viability over thethree year period,based on a worki

320、ng capital model preparedby the Investment Manager.The working capital modelforecasts key cash flow drivers such as capital deploymentrate,investment returns,Management Fees and operatingexpenses.In connection with the preparation of the workingcapital model,dividend payments and/or share repurchase

321、swere assumed to not occur during the three year period,unless already predetermined.In addition,the Boardreviews credit market availability,but no such financinghas been assumed.Report of the Directors(continued)If factors apart from capital deployment rate remainconstant,accelerating the capital d

322、eployment rate by20 per cent.,from 36 months to 30 months,would resultin the Company being directed by the Board,and theInvestment Manager recommending,to preserve workingcapital and postpone future investments after 24 months,rather than 27 months;unless a financing or capital raisewas completed.In

323、 both scenarios,the Company is forecastedto maintain sufficient working capital for the three year period.Based on the aforementioned procedures and theexisting internal controls of the Company and InvestmentManager,the Board has concluded there is a reasonableexpectation that the Company will be ab

324、le to continue inoperation and meet its liabilities as they fall due over thethree-year period of the assessment.Financial Risk Management Policiesand ObjectivesFinancial Risk Management Policies and Objectives aredisclosed in Note 11 on pages 63 to 67.Principal Risk and UncertaintiesPrincipal Risk

325、and Uncertainties are discussed in theCorporate Governance Report on pages 33 to 39.Subsequent EventsSubsequent Events are disclosed in Note 15 on page 69.Annual General MeetingsThe AGM of the Company will be held at 10.30 am BST on22 May 2018 at The Old Government House Hotel,St AnnsPlace,St Peter

326、Port,Guernsey,Channel Islands.Details ofthe resolutions to be proposed at the AGM,together withexplanations,will appear in the notices of meetings to bedistributed to Shareholders listed on the register as at31 December 2017 together with this Annual Report.As amatter of good practice,all resolution

327、s will be conductedon a poll and the results will be announced to the marketas soon as possible after the meeting.Members of the Board,including the Chairman and theChairperson of each Committee,will be in attendance at theAGM and will be available to answer Shareholder questions.By order of the Boa

328、rdRichard HaydenChairman27 February 2018Directors Responsibilities StatementRiverstone Energy Limited Annual Report and Financial Statements 2017The Directors are responsible for preparing the AnnualReport and Financial Statements in accordance withapplicable law and regulations.The Companies Law re

329、quires the Directors to prepareFinancial Statements for each financial year.Under theCompanies Law,the Directors must not approve theFinancial Statements unless they are satisfied that they givea true and fair view of the state of affairs of the Companyand of the profit or loss of the Company for th

330、at period.In preparing these Financial Statements,the Directors arerequired to:select suitable accounting policies in accordance withIAS 8:Accounting Policies,Changes in AccountingEstimates and Errors and then apply them consistently;make judgements and estimates that are reasonableand prudent;prese

331、nt information,including accounting policies,in amanner that provides relevant,reliable,comparable andunderstandable information;provide additional disclosures when compliance withthe specific requirements in IFRS are insufficient toenable users to understand the impact of particulartransactions,oth

332、er events and conditions on theCompanys financial position and financial performance;state that the Company has complied with IFRS,subjectto any material departures disclosed and explained inthe Financial Statements;andprepare the Financial Statements on a going concernbasis unless it is inappropria

333、te to presume that theCompany will continue in business.The Directors confirm that they have complied with theabove requirements in preparing the Financial Statements.The Directors are responsible for keeping properaccounting records,which disclose with reasonable accuracyat any time,the financial position of the Company and toenable them to ensure that the Financial Statements complywith Companie