Oil investment vehicle Riverstone turns loss as prices continue to remain ‘volatile’

Riverstone Energy
Riverstone Energy thinks oil producers can still create good returns for investors

Investment manager Riverstone Energy (REL) has posted a half-year loss as the impact of “volatile oil prices” looks set to continue.

The Guernsey-based company, which invests in global energy firms and assets mainly in the US, Canada and Mexico, said the primary driver of the loss was its second largest investment ¬– Delaware focussed pure-play Centennial.

The West Texas publicly traded group saw its share price drop from $20.11 in December to $19.74 at June 30, as market sentiment for oil producers weakened.

REL also blamed the low price operating resilience of US shale and a failure for Opec to rebalance the oil market with output cuts.

However, in the firm’s H1 report, it maintained the need for a level of “over-commitment” to optimise the level of capital invested.

Chairman Richard Hayman said: “Oil prices could continue to prove volatile over the next several months as the market tests the ability of shale producers to respond to price signals by moderating drilling activity and capital expenditure budgets.

“In addition, the market will be carefully observing any rhetoric from OPEC regarding future production cuts, given that Libya, Nigeria and Iraq have increased volumes in recent months.

“While future cohesion among OPEC remains uncertain, oil demand growth continues to be robust, helping normalise the inventories which have been built-up over the cycle.

“Finally, geopolitical risks and sanctions against key producers could always surprise the market.”

REL was launched as an energy-focused investment vehicle by international private-equity firm Riverstone Holdings in 2013.

REL said its net asset value per share – a key performance measure for investors as of June 30 was $19.74, representing a decrease of 36 cents or 1.8%. versus NAV per share at December 31, 2016.

A total of $142million was invested in the six months to the end of June 2017 in a total of 10 companies.