Review of How SM Energy Company Bought Rock Oil Holdings LLC

Riverstone Energy Limited has announced the sale of its Rock Oil Holdings LLC to the SM Energy Company. Riverstone Holdings LLC that manages the Riverstone Energy Limited made the announcement that an agreement for the sale of its membership interests at Rock Oil Holdings LLC to the SM Energy Company, an E&P Company based in US. Riverstone Holdings was founded by David Leuschen and Pierre Lapeyre. Rock Oil Holdings LLC is an oil and gas company based in Denver and Houston and has its focus on Permian Basin.

Rock Oil was founded back in March 2014 with a strategy to apply its technical and land expertise to the development and acquisition of assets found in top-shelf North American plays. Ever since it was formed, Rock Oil has been involved in a number of acquisitions in its process of establishing a position of about 24,783 acres in the Midland Permian Basin that produces approximately 4,900 boepd.

Under the transaction terms, REL will stand to realize about $237 million in gross cash proceeds. This will represent a gross multiple of 2.1x on the initial investment the company made of $114 million. This will represent a profit of $123 million and a further uplifted $84 million. This equals 55% over its carrying value that was at $152 million by 30 June, 2016 the date when the Portfolio investments were valued last. The gross profit earned by the company will be subjected to a performance fee and taxes when the sale will be closed. This is expected to happen early October and will be subject to a number of routine closing conditions. The company is expected to release this year’s interim results that will include the updated NAV for the period ending 30 June 2016 on August 11, 2016.

About Riverstone Energy Limited

REL refers to the close-ended investment company that has investments exclusively in international global energy industry, with a specific focus on production and exploration and other midstream sectors. REL will be looking to exploit the prospects offered by the energy investment platform by Riverstone. REL forms part of the FTSE 250 members and has its ordinary shares listed for investors to buy and trade in them on the London Stock Exchange. The shares usually trade under the RSE symbol. Up to now, REL has successfully made 16 investments that span from conventional and unconventional activities related to oil and gas in the Continental U.S., Gulf of Mexico, the U.K., Western Canada, North Sea, Mexico, Norwegian Sea and credit.

Comments are closed, but trackbacks and pingbacks are open.