energy

transition

Powering a shift toward

Riverstone

Energy

Limited

(LSE: RSE)

Annual Report and Financial Statements

for the year ended 31 December 2021

2021

Riverstone Energy Limited

Annual Report and Financial Statements for the year ended 31 December 2021

Financial and

Operational Highlights

Chairman’s Statement

Environmental, Social and

Governance Report

Corporate Governance

Report

Financial Statements

CONTENTS

WHO WE ARE…

Riverstone Energy Limited

The Company’s investment manager is

RIGL Holdings, LP, which is majority-owned

and controlled by affiliates of Riverstone.

Riverstone is an energy and power-focussed private

investment firm founded in 2000 by David M.

Leuschen and Pierre F. Lapeyre with approximately

$43 billion of capital raised. Riverstone conducts

buyout and growth capital investments in the E&P,

midstream, oilfield services, power and renewable

sectors of the energy industry. Since 2009,

Riverstone has invested over $6 billion in renewable

energy and decarbonisation, across 26 investments

in technologies ranging from wind development to

financial software facilitating renewable deployment.

With offices in New York, London, Houston,

Mexico City, Amsterdam and Menlo Park, the

firm has committed to over 200 investments in

North America, Latin America, Europe, Africa,

Asia and Australia.

The registered office of the Company is

PO Box 286, Floor 2, Trafalgar Court,

Les Banques, St Peter Port, Guernsey,

GY1 4LY.

ifc Who We Are…

02 Financial and Operational Highlights

03 Key Financials

04 Chairman’s Statement

08 Environmental, Social and Governance Report

15 Investment Manager’s Report

29 Investment Policy

31 Investment Restrictions

32 Board of Directors

34 Report of the Directors

42 Directors’ Responsibilities Statement

43 Responsibility Statement of the Directors in

Respect of the Annual Report under the

Disclosure Guidance and Transparency Rules

44 Corporate Governance Report

54 Report of the Audit Committee

58 Independent Auditor’s Report to the Members

of Riverstone Energy Limited

63 Independent Auditor’s Report to the Directors

of Riverstone Energy Limited

64 Statement of Financial Position

65 Statement of Comprehensive Income

66 Statement of Changes in Equity

67 Statement of Cash Flows

68 Notes to the Financial Statements

92 Alternative Performance Measures (“APMs”)

94 Glossary of Capitalised Defined Terms

99 Directors and General Information

Riverstone Energy Limited – Annual Report and Financial Statements 2021

RIVERSTONE ENERGY LIMITED SEEKS TO ACHIEVE

SUPERIOR RISK ADJUSTED RETURNS THROUGH

INVESTING IN THE ENERGY SECTOR WITH A

SPECIFIC FOCUS ON ENERGY TRANSITION AND

DECARBONISATION OF THE GLOBAL ECONOMY.

The transition to a clean mix of energy sources will

require unprecedented investment in new technologies

and infrastructure. REL is poised to power that momentum

by supporting its legacy positions and by executing on its

modified investment programme. In 2021, REL invested

$97 million in eight companies located at diverse

junctions of the energy transition value chain.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

FINANCIAL AND OPERATIONAL HIGHLIGHTS

(1)

Commitments during

the year ended

31 December 2021

Commitments increased by a total of $97 million

($97 million pursuant to decarbonisation strategy):

(i) $30 million in Samsung Ventures

(ii) $25 million in GoodLeap, LLC (formerly Loanpal, LLC)

(iii) $20 million in Solid Power, Inc.

(iv) $10 million in Hyzon Motors, Inc.

(v) $10 million in FreeWire Technologies, Inc.

(vi) $0.6 million in Decarbonization Plus Acquisition

Corp. II/ Tritium DCFC Limited

(2)

(vii) $0.6 million in Decarbonization Plus Acquisition

Corp. III/ Solid Power Inc.

(2)

(viii) $0.6 million in Decarbonization Plus Acquisition

Corp. IV

(2)

Remaining potential

unfunded commitments

at 31 December 2021

$13 million

(3)(4)

($7 million pursuant to decarbonisation strategy

and $6 million pursuant to legacy conventional strategy):

(i) $7 million in Enviva Holdings, LP

(ii) $6 million in Onyx Power

Investments during

the year ended

31 December 2021

Invested a total of $108 million

(3)

($97 million pursuant

to decarbonisation strategy and $11 million pursuant to

legacy conventional strategy):

(i) $30 million in Samsung Ventures

(ii) $25 million in GoodLeap, LLC (formerly Loanpal, LLC)

(iii) $20 million in Solid Power, Inc.

(iv) $10 million in FreeWire Technologies, Inc.

(v) $10 million in Hyzon Motors, Inc.

(vi) $7 million in Onyx Power

(vii) $4 million in ILX Holdings III, LLC

(viii) $0.6 million in Decarbonization Plus Acquisition Corp. II

(ix) $0.6 million in Decarbonization Plus Acquisition Corp. III

(x) $0.6 million in Decarbonization Plus Acquisition Corp. IV

Realisations during

the year ended

31 December 2021

Realised a net total of $176 million

(3)

($175 million pursuant

to legacy conventional strategy and $1 million pursuant to

decarbonisation strategy):

(i) $167 million in ILX Holdings III, LLC

(ii) $6 million in Castex Energy 2014, LLC

(iii) $2 million in Meritage Midstream Services III, L.P.

(iv) $3 million in aggregate from GoodLeap, LLC

(formerly Loanpal, LLC), Rock Oil Holdings, LLC and

Ridgebury H3 LLC

(v) ($2 million) in Sierra Oil & Gas Holdings, L.P.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

POSITIONED TO GROW WITH A RAPIDLY RECOVERING WORLD.

POST-PANDEMIC OPTIMISM IS POWERING MARKET

MOMENTUM FOR ENERGY TRANSITION.

KEY FINANCIALS

2021 2020

NAV as at 31 December $682 million /

£506 million

(5)

$390 million /

£286 million

(5)

NAV per Share as at 31 December $12.41 / £9.19

(5)

$6.20 / £4.55

(5)

Market capitalisation at 31 December $345 million /

£255 million

(5)

$255 million /

£187 million

(5)

Cash and cash equivalents at 31 December $106 million

(6)

£78 million

(5)

$99 million

(6)

£73 million

(5)

Marketable securities (unrestricted) at

31 December

$195 million

(7)

£144 million

(5)

$31 million

(7)

£23 million

(5)

Marketable securities (restricted) at

31 December

$47 million

(8)

£35 million

(5)

n/a

Share price at 31 December $6.28 / £4.65

(5)

$4.05 / £2.97

(5)

Total comprehensive income/(loss) for

the year ended 31 December

$341.9 million $(318.9) million

Basic and diluted Earnings/(Loss) per Share

for the year ended 31 December

561.73 cents (442.25) cents

Number of Shares repurchased/average price

per Share for the year ended 31 December

(9)

8,000,867

$6.28 / £4.60

16,958,265

$3.68 / £2.90

Number of Shares outstanding at 31 December 54,937,599 62,938,466

Per cent. change in Share price for the year

ended 31 December

56.6 per cent. (28.3) per cent.

(1)

Amounts shown reflect investment-related activity at the Partnership, not the Company.

(2)

Represents investment in Founder Shares and Warrants consistent with Sponsor economics for DCRN and

DCRC of $0.0025 cost per Founder Share and $1.50 cost per Founder Warrant, which is exercisable on a

one-for-one basis, and for DCRD of $0.0022 cost per Founder Share and $1.00 cost per Founder Warrant,

which is exercisable on a one-for-one basis.

(3)

Amounts may vary due to rounding.

(4)

Excludes the remaining unfunded commitments for Carrier II and Hammerhead of $36 million, in aggregate,

which are not expected to be funded. The expected funding of the remaining unfunded commitments at

31 December 2021 are $nil in 2022, 2023 and 2024. The residual amounts are to be funded as needed in

2025 and later years.

(5)

Based on exchange rate of 1.3503 $/£ at 31 December 2021 (1.3643 $/£ at 31 December 2020 and

1.606 $/£ at IPO).

(6)

At 31 December 2021 and 2020, respectively, amounts are comprised of $7.3 million and $8.8 million held

at the Company, $4.5 million and $90.3 million held at the Partnership and $94.0 million and $nil held at

REL US Corp.

(7)

Unrestricted marketable securities held by the Partnership consist of publicly-traded shares of Centennial,

Pipestone, Enviva, Solid Power, Hyzon and Talos for which the aggregate fair value was $195 million at

31 December 2021, and $180 million as of 22 February 2022, exclusive of the sale of Pipestone for proceeds

of $41.7 million. (31 December 2020: Centennial, Pipestone and Talos).

(8)

Restricted marketable securities held by the Partnership consist of publicly-traded shares of Solid Power,

DCRN/Tritium and DCRD for which the aggregate fair value was $47 million at 31 December 2021 and

$42 million as of 22 February 2022. (31 December 2020: n/a).

(9)

Inception to date total number of shares repurchased were 24,959,132 at an average price per share of

£3.45 ($4.52).

Riverstone Energy Limited – Annual Report and Financial Statements 2021

It is perhaps too early to call an end to the COVID-19 pandemic, but real progress

on vaccination has been made and it is encouraging to see economies around the

world return to growth. At the same time, we have seen a huge increase in

national and international commitments to decarbonisation, not just of the energy

sector but across construction, logistics, agriculture and heavy industry.

WHILE IT HASN’T BEEN WITHOUT ITS CHALLENGES,

THERE WAS MUCH TO BE OPTIMISTIC ABOUT IN 2021.

Further, the current situation between Russia and Ukraine

continues to create uncertainty in the global energy markets.

While international efforts to find a peaceful solution persist,

any further escalations are likely to push energy prices higher.

After several years of restructuring and reorienting our

investment portfolio, I believe that REL is now well placed

to capitalise on these changes. While improving the cost

efficiency of our commodity-linked portfolio we have picked

up the pace of our investments into the businesses that are

developing and installing the technologies and infrastructure

that will help the world to meet its net zero commitments.

Committed to accelerating the transition in a pivotal year

for climate

Without doubt, 2021 has been an important year for climate

– one in which the world signed up to bigger and bolder

emissions reduction targets in an effort to achieve net zero.

In the run up to COP26 in Glasgow in November we saw a

number of major commitments from governments around

the world.

President Biden’s Leaders’ Summit on Climate in April

brought together over 40 Heads of State to announce a series

of new climate ambitions – notably China’s decision to begin

phasing out coal use over the 2026-2030 period. The US,

Japan, UK and Australia all announced new mid-term CO

reduction targets and the IEA highlighted the need for radical

action if the world is serious about tackling climate change in

its new “Net Zero by 2050” scenario.

The focus for COP26 itself was on making enough progress

in talks to keep open a credible path to limiting global rises in

temperature to 1.5 degrees centigrade by the end of the century.

Following the event, it is now estimated that 90 per cent. of

the global economy is covered by a net zero target – with India

among the most significant additions to the list. A commitment

was also made to phase down the use of coal, reduce

methane emissions, and tackle deforestation and land use.

The establishment of the Glasgow Financial Alliance for

Net Zero also saw banks, asset managers and owners

with $130 trillion under management commit to align

themselves with net zero over time.

Focusing on decarbonisation

Momentum on climate grew rapidly in 2021 and the new

global consensus on net zero acts as a powerful tailwind

to REL’s own investment strategy. Our Investment Manager

has been working in the renewable energy sector for over

15 years. Back then, it was clear to Riverstone that the

challenge posed by climate change meant the long-term

future for the energy sector would be in renewables and,

more recently, in the decarbonisation of other sectors.

I am proud of the leading track record we have since

built up in investing at an early stage in world-class

businesses that play a meaningful role in tackling climate

change. For instance, Enviva, a biomass industry pioneer

which produces wood pellets as an alternative to coal and

so helps reduce power producers’ GHG emissions by up

to 85 per cent., while GoodLeap (formerly Loanpal) is now

the leading U.S. lender for residential solar installations.

In July 2020, we took the decision to reorientate our portfolio

to further lean into the opportunities offered by the energy

transition. We decided to focus on the need to decarbonise

not just energy, but also other key sectors including

industrials, transportation, commercial and residential

property, and agriculture.

Our research shows that the process of decarbonisation

will require approximately $6 trillion in annual investment

worldwide by 2030. As a result, we have identified five key

areas of focus for our future investment: grid flexibility and

resilience; electrification of transport; agriculture; next

generation liquid fuels such as hydrogen; and next horizon

resource use plays, for instance in smart building and the

digitisation of global supply chains. Taken together, we

expect these five areas to require over $3 trillion in annual

investment by 2030 – a tripling of current spending levels.

Chairman’s Statement

Richard Hayden

Chairman

Riverstone Energy Limited – Annual Report and Financial Statements 2021

This represents an enormous opportunity for investors and

the start of what we believe will be a multi-decade trend that

will impact every part of the economy. Reflecting our ability

to identify and execute on attractive opportunities in a

competitive market, we now have eight active investments

in decarbonisation, with seven added in 2021.

GoodLeap is a technology-enabled sustainable home

improvement loan originator and the leading point-of-sale

platform for sustainable home solutions in America.

FreeWire is the leading provider of battery-integrated

DC fast chargers, while Hyzon is the industry-leading global

supplier of zero-emission hydrogen fuel cell powered

commercial vehicles. Finally, through Samsung Ventures we

acquired two battery breakthrough platforms, Solid Power

and Ionic Materials.

Following these investments 35 per cent. of the current

portfolio’s gross unrealised value is now in decarbonisation

investments, rising to 37 per cent. when we include the

recent investments in T-REX Group, Tritium and the first

closing of an electric motor company’s latest financing

round (see Post-Year End Updates section of the Investment

Manager’s Report for further details). This represents a

demonstrable delivery in the year towards our stated

strategy to move the Company’s focus progressively through

a transition stage towards decarbonisation assets.

Improved commodity price outlook

While uncertainty remains about the future trajectory of

COVID-19 – and the emergence of Omicron in Q4 reminds

us of the ongoing risk of new variants – enormous progress

was made during the year on vaccination delivery. This has

meant, in advanced economies at least, that economic

growth has bounced back.

The return to growth has, in turn, led to a dramatic

improvement in commodity prices. Over full year 2021, the

WTI price averaged £50.50 ($68.18) per barrel, an increase

of 41 per cent. versus the full year 2020 average of £28.75

($39.19). At the same time natural gas prices rose sharply

in a number of regions, but especially in Europe.

These improvements in commodity prices have contributed

to an improved performance in our legacy commodity-linked

portfolio over the course of the year. This is testament to the

hard work undertaken by our teams to reduce costs,

preserve liquidity and allocate capital to the strategies that

will maximise value for our shareholders. While we remain

cautious on the outlook for commodity prices our portfolio

is now better positioned both to capitalise on a world of

$80 per barrel oil and weather one of $40 per barrel

allowing us to maximise value in the Company’s transition

to a decarbonisation asset base.

It is important, though, to recognise the strain these much

higher prices – and in particular those we have seen for

natural gas – can have on some of the poorest in our

societies. It is a salutary reminder of what happens when too

much focus is put on reducing supply without either providing

alternative clean power production or improving energy

efficiency to reduce demand. It is vital that the transition to

a low carbon economy is a just and orderly one if we are to

reach net zero while preserving peoples’ standard of living.

Buyback programme increased to £90 million

We completed a £50 million share buyback programme

in March 2021, during which a total of 17,214,197 ordinary

shares were bought back at an average price of £2.90 per

ordinary share.

The Board and Investment Manager continue to believe in

the attractiveness of buybacks to return excess cash to

Shareholders while the shares trade at steep discounts to

NAV and intrinsic value. A further £20 million programme

was announced in May 2021 which was extended by another

£20 million in October 2021. As at 31 December 2021, a total

of 7,744,935 ordinary shares have been bought back at an

approximate cost of £36 million ($50 million) at an average

price of £4.65 ($6.40) per ordinary share, leaving £4 million

outstanding which we expect to complete in the first half

of 2022.

Post year-end, on 8 February 2022, the Company announced

that the Board and Investment Manager agreed to allocate an

additional £46.0 million to the programme. As the Company

currently has the authority to repurchase 1,799,944 shares

pursuant to the authority granted at its 2021 annual general

meeting, the Board is convening an EGM on 4 March 2022 to

seek shareholder approval to renew the Company’s authority

to repurchase up to 14.99 per cent. of the shares outstanding

as at the date of the meeting.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Portfolio valuation

REL ended the period to 31 December 2021 with a NAV of

$12.41 (£9.19) per share, a 100.2 per cent and 102.0 per cent

increase in USD and GBP, respectively, compared to the

31 December 2020 NAV of $6.20 (£4.55) per share. REL

ended the period with an aggregate gross cash balance

of $105.8 million (£78.1 million) across the Company,

Partnership and REL US Corp. Reflecting the continued

improvement in the commodity price environment and the

extension of the share buyback programme, shares traded

up 56 per cent. during the full year 2021.

REL’s largest investments by gross unrealised value either

maintained or improved their marks quarter on quarter.

GoodLeap and Enviva, two of REL’s decarbonisation

investments, were marked up from 2.50x to 2.75x, and from

1.70x to 2.45x Gross MOIC, respectively. Onyx improved

substantially as well, moving from a 1.00x to 1.70x Gross

MOIC valuation due, in part, to the company’s strong fourth

quarter financial performance driven by favourable

conditions in European energy markets. Although flat

quarter on quarter, REL’s legacy oil and gas investments

continued to benefit from supportive energy prices,

robust demand, and improved operations.

The valuation of REL’s investments is conducted quarterly

by the Investment Manager and is subject to approval by the

Independent Directors. Furthermore, the valuations are

subject to an audit by Ernst and Young LLP in connection

with the annual audit of the Company’s Financial Statements.

The Company’s valuation policy is compliant with both

IFRS and IPEV Valuation Guidelines and has been applied

consistently from period to period since inception. As the

Company’s investments are generally not publicly quoted,

valuations require meaningful judgement to establish a

range of values. The ultimate value at which an investment

is realised may differ from its most recent valuation and the

difference may be significant. Further information on the

Company’s valuation policy can be found in the Investment

Manager’s Report.

Investments and performance

For full year 2021, through the Partnership, REL received

approximately $176 million in gross proceeds from its

portfolio. This was principally due to the exit from ILX III in

the third quarter which generated proceeds of $168 million

net to REL, representing a 23 per cent. premium to the

31 December 2020 valuation, and the proceeds from the

sale of the Talos shares received from the prior sale of the

Castex 2014 investment.

Demonstrating good progress on our strategy to realign

the portfolio to benefit from the opportunities created by the

energy transition, REL invested a total of $108 million in the

course of 2021. This was primarily focused on our growing

portfolio of decarbonisation investments. Our investments

included a $30 million acquisition of an interest in a Samsung

Ventures’ portfolio focused on battery technologies in August,

with the majority of the value associated with Solid Power, Inc.

In December, Solid Power was combined with

Decarbonization Plus Acquisition Corporation III (DCRC),

an REL-sponsored SPAC, and in so doing became the only

pure-play solid-state battery company to trade on the public

markets. In connection with the Solid Power / DCRC

business combination, REL invested an additional $20 million

through a PIPE transaction.

Elsewhere in 2021, REL made an $25 million investment

in GoodLeap, with $10 million invested in Decarbonization

Plus Acquisition Corporation (DCRB) in July. Our investment

in DCRB occurred simultaneously with the closing of

DCRB’s merger with Hyzon Motors Inc. Hyzon is an

industry-leading global supplier of hydrogen fuel cell

powered commercial vehicles.

A further $10 million and $7 million was invested in FreeWire

and Onyx, respectively. In addition, REL invested $0.6 million

into Decarbonization Plus Acquisition Corporation IV (DCRD),

a SPAC which seeks to capitalise further on the opportunities

offered by decarbonisation across multiple sectors, including

energy, agriculture, industrials, transport and commercial

and residential property. This investment in DCRD, as well

as the Company’s investments in DCRN/Tritium and

DCRC/Solid Power, represents Founder Shares and

Warrants consistent with Sponsor economics of $0.0025

cost per Founder Share and $1.50 cost per Founder Warrant,

which is exercisable on a one-for-one basis.

Investment Management Agreement

During the full year period to 31 December 2021, REL,

through the Partnership, incurred Management Fees of

$8.9 million (31 December 2020: $5.6 million). This increase

was due to the improvement in the NAV over that period.

Of the $8.9 million, $2.5 million remained outstanding at

the period end. The annual Management Fee is equal to

1.5 per cent. per annum of the Company’s Net Asset Value

(including cash). The fee is payable quarterly in arrears and

each payment is calculated using the quarterly Net Asset

Value as at the relevant quarter end.

Following the revised terms of the Investment Management

Agreement which were announced on 3 January 2020 (and

effective from 30 June 2019), approximately $28.7 million in

performance fees, based upon realised and unrealised gains

of $143 million as at 31 December 2021, that would have

been due under the prior agreement were not paid or

accrued. This is because REL did not meet the appropriate

Cost Benchmark at year end. In addition, the Investment

Manager has agreed that REL may repurchase shares or pay

dividends for an amount equal to 20 per cent. of the net gains

on dispositions. Finally, under the revised agreement no

further carried interest will be payable until the remaining

realised and unrealised losses are made whole with future

gains. REL has made considerable progress in making whole

these losses, with realised and unrealised losses reduced

from $565 million as at 31 December 2020 to $208 million as

at 31 December 2021. The Board considered these changes

to the IMA to be significantly value enhancing for Shareholders.

Chairman’s Statement continued

I am pleased with the real

progress that REL has made

in reorientating our portfolio

further into decarbonisation

opportunities and am excited

about what the future holds.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

In addition, there is now an 8 per cent. annual, cumulative

hurdle for each investment. After three years, if REL has

not met the Cost Benchmark for four consecutive quarters,

any accrued but unpaid performance fees will expire.

As with the original IMA, any performance fees payable

to the General Partner will be used for share purchases.

At year end, affiliates of Riverstone own 6.6 per cent. of REL

shares outstanding of which 4.8 per cent. are owned by the

Riverstone Co-Founders.

In addition, the Board committed to review the Investment

Manager’s performance with the decarbonisation strategy

and decide prior to 31 December 2022 whether or not it

would be in the best interest of Shareholders to seek their

approval for a wind-up of the Company. Based upon the

significant improvement in the performance of REL, it is

extremely unlikely that the Independent Directors will seek

such approval before 31 December 2022 for a managed

wind-down of the Company. However, a final decision is yet

to be made by the Board.

Even though the IMA is perpetual, it is important to note,

that the Board and any 10 per cent. Shareholder or group

can call for an EGM to vote to on a wind-up of the Company

at any time. However, such a vote to wind-up, if passed, would

trigger an exit fee equal to twenty times the most recent

quarterly Management Fee (see Note 9 for further details).

At year end, such amount payable to the Investment Manager

would have been approximately $49 million.

The IMA does not provide for the Company to terminate the

agreement without cause, and poor investment performance,

departure of key Riverstone executives, or change of control,

do not constitute cause. The Company may terminate the

IMA, if the IM is in material breach which has not been

rectified. The IM would then be entitled to receive a payment

equal to four times the most recent quarterly Management

Fee. At year end, such amount payable to the Investment

Manager would have been approximately $10 million.

Another change has been the active participation of the

Board in approving new decarbonisation investments which

are no longer part of the co-investment programme with

Riverstone Private Funds V and VI, which are now fully

invested. During 2021, the Board had four Board/Committee

meetings and fifteen ad hoc meetings to review and consent

to or decline investment opportunities. REL no longer invests

alongside Riverstone’s Fund V and Fund VI as originally

contemplated by its investment policy but the Investment

Manager has stated that it intends to use its best efforts to

provide REL with investment opportunities whenever REL

has capacity to do so. During 2021, the Investment Manager

recommended nine investment opportunities, of which eight

received consent from the Board. All of these were outside

of the legacy Fund V and VI deal flow contractual right.

Board succession

Lastly, Peter Barker, Patrick Firth and I will be reaching our

ninth year as Non-Executive Directors and will be retiring

from the Board in advance of the Company’s Annual General

Meeting in 2023, but most likely sometime before then. The

search for replacements has already started and we expect

an orderly transition to be completed after the date when the

Board could call a vote regarding a potential wind-down of

the Company, of which the likelihood is remote as of the date

of this report (see Board Tenure and Re-election section of

the Corporate Governance Report for further details).

Conclusion

I am pleased with the real progress that REL has made

in reorientating our portfolio further into decarbonisation

opportunities and am excited about what the future holds.

The Investment Manager’s long experience in sourcing and

executing value accretive investments in companies focused

on renewable energy and wider decarbonisation positions

REL well. We are now able to help the world meet its net zero

commitments and take advantage of the opportunities

offered by this dramatic shift in the global economy over the

coming decades.

Richard Hayden

Chairman

23 February 2022

Riverstone Energy Limited – Annual Report and Financial Statements 2021

This shift is reflective of a larger awareness and implementation of Environmental,

Social and Governance (“ESG”) policies and is a clear statement of the Company’s

focus on this area. The Company’s focus on ESG not only guides its new investments,

but also extends to its legacy portfolio, which has made demonstrable progress

in the pursuit of improvement of ESG policies and performance.

THE INVESTMENT POLICY OF THE COMPANY, WHICH WAS ORIGINALLY

FOCUSSED ON THE TRADITIONAL OIL AND GAS SECTOR, HAS BEEN

TRANSITIONED TOWARDS DECARBONISATION ASSETS SINCE 2020.

The Company itself, led by its independent Board, views

ESG as a core element in the management of Riverstone

Energy Limited. In order to put ESG into practice, the Board

relies on its Investment Manager to design and implement

an ESG policy which applies to their operations and those

of the investee companies. This policy and examples of its

application are highlighted below.

The Company utilises the services of Riverstone as the

Investment Manager to take appropriate ESG principles

into account in its investment decisions and in the ongoing

management of the portfolio. In order to ensure the

robustness of these principles, the Board engages with

the Investment Manager on ESG matters and monitors

compliance of REL’s portfolio companies with Riverstone’s

ESG policy. Patrick Firth, a member of the REL Board and

Audit Committee Chair, leads the ESG efforts for the

Company. The Board receives periodic updates from the

Investment Manager on the Investment Manager’s ESG

programme and on ESG matters related to the REL

investment portfolio. The Board takes its fiduciary

responsibility to Shareholders seriously and engages with

Riverstone on corporate governance matters as evidenced

by the changes to the Investment Management Agreement

agreed in January 2020.

Riverstone published its annual ESG report in February 2022.

The pages that follow summarise the key elements for

investors which impact REL current and future investments.

More detail is included in the full report, which is available

on Riverstone’s website: https://www.riverstonellc.com/en/

responsible-investing/.

Statement from the Investment Manager

In so many ways, 2021 was a year in which the importance

of ESG issues were underlined and on a scale we have

never seen before. As we emerge from the second year

of the COVID-19 pandemic, the focus on ESG has never

been greater.

Riverstone’s focus has been on further enhancing its ESG

programme by delivering on the objectives we set ourselves

in 2021 – both at firm level as well as across our investment

portfolio – not only by managing material ESG risks but

also by seeking to capitalise on a number of important

ESG opportunities.

Continued decarbonisation focus

As one of the largest asset managers in the energy, power

and infrastructure sectors, we are acutely aware of the

existential threat posed by climate change and the need to

rapidly decarbonise the global economy. This was underlined

in last year’s report by the Intergovernmental Panel on

Climate Change (IPCC) which gave the starkest reminder

to date of how fragile our life on this planet is. This was

followed up by the United Nations Climate Change

Conference (COP 26) which made certain achievements

(notably around methane emissions and deforestation)

but arguably did not deliver on other key issues.

To Riverstone, the science is very clear – action is required

now if we are to stand a chance of limiting the global

temperature rise to 1.5°C above pre-industrial levels by 2050.

Environmental, Social and Governance Report

Riverstone Energy Limited – Annual Report and Financial Statements 2021

In our businesses, this translates to us seeking to help our

portfolio companies to reduce the emission of GHGs while

simultaneously implementing ways in which more carbon

can be sequestered from the atmosphere. This is not a

straightforward exercise with some of our portfolio

companies, however, we are encouraged by the steps a lot

of them have taken to decarbonise, as well as their broader

ESG efforts.

As you will have seen by the investments we have made over

the last two years (including FreeWire, Hyzon, Solid Power

and Tritium), our plan going forward is to invest only in those

businesses that support decarbonisation and the transition

to net zero. In terms of our current portfolio, a priority for us

in 2022 will be gaining a more complete understanding of our

portfolio’s GHG emissions and taking active steps to help our

portfolio companies reduce their emissions.

Programme enhancements

Outside of our ongoing decarbonisation investment

programme, another key focus last year has been working

with our existing portfolio companies to help them improve

their approach to ESG risks and opportunities. As you will

see from the Riverstone ESG report, we have seen an

improvement by the majority of our portfolio against our

ESG minimum expectations and plan to raise the bar on

a number of these in 2022. Further, we have been pleased

by the level of sophistication of a number of our portfolio

companies’ ESG programmes manifested by the increased

number of them making their own voluntary ESG disclosures

in 2021.

ESG industry collaboration

Since last year, Riverstone has made a deliberate effort to

be more engaged in the fast-moving dialogue around ESG.

As a firm, we are keen to participate in some of the groups

and projects that many of our peers are involved in. We are

a signatory of the UN-supported Principles of Responsible

Investment (UNPRI) but feel we have more to give in terms of

the dialogue around how ESG monitoring and disclosure will

evolve. Last year we became a member of the PRI-supported

Initiative Climat International (iCI) and the Institutional

Limited Partners Association’s (ILPA) Diversity In Action

initiative. We have also joined the ILPA-led ESG Data

Convergence Project in the hope that we can contribute to a

consensus around a standardised set of ESG metrics and

procedures to enable us and other asset managers to gather

and disclose better, more informed ESG data.

Looking forward

We are encouraged by the improvements we have made

to our ESG programme in 2021. However, we are not

complacent and, particularly against the backdrop of the

heightened focus on ESG (and in particular on climate

change issues) by the SEC and other regulators, we

recognise there is much more work required, in

partnership with you, our investors, our management

teams, regulators and other important stakeholders.

We will continue to prioritise our commitment to being

responsible investors and look forward to providing further

updates on our ESG activities in the year to come.

As Riverstone continues to focus on increasing investment

exposure to opportunities arising from energy transition and

decarbonisation, the firm remains committed to continue

growing our ESG programme and embedding it in our

culture. In 2022 and beyond, the firm will look to build on the

successes of the past year across five overarching themes.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

In parallel we will continue to make progress across the

elements of our ESG programme: Risk Management

(formerly Due Diligence & Initial Investment), Portfolio

Engagement, ESG at Riverstone, Climate Change, and

ESG Reporting, and report progress in next year’s

ESG report.

However, in line with our focus, our objectives for 2022

and 2023 are centered on our response to climate change,

namely to:

Complete actions to align Riverstone’s reporting with

the recommendations of the TCFD

Update and expand our scenario analysis to all portfolio

companies and future investments using the latest

climate projections (including using the results of

the analysis to deepen our engagement and build

climate resilience and support our portfolio companies

in leveraging the opportunities presented by the

energy transition)

Continue to calculate Riverstone’s GHG footprint and

engage with our portfolio companies to set targets for

annual reductions

Engage a third party to help our portfolio companies

complete a GHG footprint and engage with portfolio

companies regarding individual reduction targets

Build ESG capacity at all levels in Riverstone

through training

Riverstone’s Approach to ESG

As one of the most experienced private investment firms

within the energy, power and infrastructure sectors,

Riverstone recognises the ever-increasing importance

of ESG and has made the proactive implementation of

ESG initiatives one of its highest priorities. Riverstone

takes its fiduciary responsibility to investors very seriously

and believes that a strong commitment to addressing

ESG factors is critical to the success of its funds, portfolio

companies and firm. By devoting substantial internal and

external resources towards ESG matters, Riverstone has

developed clear processes that take account of leading

industry standards. Riverstone believes this effort helps it

to make sustainable, ethical and socially responsible

decisions over the long run.

ESG objectives

Riverstone has established institutional ESG processes that

support the high standards that it has set for itself. These

procedures were developed to achieve several key objectives

related to ESG, including:

Providing Riverstone personnel and its portfolio

companies with training and the resources to ensure that

those portfolio companies can provide the necessary

ESG support appropriately

Identifying potential risks and mitigants before an

investment is made

Immediate assistance with the identification of any issues

that may arise and tracking ongoing performance

through portfolio monitoring

Evaluating and tracking portfolio companies’ execution of

opportunities to improve current practices at its portfolio

companies and firm

Environmental, Social and Governance Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Riverstone’s ESG policy

In support of meeting its ESG objectives, Riverstone has an

ESG policy that sets out its approach to handling key ESG

factors, including inter alia natural resource management,

health and safety, community and stakeholder impact,

climate change, GHG emissions and governance. This policy

helps inform the ESG considerations that are relevant to the

management of Riverstone’s portfolio companies from initial

due diligence all the way through to an exit, and the operation

of Riverstone’s own business. Since inception, Riverstone has

continuously evolved its ESG policy in conjunction with third

party ESG experts to strive towards best practices across the

board. A copy of Riverstone’s ESG policy is available online:

https://www.riverstonellc.com/media/1189/Riverstone_

ESG_Policy_Statement.pdf

ESG resources at Riverstone

Riverstone’s ESG Committee comprises a cross-functional

set of leaders and our external ESG advisor, ERM. The ESG

Committee meets on a quarterly basis to continually develop

our ESG strategy, support ESG initiatives across the firm

and its portfolio companies, grow the capabilities of the

investment teams on which REL relies, and analyse and

benchmark ESG performance and trends using data from

portfolio company operations.

To facilitate engagement with portfolio companies on

ESG matters, the Investment Manager has nominated one

person on each investment team to serve as ESG deal lead

responsible for liaising with portfolio companies on ESG

matters and generally keeping ESG matters on the agenda.

As ESG deal lead, nominated investment team members are

accountable for their respective company’s ESG management

and performance. The quality of the engagement by each

ESG deal lead is assessed as part of Riverstone’s annual

performance reviews which drive decisions around the

individual’s compensation and promotion at Riverstone.

ESG in Practice

The careful evaluation of ESG issues is a mandatory

component for the underwriting of all REL investments.

Furthermore, Riverstone investment professionals conduct

a comprehensive evaluation of ESG considerations

throughout the lifecycle of an investment. These steps are

summarised below:

Risk identification

Use Riverstone’s deep industry expertise and its

proprietary ESG toolkit to identify and manage material

ESG risks and value creation opportunities in a consistent

manner for each new potential investment

Due diligence

Early engagement with the management team and

advisors to understand the “ESG landscape” for a

potential investment

Engage third party experts to evaluate specific risks and

areas of concern

Thorough evaluation of key ESG risks for each potential

investment and determination of whether appropriate

mitigants can be implemented

Investment Committee

Complete ESG risk assessment as part of the Investment

Committee memo for potential investments, within the

context of the investment’s broader risk analysis

Review third party ESG assessments and reference checks

Determine whether a potential investment has any

ESG risks that are “deal-breakers”

Robust discussion at Investment Committee of the

ESG risk evaluation scorecard

Go/no go investment decision

Ongoing monitoring and portfolio management

Health, safety, environmental (HSE) and other material

ESG issues as part of Riverstone’s participation on the

board of portfolio companies

Annual portfolio review through ESG questionnaires with

portfolio company follow-up based on responses received

All portfolio companies are subject to periodic

assessment of foreign bribery risks and regular reporting

and training required for those portfolio companies

identified as facing higher levels of risk

Portfolio companies ensure regular training and

compliance reviews are undertaken including, where

necessary, by third party legal teams

Exit

Where appropriate, make relevant ESG disclosures

and evaluate whether potential buyers’ ESG standards

comply with all applicable laws with regard to, for

example, employees and decommissioning of assets

and infrastructure

Riverstone Energy Limited – Annual Report and Financial Statements 2021

ESG: 2021 in Review

In our 2020 ESG report, we established a number of

overarching ESG objectives for 2021. Our progress through

2021 against these objectives, and other ESG issues

addressed during the year, are summarised below and

presented in more detail throughout this report.

Due diligence and initial investment

Expanded the scope and coverage of our ESG toolkit

to promote consistency in the way ESG opportunities are

managed at Riverstone

Portfolio monitoring

Increased frequency of engagement with portfolio

companies on ESG matters

Marked improvements in performance across

portfolio companies against ESG Minimum Expectations

(or ‘ESG-MEs’)

Reviewed and expanded our ESG-MEs and metrics for

portfolio companies to launch in 2022

Climate change

Conducted a gap analysis to determine Riverstone’s

current position against the Task Force on Climate-Related

Financial Disclosures (TCFD) recommendations with the

intent of setting actions to bring the firm towards

alignment over the next two years

Supported our portfolio companies in increasing their

level of Scope 1 and Scope 2 GHG emissions in line with

our ESG-MEs

Formalised climate screening in our ESG toolkit and

Investment Committee template so that it is consistently

applied to all new investments

Joined the UN PRI-backed Initiative Climat

International (iCI)

ESG reporting

Submission of voluntary reporting to PRI

Signed up to the ILPA’s ESG Data Convergence Project

ESG at Riverstone

Became member of ILPA’s Diversity in Action

Instituted internship programme with a Historically

Black College and University (HBCU) in the U.S.

Calculated our firm’s GHG footprint

Produced Energy Expansion webcasts for our website

with insights and trends from experts in energy, power,

infrastructure and decarbonisation

Climate Change

At Riverstone, we recognise climate change and the

transition to a low carbon economy as our greatest risk and

our largest opportunity. This reality is reflected in the way

that the Investment Manager and REL conducts business.

In last year’s Riverstone ESG report, we acknowledged the

importance of the recommendations published by the TCFD in

helping companies improve transparency on climate-related

risks and opportunities, and over the course of 2021, we have

been working on ways to adopt the framework.

Governance

Our ESG Committee comprises a cross-functional set of

leaders and our external ESG advisor, ERM. The committee

is responsible for our climate strategy, our greenhouse gas

(GHG) footprinting effort, and more broadly our firm’s

response to climate change.

At the portfolio-level, each of our investment teams has a

designated ESG lead to ensure that climate-related risks

and opportunities are appropriately screened, assessed,

and managed throughout the investment process. During

pre-investment, this information is presented to the Investment

Committee when making investment decisions. The ESG leads

are supported by the ESG committee and ERM as required.

Strategy

We have continued to evolve our thinking around our climate

strategy which includes integrating updates to market and

regulatory drivers. Our climate strategy is centered on two

broad pillars:

Continuing to invest in low carbon forms of energy

through our decarbonisation platform

Working with our portfolio companies to decarbonise

and build resilience to climate-related issues

Our investments in the energy sector and our work with our

portfolio companies enable Riverstone to have a positive

impact on the low carbon economy transition. Management

of climate-related risk and opportunity is a core part of our

approach to investing, and is reflected by our growing

contributions to a fair and just transition in the energy sector,

which continues to create new opportunities for Riverstone

and REL.

Over the next two years, we will start implementing actions

to align ourselves to the recommendations of the TCFD.

In 2021 we joined Initiative Climat International (iCI), which

is led by a group of leading private equity firms and is

supported by the PRI. The purpose of the iCI is to analyse,

manage, and mitigate climate-related financial risk and

GHG emissions in private equity portfolios in line with the

recommendations of the TCFD.

Environmental, Social and Governance Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Riverstone recognises the need to collaborate and build

industry best practices, and is keen to make a meaningful

contribution to iCI. The nature of our investments can bring

a specific insight to the decarbonisation of the energy sector,

from which we will build towards our ambition of becoming

a leader in climate change mitigation.

Risk management

We continue to identify and assess climate-related risks in our

portfolio and for potential future investments. We have updated

our ESG toolkit so that this is more consistently applied in our

investment process. This includes our climate change

screening questionnaire and our Investment Committee

templates requiring identification of climate-related risks

and opportunities during our pre-investment process. These

tools actively engage portfolio company management and

help them focus on reducing GHG emissions and managing

climate-related risks and opportunities.

For ownership, this includes an assessment that was

conducted for a number of representative companies

across sectors and geographies in which we operate.

The assessment covered the risks arising from changes

to the climate itself, as well as the risks and opportunities

associated with the low carbon energy transition. The

guidance has helped our investment teams to:

Ensure our portfolio companies are positioned to

undertake timely and appropriate mitigation and

management of climate risk

Support our portfolio companies in capturing

transition-related opportunities where they exist

Metrics and targets

Our strategy also requires us to look at the climate impact

of our own activities. For our firm this means calculating

our GHG emissions and looking for ways to reduce or offset

our carbon footprint. Similarly for our portfolio, one of our

ESG-MEs requires portfolio companies to calculate their

GHG baseline for Scope 1 (direct emissions) and Scope 2

(purchased energy), and annually report and monitor GHG

emissions. The number of Riverstone portfolio companies

that are meeting this ESG-ME fully has increased since last

year from 39 per cent. to 64 per cent. However, we recognise

there is room for improvement and it remains a key area of

focus for us. Using the results of the 2021 survey, we will

prioritise companies for engagement and offer additional

support to our companies to establish a complete baseline

for our portfolio with a view of setting credible GHG

reduction targets.

Riverstone’s decarbonisation roadmap

The risks and impacts of climate change have brought

decarbonisation of the energy industry to the fore as

essential to the low carbon economy. Tighter access to

bank capital, new capital demands to fund decarbonisation,

and emission reduction investments among other market

changes are shifting conventional energy investment

strategies and forcing some companies to reposition their

entire business.

These transitions take time, and we are committed to

evolving our global energy expertise to scale businesses

and our activity in renewable energy into growing our

decarbonisation platform. We expect this will quickly

become our dominant investment platform.

Riverstone’s decarbonisation platform

The Riverstone decarbonisation platform’s focus is

specifically on reducing the impact carbon has on the

climate. This focus represents many new and attractive

business models that are insulated from commodity prices.

We are focused on the following five core areas and have

executed successful investments in four of these to date:

Grid flexibility and resilience – balancing the grid and

battery storage

Electrification of transportation – EV infrastructure,

batteries, and supply chain

Next generation green liquid fuels – hydrogen,

RAE diesel, gasoline, and jet

Efficiency of use – smart software/devices and digitisation

Proven agriculture and resource plays

These core areas offer profitable scale solutions for climate

impact, are investable today, enjoy strong policy and societal

support, and meet the ESG criteria demanded by the

institutional capital flows which are key to driving meaningful

contribution from the private sector. We are focused on

growth capital investments in proven companies and

technologies with demonstrated commercial success to

accelerate growth and value creation.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

ESG in Practice within REL’s Portfolio:

FreeWire Technologies

FreeWire Technologies is a leading U.S.-based provider of

fully-integrated electric vehicle (EV) charging stations and

power solutions. FreeWire’s combination of proprietary

battery and power conversion technology enables ultrafast

charging at all locations, freeing customers from the

limitations of the traditional power grid. The company is

well-positioned for further growth, helping customers reach

decarbonisation goals and catalysing the global transition to

sustainable electrification.

Upgrading the electric grid and individual site power

infrastructure to rapidly meet charging demand is a

costly and time-intensive process with each installation

often requiring eight to 12 months for completion,

slowing efforts to address environmental goals (Source:

https://www.canarymedia.com/articles/ev-charging/

ev-charger-installations-in-california-are-bogged-down-

by-local-permitting). Upgrading electrical infrastructure

to support multiple fast chargers would require significant

permitting and coordination with the local utility. USA’s aging,

disaster-prone electric grids will come under increasing

strain, potentially threatening to short-circuit the country’s

progress toward decarbonisation.

In 2021 alone, FreeWire contributed to emissions reductions

with the launch of its latest product, Boost Charger, resulting

in the following benefits:

9,910 charges delivered to EVs

281 MWh of energy provided

8,338 gallons of gas avoided

205,955 gas-free miles delivered

FreeWire’s ultrafast charging technology solves grid

constraints by packaging charging infrastructure, grid

infrastructure, and energy storage in a fully-integrated

solution. The company’s Boost Charger plugs into existing

low-voltage utility service and delivers high-power charging

in areas that typically require extensive grid upgrades.

This is especially important for expanding electrification

in economically disadvantaged areas where EV adoption

is slower and there are typically higher levels of pollutants.

The integrated system unlocks an entirely new category

of distributed energy services that conventional charging

solutions cannot provide, and is only partially addressed by

standalone energy storage. Further, chargers paired with

energy storage will optimise renewable energy sources and

provide additional grid resiliency, allowing EVs to recharge

and support critical facilities when power is out.

FreeWire has deployed battery-integrated chargers with

Fortune 100 companies, commercial customers, fleets,

retail locations, and gas stations. In addition to its partnership

with bp pulse, FreeWire and ampm, a bp subsidiary and

convenience store chain with over 1,000 locations, have

already deployed multiple public charging stations in the U.S.

The ability to address barriers to mass EV adoption, reduce

GHG emissions from transportation, and enable less strain

on the electric grid with ready-to-deploy ultrafast charging

and power solutions may very well be the missing link in the

energy transition.

FreeWire is deploying next-generation charging

infrastructure and power solutions more quickly, at a lower

cost, and in more locations than competitors. The ability

to address barriers to mass EV adoption, reduce GHG

emissions from transportation, and enable less strain on

the electric grid with ready-to-deploy ultrafast charging

and power solutions may very well be the missing link

in the energy transition.

Environmental, Social and Governance Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2021

The post-pandemic recovery in 2021 was uneven, benefiting wealthy nations,

with privileged access to vaccines. Despite disparities in access, the rate of

post-recession economic recovery was one of the highest in nearly a century.

POSITIONED FOR GROWTH

As pent-up demand for consumer goods and travel roared

to life, suppliers met spikes in demand for crude oil with

gradual increases in supply. Consequently, WTI prices soared

to over $80 during 2H 2021, ending the year at $76.83 per

barrel representing a 59 per cent. year over year rise. Brent

crude performed similarly, ending the year at $77.24 per barrel,

increasing by 51 per cent. over the year. This recovery, while

welcome, proved an unanticipated challenge for some regions

as increased economic activity coincided with unusually cool

temperatures and widespread fuel shortages. However, the

current situation between Russia and Ukraine continues to

create uncertainty in the global energy markets. While

international efforts to find a peaceful solution persist, any

further escalations are likely to push energy prices higher.

In Europe, long-term energy transition efforts have included

shuttering coal-fired power plants in favour of increased

reliance on cleaner-burning, imported natural gas, and

renewables. The EU, a net importer of natural gas was left

vulnerable to increased global demand, and Russian and

OPEC-restricted supply. As a result, the EU’s fuel storage

sites fell to just 56 per cent. of full capacity, 15 percentage

points below their ten-year average.

Between increasing

demand, lower-than-forecasted turbine-generated power

and higher costs of fuel, power prices in late 2021 hit 182

euros per megawatt-hour on average, an all-time high.

While countries across Europe resorted to powering base

loads with cheaper coal, investment into cleantech, green

shift technologies and the broader energy transition reached

new heights. Wind and solar developers added 40GW of

renewable energy capacity to Europe’s grid in 2021.

Consumers across the globe demonstrated their support

for the transition with their pocketbooks, purchasing electric

vehicles (EV), with increases in sales of 17 per cent. from Q3

to Q4 of 2021, and by 34 per cent. year on year.

Institutional

investors, too, joined the bandwagon, as global sustainable

debt issuances hit $1.6 trillion, more than doubling the value

of issuances in 2020.

REL has adjusted its investment strategy and is working on

repositioning its portfolio to capture these trends. Prior to

the resurgence in oil prices during the second half of 2021,

REL has been managing its legacy commodity-linked

portfolio companies to reduce costs, preserve liquidity and

position its companies to operate in an oil price environment

of around $45-60 per barrel. The current prices of crude

and natural gas have exceeded forecasts and bode well for

sustained performance from our companies despite ongoing

headwinds facing the industry.

In July, REL took advantage of improving market conditions

to exit its position in ILX III, a Gulf of Mexico producer. The

exit provided REL with an additional $168 million in liquidity

to both accelerate REL’s new investment programme,

transitioning the portfolio away from E&P investments and

toward energy transition and decarbonisation of the global

economy. We believe that these themes have become

secular trends. The accelerating transition to cleaner

energy supports our investment thesis and underlines

our confidence in the investment opportunity and its

associated returns.

Over the course of the year, REL deployed over $95 million

in seven different decarbonisation investments, including

GoodLeap (formerly Loanpal), FreeWire, Hyzon Motors,

DCRN (Tritium), DCRC (Solid Power), Samsung Ventures,

and DCRD. Our work over the last two years to reposition

the portfolio allowed shareholders to benefit two-fold: an

increase in consumer adoption of the energy transition and

energy market volatility driven by the transition to a lower

carbon future.

Investment Manager’s Report

Source: World Bank

Source: Bloomberg

Source: Bloomberg New Energy Finance

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Investment Strategy

Historically, the Investment Manager’s objective was to

achieve superior risk adjusted after tax returns by making

privately negotiated investments in the E&P, midstream,

services and power (including renewables) sectors,

representing a significant component of the global economy.

Long-term market drivers of economic expansion, population

growth, deregulation, privatisation and continued commodity

price volatility will continue to create opportunities for REL.

The Investment Manager continues to reposition REL’s

portfolio away from commodity price-sensitive oil and gas

investments towards a focus on renewable and the

decarbonisation thematic. This shift in the portfolio began in

the summer of 2020 with the Company investing $18 million

to recapitalise Enviva Holdings, and the Company’s

$25 million and $10 million commitments announced in

January 2021 to GoodLeap, LLC and FreeWire Technologies,

Inc., respectively. Further, in February 2021, REL announced

a $10 million commitment to DCRB, via a private placement,

and a $0.6 million commitment to DCRN, via an initial

public offering. Similarly, in March 2021, REL announced

a $0.5 million commitment to DCRC, via an initial public

offering, followed in June 2021 by a further $20 million

commitment, via a private placement. The Company believes

that each of these commitments provides an opportunity to

create shareholder value while supporting REL’s long-term

focus on ESG and energy transition investments. Going

forward, REL expects to continue to increase its exposure

in areas that support decarbonisation across the entire

investment spectrum, from traditional power generation

to technology-enabled solutions that facilitate increased

renewables adoption and helps the global economy reach

its climate change goals.

The Company’s Board is supportive of the modified

investment strategy and will continue to monitor the

Investment Manager’s success in repositioning the

Company’s portfolio through the modified investment

strategy. At the EGM last year, the Board committed to review

the Company’s performance and, before 31 December 2022,

decide whether or not it would be in the best interest of all

shareholders to request an EGM to vote on a run-off of

its portfolio.

Key Drivers of Investment Strategy:

Capital constraints among companies with high levels

of leverage and/or limited access to public markets;

Industry distress and pressures to rationalise assets;

Increases in ability to extract hydrocarbons from oil and

gas-rich shale formations;

Historical under-investment in energy infrastructure; and

Rapid growth in electricity consumption and energy

transition.

The Investment Manager, through its affiliates, has a strong

track record of building businesses with management teams.

The Company aims to capitalise on the opportunities

presented by Riverstone’s pipeline of investments, as well as

through its modified investment strategy implemented in

2019. This can be seen through the Company’s investments,

through the Partnership, in Ridgebury H3 in 2019, Enviva in

2020 and DCRB, DCRN, DCRC & DCRD SPAC investments

in 2021, as the Private Riverstone Funds did not participate.

The Investment Manager, having made over 200 investments

globally in the energy sector since being founded in 2000,

utilises its extensive industry expertise and relationships to

thoroughly evaluate investment opportunities and uses its

significant experience in conducting due diligence, valuing

assets and all other aspects of deal execution, including

financial and legal structuring, accounting and compensation

design. The Investment Manager also draws upon its

extensive network of relationships with industry-focussed

professional advisory firms to assist with due diligence in

other areas such as accounting, tax, legal, employee

benefits, environmental, engineering and insurance.

Investment Manager’s Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2021

WESTERN CANADA

Committed:

$397m (40%)

Invested:

$385m (41%)

PERMIAN & EAGLE FORD

Committed:

$401m (41%)

Invested:

$377m (40%)

DECARBONISATION

Committed:

$122m (12%)

Invested:

$115m (12%)

INTERNATIONAL

Committed:

$66m (7%)

Invested:

$60m (7%)

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Current Portfolio – Conventional

Gross

Committed

Capital

($mm)

Invested

Capital

($mm)

Gross

Realised

Capital

($mm)

(1)

Gross

Unrealised

Value

($mm)

(2)

Gross

Realised

Capital &

Unrealised

Value

($mm)

31 Dec

2021

Gross

MOIC

(2)

31 Dec

2020

Gross

MOIC

(2)

Investment

(Public/Private)

Centennial (Public) 268 268 172 91 263 0.98x 0.73x

Hammerhead Resources (Private) 307 295 23 93 116 0.39x 0.15x

Onyx (Private) 66 60 – 102 102 1.70x 1.00x

Carrier II (Private) 133 110 29 48 77 0.70x 0.40x

Pipestone Energy (formerly CNOR) (Public) 90 90 16 36 52 0.58x 0.25x

Total Current Portfolio – Conventional – Public

(3)

$358 $358 $188 $126 $314 0.88x 0.61x

Total Current Portfolio – Conventional – Private

(3)

$507 $465 $52 $243 $295 0.63x 0.31x

Current Portfolio – Decarbonisation

Gross

Committed

Capital

($mm)

Invested

Capital

($mm)

Gross

Realised

Capital

($mm)

(1)

Gross

Unrealised

Value

($mm)

(2)

Gross

Realised

Capital &

Unrealised

Value

($mm)

31 Dec

2021

Gross

MOIC

(2)

31 Dec

2020

Gross

MOIC

(2)

Investment

(Public/Private)

GoodLeap (formerly Loanpal) (Private) 25 25 1 67 68 2.75x n/a

Solid Power (Public) 48 48 – 59 59 1.24x n/a

Enviva (Public) 25 18 – 44 44 2.45x 1.60x

FreeWire (Private) 10 10 – 20 20 2.00x n/a

Hyzon Motors (Public) 10 10 – 6 6 0.65x n/a

DCRN

(5)

(Public) 1 1 – 4 4 6.46x n/a

Ionic I & II (Samsung Ventures) (Private) 3 3 – 3 3 1.00x n/a

DCRD

(5)

(Public) 1 1 – 1 1 1.00x n/a

Total Current Portfolio – Decarbonisation –

Public

(3,5)

$84 $77 $- $115 $115 1.49x 1.60x

Total Current Portfolio – Decarbonisation –

Private

(3)

$38 $38 $1 $90 $91 2.42x n/a

Cash and Cash Equivalents

(11)

$106

Total Liquidity $347

Total Market Capitalisation $345

Investment Manager’s Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Realisations

Gross

Committed

Capital

($mm)

Invested

Capital

($mm)

Gross

Realised

Capital

($mm)

(1)

Gross

Unrealised

Value

($mm)

(2)

Gross

Realised

Capital &

Unrealised

Value

($mm)

31 Dec

2021

Gross

MOIC

(2)

31 Dec

2020

Gross

MOIC

(2)

Investment

(Initial Investment Date)

Rock Oil

(6)

(12 Mar 2014) 114 114 232 3 235 2.06x 2.04x

Three Rivers III (7 Apr 2015) 94 94 204 – 204 2.17x 2.17x

ILX III

(7)

(8 Oct 2015) 179 179 171 1 172 0.96x 0.80x

Meritage III

(8)

(17 Apr 2015) 40 40 86 – 86 2.16x 2.10x

RCO

(9)

(2 Feb 2015) 80 80 80 – 80 0.99x 0.99x

Sierra (24 Sept 2014) 18 18 38 – 38 2.06x 2.15x

Aleph Midstream (9 Jul 2019) 23 23 23 – 23 1.00x 1.00x

Ridgebury H3 (19 Feb 2019) 18 18 22 – 22 1.22x 1.22x

Castex 2014 (3 Sep 2014) 52 52 14 – 14 0.27x 0.20x

Total Realisations

(3)

$619 $619 $871 $4 $875 1.41x 1.36x

Withdrawn Commitments and Impairments

(10)

350 350 9 – 9 0.02x 0.02x

Total Investments

(3) (11)

1,955 1,906 1,121 578 1,699 0.89x 0.69x

Total Investments & Cash and Cash Equivalents

(3)

$684

(1)

Gross realised capital is total gross proceeds realised on invested capital. Of the $1,121 million of capital realised to date, $823 million is the return of the

cost basis, and the remainder is profit.

(2)

Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested Capital) are before transaction costs, taxes (approximately 21 to 27.5 per cent. of U.S.

sourced taxable income) and 20 per cent. carried interest on applicable gross profits in accordance with the revised terms announced on 3 January 2020,

but effective 30 June 2019. Since there was no netting of losses against gains before the aforementioned revised terms, the effective carried interest rate

on the portfolio as a whole will be greater than 20 per cent. No further carried interest will be payable until the $208 million of realised and unrealised

losses to date at 31 December 2021 are made whole with future gains, so the earned carried interest of $0.8 million at 31 December 2021 has been

deferred and will expire in October 2023 if the aforementioned losses are not made whole. Since REL has not yet met the appropriate Cost Benchmark at

31 December 2021, $28.7 million in Performance Allocation fees that would have been due under the prior agreement were not accrued. In addition, there

is a management fee of 1.5 per cent. of net assets (including cash) per annum and other expenses. Given these costs, fees and expenses are in aggregate

expected to be considerable, Total Net Value and Net MOIC will be materially less than Gross Unrealised Value and Gross MOIC. Local taxes, primarily on

U.S. assets, may apply at the jurisdictional level on profits arising in operating 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

US tax purposes. The C Corporations serve to protect REL’s public investors from incurring U.S. effectively connected income. The C Corporations file

U.S. corporate tax returns with the U.S. Internal Revenue Service and pay U.S. corporate taxes on its taxable income.

(3)

Amounts may vary due to rounding.

(4)

Represents closing price per share in USD for publicly traded shares of Centennial Resource Development, Inc. (NASDAQ:CDEV – 31 December 2021: $5.98

price per share) for Centennial investment, as well as USD-equivalent closing price per share for Pipestone Energy Corp. (TSX-V:PIPE – 31 December 2021:

$3.04 price per share) for Pipestone Energy (formerly CNOR) investment.

(5)

SPAC Sponsor investment for Decarbonization Plus Acquisition Corporation II (NASDAQ:DCRN) and Decarbonization Plus Acquisition Corporation IV

(NASDAQ:DCRD).

(6)

The unrealised value of the Rock Oil investment consists of rights to mineral acres.

(7)

The unrealised value of the ILX III investment consists of 43,333 shares of Talos Energy Inc stock (NYSE:TALO) in connection with its former investment

in ILX III.

(8)

Midstream investment.

(9)

Credit investment.

(10)

Withdrawn commitments consist of Origo ($9 million) and CanEra III ($1 million), and impairments consist of Liberty II ($142 million),

Fieldwood ($80 million), Eagle II ($62 million) and Castex 2005 ($48 million).

(11)

This figure is comprised of $7.3 million held at the Company, $4.1 million held at the Partnership and $94.4 held at REL US Corp.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Investment Manager’s Report continued

Investment Portfolio Summary

As of 31 December 2021, REL’s portfolio comprised fourteen active investments including four E&P investments,

nine decarbonisation investments and one power investment.

ONYX

As of 31 December 2021, REL, through the Partnership, has

invested $60 million of its $66 million commitment to Onyx.

Onyx is a European-based independent power producer that

was created through the successful acquisition of 2,350MW of

gross installed capacity (1,941MW of net installed capacity) of

five coal- and biomass-fired power plants in Germany and the

Netherlands from Engie SA. Two of the facilities in the current

portfolio are among Europe’s most recently constructed

thermal plants, which benefit from high efficiencies, substantial

environmental controls, low emissions profiles and the

potential use of sustainable biomass.

As of 31 December 2021, REL’s interest in Onyx, through the

Partnership, was valued at 1.70x Gross MOIC

(1)

or $102 million

(Realised: $- million, Unrealised: $102 million). The Gross

MOIC

(1)

increased over the period.

HAMMERHEAD

As of 31 December 2021, REL, through the Partnership,

has invested $295 million of its $307 million commitment to

Hammerhead. Hammerhead is a private E&P company focused

on liquids-rich unconventional resources in the Montney and

Duvernay resource play in Western Canada. Since its

establishment in 2010, Hammerhead has aggregated one of the

largest and most advantaged land positions in the emerging

Montney and Duvernay formations of Western Canada’s Deep

Basin. The company controls and operates 100 per cent. of this

asset base, which comprises over 1,800 net drilling locations

across approximately ~112,000 Montney net acres. Since

Riverstone’s initial investment, Hammerhead has increased

production almost ten-fold and has significantly grown reserves

to 309 mmboe. As of 31 December 2021, the company was

currently producing approximately 29,500 boepd.

The company continues to focus on ramping development within

cash flow in the near term and paying down debt. The company

elected to increase development pace in 2H 2021 on the back of

higher commodity prices, and the company will continue to ramp

development in 2022. As of 31 December 2021, Hammerhead

had hedged approximately 46 per cent. of forecasted 2022 oil

production at a weighted average price of CAD$87/bbl.

As of 31 December 2021, REL’s interest in Hammerhead,

through the Partnership, was valued at 0.4x Gross MOIC

(1)

$116 million (Realised: $23 million, Unrealised: $93 million).

The Gross MOIC

(1)

was held flat to the prior quarter.

$295m

invested of its $307 million commitment to Hammerhead

$60m

invested of its $66 million commitment to Onyx

(1)

Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested Capital) are before transaction costs, taxes (approximately 21 to 27.5 per cent. of U.S.

sourced taxable income) and 20 per cent. carried interest on applicable gross profits in accordance with the revised terms announced on 3 January 2020, but

effective 30 June 2019. Since there was no netting of losses against gains before the aforementioned revised terms, the effective carried interest rate on the

portfolio as a whole will be greater than 20 per cent. No further carried interest will be payable until the $208 million of realised and unrealised losses to date

at 31 December 2021 are made whole with future gains, so the earned carried interest of $0.8 million at 31 December 2021 has been deferred and will expire in

October 2023 if the aforementioned losses are not made whole. Since REL has not yet met the appropriate Cost Benchmark at 31 December 2021, $28.7 million

in Performance Allocation fees that would have been due under the prior agreement were not accrued. In addition, there is a management fee of 1.5 per cent. of

net assets (including cash) per annum and other expenses. Given these costs, fees and expenses are in aggregate expected to be considerable, Total Net Value

and Net MOIC will be materially less than Gross Unrealised Value and Gross MOIC. Local taxes, primarily on U.S. assets, may apply at the jurisdictional level

on profits arising in operating 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 US tax purposes. The C Corporations serve to protect REL’s

public investors from incurring U.S. effectively connected income. The C Corporations file U.S. corporate tax returns with the U.S. Internal Revenue Service and

pay U.S. corporate taxes on its taxable income

Riverstone Energy Limited – Annual Report and Financial Statements 2021

GOODLEAP (FORMERLY LOANPAL)

As of 31 December 2021, REL, through the Partnership,

has invested in full its $25 million commitment to GoodLeap.

The company is a technology-enabled sustainable home

improvement loan originator, providing a point-of-sale lending

platform used by key residential contractors. GoodLeap does

not take funding risk, the company presells its originated loans

via forward purchase agreements to large asset managers.

The company’s attractive unit economics and asset-light

business model allow for rapid growth and the ability to scale

faster than its competitors, while generating free cash flow by

capitalising on upfront net cash payments on the flow of loan

originations and avoiding costly SG&A and capital expenditures

incurred by other portions of the value chain.

In June 2021, Loanpal formally rebranded as GoodLeap,

signifying the company’s growth into a broader sustainable

solutions marketplace. This followed GoodLeap’s entrance

into the broader market for sustainable home upgrades in

early 2021.

As of 31 December 2021, REL’s interest in GoodLeap, through

the Partnership, was valued at 2.75x Gross MOIC

(1)

$68 million (Realised: $1 million, Unrealised: $67 million).

The Gross MOIC

(1)

increased over the period.

$25m

invested in full its commitment to GoodLeap

CENTENNIAL (CDEV)

As of 31 December 2021, REL, through the Partnership, has

invested in full its $268 million commitment to Centennial.

Centennial, based in Denver, Colorado, is an E&P company

focussed on the acquisition and development of oil and

liquids-rich natural gas resources in the Permian Delaware

Basin, West Texas. The company has rapidly aggregated an

75,500 net acre position in its targeted basin (adjusted for a

pending ~6,200 net acre Southern Delaware divestiture).

In 2021, CDEV has been committed to running a two-rig

operated drilling programme, with a focus on capital efficiency

and operational improvements. Increased drilling efficiencies

via longer laterals and larger well packages have contributed to

a structural reduction in well costs. These improvements, as

well as the strong commodity environment, have led to strong

free cash flow generation. In 3Q 2021, Centennial generated

record free cash flow of ~$77 million, its fifth consecutive

quarter of positive free cash flow.

For FY 2021, Centennial has provided guidance of 60,500-61,850

barrels of oil equivalent per day of production, $300-$315 million

of capital expenditures, and $200-$220 million of free cash flow.

In addition, CDEV has made significant progress deleveraging,

and is currently targeting Net Debt / LTM EBTIDAX of 1.5x by

year end (down from 4.3x in Q1 2021).

To-date, Centennial has hedged approximately 10,972 barrels

per day of forecasted oil production in 2022 at a weighted

average price of $65.31, and 6,459 barrels of oil equivalent per

day of forecasted gas production in 2022 at a weighted average

price of $3.29.

REL, through the Partnership, owns approximately 15.2 million

shares which are publicly traded (NASDAQ:CDEV) at a 60-day

volume weighted average price of $6.70.

As of 31 December 2021, REL’s interest in Centennial, through

the Partnership, was valued at 0.98x Gross MOIC

(1)

$263 million (Realised: $172 million, Unrealised: $91 million).

The Gross MOIC

(1)

, which reflects the mark-to-market value

of REL’s shareholding, increased over the period.

$268m

invested in full its commitment to Centennial

Riverstone Energy Limited – Annual Report and Financial Statements 2021

Investment Manager’s Report continued

Investment Portfolio Summary (continued)

ENVIVA

As of 31 December 2021, REL, through the Partnership,

has invested $18 million of its $25 million commitment to

Enviva. Enviva, based in Bethesda, Maryland, is the world’s

largest supplier of wood pellets to major utilities and heat

and power generators, principally in Europe and Japan.

Through its subsidiaries, Enviva owns and operates nine

plants with a combined wood pellet production capacity

of approximately 6.2 million MTPY.

On 3 November 2021, Enviva announced its first direct

contract with an industrial customer, a European counterparty

that processes solid biomass into refined liquid fuels.

On 31 December 2021, Enviva completed its conversion from

a master limited partnership to a corporation following

approval by Enviva unitholders on 17 December 2021.

As of 31 December 2021, REL’s interest in Enviva, through the

Partnership, was valued at 2.45x Gross MOIC

(1)

or $44 million

(Realised: $- million, Unrealised: $44 million). The Gross

MOIC

(1)

increased over the period.

$18m

invested of its $25 million commitment to Enviva

$110m

invested of its $133 million commitment to Carrier II

CARRIER II

As of 31 December 2021, REL, through the Partnership,

has invested $110 million of its $133 million commitment

to Carrier II. Carrier II is focussed on the acquisition and

exploitation of upstream oil and gas assets by partnering with

select operators that are developing both unconventional and

conventional reservoirs in North America. Shortly after its

establishment in May 2015, Carrier II entered into a joint venture

agreement with a highly experienced operator group made up

of Henry Resources, LLC and PT Petroleum, LLC, targeting

19,131 net acres for development in the southern Midland Basin

(subsequently increased to 20,260 net acres). In addition,

through three separate acquisitions, the company has acquired

3,892 net acres in Karnes County in the Eagle Ford basin,

targeting the Sugarloaf Project and the Chisholm Project,

both operated by Marathon Oil Corp.

During the fourth quarter of 2019, Carrier successfully

completed the sale of its Southern Midland Basin assets

and brought six additional Eagle Ford wells online, resulting

in a total of 34 new wells in 2019. As of 31 December 2021,

Carrier II was producing approximately 3,479 boepd and

the company had hedged approximately 64 percent and

68 percent of forecasted 2022 oil and gas production,

respectively, at a weighted average price of $57.59 per barrel

and $2.88 per mmbtu.

Since inception, Carrier II has distributed $29 million through

dividends to REL, through the Partnership, representing

approximately 26 per cent. of REL’s invested capital. As of

31 December 2021, REL’s interest in Carrier II, through the

Partnership, was valued at 0.70x Gross MOIC

(1)

or $77 million

(Realised: $29 million, Unrealised: $48 million). The Gross

MOIC

(1)

remained flat over the period.

Riverstone Energy Limited – Annual Report and Financial Statements 2021

$30m

invested in full its commitment to Samsung Ventures

SAMSUNG VENTURES

On 17 August 2021, REL announced the purchase of an

interest in one of Samsung Ventures’ battery technology

focused venture capital portfolios (the “Samsung Portfolio”)

for $30.0 million. The majority of the Samsung Portfolio

consists of 1.66 million shares of Solid Power, Inc., which

successfully completed its business combination with DCRC

on December 8, 2021. Gross proceeds to Solid Power from the

transaction amounted to $542.9 million from a fully committed

$195 million PIPE and $347.9 million of cash held in trust net

of redemptions; only 0.6 per cent. of shares held by public

stockholders of DCRC were redeemed. Of the shares voted at

the special meeting of DCRC’s stockholders, over 99.9 per cent.

voted to approve the business combination.

The remainder of the portfolio is held in shares of Ionic

Materials (Ionic I & II), a material science company that

manufactures transformative polymers for use in solid-state

batteries, healthcare and 5G applications. Ionic Materials’ solid

polymer is believed to be the first of its kind to conduct ions at

room temperature, a critical enabler of solid-state batteries.

REL’s aggregate investment in the Samsung Portfolio is marked

at 1.35x Gross MOIC

(1)

at 31 December 2021.