Riverstone Energy Limited

Annual Report and Financial Statements for the year ended 31 December 2022

energy

transition

Powering a shift toward

Annual Report and Financial Statements

for the year ended 31 December 2022

2022

Riverstone

Energy

Limited

(LSE: RSE)

Contents

Who We Are… 01

Financial and Operational Highlights 02

Key Financials 03

Board Chair’s Statement

Environmental, Social and Governance Report 08

Investment Manager’s Report 18

Investment Strategy

Board of Directors 34

Report of the Directors

Directors’ Responsibilities Statement 44

Responsibility Statement of the Directors in

Respect of the Annual Report under the

Disclosure Guidance and Transparency Rules

Corporate Governance Report 46

Report of the Audit Committee 56

Independent Auditor’s Report to the Members

of Riverstone Energy Limited

Independent Auditor’s Report to the Directors

of Riverstone Energy Limited

Statement of Financial Position 67

Statement of Comprehensive Income 68

Statement of Changes in Equity 69

Statement of Cash Flows 70

Notes to the Financial Statements 71

Alternative Performance Measures (“APMs”) 93

Glossary of Capitalised Defined Terms 95

Directors and General Information 99

Riverstone Energy Limited – Annual Report and Financial Statements 2022

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 committed over

$8 billion in renewable energy and decarbonisation, across 45 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 COMPANY 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 conventional positions and by executing on its modified investment

programme. In 2022, REL invested $95 million in six companies located at diverse

junctions of the energy transition value chain.

The registered office of the Company is PO Box 286, Floor 2, Trafalgar Court,

Les Banques, St Peter Port, Guernsey, GY1 4LY.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Financial and Operational Highlights

(1)(2)

Net commitments during the year

ended 31 December 2022

Commitments increased by a net total of $69 million ($93 million pursuant to

decarbonisation strategy and ($24 million) pursuant to legacy conventional

strategy):

(i) $25 million in Tritium DCFC Limited

(ii) $20 million in Anuvia Plant Nutrients, Inc.

(iii) $17.5 million in T-REX Group, Inc.

(iv) $17.5 million in Infinitum Electric Inc.

(v) $12.5 million in Our Next Energy, Inc.

(vi) $4 million in Group14 Technologies Inc.

(vii) ($24 million) in Carrier Energy Partners II LLC

(viii) ($3 million) in Enviva, Inc. (in connection with overall approved

commitment reduction)

Remaining potential

unfunded commitments at

31 December 2022

$11 million

(2)(3)

($5 million pursuant to decarbonisation strategy and $6 million

pursuant to legacy conventional strategy):

(i) $6 million in Onyx Power

(ii) $4 million in Enviva Inc.

(iii) $1 million in Our Next Energy, Inc.

Investments during the year ended

31 December 2022

Invested a total of $95 million

(2)

($95 million pursuant to decarbonisation strategy):

(i) $25 million in Tritium DCFC Limited

(ii) $20 million in Anuvia Plant Nutrients Inc.

(iii) $17.5 million in T-REX Group, Inc.

(iv) $17.5 million in Infinitum Electric Inc.

(v) $11.5 million in Our Next Energy, Inc.

(vi) $4 million in Group14 Technologies Inc.

Realisations during the year ended

31 December 2022

Realised a total of $164 million

(2)

($163 million pursuant to legacy conventional

strategy and $1 million pursuant to decarbonisation strategy):

(i) $61 million in Onyx Power

(ii) $42 million from Pipestone Energy Corp. (formerly Canadian Non-Operated

Resources LP)

(iii) $34 million in Carrier Energy Partners II LLC

(4)

(iv) $23 million from Permian Resources Corporation (formerly Centennial

Resource Development, Inc.)

(v) $2 million from Meritage Midstream Services III, L.P.

(vi) $2 million in aggregate from ILX Holdings III, LLC, GoodLeap, LLC, Rock Oil

Holdings, LLC and Tritium DCFC Limited

INCREASING VALUE THROUGH SHARE REPURCHASES AND A FORWARD-LOOKING,

BALANCED APPROACH TO PORTFOLIO CONSTRUCTION WITH RISK-ADJUSTED RETURNS.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Key Financials

2022 2021

NAV as at 31 December

(5)

$739 million / £610 million

(6)

$682 million / £506 million

(6)

NAV per Share as at 31 December

(5)

$ 14.52 / £11.99

(6)

$12.41 / £9.19

(6)

Per cent. change in NAV per Share (USD) for the year

ended 31 December

17.0 per cent. 100.2 per cent.

Market capitalisation at 31 December $418 million / £345 million

(6)

$345 million / £255 million

(6)

Share price at 31 December $8.21 / £6.78 $6.28 / £4.65

Per cent. change in Share price (Sterling) for the year

ended 31 December

45.8 per cent. 56.6 per cent.

Number of Shares outstanding at 31 December 50,891,658 54,937,599

Share price discount to NAV 43.5 per cent. 49.4 per cent.

Cash and cash equivalents at 31 December $120million

(7)

/ £99million

(6)

$106 million

(7)

/ £78 million

(6)

Marketable securities (unrestricted) at 31 December $177 million

(8)

/ £146 million

(6)

$195 million

(8)

/ £144 million

(6)

Marketable securities (restricted) at 31 December $4 million

(9)

/ £3 million

(6)

$47 million

(9)

/ £35 million

(6)

Total comprehensive income for the year ended

31 December

$88.9 million $341.9 million

Basic and Diluted Earnings per Share for the year ended

31 December

171.87 cents 561.73 cents

Number of Shares repurchased/average price per

Share for the year ended 31 December

(9)

4,045,941

$7.95/ £6.63

8,000,867

$6.28 / £4.60

(1)

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

(2)

Amounts may vary due to rounding.

(3)

Excludes the remaining unfunded commitment for Hammerhead of $12.2 million, which is not expected to be funded. The expected funding of the remaining

unfunded commitments at 31 December 2022 are $4.5 million in 2023 and $nil in 2024. The residual amounts are to be funded as needed in 2025 and later years.

(4)

Please see page 30 for further information regarding the details of the Carrier II realisation transaction in December 2022.

(5)

NAV and NAV per Share are reflective of the fair value movements in the underlying investments held by the Partnership, net of income and expenses of

the Partnership and its related Investment Undertakings, including any Performance Allocation and applicable taxes which were both $nil as of

31 December 2022 and 31 December 2021.

(6)

Based on exchange rate of 1.2103 $/£ at 31 December 2022 (1.3503 $/£ at 31 December 2021 and 1.606 $/£ at IPO).

(7)

At 31 December 2022 and 2021, respectively, amounts are comprised of $15.8 million and $7.3 million held at the Company, $68.4 million and $4.5 million

held at the Partnership and $35.3 million and $94.0 million held at REL US Corp.

(8)

Unrestricted marketable securities held by the Partnership consist of publicly-traded shares of Permian Resources (formerly Centennial), Enviva,

Solid Power, Tritium and Hyzon for which the aggregate fair value was $177 million at 31 December 2022, and $197.8 million as of 27 February 2023

(31 December 2021: $195 million).

(9)

Restricted marketable securities held by the Partnership consist of publicly-traded shares of Tritium and DCRD for which the aggregate fair value was

$4 million at 31 December 2022 and $234 million as of 27 February 2023, which also includes the shares of HHRS (see Post-Year End Update section on

page 31 for further information) (31 December 2021: $47 million).

(10)

Inception to date total number of shares repurchased were 29,005,073 at an average price per share of £3.89 ($5.00) for a total cost of approximately

£113 million ($145 million).

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Board Chair’s Statement

Dear Shareholder,

Global market disruption

2022 was one of the most event and policy driven energy markets

I have ever seen. On the face of it, commodity prices ended the year

in a similar place to where they started. WTI opened 2022 at

US$75.99/bbl and closed it at US$80.16/bbl. In Europe, the

Title Transfer Facility (TTF) natural gas price started the year

at € 80.43/MWh and ended it at € 76.31/MWh.

But this apparent calm year-on-year masked extreme intra-year

price movements, driven in a large part by Russia’s invasion

of Ukraine and the ensuing European gas and power crisis.

The high/low price for WTI during the year was $123.64/$71.05

per barrel. A near decade of under-investment in conventional fossil

fuels, combined with continued post-COVID demand recovery,

further exacerbated the energy crisis.

Unpredictable commodity prices have been matched by uncertainty

in the global stock and bond markets. The highest inflation seen in

Europe and North America for forty years, and subsequent shift

towards higher interest rate policies by the World’s central banks

for the first time in over a decade, contributed to a significant sell

off in technology and other growth sectors. It has also been a

difficult year for the SPAC market, which has seen demand fall back

from the high levels of 2020 and 2021.

Despite this tough backdrop REL has performed well. Our listed

companies have remained focused on executing their achievable

near-term growth plans. Furthermore, higher commodity prices

have lifted the value of our conventional E&P investments,

generating additional cashflows that support our share buybacks

and the growth of our decarbonisation portfolio as we continue to

pivot into the energy transition.

Government policy supports decarbonisation investment

Elevated energy prices and wider inflationary pressures continue

to fuel a cost-of-living crisis, threatening major economies with

recession just as they recover from the pandemic. More welcome

is that after years of low cost and abundant energy being taken for

granted, we are now seeing greater attention being placed on

energy security on both sides of the Atlantic.

Many European governments have reacted to the crisis by

introducing some form of windfall tax on high energy profits and at

the EU level a gas and power price cap. While it is understandable

that governments act to protect their most vulnerable citizens at

this time, this needs to be balanced against compounding the crisis

by dis-incentivising badly needed new investment in energy.

Consequently, it is encouraging that in addition to imposing

additional taxes governments have also doubled down on

decarbonisation as a means both to bolster energy security

through diversification and accelerate efforts to keep global

warming to below 1.5 degrees.

The EU announced the REPowerEU plan in May with the intention

to make Europe independent of Russian fossil fuels before 2030.

Under the plan the Commission made hundreds of billions of

Euro’s in financing available to member states to support clean

energy and clean industry initiatives and encourage significant

energy saving initiatives across the bloc.

In August, the US Congress passed its largest ever climate-related

legislation, the Inflation Reduction Act (“IRA”). The legislation

makes $391 billion of climate related incentives and provisions

available, two thirds of which are uncapped and could see the

overall quantum rise further. Designed to spur growth of the US’s

domestic green energy industry and supply chain, the legislation

will accelerate the development of blue hydrogen and CCUS

amongst others.

REL is well placed to capitalise on these new initiatives. While there

is little in either REPowerEU or the IRA to address one of our key

strategic initiatives which is to invest in grid flexibility and resilience,

our other areas of focus should benefit. These are the electrification

of transport; agriculture; next generation liquid fuels; and next

horizon resource use plays – all areas we have identified as attractive

opportunities for making decarbonisation investments.

THOUGH THE COVID-19 PANDEMIC AND RESULTING ECONOMIC IMPACTS

SEEMS TO BE LARGELY IN THE PAST, 2022 PRESENTED A NEW SET OF

CHALLENGES AND OPPORTUNITIES FOR INVESTORS GLOBALLY.

The conflict in eastern Europe has presented a distraction from the energy transition as officials turn to

reliable energy sources to ride out market volatility. This has helped expose weaknesses in the energy system

that regulatory initiatives like the Inflation Reduction Act in the United States will help to address

by incentivising capital allocation and green infrastructure development.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Board changes

As previously announced, after nearly ten years as a REL Non-

Executive Director and as Chair of the Board for almost seven years,

I am standing down as Chair of the Board in February 2023 and

retiring from the Board after the AGM in May 2023. I am proud that

over the course of my time as Chair of the Board, REL has

successfully reoriented its strategy towards investing in the energy

transition, while strengthening its balance sheet and improving the

liquidity of its assets, as well as implemented significant favourable

adjustments to the IMA. Further, as of 31 December 2022, REL has

returned £113 million ($145 million) to Shareholders by purchasing

29,005,073 shares through the buyback programme, representing

36.3 per cent. of the total outstanding shares at commencement in

May 2020, at a weighted average price of £3.89 ($5.00) per share.

As a result, I am leaving the Company well positioned to benefit from

and support decarbonisation, the greatest investment theme of the

coming decades.

In October 2022, we welcomed Richard Horlick to the Board as a

Non-Executive Director. Richard brings a huge amount of

experience from a long career in investment management, including

with Schroders and Fidelity International. As well as joining the

Audit Committee, Nomination Committee and Management

Engagement Committee, Richard will become Chair of the Board in

February 2023. I wish him every success in the role

During the year, two further Non-Executive Directors announced that

they would be standing down from the Board, having served for

nearly ten years. Peter Barker will retire from the REL Board at the

Company’s 2023 Annual General Meeting, while Patrick Firth will

remain on the Board until December 2023 to ensure the orderly

transition of his responsibilities as Chair of the Audit Committee.

Again, I would like to thank both Peter and Patrick for their service to

REL and our Shareholders over the years.

I would like to welcome John Roche to the Board. John joined as a

Non-Executive Director in December 2022 and will become Chair of

the Audit Committee, taking over from Patrick Firth. John is a former

partner of PwC. With these changes to the Board of Directors, I

believe REL is now well placed for the next phase of its growth as the

Company continues to maximise the value of its conventional energy

investments and build out its investment portfolio in the

decarbonisation space.

Investment portfolio summary

As of 31 December 2022, REL’s portfolio comprised thirteen active

investments in decarbonisation and three conventional energy

investments. Over the course of 2022, we continued to invest in the

decarbonisation pipeline, making six exciting new investments.

At the beginning of the year, we made a $17.5 million investment in

T-REX Group. T-REX brings together asset class expertise, critical

data management capabilities, and a platform for deal structuring,

cash flow modelling, scenario analysis, real-time performance

tracking, and reporting. By giving institutions the modernised tools

and validation they require to deploy capital, T-REX facilitates

increased investment allocations into sustainable,

decarbonisation-related assets.

Shortly afterwards in February, REL announced it was making a

lead investment of $17.5 million in Infinitum Electric’s $80 million

Series D round. Founded in 2018, Infinitum Electric created the

breakthrough air-core motor which offers superior performance

at half the weight and size of conventional motors – and at a

fraction of the carbon footprint.

In March, REL invested $20 million in Anuvia Plant Nutrients’

$65.5 million Series D fund raising round. The company has

developed and now uses a unique technology that optimises

nutrient availability and efficiency for plants, while also improving

soil health, preserving natural resources, and reducing

greenhouse gas emissions.

Group14 Technologies held a $400 million Series C round in

April, with REL investing $4 million. Group14 is a battery

materials technology company that has developed a proprietary

silicon-based anode battery material to replace graphite in

conventional lithium-ion batteries.

In September, REL, alongside other investors, increased Tritium

DCFC Limited’s existing debt facility by $60 million to a total of

$150 million. Tritium is a global developer and manufacturer of

direct current (DC) fast charging technology for electric vehicles.

The additional funding will be used to fund working capital,

product development and to help accelerate production to meet

high demand from across the globe.

Our final investment of the year came in December, when REL

funded $11.5 million of its $12.5 million commitment to Our Next

Energy’s $300 million Series B round, valuing the company at over

$1 billion. ONE is a Michigan-based energy storage technology

company working to develop batteries for mobility and large-scale

storage applications.

The year also saw two mergers in our portfolio companies.

Centennial and Colgate completed its merger in September to

create a $7 billion Permian basin pure-play. REL has invested

$268 million into Centennial since 2016 and has so far realised

$194 million, or ~73 per cent. of its cost basis through proceeds

from share sales.

In September, REL announced that Hammerhead Resources Inc.,

a Calgary based E&P company, was merging with Decarbonization

Plus Acquisition Corporation IV (DCRD), a special purpose

acquisition company. The combination values Hammerhead at an

EV of C$1.39 billion, approximately 2.2x DCRD’s projected 2024

EBITDA for Hammerhead. The transaction will create a publicly

traded upstream oil and gas company with an identified investment

programme to decarbonise its oil and gas operations through

carbon capture and sequestration. This is expected to lead to a

79 per cent. reduction in scope 1 and 2 emissions by 2029 versus

2021, even after a doubling in production. The transaction closed

on 23 February 2023 (see Post-Year End Update section in the

Investment Manager’s Report on page 31 for further details).

Finally, REL realised some value from its legacy energy assets

announcing in February that it was exiting Pipestone Energy Corp.

Pipestone, a Calgary-based E&P company listed on the Toronto

Stock Exchange, yielded net proceeds of C$53 million, representing

approximately a 0.64x Gross MOIC. The sale further shifted our

portfolio away from oil and gas and provided additional proceeds to

accelerate our growth in decarbonisation opportunities.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Board Chair’s Statement continued

Buyback programme

Since the Company’s announcement on 14 February 2022 of the

authorised increase of £46 million for the share buyback

programme, 4,045,941 ordinary shares have been bought back at

a total cost of approximately £26.8 million ($32.2 million) and at

an average share price of approximately £6.63 ($7.95). As of

31 December 2022, £23.2 million was available for repurchasing.

With the intention to narrow the Company’s trading discount, the

Board took the decision in Q4 2022 to steadily buyback shares up to

£15.5 million ($17.5 million) for the period to 31 December 2022. In

Q4, REL repurchased 1,190,588 shares, an increase from 632,041

shares purchased in Q3. The Board will continue evaluating

opportunities for additional share buybacks or tender offers based

upon projected cashflow from potential significant asset

investment and divestitures.

Portfolio valuation

REL ended the period to 31 December 2022 with a NAV of

$14.52 (£11.99) per share, a 17.0 per cent. and 30.5 per cent.

increase in USD and GBP, respectively, compared to the

31 December 2021 NAV of $12.41 (£9.19) per share. REL ended

the period with an aggregate gross cash balance of $120 million

(£99 million) across the Company, Partnership and REL US Corp.

Reflecting the improved commodity price environment and the

extension of the share buyback programme, shares traded up

45.8 per cent. during the full year 2022.

Owing to the volatile markets, REL’s largest investments by gross

unrealised value had a mixed performance year on year. Onyx was

marked up from 1.70x to 3.00x Gross MOIC during 2022, a

substantial improvement and benefiting from continued good

performance in European energy markets. However, GoodLeap,

one of REL’s decarbonisation investments, saw a decline in its

marks from 2.75x Gross MOIC at the start of the year to 2.20x in

December 2022.

The valuation of REL’s investments is conducted quarterly by the

Investment Manager and is subject to approval by the independent

Directors. In addition, the valuations of REL’s investments are

audited by Ernst & 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. Those of the Company’s investments which are not

publicly quoted require meaningful judgement to establish a range

of values, and 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.

Outlook for 2023 and beyond

As I wrote at the beginning, 2022 has seen unprecedented event

and policy driven shifts in global energy and public markets. While

that makes predictions about the future even harder to make than

usual, I believe we are likely to see geopolitics continue to

dominate, whether that is Ukraine, US-China relations, or rising

tensions in Asia Pacific, and Taiwan in particular. These are likely

to outweigh any recessionary impacts with commodity prices

remaining elevated as a consequence.

While Europe looks like it will weather the 2022/23 winter, the

following winter could well be tougher, especially if a lack of

alternatives to Russian gas makes it hard to fill European

storage during the summer months. There is also a risk that by

dis-incentivising further necessary investment in energy –

renewable and conventional – the EU’s gas and power cap and

other windfall taxes will further limit the supply of badly needed

energy into Europe. Obviously, a powerful settlement to the

Ukraine conflict and lifting of sanctions could be expected to

stabilise energy prices at lower levels.

What is required is a pragmatic approach and recognition that

cleaner fossil fuels have an important role to play as a bridge to

wider decarbonisation in the energy transition. We believe the need

to provide greater supplies of green fossil fuels will become more

widely accepted. The IRA will boost both blue hydrogen and Carbon

Capture, Utilisation and Storage (CCUS) in the US and, with

transactions like Hammerhead and DCRD. Pressure on agriculture

to deliver the crop and food yields necessary to supply the world, at

a time when weather and climate is making this ever harder,

continues the drive and opportunity for innovative solutions. REL is

well placed to continue to invest into these trends as part of

growing its wider decarbonisation portfolio.

The Board’s objective has always been to maximise shareholder

value and to maintain the highest standards of corporate

governance. Over the past several years, there have been several

significant changes to the IMA. These include the Investment

Manager’s representatives voluntarily leaving the Board, amending

the IMA to stop performance fees until there is 100 per cent. make

whole from prior realised and unrealised losses (aggregating circa

$660 million at the start and now $95 million), and instituting an

8 per cent. hurdle for each deal as well as the requirement of full

capital return on individual deals before a performance fee. It is

important to note that changes to the IMA cannot be unilaterally

made by the Board. The Investment Manager’s consent is required

for IMA amendments, and both the Investment Manager and the

Cornerstone Investors must agree to any changes in performance

fees. Such negotiations are always protracted and require

compromises by all parties.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

To be very clear, the Board has always been focused on the Net

Asset Value (“NAV”) share discount in making asset allocations.

We evaluate the immediate NAV uplift of share buy back as well as

the long term value enhancement from new investments in high

return decarb opportunities. Since inception, the Board has

emphasised and the Investment Manager has sought to achieve

high risk adjusted long term returns as was the premise with

Riverstone Energy Funds V and VI, which was set forth in the IPO

prospectus. When the share NAV discount is large, the Board has

pursued aggressive open market and tender offer buy backs. In

aggregate, REL has purchased 29,005,073 shares, representing

36.3 per cent. of the total outstanding shares at a weighted average

price of £3.89 ($5.00) per share. This is one of the largest

buybacks for any closed end fund since May 2020 when the

Company commenced its buyback programme. However, we are

also cognisant of the after effects of such programmes: reduced

share liquidity, less capital available for future investments,

smaller pool of investment opportunities, smaller deal size with

higher likely volatility, and therefore fewer deals, more

concentration, and less diversification, all of which entails

additional risk.

The Board welcomes feedback from Shareholders, but will not

relinquish its responsibilities to meet short-term objectives.

Moreover, if the Board deems it appropriate, they will call an EGM

for a shareholder vote, as can any shareholder or shareholder

group which in aggregate totals 10 per cent or more of the

shares outstanding.

Our investment protocols have proven to be successful during

2022. According to a recent JPM Euro Equity research report,

with the exception of four aircraft leasing companies, REL had

the highest price total return for closed end investment

companies. During 2022 and 2021, respectively, the Company’s

share price traded up 45.8 per cent. from £4.65 to £6.78 per share

and 56.6 per cent. from £2.97 to £4.65 per share. The list included

many energy, renewable, infrastructure and commodity funds.

Still, more can and will be done. Energy markets, both fossil and

renewable, have been challengingly volatile and the Board must

adapt accordingly. They will continue to allocate capital where they

expect the highest risk adjusted long term returns from both

capital investments and share repurchases. The Board will also

maintain their regular discussions with the Investment Manager to

make further shareholder friendly changes to the IMA, which will

require the consent of the Investment Manager and possibly the

Cornerstone investors as well. This approach should give the

Directors and Shareholders confidence that REL will continue with

the success it has achieved to date.

Let me end by thanking you for your continued support. REL

has repositioned its investments and portfolio over recent

years to capitalise on the shift towards the energy transition.

The long-term trends and demand driving our decarbonisation

investments remain strong and we see the opportunity for continued

capital deployment. At the same time the Investment Management

team and the teams running our portfolio companies have taken the

necessary steps to reduce leverage, improve cash generation and

improve liquidity. As a result, both our conventional, legacy E&P

investments and our thirteen decarbonisation investments are well

placed to continue to perform through a period of considerable

disruption and uncertainty in global energy markets.

I look forward to watching REL continue to grow under a refreshed

Board and would like to thank you all for your support over the past

10 years.

Richard Hayden

Chair of the Board

28 February 2023

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Environmental, Social and Governance Report

THE INVESTMENT STRATEGY OF THE COMPANY, WHICH WAS ORIGINALLY FOCUSSED

ON THE TRADITIONAL OIL AND GAS SECTOR, HAS BEEN TRANSITIONED

TOWARDS DECARBONISATION ASSETS SINCE 2020.

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 Company itself, led by its independent Board, views ESG as a

core element in the management of REL. 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 support 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 for 2022 in

February 2023. The pages that follow summarise the key

elements for investors which impact REL’s 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/esg-reports. The statement from the

Investment Manager below relates to the Investment Manager’s

portfolio which includes investments made by the Company.

While Riverstone seeks to integrate ESG matters into its overall

investment management processes, including the standards and

strategies described in this report, there can be no assurance that

Riverstone will be able to successfully apply such strategies or

implement its ESG policies to procure particular ESG results for

any particular portfolio company or other initiative. The ESG

results for any portfolio company or business are no guarantee as

to ESG outcomes for any other portfolio company. Applying ESG

factors to investment decisions involves a mix of factors, including

considerations that are qualitative and subjective by nature. There

can be no assurance that the ESG criteria utilised by Riverstone, or

any judgment exercised by Riverstone with respect to ESG matters,

will reflect the beliefs or values of any third party.

No representation, warranty, forecast or other projection is given

with respect to any investment results. This report contains

forward-looking statements and actual results and outcomes may

differ materially and adversely. Numbers and percentages in this

report include estimates, approximations and assumptions that, if

inaccurate, may make results differ from current disclosures and

expectations. We are also reliant in part on third party data that we

have not independently verified or audited.

Riverstone’s ESG Report

Our primary obligation is to be exceptional stewards of our

investors’ capital. In today’s world, this translates not only into

delivering strong risk-adjusted returns but also doing so in a

manner which formally adopts and integrates proportionate and

measured environmental, social and governance (ESG) practices

for the benefit of a diverse group of stakeholders.

This is all at a time of increasing economic uncertainty, emerging

regulatory complexity and political scrutiny that will undoubtedly

shape how ESG evolves over the coming years.

We continue to recognise the correlation between those

businesses that make ESG a core pillar of their strategies and

day-to-day operations and those that are successful in what they

do. At Riverstone, we remain committed to deploying your capital

in a manner that appropriately and thoughtfully integrates

sustainability, ethical and social considerations.

In our last ESG report, we outlined several ambitious objectives.

The advances we have made against each of these are set out in

more detail in the following pages.

The below report on ESG is for the period ending on 31 December

2022. This report does not constitute an offer to sell or a

solicitation of an offer to purchase any securities. Past or projected

performance is no guarantee of future results. Additionally,

Riverstone may provide information herein that is not necessarily

“material” under the federal securities laws for SEC reporting

purposes, but that is informed by various ESG standards and

frameworks (including standards for the measurement of

underlying data) and the interest of various stakeholders. Much of

this information is subject to assumptions, estimates or third-party

information that is still evolving and subject to change.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

For example, Riverstone’s disclosures based on any standards

may change due to revisions in the framework requirements,

availability of information, changes in Riverstone’s business or

applicable government policies, or other factors, some of which

may be beyond Riverstone’s control.

Emissions Reporting

We are particularly proud of the work we have undertaken to

measure greenhouse gas (GHG) emissions across Riverstone’s

portfolio (which includes the companies in which the Company has

invested). We now know the magnitude of financed emissions from

our investments for the 2021 calendar year. Having completed our

baseline year, we have two primary goals on emissions:

Increasing GHG emissions data quality with more of our

portfolio companies reporting more granular, “bottom-up”

data; and

Working with our portfolio companies on GHG emissions

reduction initiatives and technologies

As a firm, we will continue to invest in climate solutions and data

analytics to decrease the emissions of our portfolio companies.

By reducing these emissions and being able to track such

reductions, we understand and effectively communicate our

contribution to climate change mitigation.

Climate Risk Assessments

The climate crisis poses a host of different risks to the financial

stability of all organisations that need to be anticipated and

incorporated into investment decisions. These risks fall under two

main categories: “physical risks” and “transition risks.”

During 2022, we undertook physical and transition climate risk

assessments for the majority of Riverstone’s portfolio, including

for a number of the companies in which the Company has invested.

We plan to use the results to support our portfolio companies as

they seek to improve their climate resilience and capture potential

opportunities presented by the energy transition.

While some of the identified risks may be unavoidable,

understanding and adapting to the distinct and systemic risks

posed by the effects of climate change are important first steps to

reducing climate risk.

In addition to our work around emissions and climate change,

there are a number of other noteworthy developments to our ESG

programme which are highlighted in the following pages.

Looking Forward

We are encouraged by the improvements we have made to our

ESG programme in 2022. However, against the backdrop of the

heightened focus on ESG and, in particular, on climate change

issues, we recognise there is much more work required, in

partnership with our investors, our management teams, our

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.

In support of the low carbon transition, we will continue to focus on

investments in decarbonisation and plan to further align with the

recommendations of the Task Force on Climate-related Financial

Disclosures (TCFD).

As the ESG landscape evolves, we are preparing to manage risks

by monitoring emerging industry trends and scanning the

regulatory horizon, including evolving requirements from the SEC.

We also plan to maintain awareness of changes in reporting

frameworks as the International Sustainability Standards Board

(ISSB) strives to develop global sustainability standards. We will

consider opportunities to integrate these standards once available

to provide additional critical ESG data in our reporting. In addition,

we will monitor the framework in development from the Taskforce

on Nature-related Financial Disclosures (TNFD).

We will also continue to mature our ESG programme by leveraging

the insights collected during the past year and strengthening our

management approach for climate change.

To accomplish this, we plan to build on the objectives outlined in

our 2021 ESG Report while looking to incorporate additional

priorities for 2023 and 2024 and:

Continue to further align our reporting with the TCFD

recommendations and evaluate opportunities to advance our risk

management and estimate the financial implications of risks

Refine our GHG accounting across our portfolio companies and

include any new investments in our GHG inventory

Consider development of potential targets for emission

reductions and support our portfolio companies in

understanding their emissions and pursuing their own

reduction goals

Using the findings from our climate risk assessment, enhance

our engagement with our portfolio companies to mitigate

climate-related risks, capitalise on opportunities to enhance

resilience and assess opportunities to build on our risk

assessment further by evaluating additional companies and

considering sensitivity analysis

Update our annual ESG questionnaire to further monitor ESG

practices and track performance with additional focus on

climate change

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Continue to facilitate ESG training/capacity building at

Riverstone to promote greater ESG awareness and

capabilities, specifically to further incorporate climate-related

considerations into our ongoing risk management and due

diligence processes

Further evolve our ESG due diligence procedures and

resources to incorporate climate risk assessment for potential

investments and enhance rigor of assessment process

Riverstone’s Approach to ESG

As one of the most experienced private investment firms within

the energy, power, infrastructure and decarbonisation 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 enable those portfolio

companies to 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

Riverstone’s ESG policy

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. 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/en/

responsible-investing/esg-policy.

ESG resources at Riverstone

Riverstone’s ESG Committee comprises a cross-functional set of

leaders and our external ESG advisor, Environmental Resources

Management (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.

Nominated investment team members serve as ESG deal leads

and engage their respective portfolio company on ESG

management and performance. In partnership with Riverstone’s

internal legal team, ESG deal leads maintain responsibility for

coordinating the completion of annual compliance reviews and

ESG questionnaires and providing feedback on the ESG

monitoring scorecards.

Riverstone’s annual performance reviews assess the quality of

ESG engagement driven by each ESG deal lead, and the results

inform decisions related to compensation and promotion for

ESG deal leads.

ESG in Practice

The careful evaluation of ESG issues is a mandatory component for

the underwriting of all REL investments, both by the Investment

Manager’s Investment Committee and the Company’s Board.

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, its ESG Minimum

Expectations (or ’ESG-MEs’) and its proprietary ESG toolkit to

identify and manage material ESG risks and value creation

opportunities in a consistent manner for investments

throughout the deal lifecycle

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

Completion of the climate change screening questionnaire to

analyse whether a company has considered impacts from

climate-related market shifts, regulatory and voluntary

frameworks and extreme weather events

Environmental, Social and Governance Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2022

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, and by the

Company Board, 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 implement regular training and

compliance reviews including, where necessary, by

third-party legal teams

A third party conducts regular cybersecurity assessments of

portfolio companies to evaluate financial, operational

technology and information technology controls

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

ESG:2022 in Review

In our 2021 ESG report, we established a number of overarching

ESG objectives for 2022 and 2023. Our progress through 2022

against these objectives, and other ESG issues addressed during

the year, are summarised below and presented in more detail

throughout this report.

Climate change

Completed actions to further develop Riverstone’s ESG

reporting, resulting in further alignment with the

recommendations of the Task Force on Climate-Related

Financial Disclosures (TCFD)

Engaged a leading carbon accounting platform, Persefoni, to

collaborate with our portfolio companies to track their

emissions, yielding disclosure of our financed emissions for the

first time, including Scope 1 and 2 emissions and significant

sources of Scope 3 emissions for our portfolio companies

Performed climate risk assessments to identify physical and

transition risks for the majority of the portfolio

ESG integration

Maintained portfolio company performance against our

ESG Minimum Expectations (or ‘ESG-MEs’) and continued

to strengthen criteria to drive further improvements

in performance

Developed an ESG onboarding pack for new portfolio

companies to share information with them about our ESG

programme, portfolio engagement and best practices

Continued to expand our Green and Sustainability-Linked Loan

investments across our credit funds

ESG engagement

Strengthened our partnership with Howard University by

providing summer internships, participating in their career fair

and leading on-campus seminars

Built ESG capacity at all levels in Riverstone by facilitating

training on ESG topics, including unconscious bias and

anti-harassment, and providing guidance on effectively

utilising the ESG toolkit

Participated in the ESG Data Convergence Initiative (EDCI) to

contribute comparable data that will enable private equity

firms to better assess their ESG progress and practices

Riverstone Energy Limited – Annual Report and Financial Statements 2022

CLIMATE CHANGE AND DECARBONISATION

Alignment with the TCFD recommendations

Riverstone recognises climate change is a threat to our global

economy, society and ecosystems. As a firm, we support the Paris

Agreement and its goal to limit global warming “to no more than”

(which tracks our ESG policy) 2°C above pre-industrial levels. In

addition, climate change also impacts how we evaluate investment

risk and opportunity as part of the world’s transition to a low

carbon economy.

In its April 2022 report, the Intergovernmental Panel on Climate

Change (IPCC) identified the financial industry as a fundamental

enabler of the low carbon transition. As the effects of climate

change continue to become more apparent, capital allocators can

look to climate-related disclosures to make informed decisions.

To enable greater understanding of these impacts, the TCFD

recommendations promote consistency and transparency around

climate-related reporting. The climate disclosure proposal

presented by the U.S. Securities and Exchange Commission (SEC)

also aligns emerging regulations with the pillars and requirements

of the TCFD framework.

In 2022, Riverstone performed analyses and took steps to improve

our management practices and enhance our disclosures through

increased alignment with TCFD guidance. Riverstone’s disclosures

aligning with the TCFD recommendations and structure are

included in pages 12 to 17 of this report.

In addition to reporting on more elements of the TCFD

recommendations in 2022, we also consider the TCFD

Supplemental Guidance for the Financial Sector specific to

asset managers.

Riverstone’s GHG emissions disclosure efforts align with the

Partnership for Carbon Accounting Financials (PCAF) Global GHG

Accounting and Reporting Standard for the Financial Industry.

We also reference the supplemental guidance in the GHG

Accounting and Reporting for the Private Equity Sector report —

produced by Initiative Climat International (iCI) and ERM and

supported by the Principles for Responsible Investment (PRI).

The statement from the Investment Manager below around

governance, strategy, risk management and metrics and targets

relate to the Investment Manager’s portfolio which includes

investments made by the Company.

Governance

Responsibilities

Driving collaboration across the firm, our cross-functional ESG

Committee leads Riverstone’s ESG programme and our response to

climate change, which includes our climate strategy, climate risk

assessments, risk management efforts and GHG reporting for our

firm and portfolio.

The ESG Committee monitors consistent application of our ESG

Policy and associated ESG initiatives across our activities.

The ESG Committee also supports our ESG deal leads. Each of our

investment teams has a designated ESG deal lead who help to

screen, assess and manage climate-related risks and opportunities

for each portfolio company throughout the investment lifecycle.

Please refer to page 10 for more details about the responsibilities of

ESG deal leads.

We incorporate external support as needed to enhance our ESG

programme and disclosures. For example, ERM serves as an

external advisor to our ESG Committee and assists our ESG deal

leads with portfolio engagement.

As part of Riverstone’s commitment to decarbonisation, we have

also engaged a leading carbon accounting platform, Persefoni, to

measure, track and report GHG emissions across our portfolio.

Persefoni’s platform is fully compliant with the PCAF framework,

and all calculations adhere to the global gold standard of carbon

accounting—the GHG Protocol. To learn more about how we strive

to understand and monitor the GHG footprint of our investments,

please see this video for interviews with key leaders within the firm.

Awareness

We endeavour to enhance understanding of climate-related risks

and opportunities across our firm and increase awareness of key

actions by providing regular ESG training for our investment

professionals. Through our ESG training we review information

about Riverstone’s ESG programme and ESG deal lead

responsibilities. We also provide updates on available resources

such as the ESG toolkit and the ESG diligence scorecards, which

include our climate change screening questionnaire and inform

due diligence and portfolio engagement around ESG topics. In

addition, we held a firm-wide call in 2022 to share the findings of

our climate risk assessments and highlight the importance of

managing climate-related risks and opportunities.

Environmental, Social and Governance Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Strategy

Climate-Related Risks and Opportunities

We continue to inform our climate strategy by monitoring physical

and transition risks and opportunities within our portfolio.

Riverstone leverages these insights to drive conversations with

portfolio company management teams and to inform our overall

decarbonisation investment approach as part of the low carbon

transition. We consider the following time horizons as we

evaluate risks:

Short term: Present-2030

Medium term: 2031-2040

Long term: 2041-2050

Climate risk assessments allow us to proactively identify key

hazards. Our investment time horizon focuses on the short-term

timeframe. By understanding present and future risks, we can

support portfolio company success throughout the lifetime of our

investment and integrate our findings into implementation plans

and investment strategies. To inform our efforts, our third-party

partner, ERM, leveraged a Screen—Assess—Adapt strategic

approach for reviewing portfolio company data and used innovative

tools that generated insights into key risks and opportunities.

Physical Risk

Based on the evaluation of the selected sites of the Investment

Manager’s portfolio companies, the climate risk assessment

showed that approximately 3 per cent. of assets have high risk and

35 per cent. have moderate risk. While the number of high-risk

assets remains the same by 2030, the proportion of moderate risk

assets increases to 45 per cent.

Climate risk assessment conducted on a subset of the Investment

Manager’s portfolio revealed that companies may be subject to a

variety of physical climate hazards. Please see page 14 for details

about the selection of portfolio companies included in the analysis.

In the short term, top climate hazards across select portfolio

companies of the Investment Manager include water stress

(including drought) and tropical cyclones. Key emerging risks,

which reflect the greatest increases over medium-and long-term

time horizons, are extreme heat, water stress and wildfires.

Company-specific risk profiles, which highlight key climate

hazards facing the portfolio company, were developed and shared

with each company that was included in the assessment.

Impacts of climate hazards vary by sector and asset type.

Examples of potential impacts to operations include the following:

Extreme weather events, such as cyclones, wildfires and

flooding, may damage critical infrastructure, buildings,

equipment and vehicles, as well as interrupt key transportation

routes and supply chain networks

Water stress and extreme heat may reduce productivity

levels and lead to higher costs for cooling systems and other

operational needs

Climate hazards may pose health and safety risks to

site personnel and may require delays in operations that

impact revenue

If risks are not managed properly, climate-related events

could lead to potential contaminations, waste releases and

water pollution in the local environment

Transition Risk

From a transition risk perspective, losses in market share and

revenue primarily drive growing risks for exploration and

production and midstream oil and coal-fired power generation

portfolio companies in the medium- and long-term timeframes in

a low carbon future. Some portfolio companies could benefit in

the future from falling fuel prices but may also realise reduced

operational expenditures by switching to lower carbon fuels.

However, potential decarbonisation policies may add carbon

pricing to fuel costs and require companies to invest in emissions

reduction measures throughout their operations.

In the near term, natural gas may serve as a lower-emitting

“bridge option” compared to coal and other high carbon fuels. If

demand increases, natural gas-fired power generation portfolio

companies may have potential expansion opportunities. Despite

potential short-term benefits, natural gas demand is ultimately

expected to decrease over medium- and long-term time horizons

in a low carbon future and impact the market share for portfolio

companies in related sectors.

Power and energy transition portfolio companies may have greater

growth opportunities in a low carbon future, which could be readily

available in the short-term time horizon. Emerging supportive

policies and incentives may further improve the conditions for

these portfolio companies, depending on geography. Portfolio

companies that focus on renewable energy and electric vehicle

charging infrastructure may have greater opportunity for market

expansion over time. However, portfolio companies may receive

pressure to decarbonise their supply chains and invest in new

technology to reduce their carbon footprint, which may increase

operational costs for emissions management.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Implementation Plan

At portfolio company level, we aim to enhance our resilience

against climate-related risks through strategic engagement and

mitigation of risks identified in our assessment. By leveraging

these findings to promote discussion with management teams, we

plan to outline actions for mitigating physical risks, encouraging

geographical diversity, preparing for market shifts and limiting

emissions in advance of impending regulations.

Our climate strategy focuses on investments that align with our

decarbonization platform. Our climate risk assessment highlighted

the intensifying risks usually associated with conventional

investments and outlined the types of companies that may access

greater market share in the future. The screening did not include

financial or impact assessments at this stage, but we plan to make

use of the initial insights from the risk analysis. Going forward, we

intend to primarily invest in businesses that support the low

carbon transition and represent key growth opportunities. We

concentrate on reducing the impact that our investments have on

the climate by investing in five core areas that offer scalable

climate solutions:

Grid flexibility and resiliency

Electrification of transportation

Next generation fuels

Efficient resource use

Agriculture and natural resource plays

As we evolve our investment strategy in alignment with the low

carbon transition, we will also consider opportunities to integrate

climate-related physical and transition risks into our investment

process. We will strive to draw on potential opportunities to increase

resilience and drive value creation across our portfolio, and we aim

to track our progress as we build further on our performance.

Risk management

We actively utilise our ESG toolkit, climate risk assessments and

portfolio engagement processes to support our portfolio companies

in managing climate-related risks and monitoring GHG emissions.

During pre-investment due diligence, our deal teams evaluate how

a potential investment assesses and manages climate-related

risks and opportunities. As part of scoring prospective investments

on the basis of ESG performance, the deal teams utilise our climate

change screening questionnaire to analyse whether a company has

considered impacts from climate-related market shifts, regulatory

and voluntary frameworks and extreme weather events.

Each Investment Committee memo includes the results of this

assessment, along with a summary of other key ESG practices,

to inform investment decisions.

In 2022, we collaborated with a third party, Persefoni, to engage a

subset of our portfolio companies in developing high-quality GHG

inventories to track their emissions. During ownership, we expect

portfolio companies to establish a GHG baseline inventory for Scope

1 and 2 emissions, monitor their emissions and annually report on

performance as part of our portfolio engagement process.

Deal teams, with third party support as required, develop actions

to help portfolio companies meet our expectations and improve

their overall ESG performance, including efforts related to

climate change.

Additionally, Riverstone actively communicates with portfolio

companies on climate-related topics throughout the year as part

of our wider portfolio engagement efforts.

Climate Risk Assessment

Riverstone utilises risk assessments throughout the investment

lifecycle to identify and assess the impacts from potential

climate-related risks and opportunities. The analysis allows us to

identify risks for and to better inform our engagement with specific

portfolio companies.

In 2022, we expanded upon our pilot climate assessment and

conducted an in-depth climate risk assessment for certain

portfolio companies to contribute to a greater understanding of

Riverstone’s exposure to acute and chronic climate hazards, as

well as the types of climate policy, technology, market,

reputational and legal risks. We selected portfolio companies

while considering the level of our equity ownership and the

materiality of each company to our business strategy. The subset

of companies reflects the wide range of sectors and geographies

represented in our portfolio.

The results of the recent analysis provided insights about the

relevant types of climate-related risks and opportunities, which are

described in this report starting on page 13. In addition to supporting

engagement with specific portfolio companies, we aim to apply the

results to inform our ongoing implementation plan to prepare for

climate change and advance our decarbonisation investments.

Physical Risk Analysis

To understand the acute and chronic physical risks associated with

climate change, our assessment included analysis of extreme

temperatures, river flooding, rainfall flooding, coastal flooding,

tropical cyclones, wildfires, rainfall-induced landslides, water

stress and drought. We evaluated current and emerging climate

hazards at operational sites for certain portfolio companies at

present, 2030 and 2050 timeframes.

Environmental, Social and Governance Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2022

The scenarios used for the climate analysis are based on the IPCC

Assessment Report 6, which incorporates around 100 leading

climate models into five Shared Socioeconomic Pathways (SSPs).

These SSPs present plausible scenarios for global trends in net

carbon dioxide emissions. Although uncertainties exist around the

different scenarios and climate impacts, evaluation across

multiple scenarios enables increased preparedness against

possible risks. Two climate scenarios were analysed in our

physical risk assessment:

SSP1-2.6 is a low GHG emissions scenario in which global

warming stays below 2°C by 2100, aligned to current

commitments under the Paris Agreement

SSP3-7.0 represents a high GHG emissions scenario in which an

average warming greater than 3°C is projected to occur by 2100

We utilised ERM’s proprietary Climate Risk Impacts and Solutions

Platform (CRISP) tool to conduct a TCFD-aligned assessment of

the Investment Manager’s portfolio’s physical assets. CRISP

integrates climate data and exposure ratings, which account for

the characteristics of the site type (e.g., an oil and gas, renewable

or manufacturing site), and normalises the risk levels of individual

climate hazards to produce overall risk scores. The analysis

considered acute risks, which reflect extreme weather events, and

chronic risks, which are longer-term shifts in climate patterns.

For the subset of portfolio companies reflected in the analysis, the

screening provided asset-specific climate risk scores and

highlighted the asset locations and climate hazards that pose the

greatest risk. Assessment results included climate risk scores at

the present, 2030 and 2050 timeframes under the two SSP

scenarios. This analysis generated asset-specific insights about

the top baseline climate hazards and emerging climate hazards at

a given location. We will leverage these findings throughout

portfolio engagement to build resilience across operational sites

within our portfolio.

Physical Risk Level in Current and Future Time Horizons*

* Based on the SSP3-7.0 climate scenario and the assets analysed in the 2022 climate risk assessment.

** Climate risk ratings at the asset level present a summary statistic across different climate hazards (flooding, extreme heat, tropical cyclones, etc.) While generalising an

asset’s overall climate risk from “Low” to “Very High” is essential for comparative analysis, especially when assessing risk across a portfolio of assets, an overall risk rating

should be distinguished from the underlying individual climate hazards. Certain individual hazards may be rated as “Very High Risk,” but with an asset’s overall resulting risk

rating being lower due to other individual hazards being rated as “Low Risk.” An asset must be threatened by several hazards that reflect “Very High Risk” for an asset to

achieve a “Very High Risk” rating overall. For “Very High Risk” and “High Risk” categories, each asset risk category may remain stable due to individual hazards remaining

relatively stable for all time horizons. Conversely, the individual hazards may increase or decrease but result in a stable rating (e.g., risk of flooding may be increasing while

risk of extreme cold may be decreasing).

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

2050

2030

Baseline

Minimal RiskLow RiskModerate RiskHigh Risk

Percent Totals **

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Transition Risk Analysis

We also conducted a climate transition risk assessment to better

understand how climate-related risks and opportunities might

develop under different scenarios, including how impacts change if

policy efforts ramp up over time to meet climate targets. Similar to

the physical risk analysis, the transition risk analysis employed

two main scenarios to determine potential trends. For global

temperature alignments, the scenarios incorporated data

primarily from the International Energy Agency (IEA) World Energy

Outlook and IEA Energy Technology Perspectives models:

The 2°C scenario limits global temperature rises by 2°C by

2100, based on pathways for sustainable development

The business-as-usual (BAU) scenario applies current policies

and commitments outlined by countries to mitigate emissions

This assessment incorporated geographic- and sector-specific

energy and emission results from the climate scenario modelling

to assess risks and opportunities from 2030 to 2050. To estimate

the effects of a low carbon transition, the process involved

assignment of company relevance weightings to sector-specific

indicators, used as a proxy for understanding potential commercial

impacts on each of the individual portfolio companies analysed.

Geography also impacts trajectories for risk assessment and indicator

data, because forecasts may expect certain countries to decarbonise

more quickly compared to other less developed regions. This

assessment relied on geography-specific model data where available,

based on the main operating regions of the portfolio companies, and

considered relevant policies and regulations specific to that region.

Scenario indicators were selected to cover a broad range of transition

risks and opportunities across the economy and Riverstone’s

business. Indicators included sector-specific model results related to

emissions in various industries and across the value chain, fuel

demand in certain markets, fuel prices and different power generation

resource types. Transition scenario indicators collectively describe an

economy-wide shift from BAU to the low carbon 2°C scenario path and

individually they provide relevance to the target sector and portfolio

company. The assessment generated indicator scores for 2030 to 2050

based on assigned relevance weightings, which were informed by how

the indicator potentially characterised the financial risk or opportunity

of transition to a company. As described in pages 13 and 14, the results

generally align with our expectations for growth or decline in certain

sectors while generating additional insights about specific risks.

The risk assessment provides information for Riverstone to

consider while evaluating potential adjustments to risk appetite

and strategy. We can also use the findings to respond to emerging

changes in a low carbon future and to capitalise on potential

opportunities for growth. This evaluation of risks continues to

represent an ongoing process as we strive to determine the extent

of financial and risk management implications.

Company Climate-related Targets*

Enviva

2030 Net Zero Target

Plan to Neutralise Scope 2

Emissions by using 100%

renewable energy by 2030

Hammerhead Resources

2030 Net Zero on Scope 1 and

2 Emissions

Onyx Power

2035 carbon neutral target

* This table is based on third-party information as of 31 December 2022, and

has not been independently verified.

Environmental, Social and Governance Report continued

To measure our portfolio’s progress in this area, we also track

GHG reporting through our ESG-MEs, which include a

recommendation for companies to calculate their GHG baseline for

Scope 1 (direct emissions) and Scope 2 (purchased energy) and

annually monitor and report their GHG emissions. We continue to

track this metric to assess how companies can enhance their GHG

emissions management. We also collect and report climate data

along with other ESG-related data through the EDCI.

Metrics and targets

To establish a baseline for our portfolio, Riverstone engaged a

leading carbon accounting platform, Persefoni, to support our

portfolio companies in calculating their GHG emissions. We

performed our GHG accounting in alignment with the PCAF

standard to estimate our Scope 3 category 15 financed emissions

across our portfolio. The organisational reporting boundary was

used in accordance with the GHG Protocol, and the calculations

included the seven GHGs outlined in the IPCC Fourth Assessment

Report and converted to carbon dioxide equivalent (CO2e) using

relevant global warming potentials. For each portfolio company,

we evaluated Scope 1 and 2 emissions, and we included partial

Scope 3 emissions for portfolio companies based on Scope 3

materiality determinations

(1)

We plan to explore opportunities to help portfolio companies set

individual reduction targets. Some of our portfolio companies have

already set GHG reduction targets:

(1)

Materiality was determined by reviewing common sources of emissions for each industry and evaluating the most significant sources for each portfolio company included in

Scope 3 calculations. Companies were then engaged to confirm the materiality of emissions for relevant Scope 3 categories.

~41,000 metric tons of CO

e of ﬁnanced

emissions (Scope 1 and 2)

“

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Additionally, we continue to calculate Riverstone’s annual firm GHG footprint to assess the climate impact of our own activities and identify

ways to reduce or offset our carbon footprint. In 2022, we expanded and refined our analysis of Scope 1 emissions from stationary

combustion at our facilities, Scope 2 emissions from purchased electricity at our sites and Scope 3 emissions from private and commercial

air travel (category 6). We also re-evaluated our 2021 emissions baseline using our revised methodology, leading to an updated estimate of

326 metric tons CO

e for our operational emissions in 2021 (note: we updated our calculation methodology but did not incorporate new

sources of data). This adjustment was largely driven by adopting an updated methodology around private air travel.

In 2022, our total emissions across these categories amounted to approximately 413 metric tons of CO

e. Compared to 2021, Riverstone’s

emissions increased by approximately 27 per cent. year-over-year. This increase was largely due to greater amounts of business travel and

increased office energy use as our operations returned to more in-person work, post-pandemic.

ESG in Practice within REL’s Portfolio*

(1)

2021 emissions have been amended from Hammerhead’s 2022 ESG Report to reflect a 733 metric ton increase due to previously unaccounted liquid fuel invoices. Regarding calculation

methodology, greenhouse gases included in Scope 1 and 2 calculations are carbon dioxide (CO

), methane (CH

), nitrous oxide (N

O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs),

sulfur hexafluoride (SF

) and nitrogen trifluoride (NF

). HFCs, PFCs, SF

and NF

volumes are zero. All emission factors used for Scope 1 and 2 emissions, nitrogen oxides, sulfur dioxides and

other significant air emissions are provided by the Canadian Association of Petroleum Producers (CAPP), Canada Energy Regulator (CER), Environment Climate Change Canada (ECCC) and

Alberta Environment and Parks (AEP). All standards, methodologies and assumptions used for air emission calculations are provided by the CAPP, ECCC and AEP.

Hammerhead

Hammerhead Resources (Hammerhead) is a growth-oriented, upstream Canadian oil and gas company headquartered in

Calgary, Alberta, with an asset portfolio in Northern Alberta.

In 2020, Hammerhead made the commitment to net zero by 2050. Since that time, Hammerhead has dedicated resources to

focus on understanding baseline air pollutants and emissions (Scopes 1, 2 and 3), challenging operations to improve efficiency

around emitting sources and evaluating solutions to achieve an accelerated net zero goal, on a Scope 1 and 2 basis, by 2030.

Hammerhead has mapped a path to net zero using carbon capture technology and will be progressing engineering design on

its current batteries in the coming years. Hammerhead’s goal is to not only be considered a top producer, but also to

accelerate its net zero target to 2030, while also becoming a leader in sustainability and ESG disclosure and performance.

Hammerhead 2021 Emissions (metric tons CO

(1)

Combustion 73.6%

Flaring 10.5%

Venting 8.9%

Drilling & Completion

Combustion 6.5%

Fugitives 0.4%

Electricity (Scope 2) 0.1%

Scope 1 & 2 Total 235,041 metric tons CO

2022

Quantified baseline for Scope 3 emissions

Sold Creek and Karr Asset certification

under EO100TM Standard for Responsible

Energy Development

Invested $2.5 million to eliminate

65 per cent. of vented emissions

2030 (2022-2030)

Carbon capture and storage

progression with net zero

Scopes 1 and 2 by 2030

2028

(2023-2028)

10% annual

reduction in flaring

2023

Pilot continuous fugitive

emissions monitoring

Zero routine venting by

end of 2023

Monitor and evaluate

new technologies and

alternate energy sources

for additional emission

reduction opportunities

Building the Path to Net Zero 2030

* The case studies presented in this report are intended to highlight relevant portfolio company ESG characteristics or results and are set forth for illustrative purposes only.

There can be no assurance that other Riverstone portfolio companies will have similar ESG characteristics or results.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Concern’s about inflation and fears of a global recession ruled fourth

quarter headlines, however due to a warmer than expected winter

consumers found some respite from elevated energy prices. This

provided relief to European consumers and also undermined

Russia’s efforts to weaponise energy in its ongoing war with Ukraine.

As the conflict stretches into its second year, the EU has made

improvements in its energy supply, leaning heavily on conventional

power assets to compensate for conflict-era deficits. Unseasonably

warm weather in the fourth quarter and near capacity storage of

natural gas in Europe drove prices to a 12-month low at year end.

Lower energy prices have provided governments a much-needed

reprieve from natural gas supply concerns to address structural

weaknesses in legacy energy supply chains and the opportunity to

further integrate additional renewable generation. On 14 January,

Germany broke the wind generation record it had set just 10 days

prior, generating 50,802 MW. Investments in grid and intermittency

management systems, among other decarbonisation technologies,

will allow the continent to take full advantage of existing assets in

efforts to advance a just and equitable energy transition.

The Investment Manager continues to make good progress in

meeting its investment strategy of re-positioning the portfolio away

from oil and gas investments in the exploration and production

sector and towards renewable energy, decarbonisation and select

infrastructure investments. This evolution in the portfolio reflects

the broader changes occurring in the global economy at large. In

2022, REL made a further six investments in line with this strategy in

the year and has also taken further steps to generate value from its

existing portfolio investments in the oil and gas space.

These portfolio changes were made against a backdrop of highly

volatile energy and commodity price moves which saw oil and gas

prices broadly ending the year where they started. Within that,

though, oil prices rose over 50 per cent. from trough to peak in the

year and gas prices more than doubled on the same basis before

pulling back in the second half of 2022. Despite these moves in

energy prices, our conventional energy companies are well

positioned to continue delivering positive earnings and returning

cash to their shareholders.

Commodity assets performed best among all asset classes in 2022

returning 16 per cent., while small-cap and growth companies

performed near the bottom of all asset classes, – down 20 per cent.

in 2022. These two extremes in performance carried implication for

REL’s entire portfolio as the majority of investments are

characterised as either commodity-linked — nearly 64 per cent. of

the portfolio’s gross unrealised value — or small cap assets, which

characterise the majority of REL’s decarbonisation holdings. REL’s

conventional portfolio investments held or improved their valuations

in the fourth quarter of 2022. Despite a considerable reduction in

anticipated weather-related natural gas demand, Permian

Resources, REL’s sole publicly traded conventional energy

investment, grew in value by 12.5 per cent. Onyx, the second-largest

investment in REL’s portfolio, made three distributions to REL

totalling $61 million. The company has returned its cost basis on

REL’s investment, maintained its value over the course of the quarter,

and continues to provide key energy resources to western Europe in

the midst of the now year-old conflict in Ukraine.

REL ended the period to 31 December 2022 with a NAV of

$14.52 (£11.99) per share, a 17.0 per cent. and 30.5 per cent. increase

in USD and GBP, respectively, compared to the 31 December 2021

NAV of $12.41 (£9.19) per share.

Consistent with its investment strategy, REL announced in February

it was exiting Pipestone Energy Corp for net proceeds of C$53

million, representing approximately a 0.64x Gross MOIC. The year

also saw two mergers in our traditional investment portfolio

companies. Centennial and Colgate were merged in July to create a

$7 billion Permian basin pure-play. REL has invested $268 million

into Centennial since 2016 and has so far realised $194 million, or

73 per cent. of its cost basis through proceeds from share sales.

In September, REL announced Hammerhead Resources Inc, a

Calgary based E&P company, was merging with Decarbonisation

Plus Acquisition Corporation IV (DCRD), a special purpose

acquisition company. The combination values Hammerhead at an

EV of C$1.39 billion and REL holds an approximate 17 per cent. stake

in Hammerhead at 0.60x Gross MOIC as of 31 December 2022, a

carrying value of $154 million. In addition, REL owns 396,456 founder

shares and 638,247 warrants in DCRD worth $3 million at

31 December 2022. The transaction will create a publicly traded

upstream oil and gas company with an identified investment

programme to decarbonise its oil and gas operations through carbon

capture and sequestration. Please see Post-Year End Update section

in the Investment Manager’s Report on page 31 for further details

regarding the closing of the transaction.

Investment Manager’s Report

POSITIONED FOR GROWTH.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

REL also made six new investments into areas aligned with the

modified investment strategy and which shift the portfolio further

towards our chosen areas of focus in renewable energy, agriculture

and decarbonisation. These investments were:

$17.5 million investment in T-REX Group, a SaaS provider

supporting the asset-backed financing industry to deploy capital.

A lead investment of $17.5 million in Infinitum Electric’s

$80 million Series D round. Infinitum Electric created the

breakthrough air-core motor which offers superior

performance at half the weight and size of conventional motors

– and at a fraction of the carbon footprint.

$20 million invested in Anuvia Plant Nutrients’ $65.5 million

Series D fund raising round. The company has developed and

now uses a unique technology that optimises nutrient

availability and efficiency for plants, while also improving soil

health, preserving natural resources, and reducing

greenhouse gas emissions.

$4 million in Group14 Technologies’ $400 million Series C round.

Group14 is a battery materials technology company that has

developed a proprietary silicon-based anode battery material to

replace graphite in conventional lithium-ion batteries.

Along side other investors, REL increased Tritium DCFC

Limited’s existing debt facility by $60 million to a total of

$150 million. Tritium is a global developer and manufacturer of

direct current (DC) fast charging technology for electric

vehicles. The additional funding will be used to fund working

capital, product development and to help accelerate

production to meet high demand from across the globe.

Lastly, in December, REL funded $11.5 million of its $12.5 million

commitment to Our Next Energy’s $300 million Series B round,

valuing the company at over $1 billion. ONE is a Michigan-based

energy storage technology company working to develop batteries

for mobility and large-scale storage applications.

There remains a significant opportunity in clean energy, driven by

increasing concern over the need to take more urgent and significant

steps to reduce the impact of carbon emissions on climate change,

as 2022 looks like being one of the warmest years on record. Coupled

with the increase in energy prices and concerns over security of

energy supply, as well as decades of under-investment in energy

generation and infrastructure assets, the pressure to find

sustainable alternative sources of energy means that three quarters

of the growth in energy investment is coming from renewable energy

investment which is expected to top $1.4 trillion in 2023.

A further catalyst for clean energy is the Inflation Reduction Act, the

largest ever climate-related bill which passed into law in the US

Congress on 16 August 2022. It provides $391 billion in climate

related incentives and provisions, with two thirds of incentives

uncapped which could see these provisions materially increase.

REL’s decarbonisation investments will stand to benefit from this

stimulus as its five investment families stand firmly at the core of the

legislation’s intended impact: batteries, renewables infrastructure,

critical materials, EV batteries and storage, and sustainable fuels to

name a few. The portfolio has already benefitted from this

legislation, with Group14 receiving in October a $100 million

non-dilutive grant to accelerate the build-out of its manufacturing

facility in Washington state. We expect other existing and future

portfolio companies to benefit from this Federal largesse.

“

With the exception of four aircraft leasing companies,

REL had the highest price total return for closed end

investment companies.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

(1)

Gross realised capital is total gross proceeds realised on invested capital. Of the $1,285 million of capital realised to date, $983 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 $95.2 million of realised and unrealised losses to date at 31 December 2022 (largest deficit of $605.5 million at 30 June 2020) are made whole with future gains, so the earned carried

interest of $0.8 million at 31 December 2022 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 2022, $38.0 million in Performance Allocation was not accrued in accordance with the terms of the current agreement, which would have been accrued under the

prior agreement. Based on the aforementioned Performance Allocation, net of estimated applicable taxes, the potential increase arising from the Investment Manager’s share purchases would

be $19 million as of 31 December 2022. 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.

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

2022

Gross

MOIC

(2)

31 Dec

2021

Gross

MOIC

(2)

Investment

(Public/Private)

Permian Resources

(4)

(Public) 268 268 194 118 312 1.17x 0.98x

Onyx (Private) 66 60 61 118 179 3.00x 1.70x

Hammerhead Resources (Private) 307 295 23 154 177 0.60x 0.39x

Total Current Portfolio – Conventional – Public

(3)

268 268 194 118 312 1.17x 0.98x

Total Current Portfolio – Conventional – Private

(3)

373 355 84 272 356 1.00x 0.61x

Total Current Portfolio - Conventional – Public & Private

(3)

641 623 278 390 668 1.07x 0.77x

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

2022

Gross

MOIC

(2)

31 Dec

2021

Gross

MOIC

(2)

Investment

(Public/Private)

GoodLeap (formerly Loanpal) (Private) 25 25 2 53 55 2.20x 2.75x

Enviva

(4)

(Public) 22 18 - 35 35 1.93x 2.45x

Infinitum (Private) 18 18 23 23 1.30x n/a

FreeWire (Private) 10 10 - 20 20 2.00x 2.00x

Anuvia Plant Nutrients Inc. (Private) 20 20 - 20 20 1.00x n/a

Solid Power

(4)

(Public) 48 48 - 19 19 0.39x 1.24x

T-REX Group, Inc (Private) 18 18 - 18 18 1.00x n/a

Tritium DCFC

(4)

(Public) 25 25 - 15 15 0.60x 6.46x

Our Next Energy (Private) 13 11 - 11 11 1.00x n/a

Group 14 (Private) 4 4 - 4 4 1.00x

n/a

DCRD

(4)(5)

(Public) 1 1 - 3 3 4.99x 1.00x

Ionic I & II (Samsung Ventures) (Private) 3 3 - 3 3 1.00x 1.00x

Hyzon Motors (Public) 10 10 - 2 2 0.16x 0.65x

Total Current Portfolio – Decarbonisation – Public

(3)

105 102 - 73 73 0.72x 1.49x

Total Current Portfolio – Decarbonisation – Private

(3)

109 108 2 152 154 1.42x 2.42x

Total Current Portfolio - Decarbonisation – Public & Private

(3)

214 210 2 225 227 1.08x 1.80x

Total Current Portfolio – Conventional & Decarbonisation

– Public & Private

(3)

855 833 280 615 895 1.07x 0.93x

Cash and Cash Equivalents

(11)

$120

Total Liquidity $311

Total Market Capitalisation $418

Investment Manager’s Report continued

Riverstone Energy Limited – Annual Report and Financial Statements 2022

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

2022

Gross

MOIC

(2)

31 Dec

2021

Gross

MOIC

(2)

Investment

(Initial Investment Date)

Rock Oil

(6)

(12 Mar 2014) 114 114 233 4 237 2.07x 2.06x

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

ILX III

(7)

(8 Oct 2015) 179 179 172 - 172 0.96x 0.96x

Meritage III

(7)

(17 Apr 2015) 40 40 88 - 88 2.20x 2.16x

RCO

(8)

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

Carrier II

(9)

(22 May 2015) 110 110 63 3 66 0.60x 0.70x

Pipestone Energy (formerly CNOR) 90 90 58 - 58 0.64x 0.58x

Sierra (24 Sept 2014) 18 18 38 - 38 2.06x 2.06x

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 0.27x

Total Realisations

(3)

819 819 995 7 1,002 1.22x 1.23x

Withdrawn Commitments and Impairments

(10)

350 350 9 - 9 0.02x 0.02x

Total Investments

(3)

2,024 2,001 1,285 622 1,906 0.95x 0.89x

Total Investments & Cash and Cash Equivalents

(3)(11)

741

(4)

Represents closing price per share in USD for publicly traded shares Permian Resources Corporation (formerly Centennial Resource Development, Inc.) (NASDAQ:PR – 31-12-2022:

$9.40 per share / 31-12-2021: $5.98 price per share); Enviva, Inc. (NYSE:EVA – 31-12-2022: $52.97 per share / 31-12-2021: $70.42 price per share); Solid Power, Inc. (NASDAQ:SLDP – 31-

12-2022: $2.54 per share / 31-12-2021: $8.74 price per share); Hyzon Motors, Inc. (NASDAQ:HYZN – 31-12-2022: $1.55 per share / 31-12-2021: $6.49 price per share); and Tritium DCFC

Limited (NASDAQ:DCFC – 31-12-2022: $1.68 price per share / 31-12-2021 $9.97 price per share), which consisted of only the Tritium/DCRN Sponsor investment at 31 December 2021.

(5)

SPAC Sponsor investment for Decarbonisation Plus Acquisition Corporation IV (NASDAQ:DCRD).

(6)

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

(7)

Midstream investment.

(8)

Credit investment.

(9)

The unrealised value of the Carrier II investment consists of certain assets held back at the closing of the transaction in December 2022, which are scheduled to be released from escrow

in Q1 2023. Please refer to the Investment Portfolio Summary section in the Investment Manager’s report on page 30 for further information regarding the details of the Carrier II

realisation transaction in December 2022.

(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 $15.8 million held at the Company, $68.4 million held at the Partnership and $35.3 million held at REL US Corp.

(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 $95.2 million of realised and unrealised losses to date at 31 December 2022 (largest deficit of $605.5 million at 30 June 2020) are

made whole with future gains, so the earned carried interest of $0.8 million at 31 December 2022 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 2022, $38.0 million in Performance Allocation was not accrued in accordance

with the terms of the current agreement, which would have been accrued under the prior agreement.

Riverstone Energy Limited – Annual Report and Financial Statements 2022

Hammerhead

As of 31 December 2022, 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 310 mmboe. As of 31 December 2022,

the company was producing approximately 30,200 boepd.

Hammerhead plans to have higher capital expenditures in 2023 than in

2022 in order to increase development activities. As of 31 December 2022,

Hammerhead had hedged approximately 47 per cent. of forecasted 2022 oil

production at a weighted average price of US$72.95/bbl.

As of 31 December 2022, REL’s interest in Hammerhead, through the

Partnership, was valued at 0.60x Gross MOIC

(1)

or $176 million

(Realised: $23 million, Unrealised: $153 million). The Gross MOIC

(1)

increased over the prior period.

In September, REL announced that Hammerhead was merging with DCRD,

a special purpose acquisition company (see further details in the DCRD

and Post-Year End Update sections on pages 29 and 31, respectively).

Onyx

As of 31 December 2022, 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 2022, REL’s interest in Onyx, through the Partnership, was

valued at 3.00x Gross MOIC

(1)

or $179 million (Realised: $61 million,

Unrealised: $118 million). The Gross MOIC

(1)

increased over the prior period.

Investment Manager’s Report continued

$60 MILLION

INVESTED OF ITS $66 MILLION COMMITMENT

TO ONYX

$295 MILLION

INVESTED OF ITS $307 MILLION COMMITMENT

TO HAMMERHEAD

Investment Portfolio Summary

Based on the aforementioned Performance Allocation, net of estimated applicable taxes, the potential increase arising from the Investment Manager’s share purchases would be

$19 million as of 31 December 2022. 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 2022

GoodLeap (formerly Loanpal)

As of 31 December 2022, 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.

During the second quarter of 2022, the company closed on its

13th securitisation which was oversubscribed despite volatile markets.

Management continues to execute on its growth plans. On 13 October 2021,

GoodLeap announced a new investment round of over $800 million, which

will support the company’s operational improvements, technology

innovation efforts, and expansion.

As of 31 December 2022, REL’s interest in GoodLeap, through the

Partnership, was valued at 2.20x Gross MOIC

(1)

or $55 million

(Realised: $2 million, Unrealised: $53 million). The Gross MOIC

(1)

decreased over the period.

Permian Resources (formerly Centennial)

As of 31 December 2022, REL, through the Partnership, has invested in full

its $268 million commitment to Permian Resources / Centennial.

Headquartered in Midland, Texas, Permian Resources is the largest

pure-play E&P company in the Delaware Basin.

In Q3 2022, Centennial closed its merger with Colgate and began its first

day of trading as Permian Resources (NYSE: PR) on 12 September 2022.

In Q4 2022, Permian Resources announced an inaugural quarterly base

dividend of $0.05 / share and a robust capital programme, aiming to return

at least 50% of free cash flow after dividends starting in 2023.

Permian Resources expects to generate ~$1.1 billion of free cash flow FY

2023 and closed on a new $2.5 billion borrowing base RCF with an elected

commitment amount of $1.5 billion.

REL, through the Partnership, owns approximately 12.5 million shares

which are publicly traded (NYSE: PR).

As of 31 December 2022, REL’s interest in Centennial, through the

Partnership, was valued at 1.17x Gross MOIC

(1)

or $312 million

(Realised: $194 million, Unrealised: $118 million). The Gross MOIC

(1)

which reflects the mark-to-market value of REL’s shareholding, increased

over the period.

$25 MILLION

INVESTED IN FULL ITS COMMITMENT

TO GOODLEAP

$268 MILLION

INVESTED IN FULL ITS COMMITMENT

TO PERMIAN RESOURCES

As of 31 December 2022, REL’s portfolio comprised twenty active investments including three E&P investments, sixteen decarbonisation

investments and one power investment.