Today, Riviera Resources (RVRA) published a press release that it will make a $1.35 per share distribution on October 27. It will make an additional distribution of $0MM to $40MM ($0.00 to $0.69 per share) at a later date. This is disappointing news. I had expected proceeds of closer to $2.48 per share, but Riviera’s estimate implies total distributions of only $2.04 at the high end and $1.69 at the midpoint. Clearly the dissolution process will be more expensive than I had estimated. Management tends to be pretty conservative in its guidance, thus, I think it’s likely that ultimate distributions will be closer to the high end of the estimated range. As such, I’m estimating the remaining proceeds (after the first transaction) will be $30MM. If this is accurate, there will be $1.87 of total distributions.
My best guess is there will be a second distribution made in November or December and then a small amount of capital will be kept on the balance sheet as the dissolution is completed (sometimes it can take a year or longer). Given the recent news, I’m downgrading Riviera to Hold. Hold.