Deutsche Rohstoff : Quarterly Report Q1 2021

FIRST QUARTER

2021

Q1 2021

OVERVIEW OF THE FIRST QUARTER 2021

The year 2021 has started very well for	ramped up the older pads in September	hedged our expected production. At the
Deutsche Rohstoff AG. The oil market has	and October 2020, followed by the import-	end of March, we had hedged 482,000
continued to recover thanks to OPEC's re-	ant Olander pad at the beginning of Janu-	barrels of oil for the remaining months of
stricted supply and the recovery in global	ary. Group net production in the first quar-	April to December at an average price of
demand. WTI was trading at 59.36 USD/	ter was an encouraging 578,912 barrels of	around 49 USD/barrel.
barrel at the end of the quarter, after tra-	oil equivalent (BOE) and 329,309 barrels of
ding below 50 USD/barrel at the beginning	oil (BOPD), respectively. In particular, pro-	In the first quarter, the hedge book resul-
of the year.	duction from the Olander well exceeded	ted in a loss of EUR 1.6 million due to the
	expectations. The coming months will	rapid and strong price increase. Hedged
Consolidated net income for the first quar-	show whether this positive trend will be	were 161,000 barrels, which corresponded
ter was EUR 11.7 million (previous year:	sufficient.	to 49 percent of actual production. If pro-
EUR 0.9 million). We generated sales of		duction continues to be above expectation,
EUR 17.9 million in the first three months	Our four companies in the USA produced	this would also mean a lower hedge ratio
(previous year: EUR 16.1 million). EBITDA	an average of 6,432 BOE or 3,659 BO per	for the coming months.
was even higher than sales at EUR 21.3	day in the first half of the year. All volume
million (previous year: EUR 9.5 million) due	figures represent the Group's net share.	The development of oil prices is in line
to the high financial result. For the full year,	The oil price realized after deducting hed-	with our positive expectations, which we
we expect sales to jump year-on-year to	ging losses (approx. USD 5.85/bbl) and	also communicated repeatedly last year.
EUR 57 to 62 million (2020: EUR 38.7 milli-	transportation costs (approx. USD 4/bbl)	We are also confident that prices will re-
on). EBITDA is also expected to be signifi-	was around USD 48/bbl.	main at an adequate level for the rest of
cantly higher than the previous year (EUR		the year. Many US banks now even expect
23.9 million) at EUR 42 to 47 million. As	Cub Creek Energy produced 460,788 BOE	prices to continue to rise significantly.
things stand today, we will close the cur-	(273,047 BO) in the first three months of
rent year with a clearly positive consolida-	the year. As expected, the Olander wells	In February, as announced, we commenced
ted result.	accounted for the largest share.	drilling 12 wells from the Knight pad,
		which is directly adjacent to the Olander
The good results are also reflected in the	Elster Oil & Gas produced 72,999 BOE	pad to the west. At the time of this report,
balance sheet as of March 31, 2021. The	(21,674 BO) through March 31. In February	drilling was nearing completion. In the co-
total of cash and cash equivalents, current	and also still in part of March, production	ming months, the wells will be completed
receivables, and non-current and current	at Elster was significantly below expecta-	and technical preparations will be made to
securities reached EUR 70.8 million, com-	tion due to maintenance work. On the	begin production in the fourth quarter.
pared with EUR 46.9 million at the end of	other hand, Elster and also Cub Creek be-
2020. This figure reflects the high cash in-	nefited from significantly higher gas prices	SHARE AND BONDS
flow in the first quarter. Accordingly, equi-	in February due to the cold snap in the
ty also increased to EUR 61.8 million at the	southern US.	Our share price gained around 50 percent
end of the quarter, EUR 17.1 million higher		in the first quarter. It has thus recovered
than at the end of 2020. The equity ratio	At Bright Rock Energy and Salt Creek Oil &	significantly from the lows of last year.
reached 26.7% compared to 22.1% as of	Gas, first quarter production totaled 45,125	Compared with US oil stocks, however, our
December 31, 2021.	BOE (34,588 BO). A significant contribution	share still has significant potential. In
	to this production came from the new	recent years, we had regularly performed
Our US subsidiaries have been producing	wells acquired in Wyoming last year.	significantly better than comparable US
at maximum capacity again since the be-		stocks.
ginning of January. Cub Creek had already	As in the previous year, we have partially

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Our bonds have since been able to climb back to pre-Corona levels. The longer-dated bond 19/24 reached a price level of 100 percent again at the beginning of March 2021 and has risen further since then.

holders received the company's new sha-	Our stock portfolio should continue to
res. During the first quarter of 2021, the	make a positive contribution to earnings. If
share price increased steadily. The avera-	the positive development continues, we
ge selling price realized in the first quarter	will also be able to resume dividend pay-
represented more than a threefold increa-	ments for 2021.
se compared with our buy price.

		With best regards from Mannheim
GOLD AND OIL PORTFOLIO	Since the portfolio was launched in April
	2020, we have realized gains of EUR 11.6
A significant contribution in the first quar-	million. At the end of March, unrealized
ter was made by our stock and bond port-	gains of EUR 2.9 million were still on the	Thomas Gutschlag	Jan-Philipp Weitz
folio, which contributed EUR 8.5 million to	books. Oil stocks and bonds as well as	CEO	CFO
net income. Outstanding was the perfor-	gold stocks contributed to this positive re-
mance of the Oasis Petroleum bond, which	sult.
we had purchased for the portfolio at very
low prices in the second and third quarters	The shares in our portfolio companies Al-
of 2020. Our calculations showed that in	monty Industries and Northern Oil & Gas
the event of a restructuring of the debt,	also developed very positively and current-
the bondholders would receive shares in	ly contain high hidden reserves.
the company at a price significantly higher
than the purchase price of the bonds. Oa-	We are confident about the further de-
sis conducted the Chapter 11 restructuring	velopment this year. The current and co-
process from September to the end of No-	ming year will be characterized by strong
vember. In early December, existing bond-	growth in production, sales and earnings.

FIRST QUARTER 2021 - DEUTSCHE ROHSTOFF GROUP 5